Q. I am 73 years old with a modest income consisting of a small pension and government benefits. I need a new vehicle and I’m considering leasing instead of dipping into my retirement savings to buy another car outright. Is this a good idea?
One-off expenses such as a replacement vehicle should be part of everyone’s retirement income planning. It’s understandable that drivers in their 70s and older may want to consider leasing instead of buying if they need to replace their car.
Driving a newer car that has the latest safety and convenience features that seniors want – air conditioning, backup camera, auto-braking and pre-collision warning – has its appeal, especially if you want to upgrade every few years to suit your future needs.
There are a few factors to consider when making the lease-or-buy decision.
Take a look at your cash flow to see if it can handle the monthly lease payments. Think about how much you drive and for how long.
One benefit of leasing is the vehicle is usually covered by a warranty for the duration of the lease. You don’t have to worry about repair and maintenance costs (other than routine maintenance such as oil changes).
Disadvantages of leasing a vehicle
While many seniors don’t use the full mileage allowance of their lease, you can easily underestimate your mileage if you spend time motoring across the province or country visiting relatives and friends. This additional mileage will cost you.
Many elderly drivers tend to accumulate a lot of scratches and dents to their vehicles, a fact that I can attest to from my own parents and in-laws, and their peers. With a lease, you will face a steep bill for the damages when you turn in the car. When you own the car, you can decide what repairs you want to make and which you can ignore.
Chances are fairly good that an unanticipated future medical issue may leave you unable to drive. Even if you get a doctor’s certificate, you may still be stuck with a significant cost to terminate the lease early. Some dealers allow the option of getting someone else to pick up the lease, but don’t count on it.
Ask a lot of questions to see how flexible the lease is. Negotiate the price just as you would if you were buying.
Buying a reliable car outright will give you many years of service. You have the flexibility to sell the car when you want to and may even have a little equity left if you purchase another vehicle, or if you must stop driving.
Another possibility to consider if you don’t drive much and live close to amenities, is to rent a vehicle for road trips, or use a car sharing service such as Autoshare or Car2Go if available in your area.