Author Topic: Trying to determine if I should lease a car or continue with our current car  (Read 2822 times)

chowdan

  • 5 O'Clock Shadow
  • *
  • Posts: 34
  • Age: 30
  • Location: Seattle
Hey everyone!

Been a while since I've posted here.

Due to the position that we are in, I figured it would be smart of me to reach out to the community and see what everyone says.

My girlfriend and I have a 2002 Honda Civic EX. The car is a great car, the engine runs great and we've never had troubles with it and I do regular oil changes. Over the last few years we have spent plenty of money on it, more so than what its actually valued at.

Back in 2013 (before I found MMM), we had a problem with our brakes where they were seizing up and engaging. It all started right around when we had taken the car into Les Schwab to get our tires replaced as it had been nearly 4 years and they were pretty bald. During the tire change, the shop informed us that the ball joint on the driver side was bad and needed replacing and the front engine mount was also broken. They also informed us that the brake fluid was incredibly dirty and needs to be replaced. Being a contractor for a game studio at the time, and the girlfriend a student, we were living on my sole income of around $30k/year, i declined to have the brake fluid replaced, and agreed they could do the ball joint as I didn't have time or experience to do it(mainly time as I'm fairly handy).

A week or so later, we were on our way back from a hike in the mountains when we were in 5th gear doing 60mph and all of a sudden the car started slowing down and the front end was shaking quite a bit. I realized our brakes were engaging and this was the cause of what was going on. This was the turning point of where the amount of money we have put into the car has gotten a bit ridiculous in my view.

We took the car back to Schwab to have them look at it and they said that the brake fluid is contaminated and the whole brake system needs to be replaced. Their quote - just over $3.6k. I was shocked, and I asked how this could happen and what is the contamination. They said it doesn't say what contaminated it, but it could either be water or some type of petroleum product that caused it. Surprise, surprise, they refused that they were the cause of the contamination, even though they were the only individual who had actually checked the brake fluid prior to the incident(i hadn't checked it in probably 2 years).

Well after fighting them for about 3 hours, they reduced their quote to exactly $3.5k for repairs. They were replacing everything, the master cylinder, slave cylinder, brake lines, calipers, routers, pads, everything.

We decided since 3.5k(on top of the $1.7k we spent on ball joint and tire replacement) was far to great, we wanted to take it to another shop that we have had good experience with. Of course schwab told us "with the engine mount in the broken state, the engine could fall out at any point in time". It was the front mount, and only the front mount. The shop that we took it too recommended we fix the problem(of course), and we decided to go through with it. They said they would replace parts one at a time starting with both master and slave cylinders. At the end of the week, we had the car back, and they had essentially replaced everything besides the calipers and routers, and charged us just over $2.6k.

Since then, we had only replaced the back tires(Mid 2015 - $400) due to one going flat, and in early 2015 we had the clutch replaced due to what felt like the clutch not disengaging or engaging($1500). Fast forward to December of 2015, the car was in Honda shop for a recall(and people complain about Tesla cars having a recall? Ours is over 13 years old and still being recalled!) and Honda said to us that the timing belt was due for a change(it hadn't been changed at the 100k mile mark and we are at 140k). They said it'd cost just over $2.1k to have replaced(along with the water pump). I refused to accept them to replace it and took it over to the same shop who did the brake job and they charged us $800 for it. The shop that did the brake job and timing belt was also the one who replaced the clutch. I talked to them regarding what felt like the clutch going out again, and ask why would it be burning out with less than 30k miles on the new clutch? My only conclusion was that the clutch wasn't replaced, or I had been driving it "incorrectly", which i highly doubt(i follow the rule of if your not shifting, the clutch is not to be touched). I am a hyper miler, so yes, i do engage it more often than the average person such as doing pulse-and-glide or when going down hills, but it shouldn't shorten the clutch to a ~30k mile lifetime.

