However, just because it's popular, it doesn't mean it's a good idea. Ramsey even warned his followers against this method during a recent episode of The Dave Ramsey Show, and his reason is actually pretty compelling.
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View this post on Instagram"Put those numbers, that stream of payments and a lump sum, into a financial calculator as opposed to the actual MSRP, the sticker price, and back out what the cost is of what's called cost of capital in a lease," he continued, explaining that this is how you can determine the interest rate you're paying on the money you're borrowing. "On average, it's 14.2 percent right now. So you borrowed money at 14 percent."
Ramsey's Followers Had Mixed Feelings About Car Leases
Ramsey may be known for his financial conservatism, but his followers didn't seem to share his philosophy about car leases. Instead of feeling "screwed," many people popped into the comments to share the benefits of car leases.
Several people shared how they like having the ability to upgrade their car at the end of their lease, with one person writing, "Leasing is great. I get a new car every 3 years. I don’t have to worry about it breaking down. No mechanics to see."
The ability to drive a higher-end vehicleLower down payment requirementsProtection against depreciationThe option to purchase your car at the end of your lease, or possibly even transfer your lease to another driver if you want to end your lease early
Of course, there are downsides as well, and the website says they include:
Higher costsDriving restrictions (leases may have a mileage limit)Higher insurance premiumsComplex lending and purchasing requirementsSources:
InstagramTravelers InsuranceMarket Reports WorldRelated: Dave Ramsey Warns Retirees Mobile Homes Aren't the Money-Savers They Appear to Be
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