Author Topic: URGENT LEASE QUESTION  (Read 12316 times)

millennialstache

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URGENT LEASE QUESTION
« on: June 23, 2015, 09:27:44 AM »
I have never bought or leased a new car and have always bought 8-10 year used cars. I live in the Midwest and drive around 1000 miles a month for work and school. Currently I drive a 06 eclipse gt and 22 mpg with premium :O... Its worth about 6-7k private party.  I'm going to a dealership today to potentially lease a brand new Honda Civic ($0 down, $159 a month).  My calculations with repairs and maintenance show that I'll be saving money (about $40 a month) doing this and selling my Eclipse.  Am I crazy?

I know that I could just buy a used car, but I have always wanted a brand new car and this seems like a somewhat rational (although unmustachian) way to go about it.

My situation: In college, doing fairly well for myself, own and renting out my townhome to roommates with no mortgage, and saving about $2-3k a month on average, no debt (student, car, house, or otherwise). 

I'm leaving to go to the dealership in about 40 minutes so just wanted some specific advice before I go!

Paul der Krake

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Re: URGENT LEASE QUESTION
« Reply #1 on: June 23, 2015, 09:35:13 AM »
IF you're basing the $159 on some ad you saw on TV or in the paper, be prepared to pay more. It will likely be $159, plus some fees, plus expensive insurance.

millennialstache

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Re: URGENT LEASE QUESTION
« Reply #2 on: June 23, 2015, 09:38:26 AM »
I've spoken to the dealership and have talked at length about fees and the related, its the highest rated dealership in the area with almost universally high reviews, but I guess I'll find out when I get there...

Its the most basic civic that is offered, but fits what I need.

mulescent

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Re: URGENT LEASE QUESTION
« Reply #3 on: June 23, 2015, 09:41:04 AM »
Well, given your 40m timeline I'm probably too late but here is my advice: DON'T DO IT!

1)  Buying a new car is a fool's game.  Leasing one is an even bigger fool's game.  Read the many articles on this site (or others) about why buying lightly to moderately used, practical cars with cash is pretty much the only way to go.

2)  You're in college, which means you aren't settled and don't have a long-term job yet.  What if you move to NYC or SF or some other metropolis where that shiny new car becomes a big liability?  What if you decide to go to grad school or take a low-paying job to invest in career development and therefore need to minimize expenses? 

3)  You didn't say anything about the state of your current car.  If it's in good shape, just keep it.  If you must have a different car, then sell your current one and use that ~7k to purchase a more practical ride.  If you feel you have to have an upgrade, add one month's savings (~3k) to what you get for the old car and buy something nicer.

mulescent

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Re: URGENT LEASE QUESTION
« Reply #4 on: June 23, 2015, 09:42:52 AM »
Oh, and one more thing: don't act hastily.  It sounds like this is all very rushed.  Give yourself two weeks from today to actually decide what to do.  Salespeople of all stripes thrive on time pressure tactics to get people to make silly decisions.  They'll have plenty of cars in two weeks; during that time you can come to a rational decision.

millennialstache

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Re: URGENT LEASE QUESTION
« Reply #5 on: June 23, 2015, 09:45:35 AM »
Thanks for the quick responses! I have two years left of undergrad, so most of the lease term will be before I move. Regardless of the job, I don't believe I could ever live in NYC or San Francisco, or other HCOL, but it is true I'm not in the most stable position. My thoughts on leasing a new car is that the 3 year warranty would save me a lot of money since 7-10 year cars usually need $750-1k a year for repairs and maintenance which should not be the case with a new car?

When I factored in gas savings, depreciation of current car, and lower repair costs, I came out ahead.  I have never considered leasing before, but the numbers sound intriguing...
« Last Edit: June 23, 2015, 09:48:05 AM by millenialstache »

GoldenStache

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Re: URGENT LEASE QUESTION
« Reply #6 on: June 23, 2015, 09:48:00 AM »
1000 miles a month, 3 year lease, what is your mileage cap?
Most dealers charge 25cents per mile over your cap. 

millennialstache

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Re: URGENT LEASE QUESTION
« Reply #7 on: June 23, 2015, 09:48:30 AM »
It would be a three year, 1000 mile a month lease.

mlejw6

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Re: URGENT LEASE QUESTION
« Reply #8 on: June 23, 2015, 09:50:09 AM »
You may be saving money each month, but you will not be saving anything over the long term. Leases are always in the dealer's favor, not yours.

Paul der Krake

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Re: URGENT LEASE QUESTION
« Reply #9 on: June 23, 2015, 09:51:53 AM »
What's wrong with just buying one?

millennialstache

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Re: URGENT LEASE QUESTION
« Reply #10 on: June 23, 2015, 09:54:49 AM »
I would rather pay ~6k in leasing over 3 years, than buy a brand new civic (18-19k cash) that will depreciate by at least that much, plus sales tax in my state would be about $1300...

Rezdent

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Re: URGENT LEASE QUESTION
« Reply #11 on: June 23, 2015, 09:55:48 AM »
You may be saving money each month, but you will not be saving anything over the long term. Leases are always in the dealer's favor, not yours.
agree.  It's even worse than buying new.  At least when you buy new you will probably have something left when payments are done (a used car that depreciated  a ton).  At the end of the lease, you got nothing.  Buying used is much better - the first person ate a lot of the depreciation.