They had looked into it and apparently below the center console where the shifter is, it lacked any grease. It was "completely bone dry", and since they greased it, it has shifted great. That was a $200 charge. I still notice an issue with 1st gear at times, where it doesn't want to go in, or it grinds when trying to get in.

So far to date, not including costs of oil changes, wiper changes, we have spent around $7,200 on the vehicle, for something that is worth, in top shape, around $5,000, however I'd say our car is worth roughly $3.5k to $4k at the most.

Right now, our front struts(both sides) are going and need to be replaced within the next year. Given that the car is worth roughly $3.5k, and we are in $7.2k so far, the amount that we have put into the car is more than enough to buy a used car. I've gotten a few different quotes, ranging from $650 to $1500 for the full job.

If we have the struts done, we would be in roughly $7.8k to $8.7k since 2013. That would mean we have paid roughly $2600 per year at the minimum for the last 3 years for a car that has 140k+ miles.

Now looking at where we are in today's world, my girlfriend has a full time job as a OR Nurse, while I am software engineer. Combined, our income is pushing $150k/year. We have a budget plan that we are trying to follow that will allow us to be able to upgrade to a bigger sailboat that we plan to take sailing for a few years. Our goal is to quit our jobs in 2-4 years, take the money that we have saved and invested, buy a sailboat thats in the 32-40ft range, and cruise the Caribbean for a year, the South Pacific for a year and the Mediterranean for a year, for a total of 3 years.

Based on our expenses, and our income, we are saving right around 55% of our combined income, roughly 50k/year after taxes. Over 2 years, with our current savings account, we should be sitting on just over 200k in savings, or 500k if we wait 4 years. Sailing is incredibly cheap way of life, and living on $800/month is incredibly easy to do. Our savings should be able to sustain us for atleast 3 years, be able to purchase and upgrade a decent offshore cruiser and allow us to explore the world on a cheap budget for a few years, all the while having more than enough in savings to allow us to come back to the USA and get our feet settled again and be able to be out of work for 1+ years at our current way of life.

Now since we are planning to go sailing in 2 or 4 years, we have been debating, is maintaining this car WORTH the cost, since by now we could own a car with less miles on it for what we have already paid out, or would it be better for us to find a NEW car and get a lease on it for 24, 36 or 48 months, and have a monthly payment of around $100-$200, for a total range between $1200 - $2400?

Considering our car is worth $3500, if we could get a lease for $100/month, we could sell our car, meet a downpayment of $2000, and have enough remaining for 15 months worth of car payments, meaning we would only be paying out of pocket for a the remaining 9 months. Granted finding a car that can be leased at $100/month i feel would be a bit challenging, but we should be able to find one that would be close to $150/month. I would prefer to get a hybrid, like a Prius, however having a lease on a car for 24 months would mean we could then shortly cut our ties and walk from everything and have one less item that we would need to sell off before leaving.

Can someone give some advice regarding this? If the car is brand new, and manufacturer warranty last as long as the lease term, we should in theory, be able to just cover minimal costs(oil change) in terms of maintenance all the while not having to deal with shit like clutches going bad, brake systems, struts, or anything of this sort and in 24 months be able to walk away from the car and spend less than what we are projected to spend on our current car.

My big concern is that since the car has had a history of problems, as it ages even more, more problems are likely to occur, further increasing the cost of maintenance each year of the vehicle.

So is my math right? Would leasing a car, in our situation, be a better option for us? Or should we hold on to our car, keep forking out money to replace problems that come about, and in 2 years sell it(probably for less than what its worth now)? I'm at a bit of a loss, but the reason i've started looking into this is because of the fact that the car is in decent running condition now, and before any problems occur, I would like to have a sense of an idea of what I should be doing, before shit hits the fan.

Thank you MMM community for dealing with this giant post!!!!

tobitonic

  • Pencil Stache
  • ****
  • Posts: 549
I'd sell it, buy a cheap but reliable car, and then sell that when the time comes.

