Is Car Leasing a Good Idea for Pensioners and Old Drivers?

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Finding new ways to save money in retirement is rarely a straightforward process, but that doesn’t mean there aren’t a few shortcuts that retirees can try to locate. While most people have heard that buying a car offers a better investment for drivers than leasing a vehicle that might not be the case for retirees.

USA Today reported leasing enables retirees to keep more of their money in savings accounts compared to buying because signing a lease has much lower upfront costs. Monthly lease payments are also usually less than the monthly fees associated with loans.

There are several benefits that older people should consider when deciding if leasing a vehicle is the right choice for them.

1. Lower monthly payment

Leasing a vehicle typically requires a lower monthly payment and lower upfront costs than buying a vehicle. The monthly payments are lower because when you lease, you’re only paying a percentage of the total price of the car.

The overall ownership costs throughout the car lease may also be lower due to the car being under a factory warranty. Essentially, the primary costs an older adult needs to think about with a leased car include whether the lease payment will be affordable, gas costs, and the expenses related to car insurance. The average monthly lease payment is $522, according to Experian.

While the monthly payments may be lower, unless you choose to buy the car at the end of the lease term, there will always be car payments for those who continue to go from one lease to another. This can be challenging for individuals who no longer have a regular paycheck coming in.

When budgeting for a lease, keep in mind that while monthly payments may be less costly, lease agreements include extra fees and expenses such as fees for exceeding mileage limits, which can be an issue if you plan to do a great deal of traveling or road tripping.

2. Option to buy

Regardless of whether a car is secured directly from a dealer, or an older person takes over a car lease for the remainder of the term, lessees have the option to buy the car at the end of the term for the amount stated on the contract.

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When considering whether to buy, it’s important to consider the leased car as if you were shopping for a used car. Find out whether the car is priced similarly to other cars of the same make and model in the same condition and with similar mileage. If this is the case, then it may be a good financial choice to buy.

Keep in mind that the costs of ownership will go up once the lease ends because the vehicle will no longer be under the same type of warranty. The cost of repairs and maintenance will now be the owner’s responsibility.

3. Tax deductions

Older adults who choose to lease a vehicle and who are still working part-time while in retirement may benefit from tax deductions. This information can be checked ahead of time through the Internal Revenue Service.

By using the vehicle for work, older adult drivers may be able to deduct a portion of the lease payment on tax returns, as well as the cost of vehicle upkeep and the vehicle’s depreciation.

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This tax deduction benefit is only available for drivers who are leasing a vehicle while in semi-retirement and still working in some capacity but is something to consider.

4. Latest Models

A major benefit of leasing vehicles is the ability to get behind the wheel of the newest vehicles available on the market. The technology available in vehicles is constantly changing and ensures much safer drivers than in the past.

For older people, the added security of the newest features, like rearview cameras, parking assist, and lane departure warnings, can be very valuable. Those who continue to lease for the long term, cycling from one lease to the next, will always have the latest technology and safety features in the vehicles you’re driving.

5. Vehicle warranty protection

A leased vehicle will have a warranty protection on it. This means any expected repairs that the vehicle will need are covered and will not come out of your pocket. Warranty coverage like this can be very valuable for older individuals, especially those who may be on a limited budget, as it eliminates much of the financial uncertainty or guesswork associated with vehicle ownership. Drivers will, however, typically have to pay for minor maintenance such as oil changes and tire rotations.

6. Flexibility

Since a lease is typically for three years or less and a car loan is usually for five years or more, leasing can provide more flexibility for those who are unsure how much driving they will be doing in the coming years. It may be easier for a retiree to predict their driving requirements just a couple of years into the future — but it might be more difficult to predict driving needs over five years because those needs could change much more dramatically.


Leasing a car instead of buying can be a good option for older drivers, depending on your budget and how you plan to use the vehicle. But weigh the pros and cons of leasing before signing on the dotted line. Unless you plan to purchase the vehicle at the end of the lease term, you could be setting yourself up for never-ending car payments.

Dylan Miller

I am a Chicago native and regular contributor to "Locar Deals". I have a master's degree in English, am an automobile content creation specialist, and have written professionally for a variety of automotive companies over the past few years. I write on a variety of vehicles, from high-end luxury cars to ten-year-old gas guzzlers and everything in between. And I love sharing valuable car buying tips with consumers from all walks of life.

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