Lease or Buy?–How to Choose an Affordable Car (and Fix an Upside-Down Loan)

In this episode of Money Girl, Laura Adams addresses Diana's urgent financial concern about being upside down on a car loan—owing more than the vehicle is worth—while struggling to afford monthly payments. Laura outlines practical steps to manage the situation, including refinancing to lower interest rates or extend loan terms, selling the car to a private party to minimize losses, and exploring temporary payment relief from lenders. She emphasizes the importance of avoiding 100% financing and recommends a 20% down payment to prevent equity loss. The episode then compares leasing versus buying a car, detailing the pros and cons of each: leasing offers lower monthly payments, access to newer models, and reduced repair responsibility, but comes with mileage limits, no equity, and ongoing payments. Buying builds long-term equity, allows unlimited mileage, and can be cheaper over time, but involves higher payments and full maintenance costs. Laura concludes with five key questions to help listeners decide which option best fits their lifestyle and financial goals.