Car Lease for parents

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clemrick
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Car Lease for parents

Post by clemrick » Sat Jun 09, 2018 2:36 pm

My parents are 93 and 86. They bought a Buick 20+ years ago as their "last car." However, they seem to be outliving the car. They both still drive well, but cautiously. Dad may be coming to the end of his driving in the next year.

A new car dealer near them is running a lease promotion, with the possibility that the monthly payment would be around $89/month. Between parents and children, we can pay the $2,999 due at signing. I assume we will also have licensing. Is there tax on car leases (Colorado)?

Is a car lease a good idea for them? I have always bought used and one new car and have never considered leasing because we drive 15,000+ miles a year. My parents won't come close to the 10,000 allowed in the lease.

What else should we consider? DH and I will probably co-sign to get the best deal for them and if they pass before the end of 3 years we could use the car.

Thanks.

denovo
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Re: Car Lease for parents

Post by denovo » Sat Jun 09, 2018 2:56 pm

Car leases are bad regardless of age.
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sport
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Re: Car Lease for parents

Post by sport » Sat Jun 09, 2018 3:11 pm

clemrick wrote:
Sat Jun 09, 2018 2:36 pm
if they pass before the end of 3 years we could use the car.
Since you have use for the car, they should just buy one, new or used according to their means.

ResearchMed
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Re: Car Lease for parents

Post by ResearchMed » Sat Jun 09, 2018 3:22 pm

sport wrote:
Sat Jun 09, 2018 3:11 pm
clemrick wrote:
Sat Jun 09, 2018 2:36 pm
if they pass before the end of 3 years we could use the car.
Since you have use for the car, they should just buy one, new or used according to their means.
This ^^

And even if you couldn't use the car, it would be so much easier to "just sell it", whenever they don't need it anymore.
If money is a bit tighter, what about a good CPO modest brand/model car with several years of full warranty?

We had a similar situation with MIL in her early 90's, and when she no longer needed the car (a very basic Corolla), it was very simple for DH to take the car to CarMax and walk out with money. (It was quick and easy, and the local car dealers weren't offering more anyway, as it turned out.)

In our case, we couldn't use the car, or it would have been perfect for us to "keep" her almost pristine car (although the distance would have been a bit of a problem).

RM
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Jablean
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Re: Car Lease for parents

Post by Jablean » Sat Jun 09, 2018 3:25 pm

What's wrong with the car, other than it's age? Drivers with slowed down reflexes should be in safe cars, that does not have to be equivalent to new cars, especially new cars these days with gadgets everywhere. Safe driving means knowing how to work things and where the dang windshield wiper control is at.

Check with car insurer, their insurance prices may go up. They will have to cover full insurance on leases including collision which they have probably dropped on their old car.

I'd buy them a decent safe used car similar to what they already own, just a bit newer. It can be put on loan for a good price and less down payment.

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dm200
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Re: Car Lease for parents

Post by dm200 » Sat Jun 09, 2018 3:26 pm

I agree that leases (for consumers) are a bad idea. In their case, I suspect they will not use the allowable miles for the term of the lease - yet another reason it is not good.

I might just help them find a good late model used car that fits their needs.

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dm200
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Re: Car Lease for parents

Post by dm200 » Sat Jun 09, 2018 3:27 pm

Keep in mind that you may need to "intervene" when/if one or both become unsafe drivers - BUT do not or will not give up the keys.

We know a woman - still driving (safely I believe) who just turned 100! Drives to the gym 3 mornings a week to participate in an exercise class.

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Toons
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Re: Car Lease for parents

Post by Toons » Sat Jun 09, 2018 4:28 pm

denovo wrote:
Sat Jun 09, 2018 2:56 pm
Car leases are bad regardless of age.
+1
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Alexa9
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Re: Car Lease for parents

Post by Alexa9 » Sat Jun 09, 2018 4:40 pm

Your parents are at about the too old to drive age honestly. I'd be looking at nursing homes, not a new car.

tim1999
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Re: Car Lease for parents

Post by tim1999 » Sat Jun 09, 2018 4:46 pm

Alexa9 wrote:
Sat Jun 09, 2018 4:40 pm
Your parents are at about the too old to drive age honestly. I'd be looking at nursing homes, not a new car.
Additionally, most drivers I've known at that age end up with a bunch of scratches and scrapes on their cars from bumping into things in parking lots, their garages, driveways etc. which would get costly when a leased car is turned in. Selling a car owned outright to a private party likely won't result in as much of a value deduction.

By the time the keys were taken away from her at around age 90, my grandma's Cadillac had only 30,000 miles on it but looked like it went through a war.

