Why does Suze Orman say not to lease a car?
Asked by: Danika Beatty | Last update: April 22, 2026Score: 4.1/5 (3 votes)
Suze Orman advises against leasing cars because it's like "throwing money away" for a temporary vehicle, as you build no equity and end up with nothing at the lease's end, unlike buying and owning for the long haul. She views leasing as a costly cycle of payments for a car you don't own, preferring you buy a reliable car and keep it for 15+ years, saving money by avoiding continuous new car payments and building an asset.
What does Suze Orman say about leasing a car?
But according to personal finance expert and New York Times bestselling author Suze Orman, you should never lease one. “Leasing a car is the biggest waste of money out there. You only get to drive at 12,000 miles. You have to have a lease gap insurance.
Why is it a waste of money to lease a car?
No, leasing is generally a bad deal because you're basically just financing the depreciation over the first 36 months, and that's the most expensive period of depreciation in the car's life. The low monthly payment hides the high total costs of the transaction vs buying.
Why is Dave Ramsey against leasing a car?
Dave Ramsey considers leasing a bad idea because it's an expensive form of debt that doesn't build equity, involves hidden high interest rates (around 14%), lacks consumer protection disclosures, comes with mileage/wear-and-tear penalties, and ultimately costs more than buying a reliable used car and paying cash, trapping you in payments for something that depreciates rapidly. For Ramsey, the "smart" financial move is paying cash for a dependable vehicle you own outright, avoiding car payments and the "fleecing" of the auto industry.
Should seniors buy or lease a car?
For retirees, buying a car offers long-term savings, no mileage limits, and eventual ownership, but it requires more upfront cost. Leasing can ease budgeting with lower monthly payments and access to newer models with better safety features.
Suze Orman: Don't Ever Lease A Car
What is the 90% rule in leasing?
The 90% rule in leasing is an accounting guideline for classifying leases as either finance leases (like a purchase) or operating leases (like a rental), stating that if the Present Value (PV) of all lease payments is 90% or more of the leased asset's fair market value at lease inception, it's typically a finance lease. It helps determine if the lease effectively transfers the risks and rewards of ownership, requiring capitalization on the lessee's balance sheet.
Who benefits most from leasing a car?
If you enjoy driving the latest model vehicle, then you may benefit from leasing, as it allows you to upgrade to a new vehicle every few years without the hassle of selling or trading in. If you don't drive as many miles as the average driver, you may also want to consider low-mileage vehicle leasing plans.
What is the 1% rule when leasing a car?
The 1% lease rule is a quick guideline for evaluating car lease deals, suggesting a good lease has a monthly payment (excluding tax) around 1% or less of the car's MSRP (e.g., $400/month for a $40k car), while deals over 1.25% to 1.5% are often average to poor, requiring negotiation; it's a useful initial filter but doesn't capture all costs like fees, mileage, or incentives.
Do wealthy people buy or lease cars?
They Think Long Term. The average car on the road today is over 12 years old, meaning people keep vehicles longer than ever. Wealthy people factor this into their decision-making. If you're planning to keep a car for more than six years, buying almost always makes more financial sense.
Why do Dave Ramsey and Suze Orman say you should avoid buying a new car?
Depreciation. Cars reportedly lose 20% of their value in the first year of ownership and retain just 40% of their original value after five years. Clearly, that is not a good investment. “Your goal should be to buy the least expensive car. Period,” said Orman. “That should steer you to a used car rather than a new car. ...
Why should you never put money down on a lease?
You should avoid putting money down on a lease because if the car is totaled or stolen, you lose that cash entirely, as insurance pays the market value, not your down payment; keeping your money provides greater financial flexibility, and it's often better invested or saved, with most leases including GAP insurance to cover the difference if needed. A down payment only lowers monthly payments but doesn't reduce your total cost significantly, essentially pre-paying for something you don't own, which defeats the low-upfront-cost benefit of leasing.
What's the smartest way to pay for a car?
The best way to pay for a car depends on your finances, but generally, paying mostly cash with some financing offers a good balance, while paying all cash saves on interest but can tie up savings. For financing, securing a low-interest loan is key, and consider dealer financing incentives (like 0% APR) or refinancing for better rates, keeping loan terms short (under 60 months). Acceptable payment methods for dealers include cashier's checks, wire transfers, or credit cards for deposits to get perks like points or purchase protection.