CommonCents

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Re: URGENT LEASE QUESTION
« Reply #12 on: June 23, 2015, 09:58:12 AM »
What's wrong with just buying one?

+1
Another vote not to do it - and certainly not in this rushed fashion.  Wait at least until you graduate and know you have a job and at what salary before locking yourself into this commitment.  If you're really that worried about the gas and can't cut down on your trips, just sell and buy a more gas efficient car that is used. 

thepokercab

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Re: URGENT LEASE QUESTION
« Reply #13 on: June 23, 2015, 09:58:58 AM »
Worst mistake I made pre-MMM days was lease a new car.  In addition to the car insurance payment being extremely high, once I wouldn't buy the car outright after the lease was up the dealership nickel and dimed me for every out of place fiber once I actually turned the car in.  Never again. 

millennialstache

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Re: URGENT LEASE QUESTION
« Reply #14 on: June 23, 2015, 10:00:22 AM »
Hmmm, definitely a lot of people against leasing. I was too, but $159 a month seems worth checking out. I guess the difference maker will be the car insurance costs.

Thanks again for all of the responses!!

mskyle

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Re: URGENT LEASE QUESTION
« Reply #15 on: June 23, 2015, 10:07:44 AM »
I would rather pay ~6k in leasing over 3 years, than buy a brand new civic (18-19k cash) that will depreciate by at least that much, plus sales tax in my state would be about $1300...

Take a look at the resale prices for a three year old Civic. Small useful cars generally do not depreciate as fast as big expensive cars. Also, you will still have to pay *some* tax on the lease - I think it's usually only on the payments, not on the full value. But it will be hundreds of dollars.

Basically I'm saying you should make sure you really understand the full cost to own, here. How much will it cost you if you return the car in non-pristine condition?

frugaliknowit

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Re: URGENT LEASE QUESTION
« Reply #16 on: June 23, 2015, 10:12:26 AM »
Don't take the bait!  It's fake.

r3dt4rget

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Re: URGENT LEASE QUESTION
« Reply #17 on: June 23, 2015, 10:20:09 AM »
Thanks for the quick responses! I have two years left of undergrad, so most of the lease term will be before I move. Regardless of the job, I don't believe I could ever live in NYC or San Francisco, or other HCOL, but it is true I'm not in the most stable position. My thoughts on leasing a new car is that the 3 year warranty would save me a lot of money since 7-10 year cars usually need $750-1k a year for repairs and maintenance which should not be the case with a new car?

When I factored in gas savings, depreciation of current car, and lower repair costs, I came out ahead.  I have never considered leasing before, but the numbers sound intriguing...
You're saving $40/month on gas. That is offset by a $159/month lease payment, taxes, and probably 50-100% more per month for insurance. Even if you need $100/month for repairs, it's still cheaper to just keep your Eclipse. The best option would be to sell the Eclipse to a private party, and buy a more efficient car for around the same value or slightly less since you don't drive very much.

millennialstache

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Re: URGENT LEASE QUESTION UPDATE
« Reply #18 on: June 24, 2015, 07:59:14 AM »
Just to give everyone an update, dealership kept their word, insurance went up about $20-25, $149 in dealer fees, and $171 total lease payment with taxes.  I think that when compared to keeping the eclipse, my car costs are exactly the same, but I get a new car that I enjoy and peace of mind... Its probably true that I would've been better off spending 12-13k on a 2012 Civic but chances are I wouldn't have gotten the bumper to bumper warranty which is a big reason why I got it, and it would've cost me about $900 in taxes right away. 

BTW, my Eclipse definitely needs about $1200 a year in maintenance and repairs and depreciates at least $60 a month on average which needs to be factored in. 

« Last Edit: June 24, 2015, 08:08:26 AM by millenialstache »

Bearded Man

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Re: URGENT LEASE QUESTION
« Reply #19 on: June 24, 2015, 08:11:40 AM »
This is a logical fallacy OP, you aren't saving anything, because you will not own anything at the end of the lease. Better off buying a used car even from the dealership. Once you stop making payments you own the car...

CommonCents

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Re: URGENT LEASE QUESTION UPDATE
« Reply #20 on: June 24, 2015, 08:20:44 AM »
Just to give everyone an update, dealership kept their word, insurance went up about $20-25, $149 in dealer fees, and $171 total lease payment with taxes.  I think that when compared to keeping the eclipse, my car costs are exactly the same, but I get a new car that I enjoy and peace of mind... Its probably true that I would've been better off spending 12-13k on a 2012 Civic but chances are I wouldn't have gotten the bumper to bumper warranty which is a big reason why I got it, and it would've cost me about $900 in taxes right away. 

BTW, my Eclipse definitely needs about $1200 a year in maintenance and repairs and depreciates at least $60 a month on average which needs to be factored in.