GrowingTheGreen

  • Bristles
  • ***
  • Posts: 355
    • Growing The Green
Leases are a waste. As the PP said, get a cheap used. You can find 2006 model year cars for $5k, easy.

Scandium

  • Handlebar Stache
  • *****
  • Posts: 2337
  • Location: EastCoast
Your current car had clutch problems after 14 years. How many cars have that in their two first years of life? Warranty is a waste. I don't see how leasing is worth it over just buying a used car.

frugaliknowit

  • Handlebar Stache
  • *****
  • Posts: 1687
Dump that POS!  Carefully research and buy something for $5k or less for cash, then sell it when you are ready to sail. 

ooeei

  • Handlebar Stache
  • *****
  • Posts: 1143
The problem with buying another older used car, is you have the potential to run into the exact same issues.  Back in 2012 your car would've been considered a "high reliability older used car" that many here would've recommended you to buy, yet here you are.  If you go out and buy a 2006 Civic, there's no reason to think it's any less likely to have these issues than your current car was in 2012.  The difference is, you know these issues have all been fixed on your current car. 

Leasing a car for $150/month will cost $3600 over 2 years.  If your car's repairs and depreciation are less than $3600 in 2 years, you come out ahead.  If it was me I'd probably keep the car. 

Also I'm not sure on the specifics of the system, but it seems like if you'd replaced the brake fluid when the shop recommended it, you may have avoided a huge chunk of those repairs.  It's not really fair to blame that repair on the car being old when you declined fixing it early.
« Last Edit: February 11, 2016, 12:07:40 PM by ooeei »

neo von retorch

  • Magnum Stache
  • ******
  • Posts: 3681
  • Location: SE PA
    • Fi@retorch - personal finance tracking
It is good to learn from the past. However, be careful not to conflate anecdotes with data. Most reliable used cars (Honda, Toyota, etc) do not have the problems or repair costs you are experiencing. Since you've had that experience, you've been soured on those cars and are considering a much more expensive (usually) option. Yes, it may be so that a lease might have cost you less than all the repairs you've dealt with on this specific car, but that is the exception, not the norm. Another thing to remember is sunk cost - that particular car has been expensive, but the money is gone. Sell it and don't look back. Starting from a point where you've sold that unreliable car, where do you go? Lease or buy a used car? The answer is... buy a reliable used car. There's still a chance you'll get yet another unusually unreliable Honda, but it's a small chance. If you live in fear, you'll spend too much on insurance, warranties and leases.

With your next car, be sure to learn how to do all the regular maintenance yourself that you haven't already, and keep it in excellent shape!

JLee

  • Walrus Stache
  • *******
  • Posts: 6243
It is good to learn from the past. However, be careful not to conflate anecdotes with data. Most reliable used cars (Honda, Toyota, etc) do not have the problems or repair costs you are experiencing. Since you've had that experience, you've been soured on those cars and are considering a much more expensive (usually) option. Yes, it may be so that a lease might have cost you less than all the repairs you've dealt with on this specific car, but that is the exception, not the norm. Another thing to remember is sunk cost - that particular car has been expensive, but the money is gone. Sell it and don't look back. Starting from a point where you've sold that unreliable car, where do you go? Lease or buy a used car? The answer is... buy a reliable used car. There's still a chance you'll get yet another unusually unreliable Honda, but it's a small chance. If you live in fear, you'll spend too much on insurance, warranties and leases.

With your next car, be sure to learn how to do all the regular maintenance yourself that you haven't already, and keep it in excellent shape!

THIS, so much!

You can replace brake pads, rotors, calipers, master cylinder, and fluid in a driveway. It's a fairly simple job, all things considered.

Curbside Prophet

  • Stubble
  • **
  • Posts: 182
There is only one question I ask people who are contemplating leasing a vehicle.  Do you understand residual?  If the answer is no, then don't lease.  If the answer is yes, then you probably wouldn't be leasing.