How much is a lease on a $45000 car?
A lease on a $45,000 car typically costs $450 to $700 per month, but can vary significantly based on your down payment (e.g., $2k-$5k), lease term (usually 36 months), credit score, residual value, and money factor (interest rate). With good credit and a $2,000 down payment, expect payments around $470-$500; with $5,000 down, payments could drop to the $370-$400 range, plus fees and taxes.
What are Suze Orman's biggest financial mistakes?
Suze Orman's biggest financial mistakes often center on selling investments too soon due to fear, missing opportunities like Roth conversions, and not handling retirement funds optimally, such as using generic target-date funds or claiming Social Security prematurely, learning lessons about patience, personalized planning, and avoiding "Partnership with Uncle Sam" tax issues. She emphasizes avoiding decisions based on emotion and generic plans, advocating for understanding your unique situation and taking control, even if it means saying "no" to friends or family requests.
What is Dave Ramsey's rule on cars?
Dave Ramsey's core car rules emphasize paying cash for used cars to avoid debt, keeping your total vehicle value under 50% of your annual income, and prioritizing being debt-free over new cars, recommending cash purchases to prevent wealth tied up in depreciating assets. He suggests buying a quality, used car outright, as new cars lose value rapidly, and new car payments trap people in debt, making them stay middle-class.
Why is it not smart to lease a car?
Leasing a car can be a bad idea because you never own the asset, leading to endless payments if you continuously lease, and you pay for the car's rapid depreciation without building equity, potentially costing more long-term than buying. Downsides include strict mileage limits with hefty overage fees, penalties for wear and tear, restrictions on customization, and high costs for early termination, making it inflexible and expensive if your needs change.
Why Dave Ramsey says not to finance a car?
Dave Ramsey advises against financing cars because they are depreciating assets (lose value), trapping you in debt for something that's worth less over time, costing you interest, and preventing wealth-building through investing that money instead, keeping you stuck in the middle class instead of getting rich. He emphasizes paying cash for a reliable used car to build wealth, not take on "bad debt" that sinks your finances.
What car is the poor man's Ferrari?
A "poor man's Ferrari" isn't one specific car but a nickname for affordable sports cars that mimic Ferrari's exotic styling, mid-engine layout, or thrilling driving experience, with popular examples being the Toyota MR2, Acura NSX, and older Ferrari 308/348 models. These cars offer similar design flair or performance at a much lower cost, appealing to enthusiasts seeking that supercar feel without the high price tag.
What should a $30,000 car payment be?
For a $30,000 car, the average monthly payment varies greatly but often falls between $450 to $600, depending on your down payment, interest rate (APR), and loan term (e.g., 60 or 72 months), with shorter terms having higher payments but less total interest, and longer terms having lower payments but more interest paid over time.
What is the 90% lease rule?
A lease is classified as a capital lease if it meets any of the following criteria: the lease term covers 75% or more of the asset's useful life, includes a bargain purchase option, transfers ownership to the lessee at the end, or if the present value of lease payments exceeds 90% of the asset's market value.
What are three disadvantages of leasing a car?
Three main disadvantages of leasing a car are mileage restrictions leading to extra fees, no ownership equity built up, and penalties for excess wear and tear or early termination, meaning you don't own the asset and can face significant extra costs if you go over limits or end the contract early.
Who pays for repairs on a leased car?
The lessee is generally responsible for all repairs and maintenance on a leased vehicle. This includes things like oil changes, tire rotations, and any other necessary upkeep. However, there may be some cases where the lessor is responsible for specific repairs – such as if the vehicle is under warranty.
What are the hidden costs of leasing a car?
Hidden costs of leasing a car include end-of-lease fees (disposition, wear & tear, mileage overage), higher insurance premiums, dealer add-ons (VIN etching, protection packages), taxes on the full capitalized cost, and the loss of equity, all adding up beyond the advertised monthly payment. These costs arise from strict mileage limits, required higher insurance, and penalties for damage beyond "normal," making it crucial to read the fine print and budget for extra charges.
What happens at the end of a 3 year car lease?
At the end of the lease, you will return your vehicle to the dealership where it will be inspected. The dealership will make sure that the lease did not exceed its mileage limit and that there is not excessive wear and tear to the vehicle.