So this wasn't a divided answer - everyone said don't do it.  Yet, it sounds like you went ahead and got the lease anyways.  Honestly, why bother asking us for advice?  It's a bit annoying to have taken the time to read and write down advice only to find out it was wholly wasted.

millennialstache

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Re: URGENT LEASE QUESTION
« Reply #21 on: June 24, 2015, 08:40:15 AM »
This is a logical fallacy OP, you aren't saving anything, because you will not own anything at the end of the lease. Better off buying a used car even from the dealership. Once you stop making payments you own the car...

If my two options were keeping my car for 3 years and selling or getting the lease and selling the car, then I think it makes sense...

Keeping paid off car:

Depreciates: $50-60 a month with regular driving (1000 miles a month)
Gas cost: $60 a month more with 1000 miles and required premium gas
Repairs: $90 a month more than the civic which will need almost nothing

Total: $200-210 a month in relevant costs

Leasing:
Lease: $171 a month including tax
Insurance increase: $20-25 a month increase
Fees: $10 (estimated)

Total: $201-206 a month in relevant costs

Basically what I'm saying is that it evens itself out without even taking into account time value of money.  This becomes much more skewed when using a discount rate of even 4%... 

I do appreciate everyone's advice and I did take it all into account, just because I didn't follow the advice, doesn't mean I don't appreciate it.



expectopatronum

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Re: URGENT LEASE QUESTION
« Reply #22 on: June 24, 2015, 08:42:43 AM »
Its worth about 6-7k private party.

I would rather pay ~6k in leasing over 3 years, than buy a brand new civic (18-19k cash) that will depreciate by at least that much, plus sales tax in my state would be about $1300...

I don't get it. Another way of thinking of this is that you have now cashed in your car for $6-7K, which will cover the cost of leasing a brand new car for 3 years. At the end of the 3 years, you'll have nothing but the $1040 of savings ($40/mo for 36 mo).

Just to give everyone an update, dealership kept their word, insurance went up about $20-25, $149 in dealer fees, and $171 total lease payment with taxes.  I think that when compared to keeping the eclipse, my car costs are exactly the same, but I get a new car that I enjoy and peace of mind... Its probably true that I would've been better off spending 12-13k on a 2012 Civic but chances are I wouldn't have gotten the bumper to bumper warranty which is a big reason why I got it, and it would've cost me about $900 in taxes right away. 

BTW, my Eclipse definitely needs about $1200 a year in maintenance and repairs and depreciates at least $60 a month on average which needs to be factored in. 

But wait! Does the insurance increase mean you're only saving $15 a month, and not $40? Aille.

Civics are quite reliable. My mind is blown that you're going to sink away $6000 for peace of mind, and that undergrad is the right time to satisfy the desire to own a new car.

millennialstache

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Re: URGENT LEASE QUESTION
« Reply #23 on: June 24, 2015, 08:46:40 AM »
Its worth about 6-7k private party.

I would rather pay ~6k in leasing over 3 years, than buy a brand new civic (18-19k cash) that will depreciate by at least that much, plus sales tax in my state would be about $1300...

I don't get it. Another way of thinking of this is that you have now cashed in your car for $6-7K, which will cover the cost of leasing a brand new car for 3 years. At the end of the 3 years, you'll have nothing but the $1040 of savings ($40/mo for 36 mo). 

Just to give everyone an update, dealership kept their word, insurance went up about $20-25, $149 in dealer fees, and $171 total lease payment with taxes.  I think that when compared to keeping the eclipse, my car costs are exactly the same, but I get a new car that I enjoy and peace of mind... Its probably true that I would've been better off spending 12-13k on a 2012 Civic but chances are I wouldn't have gotten the bumper to bumper warranty which is a big reason why I got it, and it would've cost me about $900 in taxes right away. 

BTW, my Eclipse definitely needs about $1200 a year in maintenance and repairs and depreciates at least $60 a month on average which needs to be factored in. 

But wait! Does the insurance increase mean you're only saving $15 a month, and not $40? Aille.

Civics are quite reliable. My mind is blown that you're going to sink away $6000 for peace of mind, and that undergrad is the right time to satisfy the desire to own a new car.

What about repair costs, my own cars depreciation since its only applicable to keeping the car? Should those not be factored in?

expectopatronum

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Re: URGENT LEASE QUESTION
« Reply #24 on: June 24, 2015, 08:48:51 AM »
This is a logical fallacy OP, you aren't saving anything, because you will not own anything at the end of the lease. Better off buying a used car even from the dealership. Once you stop making payments you own the car...

If my two options were keeping my car for 3 years and selling or getting the lease and selling the car, then I think it makes sense...

Keeping paid off car:

Depreciates: $50-60 a month with regular driving (1000 miles a month)
Gas cost: $60 a month more with 1000 miles and required premium gas
Repairs: $90 a month more than the civic which will need almost nothing

Total: $200-210 a month in relevant costs

Leasing:
Lease: $171 a month including tax
Insurance increase: $20-25 a month increase
Fees: $10 (estimated)

Total: $201-206 a month in relevant costs

Basically what I'm saying is that it evens itself out without even taking into account time value of money.  This becomes much more skewed when using a discount rate of even 4%... 

I do appreciate everyone's advice and I did take it all into account, just because I didn't follow the advice, doesn't mean I don't appreciate it.

