By Anthony Santiago - Editor-in-Chief

April 6, 2023
should retirees buy or lease cars?

Regarding money, I'm always in the camp of being fiscally responsible. Depending on your financial position and budgeting, leasing a vehicle MIGHT make more sense.

If you are a retiree, I will review the ins and outs of answering, "Should retirees buy or lease cars?"

Retirement brings lots of choices, especially with retirement savings. Understanding your options is key so that you can choose your finances best. One of the biggest is whether to buy or lease a car. I'll cover the real facts and data-driven information to help you decide whether buying or leasing a vehicle is right for you.

Also, check out my article about the best cars for seniors.

Key Points for Retirees to Consider

✅ If you drive less than 7,500 miles per year, you might save money by leasing a car rather than buying one, especially if you are on a budget.

✅ Buying a car is typically a better option for owners (retirees) who plan to keep their vehicle for at least 3 or more years and want to avoid mileage limitations.

✅ Retirees can save time and effort with leasing since all maintenance and repairs should be included during their term agreement.

✅ Drivers should be careful that leasing may come with additional fees, such as excess mileage or wear and tear.

✅ If you want a new vehicle every few years, then leasing makes sense, but buying allows retirees to enjoy the payment-free ownership long-term.

Retirement and Car Ownership: Deciding to Buy or Lease?

Retirement is the time when you pamper yourself and enjoy the golden years. For some, it's time to treat themselves to a new vehicle. 

Many seniors and retirees ask me if they should buy or lease.

Honestly, it is a very PERSONAL decision, but I will cover the advantages and disadvantages. There are a few key questions I ask them.

  • Are you on a fixed budget (like social security)?
  • Do you have some savings toward purchasing?
  • How much do you plan to drive?
  • What brand or model are you looking to get into?

Let's get into the details!

should retirees buy or lease cars

Here are the Advantages and Disadvantages of Leasing:

Leasing Advantages
  • Lower monthly payments
  • No need to worry about reselling
Leasing Disadvantages
  • No equity at the end of the term after spending thousands of dollars
  • Restrictions on mileage and modifications

should retirees buy or lease cars

Here are the Advantages and Disadvantages of Buying:

Buying Advantages
  • Lower overall ownership cost the longer you drive it
  • More freedom with modifications and usage
  • Equity in the car if you ever have to sell it
Leasing Disadvantages
  • Higher monthly payments and longer terms on the loan payment
  • Responsible for repairs and maintenance

The Benefits of Leasing a Vehicle for Seniors

Leasing a vehicle may benefit senior citizens, including reduced monthly payments and lower maintenance expenses.

You will experience the thrill of driving a brand-new car without the long-term commitment of ownership and maintenance costs, which can appeal to many.

Ability to Drive the Latest and Greatest Model

Leasing a new vehicle can be great for seniors who want the latest model and save a little cash for the future.

The major benefit is lower monthly payments, including warranty protection, and the ability put the extra money into a new lease at the end of the term or use the fund for other life enjoyments.

Leasing is perfect if you have a limited budget and want predictable and dependable transportation.

Financial experts agree that It's perfect for seniors on a fixed income or those wanting to avoid repairs. Seniors can access the latest advanced safety features like parking assist, lane departure warnings, and front radar for high safety ratings, reducing the risk of accidents on the road.

Leasing can be a smart financial choice for seniors. However, it's crucial to carefully read and review the lease agreement to understand fees for wear and tear, miles, and other charges.

Lower Monthly Lease Payments

Leasing a car is a nice way for seniors to drive a new car without the responsibility or difficulty of owning one. Seniors can save money and reduce their financial burden through lower monthly payments than financing.

Leasing is like renting a car for a set time, usually 2-3 years. During this time, you can enjoy the new car without worrying about repairs or selling it when you're done.

You can also write off your lease as a business expense if you have a business. This can mean huge tax deductions to save you money. Speak to a tax professional regarding this option.

Leasing a car is good for older adults who want to meet their automotive and financial needs.

Remember to read the fine print and be aware of fees if you exceed your mileage limit. If you have bad credit or need to know the car's residual value, leasing may be the way to go.

Insider Tip: Before deciding whether to buy or lease a car, consider your financial situation and long-term goals to see which option is best.

Protection with Factory Warranties

In addition to lower payments and the latest tech, leasees can enjoy protection from the manufacturer's warranty coverage. Plus, bumper-to-bumper and powertrain warranties protect against unforeseen defects or repairs.

