Author Topic: Car Lease Help  (Read 1782 times)

jtraggie99

  • 5 O'Clock Shadow
  • *
  • Posts: 98
  • Age: 43
  • Location: Dallas, TX
Car Lease Help
« on: June 09, 2017, 10:22:53 AM »
Ok, the thread title is probably a bit misleading.  My ex-wife (yes, ex-wife, we are on good terms and very good friends), asked me the other day what I thought about leasing a car.  She has a 2007 Mazda 3 (that was bought brand new) that she is planning on giving to our daughter, who turns 16 later this year.  It's been a great car for her, going over 10 years now.  She has a good career (Phsychologist), owns a home, and is seemingly doing well.  I think her reasoning on a possible lease is a smaller monthly payment and having something new, under warranty, so you do not have to worry about repairs.  She also does a decent amount of driving as she periodically has to go out of town for work.

My initial response was that the best approach from a purely financial standpoint is to buy something used that she can pay off in 2-3 years max, and then keep for awhile until repairs become prohibitive.  Like I said, we are on very good terms, but still, I have to tread carefully on things like this as to not seem overbearing or coming across like I know best and just do what I say.  Mostly, I am wondering if anyone has any good articles that talk about leasing vs. buying (buying used and keeping) that I could pass along.  She's not overly spendy, although when financial stuff comes up, I try to approach it from the MMM mindset.  I'm more moderate when it comes to this stuff, but I try to pass along other ideas and approaches that she might not be aware of, just to help if I can. 


Chris22

  • Magnum Stache
  • ******
  • Posts: 3317
  • Location: Chicago NW Suburbs
Re: Car Lease Help
« Reply #1 on: June 09, 2017, 10:28:31 AM »
MMMers will hate it, but to me, if you place a value on having reliable transportation, you could do a lot worse than leasing something like a Civic or Accord for $200/mo with $1k down or whatever.  If you do it for a 2-3 year term at 12k miles/yr, you'll never have to make an significant repairs or maintenance (tires, brakes, etc) so you'll know EXACTLY what your car costs will be for the forseeable future, and you'll have a car that you'll never have to worry about, has the latest safety stuff, etc.  It won't be as cheap as the whole "$10k used car for 10 years" but it locks you in at a pretty reasonable price IMO. 

terran

  • Magnum Stache
  • ******
  • Posts: 2880
Re: Car Lease Help
« Reply #2 on: June 10, 2017, 02:41:51 PM »
If you compare the cost of leasing to buying a new car every few years and trading in the old one (instead of selling it yourself) and you don't drive too much (over what is allowed by the lease) and you're pretty neat (cleaning fees), then suspect leasing would be quite comparable. This is of course the most expensive way to own a car, so you need to decide if these things are worth the extra cost compared to buying that just off lease vehicle and driving it (nearly) into the ground and selling it yourself.

Altons Bobs

  • Bristles
  • ***
  • Posts: 337
Re: Car Lease Help
« Reply #3 on: June 10, 2017, 03:30:16 PM »
Can she do a lease as her business?

PDXTabs

  • Handlebar Stache
  • *****
  • Posts: 1804
  • Age: 37
  • Location: Portland, OR, USA
Re: Car Lease Help
« Reply #4 on: June 10, 2017, 08:00:20 PM »
She also does a decent amount of driving as she periodically has to go out of town for work.

At $0.535/mile she might pay for that lease pretty quick.

jtraggie99

  • 5 O'Clock Shadow
  • *
  • Posts: 98
  • Age: 43
  • Location: Dallas, TX
Re: Car Lease Help
« Reply #5 on: June 11, 2017, 08:31:04 AM »
Can she do a lease as her business?

Thanks for the responses everyone! 

As to her business, she works for a small private practice of psychologists.  She's not a partner and technically an employee, so I am not sure how leases work from a business expense in that case. 

DoubleDown

  • Handlebar Stache
  • *****
  • Posts: 2057
Re: Car Lease Help
« Reply #6 on: June 11, 2017, 10:04:12 AM »
Yeah, leasing is not likely the most optimal financial choice, but it's not the end of the world either. If she does decide to lease, I would really encourage her to check out some leasing companies that are not the dealers themselves, especially in major cities (depending on where you live). For example, there are leasing companies operating out of the NYC area where you can get amazing leasing deals without all the dealer add-on crap. I think it's akin to the giant premium you pay on getting service done at a dealer vs. an independent mechanic or shop.

I once leased a new car through an independent leasing company that was a steal -- I literally paid less for the lease terms than I would to buy the car and suffer depreciation (i.e., on the surface it would seem the leasing company was losing money). And they had all the same brand new, current models. There was no initial lease payment (typically several thousand dollars over 2-3 year lease), no "processing" fees, return fees, etc... Just a low monthly payment and the necessary tax/title/registration stuff. Just goes to show how much extra, hidden profit is built into most of these transactions, especially with the dealers.