Warning: you can stop reading here if it's too late and you already signed the lease.

Fast forward 3 years.

Eclipse:
Now worth about $3840 by your estimate. ($6000 lowest current value - $50/mo)
You can trade it in.

Leased Civic:
From your numbers, the max difference in relevant costs is $9/mo. Therefore, savings of $324 over 36 months. Let's assume with the savings you did something normal like stick it in a savings account.
You now need a replacement car.

At the end of this, you have $324 if you go with the Civic leasing option. Ahhh, but when you go to turn it in, the dealer takes out $150! Wtf! OK, now your net is only $174. And you STILL need a car (presumably).

If you go with the Eclipse, you can go trade it in and get probably $3500-$4000 for it and toss in money to cover the difference.

millennialstache

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Re: URGENT LEASE QUESTION
« Reply #25 on: June 24, 2015, 08:51:50 AM »
This is a logical fallacy OP, you aren't saving anything, because you will not own anything at the end of the lease. Better off buying a used car even from the dealership. Once you stop making payments you own the car...

If my two options were keeping my car for 3 years and selling or getting the lease and selling the car, then I think it makes sense...

Keeping paid off car:

Depreciates: $50-60 a month with regular driving (1000 miles a month)
Gas cost: $60 a month more with 1000 miles and required premium gas
Repairs: $90 a month more than the civic which will need almost nothing

Total: $200-210 a month in relevant costs

Leasing:
Lease: $171 a month including tax
Insurance increase: $20-25 a month increase
Fees: $10 (estimated)

Total: $201-206 a month in relevant costs

Basically what I'm saying is that it evens itself out without even taking into account time value of money.  This becomes much more skewed when using a discount rate of even 4%... 

I do appreciate everyone's advice and I did take it all into account, just because I didn't follow the advice, doesn't mean I don't appreciate it.

Warning: you can stop reading here if it's too late and you already signed the lease.

Fast forward 3 years.

Eclipse:
Now worth about $3840 by your estimate. ($6000 lowest current value - $50/mo)
You can trade it in.

Leased Civic:
From your numbers, the max difference in relevant costs is $9/mo. Therefore, savings of $324 over 36 months. Let's assume with the savings you did something normal like stick it in a savings account.
You now need a replacement car.

At the end of this, you have $324 if you go with the Civic leasing option. Ahhh, but when you go to turn it in, the dealer takes out $150! Wtf! OK, now your net is only $174. And you STILL need a car (presumably).

If you go with the Eclipse, you can go trade it in and get probably $3500-$4000 for it and toss in money to cover the difference.

But with leasing, I can sell the Eclipse for let's say $6k cash now, which would also be in a savings account or invested otherwise? The car doesn't just disappear in one and not the other.

Cycling Stache

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Re: URGENT LEASE QUESTION
« Reply #26 on: June 24, 2015, 08:58:20 AM »
What's done is done.  What this does show is how hard it is for people to avoid making non-ideal financial decisions.  It's not the end of the world, but most people agree that this was a poor financial decision.  The reasons cited--low monthly cost, fear of car repairs, get to have a new car--are not that compelling from a rational economic analysis, although they are very tempting and often given as reasons for doing things like this.

I'm sure that most of us do less than ideal things financially.  To me, the more interesting factor is that even someone reading about Mustachianism and getting engaged enough to post on the forum still cannot avoid making the same financial mistakes that most people make.  It shows how powerful the conventional wisdom and irrationalities are.

Why do we care?  Because I think most of us see the benefits of Mustachianism and would like more people to get to experience it.

For OP, drive the car, enjoy the car, but think hard before the lease is up how much your day-to-day happiniess depended on what car you were driving.  If you find yourself excited about a date or stressed about an exam, think about whether the fact that you sat in a 2015 Civic versus a 2010 Civic that morning is playing into the analysis at all.  You've done well in picking a much more economical car, but for the next car decision, think about whether the benefits you got from this lease were really worth it compared to other financial goals you could be knocking off.   I think most people here feel like money can spent elsewhere with much greater financial reward, which is why you got such a strong response.

CommonCents

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Re: URGENT LEASE QUESTION
« Reply #27 on: June 24, 2015, 09:00:09 AM »
You're presenting a false dichotomy OP.  The options aren't keep old car or lease new car.  There's many options out there, such as buy a used Civic which won't depreciate AND you still have an asset at the end.  My husband and I have an 02 Honda Civic my husband bought used that's been working great.

Anyways, I'm out from this thread as it's pretty clear you are not taking the advice despite the unanimity of it. 

millennialstache

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Re: URGENT LEASE QUESTION
« Reply #28 on: June 24, 2015, 09:06:38 AM »
You're presenting a false dichotomy OP.  The options aren't keep old car or lease new car.  There's many options out there, such as buy a used Civic which won't depreciate AND you still have an asset at the end.  My husband and I have an 02 Honda Civic my husband bought used that's been working great.

Anyways, I'm out from this thread as it's pretty clear you are not taking the advice despite the unanimity of it.

