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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: SF'd on December 02, 2015, 09:33:13 AM

Title: Leasing a new car for free? Lend me your mathstache.
Post by: SF'd on December 02, 2015, 09:33:13 AM
Hi everyone! Looking for advice/obvious issues with the following. Apologies for the long post, but I'm really interested in your thoughts as I try to grow a few more whiskers. I bolded my primary questions to make things a bit easier.

A service called Getaround (basically an app for rental cars, except you rent from regular people rather than an agency like Hertz, etc. The car owner gets paid an hourly rate and Getaround takes a cut. Borrowers are insured for $1mm with 24/7 roadside assistance and pay for their own gas.) is offering the following: A 36-month Toyota PriusC lease for $0 down and $249/month with 15k miles/year. If you list the car with them for the first year and meet certain criteria (available 75% of all weekend days and priced "within 20% of their recommended rates" being the two keys ones), you are guaranteed to make a minimum of $6k revenue for the year (I live in one the of the prime zip codes that qualify for the best rebate).

*Wife and I have no vehicle currently. We have spent ~$1,000 this year on rental cars (Not a typo! Yikes. We enjoy Napa.), mostly for weekend trips, to visit friends we can't reach via mass transit, etc. Almost all of this (and some of our considerable uber expense) would go away.
*We're getting serious about having a child and a car would be helpful with many of the responsibilities that come with that.
*Small lifestyle improvements like not having to go pick up a rental car (3+ miles downtown, usually take my bike but it takes a half hour+), walking to/from the grocery store, etc.
*We won't drive to work (parking is $$$ downtown, the bus is fine), so we won't use many of the 15k miles and can lend the car out more.

*The car won't always be available when we need it since we'll be lending it out for at least a portion of most weekends.
*Hassle of listing/inspecting/cleaning/maintaining/moving weekly to avoid towing. No idea how time consuming this will be.
*Risk that borrowers abuse the car and Getaround doesn't reimburse (or the hassle of getting them to do so).

Total 3Y Costs: $15,739 + Tax/Title/Registration/Lease Return Costs
*Lease Payment: $8,964 ($249*36 months. Are there taxes on this amount?)
*Getaround Connect: $800 ($20*35 months - first month free - plus $100 install)
*Insurance: $3,600 (assuming $100/month for full coverage)
*Parking: $375 ($111/year for a parking permit in my neighborhood. I assume some price inflation in Y2/Y3)
*Tax, Title, Registration(Do you pay all of these on a lease? How much is it in CA? The DMV site is a nightmare. We both have CA driver's licenses already.)
*Gasoline: $1,000 (~15k miles / 50 mpg / $3 per gallon)
*Maintenance: $1,000 (Is this reasonable? Assuming most is under warranty, but tires/brakes and other consumables likely need a replacement at some point over 3 years)
*Additional Costs on Lease Return: $0 (Some risk that this becomes a material expense. Anyone have experience with returning a lease?)

Total 3Y Income: $17,400
*Minimum Y1 Income: $6,000
*Y2/Y3 Income: $9,000. Welcome to assumption town. My early guess is we could lend it for a net of ~$7/hr (similar cars are $10-$12/hr, before Getarounds cut), and that people will put 15 miles per hour on the car on average. If we lend the car for 10k miles / year (leaving 5k for our occasional use), that's $4,666 per year in Y2 + Y3, rounded down to $4,500.
*Savings from not renting cars / fewer Ubers: $2,400 ($800/yr)

Net cost for a car, in San Francisco, for 3 years: -$1,660 + Tax/Title/Registration.

Am I crazy? What am I missing? Would you do it?

Here's two links with more details:
Title: Re: Leasing a new car for free? Lend me your mathstache.
Post by: DaveR on December 02, 2015, 11:10:03 AM
My first thought: if this was such a no-brainer, why isn't Getaround leasing vehicles themselves and keeping all that extra cash flow?

Also, why lease a car? Buying a used car instead will give you a better return (depreciation is the big killer).

If you have maintenance issues and the car is in the shop (even if covered under warranty) the car will be out of service and not earning you sharing revenue.

Your time is worth something, so factor that in. Even if it's 30m a week, that adds up to 78hr in 3 years (seems low) which equates to $21/hr at net cost = zero.

I would guess a rental is going to get more abuse than typical, so lease return isn't going to be a $0 line item.

What happens if Getaround burns through the rest of its series B cash and shuts down? You're left with a lease payment and no sharing revenue.
Title: Re: Leasing a new car for free? Lend me your mathstache.
Post by: lbmustache on December 02, 2015, 11:26:55 AM
Something about the #s doesn't seem right to me, and a quick glance at their site says that this deal is only available for the first 50 Getaround customers.

I have no idea what the lease specials are in your area, but Toyota dealers are offering Prii C's for $159, $1999 down. You might be able to wiggle around that downpayment some. Even if you paid that, $2k over 36 months is about $55/mo which still makes the local dealer's offer cheaper than what Getaround is offering.

If you are serious about getting a car, my recommendation would be to pick up a car for a price you are comfortable with ($5k, $8k, whatever) and for the times you are not using it, list it on Relayrides (now Turo). There is no minimum car year/mileage req that I am aware of. Allows you to earn some extra money on the side while the car isn't being used, and a $5k car isn't going to depreciate all that much.

Title: Re: Leasing a new car for free? Lend me your mathstache.
Post by: SF'd on December 04, 2015, 11:00:13 AM
Thank you both for the responses.

I agree that it's not a screaming bargain, as indicated by it still being offered despite "only" being open to 50 people, and by Getaround not just leasing the cars themselves. A used car makes sense (and the upfront cost isn't a significant issue for us), but I don't feel as comfortable with the idea of loaning something out that I don't get to "give back" to the dealer in three years, and that probably isn't going to be covered by a warranty, which I think I'd want if it's going to be abused.

I wonder if something like a ~50k mileage 2010 Camry (~$12-$13k) with a CarMax warranty (I've read that they're great) would be a better option. Insurance would be lower, could keep for 100k miles+, super reliable and more space...

Anyway, you guys have talked me off the cliff on this one. Thanks for the valid points!
Title: Re: Leasing a new car for free? Lend me your mathstache.
Post by: dudde_devaru on December 04, 2015, 11:07:28 AM
list it on Relayrides (now Turo). There is no minimum car year/mileage req that I am aware of.
Not possible with Relay Rides. They need a 10yr old or newer and with less than 100k miles or something close.

OP, before you even think of anything... Talk to the customer care of that company and find out if you can rent a leased car thru them?

AFAIK, RelayRides does not allow a leased car to rent with them. This may have changed now... not sure
Title: Re: Leasing a new car for free? Lend me your mathstache.
Post by: AZDude on December 04, 2015, 11:50:13 AM
Spend the upfront money on a used car, then put liability only insurance on it. That's like ~$50 a month at most in upkeep, insurance, and registration. Alternatively, look at something like