Leasing a car comes with a unique set of responsibilities and advantages compared to buying. When you lease, you take on the obligations of car ownership, such as insurance, registration, inspections, and legal liability, but you don’t actually own the vehicle. The leasing company or bank retains ownership. While this arrangement might not appeal to everyone, leasing offers distinct benefits, especially for certain demographics, including seniors and AARP members. For many, the Aarp Car Leasing Program, or the concept of leasing as a smart financial move for seniors, is worth exploring.
boomers shopping for a new in with salesman in a dealership
Image alt text: Senior couple discussing car leasing options with a dealership salesman, highlighting the AARP car leasing program benefits for older adults.
One of the most compelling reasons to consider an AARP car leasing program, or leasing in general, is the potential for lower monthly payments compared to financing a purchase. This can be particularly attractive for those on a fixed income, a common scenario for many seniors. Furthermore, leasing allows you to regularly access the newest car technology and safety features. As technology rapidly advances, especially in vehicle safety, leasing every few years ensures you’re always driving a car equipped with the latest innovations. Typically, lease terms, often around 36 months or 36,000 miles, align with most new car warranties, potentially saving you from unexpected repair costs during the lease period.
If you’re considering your first lease, you might have a used car to trade in. This trade-in value can significantly reduce your initial lease payments, making leasing even more financially appealing. However, it’s important to remember that this advantage is a one-time benefit and won’t be available when you lease again at the end of your term.
The attractiveness of lower monthly payments through leasing is undeniable. In fact, statistics from Edmunds.com revealed that nearly a third (31.3 percent) of new car transactions in the first half of 2018 were leases, a significant increase from 25.7 percent in the first half of 2013. This trend highlights the growing popularity of leasing as a viable option for many car consumers.
Let’s look at a simplified example to illustrate the financial appeal of leasing, using data from carpaymentcalculator.net. Imagine you’re interested in a 2018 Honda CR-V, a popular SUV, priced at $33,500 (or $35,000 including taxes and fees). You have a trade-in valued at $10,000 and are seeking a deal with no upfront payment upon signing the lease. If you were to finance this purchase with a three-year loan at a 5 percent interest rate (an average rate at the time according to Bankrate.com), your monthly payment would be a substantial $749. However, leasing the same vehicle for three years could reduce your monthly payment to approximately $287.
This significant difference is striking. To achieve a loan payment comparable to the lease payment, you would need to extend the loan term to around eight years. While you would own the car after paying off the loan, consider how long you realistically want to keep a vehicle. For many, especially those who appreciate driving newer models with updated features, leasing offers a financially sound way to consistently drive a modern vehicle.
Key Considerations for AARP Car Leasing (and Leasing in General)
1. Choose a Car with Strong Resale Value:
In a lease, you essentially pay for the car’s depreciation over the lease term. Therefore, selecting a vehicle that holds its value well will result in lower lease payments. While this might limit your choices, focusing on brands and models known for strong resale value is a smart leasing strategy. Toyota, for example, consistently ranks high in resale value. Kelley Blue Book’s 2018 awards highlighted the Toyota Tacoma, Tundra, and 4Runner as top performers, retaining approximately 65 to 70 percent of their new value after three years.
While Toyota excels overall, resale value data is segmented by vehicle category. This allows you to identify top performers within specific segments like sedans, minivans, or SUVs, ensuring you can find a vehicle that meets your needs while also leasing advantageously. The Jeep Wrangler and several pickup trucks follow Toyota in resale value rankings, with the Subaru WRX sedan appearing at number 10.
According to Ronald Montoya, senior consumer advice editor at Edmunds.com, “Vehicles that are popular and have good resale value — SUVs, Toyotas,” are generally the most financially sensible choices for leasing.
2. Understand the Lease Deal Intricacies:
Lease agreements can involve numerous variables, making it crucial to thoroughly understand the deal. As Montoya aptly states, leases “have a lot of variables.” Negotiation is possible, although dealers may resist price reductions, similar to car buying. Researching the market price for comparable new models in your area using resources like Truecar.com, kbb.com, and Edmunds.com is highly recommended. Obtaining a purchase quote from the dealership’s internet department before visiting the showroom can also provide a strong starting point for negotiation.
The negotiated price, combined with fees such as sales tax and dealer documentation fees, minus the car’s projected value at lease-end, forms the basis of your lease payments. This is known as the capitalized cost, or “cap cost” in leasing terminology. Understanding cap cost is fundamental to evaluating and comparing different lease offers.
For AARP members, exploring potential partnerships or discounts related to car leasing could be beneficial. While there may not be a specific “AARP car leasing program,” AARP often negotiates member benefits across various services, and it’s worth investigating if any such advantages exist within the automotive sector. Even without a specific program, the general benefits of leasing – lower payments, new features, and warranty coverage – can be particularly appealing to seniors and AARP members seeking a cost-effective and convenient way to drive.
