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2011 Mercedes-Benz E-Class 4MATIC wagon

michael bettencourt The Globe and Mail

Chris and Jennifer, 40, Aurora, Ont.

When their car got jacked, the couple had to think on their feet - should they buy a new ride, or lease one? He says leasing is the better short-term solution, but she thinks they can score a great deal if they buy. Which idea has wheels?

HE SAYS: LEASE

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I'd left my PT Cruiser at a repair centre to get the hatchback fixed, only to learn it had been stolen from the parking lot (the mechanics had left the keys on the front seat). I can't say it was a tragedy - after seven years, the car was nearing the end of its useful life. We got $5,000 from the insurance company, and we're wondering what we should do with it. We already have a van that Jennifer uses for her work, but we need a second car for my job and our two kids' activities. I'm thinking we should just lease a new car as a stopgap measure, and buy in a few years when we're ready; I don't want to be stuck with something I'd want to get rid of. I think we'd probably have lower monthly payments if we lease, and I have to admit I'd be drawn to something like a Mercedes or a BMW - there's a certain cachet, especially at my company.

SHE SAYS: BUY

I think leasing might have made sense a few years ago, but not in this economy. Dealerships are offering some really good incentives to get the cars off the lots - no money down, lower interest rates, even zero per cent financing for up to 84 months. But my main concern about leasing is mileage: We'd definitely have overages. We drive 40,000 to 50,000 kilometres a year, and we've made several road trips to Cape Breton to visit family. The gas mileage on the Cruiser wasn't great, so I'm looking at something like a Hyundai Santa Fe. It's got better fuel economy, and it's the right size: Chris is a tall guy, and we schlep a lot of gear around for my son's hockey practices. If you lease a car, you might spend more on repairs than if you owned it - if you get a ding, you have to fix it, and on something like a Mercedes, it'll cost you more.

As told to Anna-Kaisa Walker

VITAL STATS

Years married: 5

Kids: A son, 5, and a daughter, 12

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Occupations: He's an executive with an engineering firm, she's a pediatric physiotherapist

Annual household income: $180,000 (evenly split)

Current car costs: $125 a month for insurance and $250 for gas, one 2005 Honda Odyssey (bought in cash for $46,000).

THE ADVICE: OWN THOSE WHEELS

Financial expert Kelley Keehn

Sorry, Chris, but this is an easy one. I overwhelmingly vote with Jennifer.

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There are two main issues here: 1) whether to lease or finance; and 2) what type of vehicle is best for you and your family.

First, on financing: What makes a lease so unattractive for your situation is the number of kilometres you'll put on the car. As Jennifer mentioned, you risk overages, which add up. You could use her vehicle to save on mileage, but that's just a headache. You also have much more control if you finance. Depending on the car and trim, there are a number of deals available. Sure, a lower lease payment will get you a more expensive car. However, as a depreciating asset - and I use the term "asset" loosely - a car is always an expense.

The best advice I've received from pros in the car industry is to buy cheap and drive it into the ground. And don't use your home (via a line of credit, for example) to fund your purchase. You don't want to put your property in possible jeopardy if something should happen - for example, if one of you lost your job and you could no longer pay the line of credit. Stick with financing from the dealership and their ability to shop multiple banks.

Second, on the car you choose, I again agree with Jennifer. Not only is a luxury car going to cost you more up front, but the repair and maintenance fees are nothing to ignore. Many luxury vehicles don't even have a dipstick for checking your own oil - so a routine task becomes something that now costs you with every visit to the dealer. If you really need to impress your colleagues, consider investing in a nice suit or some designer glasses.

Finally, a little car-buying tip: When you've narrowed down your choice, rent that car for a couple of days. Haul the kids around. Make a road trip if you can. "Live" in the car with the bells and whistles you want. Do you really need the sun roof? Is the head and leg room sufficient? The money you'll dish out for the rental is well worth it.

Kelley Keehn is the host of W Network's Burn My Mortgage.

Arguing over money?

He wants a pool but you want a new roof. You want a nanny, she wants daycare. He tips 20 per cent, you say 15. No matter how big or small your dispute, we'll settle it for you. (We won't publish your last name.) Send us your dilemma at cashclash@globeandmail.com.

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