Author Topic: Grade my new car lease. Mustachian or anti-mustacian  (Read 3699 times)

Iceplant18

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Grade my new car lease. Mustachian or anti-mustacian
« on: November 01, 2015, 11:51:28 PM »
I like to think of myself as generally mustacian but I figured this would be an interesting one to run by the group since, well, it's complicated. 

For 8 years now I've been getting around via motorcycle and bicycle primarily but have an old car I use every once and a while.  I'm still employed and haven't yet reached FIRE and keeping transportation costs down has always been a big priority.  Well a curve ball was thrown at me in life this year.  On my way home from work someone ran a red light while I was riding my motorcycle and sent me to the hospital for a few weeks.  My left arm was very badly damaged along with my jaw.  During the long complicated road to recovery I've become a professional therapy patient and have had, and will have, many doctors appointments to go to.  Then of course there's how to get to work upon return from disability.  Unfortunately motorcycles are out of the question now and my bicycle wont work due to my injuries & the long distances to travel to my different doctors.  That and my physical therapists office is filled with people who have been hit by cars while riding their bicycles so I've developed a bit of a fear.  So that left me with my older car to get around in but after one try I discovered that due to my car being a manual transmission, I could not longer drive it since I needed a working left arm. 

I needed something "temporary" until my left arm regained it's function enough to drive my manual transmission car however I didn't know how long that would be.  Maybe 6 months according to one doctor.  So, I leased a car.  Something I never would have done unless put in this situation.  I couldn't see any other option.  Honestly I've never leased a car in my life.  Here's the skinny on the choice I made.  Here in California we have some pretty good incentives on electric cars and thanks to a strong used car market, leases have gone down in cost.  Those in combination with my temporary need of a vehicle I was capable of driving with only my right arm, made leasing an electric car a pretty desirable option.  I looked at buying a cheap used gas car but since I couldn't maintain the car myself due to my injuries I needed something with a warranty.  After crunching the numbers, a lease on an electric car over 3 years cost about the same as buying a used car with a warranty.  Then depending on how cheap/free I can get electricity, the electric car could maybe end up cheaper.  So I leased the EV and it's costing me about 8% of my income for the next 3 years.  In and of itself it's not mustacian at all but, well, my choices were a bit limited.  I think I made a mustacian move considering.  What do you all think? 

Mustacian or anti-mustacian? 

Argyle

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Re: Grade my new car lease. Mustachian or anti-mustacian
« Reply #1 on: November 02, 2015, 12:08:14 AM »
I'm sorry to hear about your injury. 

I don't really agree with some of your basic principles here, I'm afraid.  "I looked at buying a cheap used gas car but since I couldn't maintain the car myself due to my injuries I needed something with a warranty."  Why does that follow?  A car with a warranty is going to be jacked up in price, since you're going to be buying it from a dealer.  And you know they're not going to offer a warranty unless they make money off it.

It's much more frugal just to buy a reliable used car (getting it checked out by a mechanic before you buy) and take the risk that nothing extreme is going to happen to it and that if it needs some repairs, you just pay for the repairs.  But why assume it's going to need some repairs?  My Toyota, which is 21 years old, has never needed any repairs apart from the regular maintenance. 

It seems to me that what you're basically saying is "A used car might need some expensive repairs, so I'm going to spend a lot of money another way, to avoid the risk of expensive repairs."  But with a lease, you know you're spending a lot of money it's not just a risk, it's a certainty.  And you're not going to have a car you can sell at the end of the lease period.  You said, "After crunching the numbers, a lease on an electric car over 3 years cost about the same as buying a used car with a warranty."  But you didn't need to buy a used car with a warranty; that's overpaying.  And at the end of the three-year period, if you'd bought a car, you would have had an asset you could have sold.   However much you could have sold the car for that's how much you've lost on the deal, minimum.

So 8% of your income ouch.  Well, as the saying goes, "That's what we call 'tuition.'"

gooki

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Re: Grade my new car lease. Mustachian or anti-mustacian
« Reply #2 on: November 02, 2015, 03:19:08 AM »
Why do you need a warranty on a used car? If it breaks down just the a mechanic to fix it with some of the many thousand of dollars you have saved from not leasing/buying more car than you need.

With that said, and no actual dollar values of the lease, I can't rate it.

ShoulderThingThatGoesUp

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Re: Grade my new car lease. Mustachian or anti-mustacian
« Reply #3 on: November 02, 2015, 04:21:31 AM »
If you're not transporting a child, you can buy a used i-Miev for like $7000. Bad back seat safety ratings, though.

Kroaler

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Re: Grade my new car lease. Mustachian or anti-mustacian
« Reply #4 on: November 02, 2015, 05:36:12 AM »
Sorry about your accident, thats actually really unfortunate.

