Please poke holes in this. I think this makes sense to move forward with but I’d like to know if I’m missing anything or not thinking about something correctly.
Hubby works at a high-end car dealership. Once employees of this dealership are Master Certified, which requires passing a series of training sessions over a number of years (100% paid for by the dealership), employees are offered a $500 per month stipend towards a lease of that dealerships car. The leased car can be new or used, but it has to be the high-end car specific to that dealership (for example, if he worked for BMW he’d have to drive a BMW).
It’s not just free money - they won’t pay you the stipend unless you enter into a lease. Your continued employment is not required (or guaranteed) by entering into this lease. If you are fired or quit, the lease follows you as an individual and you have to continue to pay lease payments, you simply no longer receive the stipend.
If by chance you can find a lease that is less than the $500 per month stipend, and they pay you the difference in cash. This money is taxed. So say for example you are taxed at 25%, if you can find a lease for $375 a month, they pay your lease and also pay you $125 a month, which essentially pays for the taxes.
Said high-end dealership has a hybrid. Hubby says it is likely he could find a new or slightly used hybrid for less than $500 a month to lower our gas costs and offset the taxes on the stipend. Insurance and tabs cost would likely go up, but lowering our gas costs would offset.
Hubby says the first two regular maintenance work would be free under the lease. Maintenance after that would be at a discounted employee rate. That means the costs would be in line with normal-car maintenance costs rather than ridiculous high-end-car maintenance costs. So long as he worked there, we wouldn't generally incur any higher maintenance costs than we are already incurring on our vehicles.
Hubby wants to enter into a 2 year lease and decide at that point if we should extend the lease another 2 years or exit (we probably wouldn't buy it out). We intend to FIRE in 2020. A 2 year lease would get us to 2018. A 2 year extension would get us to 2020. I asked him if the psychological impact of feeling somewhat tied to work for 2 years was concerning at all to him, or made him anxious. It doesn’t seem to be an issue.
We currently own a truck that is my daily driver or is sitting in the garage when I bike. Hubby will not sell the truck. It is his PRIDE and JOY. Ha. We also own a small sedan that gets mediocre gas mileage that we could sell for around $8K. The sedan is getting close to a mileage threshold that would depreciate it even further, so selling it sooner rather than later is appealing. We could sell the sedan, put the $8K into the market, and drive the leased hybrid for “free” until we FIRE.
It seems like a good deal to me to pull equity out of our vehicle before it depreciates any further and invest it. Odds are we’d go down to one vehicle after FIRE so we’d then simply exit our lease, having never made a lease payment out of our own money.
Entering a 2 year lease seems smart to me. It lets us exit if we end up hating the car, the deal wasn’t what it was cracked up to be, or hubby doesn’t work there anymore. We can simply roll that $8K equity from our sedan sale into purchasing a different used car if we choose to.
I think the key is finding out if they will want money up front and finding out how much the leasing fees are. If the fees are fairly minimal, I am not seeing any downside to this. Some other points to consider that I found via Google are asking about specialty gap insurance coverage, making sure the mileage amounts in the lease agreement make sense, and understanding the lease-end conditions and what they define as “normal wear” so we don’t get a bill for any minor repairs at the end of the lease.
It seems dumb to leave free money on the table, but it also seems too good to be true, so I am trying to figure out what’s in it for them. Hubby thinks his employer has this program because (other than an employee retention tool) employees get to drive and learn about the cars and develop their own good experiences with them, which makes them able to communicate better with customers. Apparently the salesman get a $1,200 a month stipend because they want them driving the really expensive high end cars. When your customers see that your salesmen drive your top-of-the-line cars (and your low level employees also drive your more reasonably priced cars), it’s a huge selling point.
Any thoughts on areas I might be overlooking? I'm a skeptical person, so I'm naturally trying to find reasons why NOT to do this, but I'm failing. It seems like a good deal, assuming we negotiate favorable terms of the contract, don't pay any money down, and keep fees to a minimum (and he keeps working there of course).