Leasing Can Make Sense for Millennials

 

As new vehicles get more and more expensive, it can be harder and harder to afford the latest car or truck. That’s especially the case for younger shoppers, who are likely to have lower-paying jobs. Now, for some of those people, buying a pre-owned vehicle is a good option. But leasing for millennials also has become an increasingly popular alternative to buying new or used.

A prime reason for this, of course, has to do with the bottom line. Many people in the so-called millennial generation—born from about 1982 to 2004—are still trying to establish themselves economically. Unemployment levels for adults between the ages of 18 and 29 are noticeably higher than the national rate. Looking at things the other way, a study from the Bureau of Labor Statistics showed young adults were employed for an average of just 74 percent of their working careers up to the age of 28.

That kind of financial uncertainty, and an interest in avoiding long-term debt, can make it hard to afford a new car, especially since the average transaction price for a new vehicle in the United States is more than $34,000. On the other hand, inexpensive used vehicles can’t meet the younger generation’s demand for the latest technologies. Which is where leasing comes into play.

It’s sort of like a long-term car rental, since you make monthly payments on the vehicle for a given time, and when that period expires, the vehicle goes back to the dealership. As a result, you’re primarily paying the dealership for depreciation with a lease, so the monthly payments are a lot less than when buying a vehicle outright. In many cases, upfront leasing costs also can be lower than a new-car down payment. You’re also paying for the car’s prime driving years, then giving it back before time and mileage can begin to seriously affect its condition.

As for the exact differences, consider: The automotive experts at Edmunds.com indicated that, at the end of the third quarter of this year, the average monthly lease payment was $428. The average monthly payment for a financed new car was 18 percent higher, reaching $505, at the same time. There may be tax benefits for leasing a car as well, though this is something that needs to be discussed with your own financial advisor.

All that said, there are some disadvantages to leasing as well. For instance, most leases limit the number of miles you can drive, and often to an amount that’s lower than the national average: The team at U.S. News & World Report found a 12,000-mile limit to be the “most common,” but the average number of miles driven per year in the United States is 13,476. When you’re paying by the mile for any overage, it has the potential to add a lot of cost to a lease deal.

Then there’s the fact that you’ll be charged for any physical damage to the vehicle that goes beyond the typical “wear and tear.” Again, this won’t necessarily be a problem for most people, however it does require that you pay more attention to routine maintenance.

Like many things in life, the decision about whether to lease or buy a car, for millennials or anyone else, comes down to individual circumstances. But whatever your circumstances, Route 33 Nissan is ready to help get you into your next set of wheels.