Suze Orman writes a column for O, The Oprah Magazine on personal finance, so presumably she knows something that Oprah Winfrey‘s readers don’t. Here’s what she says about the question of whether to buy or lease a car:
The Buy vs Lease Decision
You Auto Think Twice About Leasing a Car
By Suze Orman
It drives me nuts to see all the money wasted on car leases.
In my opinion, leases are a drug for status-conscious people who need the rush of driving a “nicer” car than they can really afford. The auto-financing folks have basically perfected a way to let you think you can have your cake and eat it too. Can’t afford to buy a BMW or Lexus? No problem, just lease it!
Well I am here to tell you it is a very big problem… .
By contrast, Mark Solheim at Kiplinger’s finance says that people have preconceived ideas about leasing he calls “myths”:
Five Myths on Leasing a Car
The truth about five common car leasing myths.
By Mark Solheim, Senior Editor
Leasing often gets a bad rap, and no wonder: Its confusing argot sounds like fodder for a course in high finance, and dealers have been known to slip bad deals past confused car buyers who simply wanted low monthly payments.
In Johnson’s view, buying is usually less expensive, but he doesn’t go into the details. He thinks the math is too intimidating for most viewers, and he advising using an on-line calculator (although it’s not clear what you’re supposed to do with the on-line calculator).
In my opinion, Orman, Solheim and Johnson are all full of baloney. Even Khan Academy, which brands itself as the website where you can “Learn almost anything for free” comes up empty on the topic of buying vs. leasing a new car.
As it turns out, this is one of the most complicated finance problems that most people will confront during their lives, and the vast majority are ill-equipped to understand it (including experienced car dealers).