Probably more important than the car itself is that they have a simple working cell phone that they know how to use in case they get stuck on the side of the road with a problem. A brand new car can blow a tire and leave them stranded.

CurlyDave
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Re: Car Lease for parents

Post by CurlyDave » Sat Jun 09, 2018 6:42 pm

Leases are not always a bad deal.

We leased a car for our son when he went to college. We were willing to buy it at the end of the lease, and the payments were quite reasonable -- sort of like the promotion you are talking about.

BUT, the car turned out to be a lemon. A bad rear main seal that the local dealer gave him the run-around on fixing under warranty, since it would have been a very expensive repair. So, we gave them their lemon back at the end of the lease and walked away.

If you look at a lease as a way to do a very extended test drive of a car, a promotional rate lease can be a good thing.

* * * * * * * * * * * * * *

And, the flip side of just buying a car is that sometimes circumstances change. We once bought a new car for DW -- a nice Honda sedan that we were intending to keep essentially forever. Then 6 months later her hip went out and she ultimately needed a hip replacement. She could still drive, but she couldn't drive the Honda sedan because it was too low for her to get in and out without pain. So we had to sell the sedan and get an SUV. If you want to see financial pain, try trading in a 6 month old car...

I wish we had leased that one.

RickBoglehead
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Re: Car Lease for parents

Post by RickBoglehead » Sat Jun 09, 2018 6:57 pm

Deal smells bad. That price raises suspicion. I bet it is for a very long term.

TrustButVerifying
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Re: Car Lease for parents

Post by TrustButVerifying » Sun Jun 10, 2018 10:52 am

It seems to me that the most important thing to consider is that today’s cars are far safer than that 20 year old Buick. Does that Buick even have airbags? Current car technology like blind spot monitoring and lane departure warning will help keep you parents from causing an accident. Today’s cars are also better engineered to protect your parents from harm in case of an accident.

I leased our last car because car technology is advancing rapidly. I figure it won't be long until self driving cars are available. As I get older, I find that I need all of the driver aids that I can get. :happy

ncbill
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Re: Car Lease for parents

Post by ncbill » Sun Jun 10, 2018 4:08 pm

clemrick wrote:
Sat Jun 09, 2018 2:36 pm
My parents are 93 and 86. They bought a Buick 20+ years ago as their "last car." However, they seem to be outliving the car. They both still drive well, but cautiously. Dad may be coming to the end of his driving in the next year.

A new car dealer near them is running a lease promotion, with the possibility that the monthly payment would be around $89/month. Between parents and children, we can pay the $2,999 due at signing. I assume we will also have licensing. Is there tax on car leases (Colorado)?

Is a car lease a good idea for them? I have always bought used and one new car and have never considered leasing because we drive 15,000+ miles a year. My parents won't come close to the 10,000 allowed in the lease.

What else should we consider? DH and I will probably co-sign to get the best deal for them and if they pass before the end of 3 years we could use the car.

Thanks.
Keep the old car if at all possible - they're used to driving it, familiar with the controls and any quirks that particular model of Buick might have.

Mordoch
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Re: Car Lease for parents

Post by Mordoch » Sun Jun 10, 2018 4:51 pm

I will add my voice to being skeptical about leasing a car in this situation.

However the one other point I would emphasize is given their ages if you do buy a new car, I would consider autostop in particular absolutely mandatory. Basically in particular at their ages the odds of some sort of sudden medical condition suddenly disabling them when driving is high and an autostop option could make the difference between them being killed or killing someone else in an accident and everyone walking away unhurt or with minor injuries.

clemrick
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Re: Car Lease for parents

Post by clemrick » Mon Jun 11, 2018 12:04 am

Thank you, everyone. I had my doubts and wanted to make sure I didn't overlook why it might be a good idea. But since no one came up with any support, we will just drop it.

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djpeteski
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Re: Car Lease for parents

Post by djpeteski » Mon Jun 11, 2018 7:02 am

denovo wrote:
Sat Jun 09, 2018 2:56 pm
Car leases are bad regardless of age.
This is so true.

However, my mom leases and I think it is the right thing for her. She is the kind of a person, that would freak out, if she took 1,000 out of savings, but then replaced it with 1,100 worth of income over 6 months.

Her income is pension/ss based, so it arrives regularly with a predictable amount. She leases an economical car with no money down and a payment that is well within her budget. She enjoys taking the car for its free maintenance and visiting with others doing the same at the dealership.

It is the right thing for her although it is a bit inefficient.

