A few days ago, my girlfriend called me in need of some advice. Her father passed away and asked me to help her mother with the family car. Her parents had leased a 2004 Cadillac CTS and her mother didn’t want to keep the car. The lease was up in June and she wanted to know what to do.

She told me that the car only had 13,000 miles on it. The first thing I thought to myself was “Oh my goodness, your parents only put 13,000 miles on the car in four years.” In this case, her mother SHOULD NOT have leased a car, she definitely should have bought one.

Heres why..

Lets say the Cadillac was $30,000 dollars new. The dealer would have asked how many miles a year they were going to drive. The least amount a lease is calculated on is 10,000 miles a year. So the bank would have said.. “the car will hold 50% of it’s value and we think the car at the end of four years with 40,000 miles is going to be worth $15,000 dollars, half of it’s value.”

This means that in essence they were paying for miles they were never going to need. Her mother should expect to trade the car in and get at least $2,000 more that the $15,000 the bank expects because she did not use the 10,000 miles a year that the bank used in its calculation.

I told her to please tell her mom to buy her next car. Even if she wasn’t eighty years old I would still tell her to buy the next car with a small down payment and finance the car for five years. Her payments would be few dollars more but at the end of the term she would own the car outright. Instead of paying monthly for a car when she was never going to use the miles .

If you only drive a car a few thousand miles a year leasing is not for you.

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