Buy out Car or New Lease?

I currently have a 2012 Honda Civic EXL and can buy it out for $13000 tax included in August. Would this be a better option then getting a new lease as I will save money over the long-term? The car has 60000 kms on it and I currently make between $40-50K

We do not know your other financial obligations. You do not know what your future holds in terms of keeping that job, getting laid off, illness, etc. So, do the math. First research the real world value of your 2012 Honda via www.kbb.com, www.nadaguides.com and www.clearbook.truecar.com. Kbb tends to use dealership data, Nada is preferred by the insurance industry and clearbook is rather new and seems to use real world sales data. So, use all three and then the average would be a good ballpark to make sure the buy out is actually a good deal in and of itself.

Second, do the math on a new lease. What's the down payment, and what's the term of the monthly payment? If you plan to keep the 2012 for a long time then buying it out on pay off means no car note for a long time to come. Once the car is out of warranty and assuming you did not buy an extended warranty from Honda, you will have yearly maintenance and service costs to contend with.

So, as I said, do the math.

Buying and owning is always a better option than leasing. You are driving what is, essentially, still a new car. The kind of car people like me love to suck up off a lot as a "new car" since the only real difference is warranty, which can be bought, and about 1/3 to original price in depreciation. Also, you have one of the most reliable cars on the planet. A car that can go 180000 Kms without breaking a sweat. Your better off driving it for a long while and saving money.

I would suggest you buy the car.

Reason is that you know it's in good condition, the mileage is genuine and it's been well cared for (assuming you have been looking after it)

Repayments on a 3 year loan for that car will be similar to the lease on a new vehicle. Difference is that after 3 years, it's YOUR car, and you can keep driving it without making car payments. Maybe another 3 years of driving. It's now 9 years old, done 180,000 ks so it's probably time to trade it. At least it will make a deposit on a new (or at least newer) car. Or, if you saved the money that you where going to use for car payments for those last three years, you can buy a newer car, for cash.

See doing this, in 6 years time, you can go and trade your Honda and buy a decent ~$13,000 used car for cash, and OWN it.

Or you keep leasing for the next 6 years, you pay out about the same money, and end up with nothing.

Leasing is never a good idea financially. Buying the car at lease end is the best deal you will get. But only because you overpaid to lease it.

There's usually no material benefit for buying it early.

Nowhere else, except buying your lease will you be able to buy a car at or near wholesale. And that car would run $2000-3000 more from a dealer.

Buying a new car is always a bad idea. Leasing a new car is even worse. But the best way to recover is to buy the car & never lease again.

Plan to keep it another 10-15+ years and take care of it.

I'm a millionaire and I drive a 94 Buick. Being cheap with cars has saved me a lot of money over the last 25 years. Probably $75k or so plus the money I earned investing the savings. Which really adds up over time.

And you won't be charged for miles or excess wear & tear if you buy it.

You would still need good credit to finance it of course.

Thanks for the responses. Just to clarify, I'm not planning on financing the buyout. I will be able to pay it off immediately and still have a pretty healthy reserve leftover. I think the answers so far have reassured that buying out this car is the way to go!

Never seek debt.