Leasing a car is becoming increasingly popular. Nearly a quarter of new car transactions last year were leases - a record high. Consumer Reports looks at the pluses and minuses of leasing rather than buying.
Amy Scher epitomizes the loyal leasing customer. She always leases a Volvo.
"We have leased cars seven times. We love leasing. It really works for us," Scher said.
People who lease are just about as satisfied with the value of their cars as people who finance, according to the latest Consumer Reports reader survey - 66 percent compared to 69 percent.
Leasing also creates brand loyalty. The survey found people who leased their last car are twice as likely as people who bought their last car to get the same brand again.
"The big attraction to leasing is the lower monthly payment. You can drive a pricier car than you may be able to afford to buy," said Margot Gilman, Consumer Reports.
Leasing a Hyundai Sonata, for instance, can cost as little as $199 per month with a $1,900 down payment. Monthly payments on a five-year loan for the same car would be around $350, depending on the terms.
But Consumer Reports says a lower monthly payment should not be the only consideration when it comes to cost.
"When you lease you're essentially renting the car long-term and own nothing at the end of the contract. With a purchase you'll almost always have some value in the car at the end of the loan," Gilman said.
And with leases, you can face extra costs if you terminate the lease early or exceed the mileage, typically around 12,000-15,000 thousand miles a year.
"Our survey found that the main reasons people decide against leasing is they think they'll save money by buying, they plan to keep the car longer than the leasing terms, and they don't want the mileage limit," Gilman said.
Luxury cars are the most likely to be leased. Jaguars, Infinitis, BMWs, Mercedes, Lincolns and Cadillacs top the list. Around a third of the new-car transactions for each of these particular brands are leases.
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