As gas prices continue to soar, who can blame us for looking for a low, car payment? Unreasonably high gas prices bring new meaning to a cheap car loan or a cheap car lease. Gas guzzling cars no doubt, will have some tempting incentives behind them as people gravitate towards more fuel efficient vehicles. Since fuel costs have to be considered part of the overall cost of our car financing, you might think it would make the most sense to lease or buy the most most economic car we can. Not so fast.
When a Cheap Car Lease Beats a Cheap Car Loan
Why Fuel Prices Can Be a Game Changer For Car Buyers
One of the things that drives a car lease or car loan payment is the demand for cheap cars. When fuel costs drive the demand for cheap cars, they suddenly are not so cheap anymore. Discounts on popular cars are fewer and far between. An attractive cheap car loan deal on a gas saver or hybrid model is less likely due to the high resale cost reflected by market demand. As proven in the Gas Mileage Ratings Article, what good does it do to save on gas if you spend that much more money up front to buy the car? On the other hand, a good lease deal is driven by a high resale value. As high fuel costs increase the demand for hybrid and economical vehicles, the residual values on these cars rise, often making them more attractive to lease. As gas prices eventually climb to $4.00 and above, it might start making some sense to pay $3,000 more for the 48MPG Hybrid over the 30MPG Hyundai Elantra. The flip side of the equation is that the most fuel efficient non-hybrid economy models tend to be in a price range that is too low to allow them to become an attractive lease. Lower priced cars do not hold their value as well. So, how does it look on paper? Let’s see how a cheap car loan stacks up against a cheap car lease when it comes to buying or leasing fuel economy vehicles.
Low-Payment Car Lease Specials
Top Fuel Economy Car Leases
|* Combined City/HWY Mileage Per Gallon|
|** Gas Cost Based on 1000 Miles Per month at $4.00 Per Gallon|
|*** Total Monthly Cost Including Gas|
Cheap Car Loan / Gas Mileage Ratings
Top Fuel Economy on a Cheap Car Loan
The charts above assume that gas costs $4.00 per gallon, you drive your car 1,000 miles per month and average city/hwy gas mileage is considered.
A couple of observations immediately stand out to me when comparing the Cheap Car Loan graph to the lease:
- With gas at $4.00 per gallon, the hybrid cars are the most expensive to lease or buy even when your monthly gas costs are factored in. Obviously, the hybrids will close the gap if and when gas goes beyond $4.00 per gallon. For right now, you’d get a cheaper car loan or cheaper car lease by sticking with the non-hybrid, fuel economy vehicles like the Chevy Cruze or Nissan Sentra.
- The savings through a low, Lease Payment is greatest among the Top-2 cars. It will save you 37% on your monthly payment to lease a Cruze or Honda Civic VP over buying it at a low interest loan. The average savings for the rest of the cars is around 25 – 27%. Stated another way; A Cheap Car Loan is more expensive than the lease.
With fuel economy factored in, the Nissan standard wins the contest. Your monthly payment on a leased sentra, including your gas costs is only $320 per month. The winner of the cheap car loan ratings goes to the Chevy Cruze at $429.65 per month. As fuel costs continue to rise it’s nice to know you’ve got some affordable options in either a cheap car loan or a cheap car lease.