However, I vote the lease as a poor value compared to the used car market for the following reasons.

You can buy a car for around 7k (very good cars in this range that aren't in risk of eminent failure) then sell 1-3 years later with only 8-10% depreciation a year.  So you buy for 7k and 3 years later you can either keep it or sell for around 5100$

At the end of the lease, you have not really anything.    So maybe I missed a critical detail but I believe there were other options that met your needs and ALSO left you with a higher net worth.

humbleMouse

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Re: Grade my new car lease. Mustachian or anti-mustacian
« Reply #5 on: November 02, 2015, 07:55:26 AM »
Yeah, even though you screwed up your arm spending a few hours on craigslist you would have found a better deal. 

frugaliknowit

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Re: Grade my new car lease. Mustachian or anti-mustacian
« Reply #6 on: November 02, 2015, 08:15:54 AM »
Sorry about your injury and everything that goes with it.

Without all of the details of the lease, we cannot say for sure how good of deal it is/isn't.

Chances are it's extremely unmustacian since you are buying a new car, the depreciation of which is being financed at "God knows what" interest rate.  I would get out of it if you can and rent until you find something that makes financial sense (used automatic for cash).

Grade is "F" (sorry!).

Dee18

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Re: Grade my new car lease. Mustachian or anti-mustacian
« Reply #7 on: November 02, 2015, 08:23:05 AM »
Best of luck with your recovery.  I had a badly broken bone a few years ago that required major surgery with a plate and screws.  It was such an inconvenience and terribly unnerving as I had previously thought I had great bones, having survived a few rock climbing mishaps.  I think leasing is rarely great financially, but with all you are dealing with it felt like the best choice.  You wanted to know your future car expenses and buying a used car would be less certain and more stressful.  So it seems you made the right choice for you, given all the facts.  Money isn't the only measure of a good decision. 

Iceplant18

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Re: Grade my new car lease. Mustachian or anti-mustacian
« Reply #8 on: November 03, 2015, 01:46:14 PM »
Yea I figured it wouldn't be considered very mustacian.  The reason I wasn't open to getting a used car out of warranty is because I'm more risk averse than I used to be.  Now that I have wildly swinging medical bills, the thought of adding the uncertainty of the used car to the mix just wasn't worth it.  Plus it only would have saved me about a months wages.  I suppose when health issues get thrown into the mix, being mustacian becomes more of a challenge.  Before the accident I never would have gone out of network with my health insurance for example.  But knowing that i'm getting better care from doctors that are out of network is worth the extra $$$.  Plus I'm probably going to pay extra for lower deductible health insurance next year because I know I'm going to have to use it no matter what to continue treatments.  I actually am really enjoying this electric car too.  I never have to do anything to it other than charge and clean it.  Comes in real handy when I don't have the strength to turn a wrench.  And I don't have to worry about it breaking down and causing me to miss a Dr. appointment.  Some of these specialists require appointments a month in advance.  :-( 

mtn

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Re: Grade my new car lease. Mustachian or anti-mustacian
« Reply #9 on: November 03, 2015, 01:52:50 PM »
Lease isn't the best deal here. The best deal would be a reliable used car that will be easy to sell in the short future. I'd vote Civic, Corolla, or Camry, in the $5,000 range, or else an earlier Prius. You want something that you can be relatively certain won't break down at all, and also won't depreciate too much in the next year.

Ok, but on to the lease to defend it--it isn't a horrible idea. It is a short term, one-time thing. I get it. You don't have to go through the hassle of selling a car at the end of it. You don't have to worry about it breaking down. I was close to leasing a Volt; if my commute was 5 miles shorter each way I probably would have--it would have saved me money on my paid for Miata that got 30MPG due to the "free" gas.

AZDude

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Re: Grade my new car lease. Mustachian or anti-mustacian
« Reply #10 on: November 03, 2015, 04:16:27 PM »
Given the availability of EV charging stations in California, it is not the worst idea. Three years seems like a long time, but I obviously have no idea what time frame your, hopefully, full recovery will be in. Maybe three was the magic number.


MgoSam

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Re: Grade my new car lease. Mustachian or anti-mustacian
« Reply #11 on: November 03, 2015, 05:48:09 PM »
I recommend looking at a used reliable car if you are worried about repairs. I drive a Camry so I'm biased, but I love it and recommend it to anyone.

rmendpara

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Re: Grade my new car lease. Mustachian or anti-mustacian
« Reply #12 on: November 03, 2015, 07:53:27 PM »
Not a bad option. Your focus really needs to be on getting back to healthy status... not saving every dime. Of course, you don't want to break the bank, but doesn't sound like you are...

You could have done it for a bit less, but chances are we're talking a few thousand dollars, I think? Not a huge deal either way, so less hassle (presuming you are correct about that) seems totally worthwhile to me considering your needs now.