When leasing a car is the more frugal option

If you need a car, the most frugal option is to buy one that’s 2 to 3 years old, pay cash and drive it until the wheels fall off.

The least frugal option traditionally has been leasing, where you make monthly payments to drive a car but don’t own it.

Few people opt for the frugal way, however, and car buying has changed enough that leasing may no longer be the costliest option.

In some situations, leasing could be the most sensible.

Costlier cars, longer loans

To understand why, let’s survey the U.S. automotive landscape. Americans are:

■ Buying more expensive cars.

■ Financing larger amounts.

■ Taking out longer loans. Americans increasingly opt for SUVs and trucks over sedans, then spring for higher trim levels and more features than in the past, says Ronald Montoya, senior consumer advice editor for car comparison site Edmunds.

Lease vs. buy calculation

On paper, buying still comes out ahead mostly because you’ll own the car with some equity at the end of the loan. But such “apples to apples” comparisons of a six-year car loan versus two three-year leases leave out details, such as maintenance bills.

These costs tick up as a car ages. The expense normally wouldn’t be enough to make leasing the cheaper option — unless people don’t have savings and use a credit card or a payday loan.

That describes a whole lot of people in the U.S., according to the Federal Reserve.

When leasing is best

Leasing is usually better than buying when:

■ You’re affluent and want a new car every few years.

■ Money is tight and you need predictability.