Asked & Answered

More on Leasing

Q -It seems that I can get a much nicer car if I lease instead of buy. Is this a bad move?

A - Yes. A car is a depreciating asset, which means it goes down in value. The average car loses 40% of its value in the first three years. Guess how long most leases last? You are basically renting a car while it loses the most value in the quickest time, and you may even get stuck with extra charges such as excess mileage or excessive wear and tear.

At the end of the lease you will have nothing to show for your money, except the opportunity to start over again. If you insist on having a new car every three years, then the lease may make the most sense, but let’s talk about that before you decide to sacrifice your wealth and financial security for a new car.

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Bill Pratt is a former credit card executive turned student-advocate. He is the author of Extra Credit: The 7 Things Every College Student Needs to Know About Credit Debt & Ca$h and a contributor to YoungMoney.com. Bill speaks at colleges to educate and entertain students about real-life issues in money, leadership and success. His goal is to help students succeed personally and financially so they can improve the lives of those around them.You can learn more about money at www.ExtraCreditBook.com