I understand that, that's one of the reasons that I've repeatedly mentioned that I may have been better off buying a used 2008-2012 civic with cash, and in my financial analysis I said IF they were the only two options, it makes sense to me.

millennialstache

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Re: URGENT LEASE QUESTION
« Reply #29 on: June 24, 2015, 09:14:19 AM »
I think this post has exceeded its useful life and can probably be closed if that's a thing. Thanks.

ReadySetMillionaire

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Re: URGENT LEASE QUESTION
« Reply #30 on: June 24, 2015, 09:15:01 AM »
You're presenting a false dichotomy OP.  The options aren't keep old car or lease new car.  There's many options out there, such as buy a used Civic which won't depreciate AND you still have an asset at the end.  My husband and I have an 02 Honda Civic my husband bought used that's been working great.

Anyways, I'm out from this thread as it's pretty clear you are not taking the advice despite the unanimity of it.

I understand that, that's one of the reasons that I've repeatedly mentioned that I may have been better off buying a used 2008-2012 civic with cash, and in my financial analysis I said IF they were the only two options, it makes sense to me.

OP, I think it would be wise to stop trying to justify your purchase in financial terms when it clearly appears that it was an emotional purchase. In other words, to me at least, it appears that you were tired of your Eclipse, decided that you wanted a Honda Civic, then fudged some numbers to justify said purchase.
« Last Edit: June 24, 2015, 10:58:44 AM by ReadySetMillionaire »

expectopatronum

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Re: URGENT LEASE QUESTION
« Reply #31 on: June 24, 2015, 09:34:51 AM »
But with leasing, I can sell the Eclipse for let's say $6k cash now, which would also be in a savings account or invested otherwise? The car doesn't just disappear in one and not the other.

True, that's a fair point and my error. Let's compare the two situations:

Leased Civic:
Cash in Eclipse in 2015 for $6000!
$201/mo in relevant costs @ 36mo = -$7236
-$100 from deposit or to clean it at the end of the lease, let's say, to be safe.
Net: -$1336
You now need a new car.

Eclipse
$150/mo in operating costs (gas and repairs) @36mo = -$5400
Sell off Eclipse after $50/mo depreciation = $4200
Net: -$1200
Ouch, man. You spent $3240 repairing the car alone. That seems insanely high to me (I own a 2005 SUV with 127K miles and have spent $750 over a 4-year time span).
You now need a new car.

Based on this I can definitely see why you would want to drive the newer vehicle and not deal with the hassle, etc of the old car if the net costs are about the same.

But let's examine another possibility:
Eclipse
Sell off Eclipse NOW: +$6000
Buy 2010-2011 used Civic: -$10000
Operating costs: -$900. This assumes similar mileage and insurance costs to the brand spankin' new leased Civic, but in reality, car insurance would likely be less than the leased and newer car.
Maint costs: -$1400. However....based on a car of that make and age, and driving 1000mi/mo, I would think this is a high estimate...

For fairness' sake, since at the end of the other 2 scenarios we needed a new car, let's say you sell off the used Civic in 3 years-
Based on depreciation of $2700 and an original price of $10K, let's say you get $7300 for it.
That's based on this site - http://www.edmunds.com/honda/civic/2010/st-101209939/cost-to-own/. I had no idea how to scale depreciation.
Net: $1000!
You now need a new car.

A $2000+ difference between that and the next best thing! It would seem that's the way to go. If I did the math incorrectly, I'd like to know where; I've never really examined lease vs buy...

And these calculators assumed you were driving about 25% more than you currently do...so their estimates of depreciation and maintenance are correspondingly higher.
« Last Edit: June 24, 2015, 11:54:23 AM by expectopatronum »

neo von retorch

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Re: URGENT LEASE QUESTION
« Reply #32 on: June 24, 2015, 10:28:04 AM »
Leased Civic cost per mile: $0.20 (paid for, mostly, by Eclipse sale) - must buy or lease.... used to brand spanking new car. Have to buy older or lease more.
Eclipse cost per mile: $0.15 + depreciation - can possibly keep driving Eclipse or sell and buy used car.
Used Civic cost per mile: $0.36 before resale

Cost per mile can be hard to calculate when you're me :)
But I do think that as far as leases go, this one was pretty inexpensive. The biggest risk is that the OP will get spoiled... hedonic adaptation. What will you do when the lease is up?

OP - did you trade in the Eclipse? Sell it?

waffle

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Re: URGENT LEASE QUESTION
« Reply #33 on: June 24, 2015, 11:01:13 AM »
If you aren't convinced by now that its a bad deal I doubt this will help much, but i'll try anyway.

First it is not just $159/month. It is $159 + Insurance (probably higher than you are paying now) + whatever down is required + dealer fees + the loss of any resale value down the road.

If you are only driving 1000 miles or less per month then that is about $136/month in gas with your current car (assuming $3/gallon) so you are already ahead just keeping your car. Also you said that you use premium. Does your car actually call for it? If not then it is generally a waste of money to go with a higher octane than the manufacturer requires. Like others have said though just sell it and buy a better used one.

tvan

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Re: URGENT LEASE QUESTION
« Reply #34 on: June 24, 2015, 11:11:21 AM »

If you aren't convinced by now that its a bad deal I doubt this will help much, but i'll try anyway.

