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Welcome to Money As If, that feeling you get when you bypass an airline's checked baggage fee by boarding with the largest possible carry-on. Today's guilty pleasures:
Is car leasing the new home-renting?
Government Spirit (Airlines)
I have a problem
— Jeanine
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IN THESE, OUR (POSSIBLE) END TIMES
Should we all lease our cars?
So, a few weeks ago, I covered whether you should wait to buy a car, given that they all cost at least $50,000 these days. (Sadly, that's not an exaggeration).
I didn't even consider leasing, given that conventional personal finance wisdom has long held that buying a car is almost always the better financial move. Leasing, conversely, is seen as more of a lifestyle choice, designed primarily for careful-enough drivers who don't mind paying a bit of a premium to switch cars every few years.
But then I overheard some friends extolling the virtues of leasing from an affordability perspective, and wondered, maybe, if, like with housing, the calculus had changed.
Survey says
Ehhh, not exactly.
"In a market where prices are high, leasing can give you a monthly payment that's easier on your budget," says automotive consultant and Certified Financial Education Instructor (CFEI®) Gretchen Seidel. It can also require fewer upfront costs than a comparable car purchase.
But the choice is still likely to cost you more in the long term — and not just because leasing requires making car payments forever and never actually owning anything.
The high interest rates plaguing today's car-buying market are making leases less affordable, too, says John Linkov, deputy auto editor at Consumer Reports, as are lots of "little fees" that car manufacturers use to bolster profits.
Average monthly lease payments have increased across all borrowing segments over the past few years, according to Experian.
Disposition or turn-in fees, for instance, are now much harder to get waived, while mileage limits have dipped — "gone are the days of 15,000-mile leases," Linkov says — so drivers can easily end up with a higher-than-anticipated bill when they return a car.
And while there are a few new caveats — "for example, if you're looking at an [electric vehicle], the tech is moving so fast that you might not want to own that car in three years," Seidel says — the basic rules of leasing remain otherwise unchanged.
It's still more of a lifestyle choice and only truly a good fit if you're relatively sure you can stay below mileage limits (meaning you don't actually drive all that much) and won't need to replace all your hubcaps at some point after running into too many curbs (not a true story, don't worry about it).
So what's a (reluctant or eager) leaser to do?
Whether you need to lease just to get into a vehicle or simply prefer to, there are ways to keep associated costs down. These include:
Look into lease swaps via platforms like Swapalease and LeaseTrader, if you would rather not lease, but can't afford to buy new or used. By assuming someone else's lease as opposed to taking out your own, you can often avoid any down payment and commit to a shorter term, usually between six and 12 months, during which your financial situation or the market could improve.
Shop around and try negotiating. You might be able to get a dealership to move on a leased car's selling price, trade-in value, or money factor (essentially the interest rate expressed as a decimal).
Look for a closed-end lease. Otherwise, you could owe more money if the car is worth less than expected at turn-in. With a closed-end lease, "If the car depreciates, that's not your problem," Linkov explains.
Carefully consider your down payment. Making one can lower monthly payments, but many experts recommend "sign-and-drive" offers, so you're not at risk of losing that money if the car is totaled or stolen early in the lease.
Resist the upgrade. Shoppers sometimes use the seemingly manageable monthly payments as an excuse to lease a car they can't actually afford. "You should lease that Civic, not the [BMW] 3 series, so when you're out of the lease, you have a down payment" for a new car, Linkov says.
Take good care of the car. "Getting hit with excess wear and tear, along with over mileage fees, will counteract the financial benefit of the lower payment while leasing," Seidel says.
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FRESH GREEN
Nowadays, most financial takes are boilerplate. These aren't.
Adults are pre-gaming before raves and concerts because drinks at the venue are so expensive. (And here I am just not attending raves and concerts.)
So, ICYMI, budget carrier Spirit Airlines appears thisclose to getting a government bailout. Given my (recessive) libertarian streak, I have some thoughts about this. Mostly, they involve that one episode of Parks & Rec where then-councilwoman Leslie bails out a failing Pawnee arthouse video store, only for its owner (guest star Jason Schwartzman) to use the government-supplied funds to turn the establishment into an adult film shop. (I dunno. It just feels like something a budget airline known for charging $2 to print out your boarding pass at the airport could do.) But then I watched bailout wonk Andrew Ross Sorkin argue that was this situation was so, so complicated because there are already so few airlines, meaning a bankrupt Spirit is likely to drive airline prices up, and, listen, yes, monopolies are bad and I hate them, but can we all just acknowledge, that Government Spirit or not, those prices are probably going to go up anyway (and not just because of the ongoing jet fuel crisis).
Service-y: How to know if you’re eligible and, if so, how to claim your refund following final approval of Capital One's $425 million savings account settlement.
THIRST TRAP
And, finally, today, in things I would buy if, you know, I could just buy things …
Why am I like this?
Screenshot from Burberry.com
I've previously documented my unfortunate proclivity for labels — and a particular thirst for Burberry products, probably because the brand doesn't even have to use actual verbiage to communicate its luxury status. (Turns out the only thing I love more than a loud label is a loud non-label label. Fun!)
So, yeah, it probably won't surprise you that my ongoing search for a summer swimsuit keeps bringing me back to this little beauty. Intellectually, I know that I only like it because I've been programmed to equate Burberry plaid with "success," but , emotionally, it feels like I like it for real, for real, you know?
Fortunately, non-labeled labeled items almost never fall into my "ehhhh, maybe I can swing this" range. There is simply no world in which I can afford to or even imagine myself spending $655 (!) on so little fabric. Not when I can just go buy a perfectly fine and (relatively) long-lasting $35 bathing suit from Cupshe.
Got questions, comments, receipts, tips, thirst traps, etc. you’d like to share? Send them to [email protected].
This article is for educational purposes only. We don’t recommend or advise individuals to buy, not buy, sell, or not sell particular investments or other assets, as everyone’s circumstances are different. Also, it’s your money and ultimately up to you to decide the best use for it.