Why your next new car should definitely be leased

Today, you'll either lease or purchase an ICE Age (Internal Combustion Engine), a Hybrid ( Battery), EV (All Battery), or Hydrogen vehicle (will the infrastructure be there long term?). And does anyone really want the social stigma associated with the purchase of a diesel vehicle today given the latest VW Group scandal? As gas and diesel engines are being usurped by other technology, and given that those new propulsion systems are improving rapidly (some aspects are developing according to Moore's Law which states that computer processing speeds will double every two years), as vehicles are increasingly becoming a rolling appliance, (as we've seen with TV's that getter better and then cheaper every Black Friday), purchasing a car today (and one that you would want to keep for more than a few years) is a bad choice.

Take for instance a 2016 Honda Accord with an MSRP of $22,905:
  • A 39-month lease at 12,000 miles per year will cost $275/month.
  • A 60-month purchase at 2% APR will cost $416/month (a net of $280/month AFTER a residual value of 60%.)

Today, when you purchase a new car you immediately lose 20 to 25% of the value when you drive it off the lot. The average cost per month doesn't equal or become less than a three-year lease until, on average, after 5 years. But given the rapid obsolescence of current vehicles given the technological changes, I would estimate 7 or more years before purchasing a car today would be less per month than a lease given the additional depreciation. Instead, by leasing, that would be 2.33 new cars that you can use in that same time versus one old car with high mileage and less performance and outdated technological features for the same cost per month.

Avoid the pain of a huge capital loss to trade in a vehicle that you would purchase today for the Apple car that comes out in a few years when you feel the need to keep up with the Joneses. Or when Google's Koala car finally comes into the mix and lets you pay for it by the minute while it drives for you (94% of the time you own a vehicle, you aren't driving it) with no drive off costs. Or don't even purchase or lease anything today and just Uber or Lyft everywhere. Treat your next car purchase as a smart phone. You won't want to be stuck with an old iCar in a few years.

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