Leasing a Car: Changing Our Mind Again

Our 2019 Lexus  has mainly sat in the garage.

Six years ago, for the first time in our boomer lifetime, we leased a car. That experience was pleasant, so we returned the vehicle at expiration and leased another one. The original rationale for leasing has not changed.

The century-old automobile industry is undergoing such speedy technological change that it would be imprudent to absorb the capital cost of an asset that could well be obsolete in 3-5 years.

However, COVID-19, like in many other areas of life, has forced the re-examination of premises; used-car price escalation has caused us to consider buying the automobile at its option price in 2022.

Used-car prices, which have soared in recent months, are now defying economic gravity.

Once thought of as the ultimate depreciating asset, some car owners are finding their vehicles are worth as much as—if not more than—they originally paid for them, dealers and analysts say...

The recent jump in used-vehicle pricing is the latest in what has been a topsy-turvy year for the U.S. car business. Consumer demand for cars and trucks is near an all-time high, but car companies are struggling to keep up, slammed by a global computer-chip shortage that is curtailing factory production on the new-car side.

A quick check of prices shows that a used car of the same year and model is going for $7,000 more than our option price. Mostly because of the pandemic, at 8,000 miles in 27 months we are also well under the expected mileage for the model.

We would be leaving money on the table if we just turned it in. Besides, we will need a vehicle anyway and are aghast at the cost of leasing a new one.

It's likely that we'll exercise the option and be owners again, but a lot can happen in a year.