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Toyota

Retirees can simplify by leasing their cars

Chris Woodyard
USA TODAY
Older drivers have to decide whether they want to buy or lease a car. For many, leasing can be a smart choice.

At a time in his life when he's seeking less hassle, Jack Correa derived a lot of pleasure out of leasing, rather than buying, a pearl-white Lexus RX 350 crossover.

"This way we always got a new car, and I didn't have to worry about any expense on it," says Correa, 58, who retired to Palm Coast, Fla., two years ago. He has leased cars since 2005.

Correa is an example of how leasing isn't just for business people seeking to simplify their expense reporting or playboys marking time with one sports car bauble before they switch to the next latest, greatest thing. Experts say it can also make sense for retirees.

"Leasing takes all the guesswork and surprises out of your cost," says Scot Hall, executive vice president for Swapalease, a company that helps motorists get out of their leases early. "All the benefits of leasing apply even more to that older demographic."

Leasing allows lower upfront costs, allowing seniors to keep more of their money in their accounts. They don't have to worry about repair costs: virtually all are covered under the car's warranty in the early years. At the end of the term, leasees just hand the car back.

"Maybe you want the simplicity factor," says Justin Leach, spokesman for Toyota Credit. It's as easy as driving the car back — "take it in and have them do it."

By holding onto cars only a few years, retirees will be able to take advantages of the latest safety and convenience breakthroughs in cars, which are coming at a faster pace. With fewer years left behind the wheel, seniors can try out the latest and greatest before they finally hang up the keys.

With many seniors living on fixed incomes, having the predictable payment of a lease all the way through the term — and knowing that about the only other costs are fuel and insurance — makes budgeting a lot easier, says Mike Money, owner of a Subaru dealership, Money Automotive Group in Salina, Kan.

And then, when the lease term is up, typically 36 months, seniors don't have to worry about how much their now-used car will fetch in trade for a used car or go through the pain of trying to find a private buyer for it. There's no guesswork about depreciation. Rather, it is built in as soon as they sign the lease.

But there are other factors that seniors need to take into account. For instance, Money points out that if a retiree is going to a drive only a few thousand miles a year, they'll be overpaying on their lease if it is based on, typically, 12,000 miles a year. Also, if they're spending a lot of time on the road in pursuit of hobbies, sports or visiting relatives, they may put more miles on a car than the lease allows, resulting in hefty mileage-penalty payments.

"The only disadvantage for leasing would be some of the older people we have really don't do much but drive around town (or) go out of town anymore, and they only put on 4,000 or 5,000 miles a year," Money says.

Correa says he managed the mileage issue by having more than one car — one owned and one leased. If it looked like he might exceed the mileage limit on his leased car, he just drove his other car more.

For Correa, leasing became a simple matter of wanting to have a fresh, nearly new car every three years and no worries about maintenance.

"I didn't have to worry about any expenses," he says. "Just make the payment, and that's it."

He says he started with a Honda Pilot before getting the Lexus. Now, however, he misses having the third row of seats like he had the Pilot and wants to get rid of the two-row RX 350, so he's trying to arrange for someone to take over his $476-a-month lease through Swapalease.

Leasing can dramatically cut a monthly payment. Buying a new $41,895 Lexus RX 350 can result in payments of $945 a month over 48 months. But leasing the same crossover over the same period of time cuts payments to $651 with $1,251 due at signing, according Lexus Financial Services' online calculator.

That's not to say there aren't some cheaper leasing deals on vehicles that may appeal to retirees. A new Acura ILX, for instance, can be leased for $209 a month for 36 months, with $2,399 due at signing through May 11, Edmunds.com says. A new Buick Encore is going for $199 a month for 24 months, with $1,999 up front. That deal ends March 31.

As appealing as that sounds, one of the risks of auto leasing for older couples is that if one dies, the other is still stuck with the lease. Andy Johnson says his stepmother was on the hook for his father's Mercedes-Benz SUV when he died in 2013. He says he was able to find a buyer to get out the lease. "If you have a situation where you are stuck in a lease, there is a way out," he says.

So, for Correa, it's a little more complicated than usual, but for most retirees, leasing can be a reasonable tool to help them make life more pleasurable.

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