Suze Orman Calls Leasing a Car the 'Biggest Waste of Money' — Here's Why You Should Always Buy
Many drivers opt for leasing because monthly payments are usually lower and they can drive a new car every few years. But personal finance expert and best-selling author Suze Orman offered a different perspective: “Leasing a car is the biggest waste of money out there.” Instead, Orman recommended people buy a vehicle, pay it off and keep it as long as possible.
If you’re considering leasing a car, in some cases it’s not necessarily a bad idea, but here are Orman’s three reasons you shouldn’t go this route.
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You Avoid Mileage Limits and Penalties
One of the reasons Orman thinks leasing over owning a car is expensive is the mileage restrictions. “You only get to drive 12,000 miles,” she said. For those who drive a lot, that can be expensive when it comes to penalties.
Most car leases limit the number of miles you can drive, often 12,000 to 15,000 per year. If you go over the limit, you face penalties, which can range from 10 cents to 25 cents or more per mile when you return the vehicle.
You Skip the Extra Insurance Requirements
Since the leasing company owns the vehicle for the length of the lease, they usually require full coverage that includes liability and gap insurance.
Gap insurance is coverage that pays the difference between what you owe on your lease and what your insurer will pay you if your car is totaled or stolen. That can add hundreds of dollars a year to your premium.
You're Making Payments Without Building Ownership
Another Orman’s objection to leasing is that you’ll never own the car. You return the car and walk away with no equity at the end of the lease term.
But if you buy, even if it’s financing, each payment brings you closer to full ownership. Once you pay off the loan, you can drive the car for years without monthly payments. This can lead to significant financial savings over the long term.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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