First it is not just $159/month. It is $159 + Insurance (probably higher than you are paying now) + whatever down is required + dealer fees + the loss of any resale value down the road.

If you are only driving 1000 miles or less per month then that is about $136/month in gas with your current car (assuming $3/gallon) so you are already ahead just keeping your car. Also you said that you use premium. Does your car actually call for it? If not then it is generally a waste of money to go with a higher octane than the manufacturer requires. Like others have said though just sell it and buy a better used one.

He already said its $0 down and dealer fees are included. He's holding his own here IMO.

The only thing he's losing is the resale value in "x" years. Which is lower than the value he can currently get for the eclipse.


waffle

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Re: URGENT LEASE QUESTION
« Reply #35 on: June 24, 2015, 01:05:36 PM »

If you aren't convinced by now that its a bad deal I doubt this will help much, but i'll try anyway.

First it is not just $159/month. It is $159 + Insurance (probably higher than you are paying now) + whatever down is required + dealer fees + the loss of any resale value down the road.

If you are only driving 1000 miles or less per month then that is about $136/month in gas with your current car (assuming $3/gallon) so you are already ahead just keeping your car. Also you said that you use premium. Does your car actually call for it? If not then it is generally a waste of money to go with a higher octane than the manufacturer requires. Like others have said though just sell it and buy a better used one.

He already said its $0 down and dealer fees are included. He's holding his own here IMO.

The only thing he's losing is the resale value in "x" years. Which is lower than the value he can currently get for the eclipse.



If that's possible great, but I've never met a dealer that didn't love to add on fees last minute after you've committed. A lot of dealers will also make an initial deal and then come back with something way off after checking your credit/funding or whatnot. They want to reel you in one step at a time and make the deal a little less sweet at each step.

thd7t

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Re: URGENT LEASE QUESTION
« Reply #36 on: June 24, 2015, 01:10:35 PM »

If you aren't convinced by now that its a bad deal I doubt this will help much, but i'll try anyway.

First it is not just $159/month. It is $159 + Insurance (probably higher than you are paying now) + whatever down is required + dealer fees + the loss of any resale value down the road.

If you are only driving 1000 miles or less per month then that is about $136/month in gas with your current car (assuming $3/gallon) so you are already ahead just keeping your car. Also you said that you use premium. Does your car actually call for it? If not then it is generally a waste of money to go with a higher octane than the manufacturer requires. Like others have said though just sell it and buy a better used one.

He already said its $0 down and dealer fees are included. He's holding his own here IMO.

The only thing he's losing is the resale value in "x" years. Which is lower than the value he can currently get for the eclipse.



If that's possible great, but I've never met a dealer that didn't love to add on fees last minute after you've committed. A lot of dealers will also make an initial deal and then come back with something way off after checking your credit/funding or whatnot. They want to reel you in one step at a time and make the deal a little less sweet at each step.
OP didn't want the best option.  He just wanted a brand new car and hoped that he'd get validation for the decision.  He acted like this was urgent, for some reason, although there will still be cars tomorrow and "the best deal" comes around over and over.  One person suggested that this might not be a specifically bad deal, but that was the only person not telling OP that this is a bad decision.

LeRainDrop

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Re: URGENT LEASE QUESTION
« Reply #37 on: June 24, 2015, 06:05:18 PM »
What's done is done.  What this does show is how hard it is for people to avoid making non-ideal financial decisions.  It's not the end of the world, but most people agree that this was a poor financial decision.  The reasons cited--low monthly cost, fear of car repairs, get to have a new car--are not that compelling from a rational economic analysis, although they are very tempting and often given as reasons for doing things like this.

I'm sure that most of us do less than ideal things financially.  To me, the more interesting factor is that even someone reading about Mustachianism and getting engaged enough to post on the forum still cannot avoid making the same financial mistakes that most people make.  It shows how powerful the conventional wisdom and irrationalities are.

Why do we care?  Because I think most of us see the benefits of Mustachianism and would like more people to get to experience it.

For OP, drive the car, enjoy the car, but think hard before the lease is up how much your day-to-day happiniess depended on what car you were driving.  If you find yourself excited about a date or stressed about an exam, think about whether the fact that you sat in a 2015 Civic versus a 2010 Civic that morning is playing into the analysis at all.  You've done well in picking a much more economical car, but for the next car decision, think about whether the benefits you got from this lease were really worth it compared to other financial goals you could be knocking off.   I think most people here feel like money can spent elsewhere with much greater financial reward, which is why you got such a strong response.
I just want to clap for this response.  Seriously, spot on.

MacGyverIt

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Re: URGENT LEASE QUESTION
« Reply #38 on: June 25, 2015, 02:04:34 PM »
What's done is done.  What this does show is how hard it is for people to avoid making non-ideal financial decisions.  It's not the end of the world, but most people agree that this was a poor financial decision.  The reasons cited--low monthly cost, fear of car repairs, get to have a new car--are not that compelling from a rational economic analysis, although they are very tempting and often given as reasons for doing things like this.

I'm sure that most of us do less than ideal things financially.  To me, the more interesting factor is that even someone reading about Mustachianism and getting engaged enough to post on the forum still cannot avoid making the same financial mistakes that most people make.  It shows how powerful the conventional wisdom and irrationalities are.

