It’s the start of a new school year, and you’ve discovered that your son or daughter needs their own car.
But, you’re not sure if you should buy new or used, or whether buying even makes sense – your neighbor mentioned that leasing might be an attractive option.
In the past, the easy answer was often to buy a used car at a reasonable cost, perhaps $5,000. However, because the car market and government subsidies have changed, the cost of leasing may be surprisingly affordable.
As an example, in August, a new Volkswagen eGolf could be leased for 36 months with $0 down and only the first payment of $300 due at signing. This car qualified for the Oregon clean energy rebate of $2,500. Additionally, for a family of four living in the Portland Metro area with household income under $100,000, an additional $2,500 was available.
Let’s look at the math in a bit more detail:
- 36 payments of $300 equals $10,800 lease cost
- Less $5,000 for a fully qualified buyer
- Results in a gross lease cost of $5,800
- Because the car was all electric, the fuel savings would likely average $50 per month, or $1,800 over three years, bringing the total lease cost down to $4,000
While insurance would be higher for the new car compared to a used vehicle, maintenance and other costs (like licensing and smog tests) should be much lower.
It appears that a similar leasing opportunity is available this month for a BMW i3.
To determine whether purchase or leasing is the best option, you should investigate the availability of government subsidies for purchasing or leasing a new “green” vehicle. It might well result in a big savings, and a happy young driver.
Photo courtesy of the Robert Zemeckis movie “Used Cars”, starring Kurt Russell
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