Since you are renting the vehicle, the lease will cover any necessary repairs. This does not cover accidents but does cover any manufacturing defects.

All-in-all, leasing a car is an easy, cost-effective option for reliable transportation.

Before signing the lease, seniors should read the agreement carefully to avoid surprises.

Ability to Change Cars

Leasing a car is a great option for seniors, especially if they want to walk away from the vehicle once the lease term is finished.

I personally have leased in the past (I'm not a retiree yet) but ended up buying at the end of the lease since there was excessive mileage beyond the mileage allowance. Getting into a new lease would be appealing if you are not driving much and want headache-free transportation.

Overall, leasing is a smart and stress-free choice for seniors who need a reliable mode of transportation.

Key Considerations Before Leasing a Vehicle

While the promise of hassle-free leasing should be a good fit, there are specific things you need to consider before committing carefully.

Regarding any lease terms, you must consider the upfront costs, monthly payments, mileage limits, and residual value to decide if leasing is right for you.

You have the option to purchase the vehicle at the end of your lease as well. As mentioned earlier, I opted for this since I incurred additional mileage fees.

Leasing is an alternative to financing (in layperson's terms). You basically have the option to buy the vehicle at the end of the lease. 

Mileage Limits

If you plan to do a lot of driving and traveling, you must carefully decide if leasing fits your needs. While there are mileage terms, higher lease agreements are available, but the monthly payments will be higher. 

However, data shows that most seniors and retirees drive an average of 7,600 miles per year.

Lease terms can be set for 10,000 miles or 12,000 miles per year. 

Additional Fees

When leasing a vehicle, consider extra fees. These include excess mileage fees, wear and tear charges, and end-of-lease disposition fees. 

Check the lease agreement and know what additional fees could apply.

Excessive Wear and Tear

Excessive use of a leased car can cause costly fees.

Also, you need to be aware of any excessive bumps, dents, or scrapes that might happen during your lease. Such technology features like backup and 360 cameras would be useful features.

Retirees should consider their driving habits and what they need to make driving easier.

Insider Tip: Speak to a financial advisor before leasing or buying a car. They'll help assess what fits your needs based on your monthly income.

should retires buy or lease cars

How to Crunch the Numbers with an Auto Loan Calculator

Retirees can find it hard to decide whether to buy or lease. 

An auto loan calculator vs. leasing can help.

Use it to compare the costs of buying and leasing. It can also help retirees with a fixed income to find an affordable monthly payment.

Final Thoughts on Leasing vs. Buying: Making the Right Choice

Deciding the right choice for your car and retirement funds can be tough.

However, leasing might be a good option if you are on a budget and plan only to drive a little. Due to the lower payments, you may be tempted to lease as a retiree. But consider fees for miles over the limit and that you won't own the car. Buying could have higher payments, but you'll own it one day.

I prefer to buy and purchase my vehicles. Leasing and buying cars both have their advantages and downsides.

You can learn more about buying vs. leasing here.

Choosing the right option depends on your individual automotive and financial needs. 

Pro tip: Consider future needs, not just current ones, before buying or leasing a car. 

FAQs about Buying vs. Leasing Cars

Yes, retirees should consider buying or leasing cars based on their financial situation and lifestyle.

1. What are the benefits of leasing a car for retirees?

Retirees who opt for leasing a car instead of buying can enjoy lower monthly payments and the flexibility to upgrade to a newer model every few years. Additionally, they may benefit from tax deductions on car leases.

2. What are the benefits of buying a car for retirees?

Retirees who purchase a car outright do not have to worry about monthly payments or mileage restrictions. They also have the option to sell the car when they no longer need it.

3. What is the tax deduction on car leases for retirees?

Retirees who lease a car may be eligible for tax deductions related to the cost of the lease, which could reduce their overall tax liability.

4. What happens if I exceed my additional mileage on a leased car as a retiree?

Retirees who exceed their allotted mileage on a leased car may have to pay additional fees at the end of their lease term. It's important to carefully monitor mileage and consider a lease with higher mileage limits if necessary.

5. What factors should retirees consider when deciding whether to buy or lease a car?

Retirees should consider their overall financial situation, including their budget, expected mileage, and long-term goals for car ownership. They should also research financing and lease options to determine which suits their needs best.

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Anthony Santiago - Editor-in-Chief

About the author

I am a passionate car enthusiast who likes to help people save money and avoid headaches when it comes to cars. I believe that everyone can find the right car at the right price. I share my tips and experience so you can learn quickly and maximize your next SUV, truck or car purchase.

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