Why do we care?  Because I think most of us see the benefits of Mustachianism and would like more people to get to experience it.

For OP, drive the car, enjoy the car, but think hard before the lease is up how much your day-to-day happiniess depended on what car you were driving.  If you find yourself excited about a date or stressed about an exam, think about whether the fact that you sat in a 2015 Civic versus a 2010 Civic that morning is playing into the analysis at all.  You've done well in picking a much more economical car, but for the next car decision, think about whether the benefits you got from this lease were really worth it compared to other financial goals you could be knocking off.   I think most people here feel like money can spent elsewhere with much greater financial reward, which is why you got such a strong response.
I just want to clap for this response.  Seriously, spot on.
+1 -- had to read this entire thread twice to believe my eyes.

"lease a car" = #facepunch

dudde_devaru

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Re: URGENT LEASE QUESTION
« Reply #39 on: June 25, 2015, 02:37:04 PM »
+100 to Cycling Stache! Awesome reply!

I have never leased before/don't know anyone who does lease. So, asking this Q here. What happens after lease ends? Are you bound by the dealer to sign another lease or can you outright pay the KBB value of the car?

Sorry if its a noob Q.

simplified

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Re: URGENT LEASE QUESTION
« Reply #40 on: June 25, 2015, 03:28:20 PM »
Before you sign a lease, they also tell you how much you will have to pay at the end of the lease to keep the car. It is never beneficial.

Dicey

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Re: URGENT LEASE QUESTION
« Reply #41 on: June 27, 2015, 09:12:18 AM »
Man, I'm sorry I didn't see this sooner! I for one (and seem to be only) say that my vote is a qualified YES!

It might cost you a little bit more than buying used or hanging on to the Eclipse, but I would bet that there are people who voted NO who pay more than your projected "loss" in Credit Card or Student Loan Debt. Hell, some folks might spend more than this on craft beers or wine. What's missing from this lopsided pile-on is a sense of balance. The OP stated that even though he's still a student, he's stashing 2-3k per month. He is so far ahead of the curve that his desire to have a new car at a reasonable cost is worthy of consideration.

A common theme in frugality land is that stuff is not worth paying for but experiences are. Why shouldn't the OP experience a new car once in his life at a time when he can afford it and the cost is comparatively minimal? After all, somebody's got to buy new cars so they will eventually become Mustachian used cars. Why not a guy who has thought it out and can afford it? If everyone followed your advice to never buy new or lease a car, those of us who require motorized transportation would be shit out of luck. The price of used cars would rise significantly.

I suspect that when questions like this come up, the people who own luxury vehicles or fancy toys with wheels lurk silently in the background, while the drive-a-tin-can-until-the-wheels-fall-off crowd forms a Greek chorus. Give the guy a break. Under his own personal set of circumstances, this is not a totally unreasonable proposition. I suspect Millenialstache has left the building, but let the record show he gets 100% credit from this FIRE'd Mustachian for thinking his decision through before taking the presumed leap. Even the fact that he was brave enough to vet his decision-making process here speaks volumes for his overall financial health.

CommonCents

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Re: URGENT LEASE QUESTION
« Reply #42 on: June 28, 2015, 02:59:53 PM »
It might cost you a little bit more than buying used or hanging on to the Eclipse, but I would bet that there are people who voted NO who pay more than your projected "loss" in Credit Card or Student Loan Debt. Hell, some folks might spend more than this on craft beers or wine.

What's missing from this lopsided pile-on is a sense of balance. The OP stated that even though he's still a student, he's stashing 2-3k per month. He is so far ahead of the curve that his desire to have a new car at a reasonable cost is worthy of consideration.

A common theme in frugality land is that stuff is not worth paying for but experiences are. Why shouldn't the OP experience a new car once in his life at a time when he can afford it and the cost is comparatively minimal?

Because leasing a new car **while in college** seems to start on the hedonistic path crazy early, getting him used to luxury in a way that's hard to fend off later.  It's generally easier to stay "living like a college student" than to go back to living like one.  That's why I didn't own a car until I was 28, earning a high salary - and the 89 Corolla was worth approximately $800 (and short lived too as I was reared ended 3 months later totaling the car, until I married my husband with his 02 Civic).

People were attempting to give him the benefit of their experience.  It's hard to believe that he'll just have a new car leased once...that from now on he'll convince himself leasing is worth it (forgetting that the middleman leaser has to make a profit) and lease newer and better cars.

(And the argument that people have their own issues is a bit of a bullshit red herring.  Just because others might be screwing up in other ways on the mustachian path doesn't mean that everyone gets a bye when they ask "should I do this?".)

