On the surface, leasing a car appears a whole lot easier than going through the hassle of buying a vehicle and paying for all the maintenance and repair costs. Not only that you get a new vehicle every 3 years or so, but you generally get to enjoy a smaller monthly payment as well, and not to forget the brand new car smell.

Financially speaking, if you’ve gotten accustomed to leasing in your 20s, 30s, and 40s, you may want to rethink your strategy as you get in your 50s and beyond. A typical lease has a lot higher finance charges than a car loan. Paying for these in addition to excess mileage penalties, excess wear-and-tear charges, and/or early termination penalties, it may cost you a lot more than you ever anticipated. And possibly the biggest disadvantage of leasing in my opinion is that leasing doesn’t build any equity in the vehicle. Resale value, even negligible, can come in handy when you’re back in the market for another car down the road. Also, having a revolving car lease payment may take away funds that you can potentially use for your own retirement or any other savings that you or your family can use.

There are advantages to leasing. One advantage is if you owned a business and you write off the lease payments and charges as a business expense, or least some of them if you use the vehicle for both personal and business needs. Although the same is true and you can write off vehicle expenses if you were to purchase the vehicle, you may have a better grasp on your future expense projections that owning, as leasing would eliminate substantially all of the repair costs. If you didn’t own a business, a leasing advantage may be that a new vehicle will be more fuel efficient and you will pay a lot less in fuel costs over time.

Understanding the ins and outs of car buying versus leasing is an essential component of a retirement planning and a mistake that you don’t want to knowingly make.