It's also because he tried to put forth logical financial reasons for having the car, but it really seemed to the other 99% of us that he was scrabbling together figures to make the argument he emotionally wanted to prevail.  I think he just confessed to really wanting it (posting in a different section) and didn't attempt to justify it financially or ask if he should or not, people would have been inclined to give a thumbs up.
« Last Edit: August 14, 2015, 09:44:43 AM by CommonCents »

expectopatronum

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Re: URGENT LEASE QUESTION
« Reply #43 on: June 29, 2015, 07:39:54 AM »
A common theme in frugality land is that stuff is not worth paying for but experiences are. Why shouldn't the OP experience a new car once in his life at a time when he can afford it and the cost is comparatively minimal? After all, somebody's got to buy new cars so they will eventually become Mustachian used cars. Why not a guy who has thought it out and can afford it? If everyone followed your advice to never buy new or lease a car, those of us who require motorized transportation would be shit out of luck. The price of used cars would rise significantly.

Well, this is what came to mind....http://www.mrmoneymustache.com/2012/04/09/what-if-everyone-became-frugal/

I actually agree that if we take the numbers presented, then sure - lease new vs keep old Eclipse was almost a wash (see above). But trading in and buying used could have put him well ahead.

I don't think it's the end of the world, as he's obviously not going into debt over it, but I think it's a reach to present it as the only option and then to say because he's doing fine and values having a new car, it's OK. Was it the BEST decision? No. Does everyone here make the best decisions 100% of the time? Also no. But does that mean that people are unqualified to weigh in on something that was "super-urgent", that OP ultimately decided for himself? Also no. He'd already proven it to himself that it was worth it FOR HIM, so it really makes no difference.

Dicey

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Re: URGENT LEASE QUESTION
« Reply #44 on: June 29, 2015, 08:14:58 AM »
But does that mean that people are unqualified to weigh in on something that was "super-urgent", that OP ultimately decided for himself? Also no. He'd already proven it to himself that it was worth it FOR HIM, so it really makes no difference.

It was the complete pile-on, juxtaposed with this post wherein nobody was batting an eyelash, much less throwing a facepunch at the question, that got to me.

http://forum.mrmoneymustache.com/ask-a-mustachian/coffee-grinder-for-around-200$/?topicseen

Just because a person makes what appears to be a sub-optimal decision doesn't mean he's going to ruin his life. There is flexibility along the path to FIRE.

(And the argument that people have their own issues is a bit of a bullshit red herring.  Just because others might be screwing up in other ways on the mustachian path doesn't mean that everyone gets a bye when they ask "should I do this?".)

Call it what you will, my point remains unchanged. Your argument reminds me of the adage "Don't let perfect be the enemy of good." Buying a new car is not the end of the financial world or proof of utter Mustachian failure for the OP. I was responding to his specific situation as presented, not "everyone".

See reference above.

CommonCents

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Re: URGENT LEASE QUESTION
« Reply #45 on: June 29, 2015, 08:48:37 AM »
But does that mean that people are unqualified to weigh in on something that was "super-urgent", that OP ultimately decided for himself? Also no. He'd already proven it to himself that it was worth it FOR HIM, so it really makes no difference.

It was the complete pile-on, juxtaposed with this post wherein nobody was batting an eyelash, much less throwing a facepunch at the question, that got to me.

http://forum.mrmoneymustache.com/ask-a-mustachian/coffee-grinder-for-around-200$/?topicseen

Just because a person makes what appears to be a sub-optimal decision doesn't mean he's going to ruin his life. There is flexibility along the path to FIRE.

I don't think anyone said he was going to ruin his life.  All comments - yours, mine and everyone else's - were coming from a desire to help a young fledgling mustachian.

But to your link of another thread - are you sure the people responding in that coffee grinder thread are the same as the ones in this thread?  I never saw it or read it, so I know I at least didn't share my opinions on it.  Seems to me your unhappiness with unequal thread responses would be better justified if it were the same people responding and equivalent situations.  And without having read that thread, I can say car decision is going to have substantially more impact on the bottom line than a $200 coffee purchase, so I personally think it ought to be scrutinized more closely.  It's the big decisions that really affect the bottom line more than the little ones (which isn't to say that the little ones should be ignored).  And then given this is a mustachian forum, the people that should be chastised for their responses would be on the other thread, not this one as it seems like they are the ones straying from the MMM path!

(And the argument that people have their own issues is a bit of a bullshit red herring.  Just because others might be screwing up in other ways on the mustachian path doesn't mean that everyone gets a bye when they ask "should I do this?".)

Call it what you will, my point remains unchanged. Your argument reminds me of the adage "Don't let perfect be the enemy of good." Buying a new car is not the end of the financial world or proof of utter Mustachian failure for the OP. I was responding to his specific situation as presented, not "everyone".

See reference above.

I think you misunderstand a bit.  I was actually responding to your point that others weren't perfect and therefore impliedly shouldn't comment on his situation or their comments are less worthy of weight/consideration:

"It might cost you a little bit more than buying used or hanging on to the Eclipse, but I would bet that there are people who voted NO who pay more than your projected "loss" in Credit Card or Student Loan Debt. Hell, some folks might spend more than this on craft beers or wine"

My point was more that just because everyone here isn't perfect optimized, doesn't mean they aren't making valid arguments for his specific situation.  That's an ad hominem fallacy.

Dicey

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Re: URGENT LEASE QUESTION
« Reply #46 on: June 29, 2015, 11:15:34 PM »
Thanks for sharing your thoughts, CommonCents. It will be interesting to see if Millennialstache keeps us apprised of his decision.