Liberty1100
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Re: Car Lease for parents

Post by Liberty1100 » Mon Jun 11, 2018 7:18 am

In thinking about what car to get and if it should be a lease or not, think about how they will be transported once they stop driving. I have heard of stories that the modern SUVs and Trucks are tough for older folks with mobility issues to step up and twist to get in the passenger seats. It might be worth buying (selling will be super easy due to the low miles, wear, and tear).

260chrisb
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Re: Car Lease for parents

Post by 260chrisb » Mon Jun 11, 2018 7:40 am

Never lease a car! Ever. Have them buy a 10 year old Buick. At their age they will not be driving for long. Maybe a couple more years? In a couple years sell the car.

ncbill
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Re: Car Lease for parents

Post by ncbill » Mon Jun 11, 2018 8:23 am

djpeteski wrote:
Mon Jun 11, 2018 7:02 am
denovo wrote:
Sat Jun 09, 2018 2:56 pm
Car leases are bad regardless of age.
This is so true.

However, my mom leases and I think it is the right thing for her. She is the kind of a person, that would freak out, if she took 1,000 out of savings, but then replaced it with 1,100 worth of income over 6 months.

Her income is pension/ss based, so it arrives regularly with a predictable amount. She leases an economical car with no money down and a payment that is well within her budget. She enjoys taking the car for its free maintenance and visiting with others doing the same at the dealership.

It is the right thing for her although it is a bit inefficient.
Nothing wrong with a lease payment for those who prefer driving new vehicles, as long as it is a modest % of monthly income.

Especially if you're willing to lease what's on sale.

E.g. with the 2019 model coming soon my local Subaru dealer is advertising the base 2018 Outback for $249/month, $249 down.

Leesbro63
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Re: Car Lease for parents

Post by Leesbro63 » Mon Jun 11, 2018 8:55 am

One thing to consider: older drivers of “Detroit Iron” often don’t adjust well to “foreign cars”. You might stick with General Motors. Even after 20 years, a new one will be closer to what they are used to than anything else.

inbox788
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Re: Car Lease for parents

Post by inbox788 » Mon Jun 11, 2018 10:25 am

clemrick wrote:
Sat Jun 09, 2018 2:36 pm
A new car dealer near them is running a lease promotion, with the possibility that the monthly payment would be around $89/month. Between parents and children, we can pay the $2,999 due at signing. I assume we will also have licensing. Is there tax on car leases (Colorado)?
What car? On an Encore, it's not a good deal. On an Enclave, it might be.

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denovo
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Re: Car Lease for parents

Post by denovo » Mon Jun 11, 2018 10:51 am

djpeteski wrote:
Mon Jun 11, 2018 7:02 am
denovo wrote:
Sat Jun 09, 2018 2:56 pm
Car leases are bad regardless of age.
This is so true.

However, my mom leases and I think it is the right thing for her. She is the kind of a person, that would freak out, if she took 1,000 out of savings, but then replaced it with 1,100 worth of income over 6 months.

Her income is pension/ss based, so it arrives regularly with a predictable amount. She leases an economical car with no money down and a payment that is well within her budget. She enjoys taking the car for its free maintenance and visiting with others doing the same at the dealership.

It is the right thing for her although it is a bit inefficient.

You can do monthly payments with purchases.
"Don't trust everything you read on the Internet"- Abraham Lincoln

mountain-lion
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Re: Car Lease for parents

Post by mountain-lion » Mon Jun 11, 2018 12:06 pm

260chrisb wrote:
Mon Jun 11, 2018 7:40 am
Never lease a car! Ever.
denovo wrote:
Sat Jun 09, 2018 2:56 pm
Car leases are bad regardless of age.
If one has met one's more long-term financial goals, and yet still has both the income and desire to always drive a new car, then a lease is a perfectly reasonable way of doing that.

Yes, it is absolutely more expensive than driving a car for a long time. But you can't take it with you, and if you have enough money to meet your other financial goals, and fancy new cars are what you want to consume, then why in the world wouldn't you?

MDfan
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Re: Car Lease for parents

Post by MDfan » Mon Jun 11, 2018 12:17 pm

mountain-lion wrote:
Mon Jun 11, 2018 12:06 pm
260chrisb wrote:
Mon Jun 11, 2018 7:40 am
Never lease a car! Ever.
denovo wrote:
Sat Jun 09, 2018 2:56 pm
Car leases are bad regardless of age.
If one has met one's more long-term financial goals, and yet still has both the income and desire to always drive a new car, then a lease is a perfectly reasonable way of doing that.

Yes, it is absolutely more expensive than driving a car for a long time. But you can't take it with you, and if you have enough money to meet your other financial goals, and fancy new cars are what you want to consume, then why in the world wouldn't you?

We have leased three cars (two for college-aged kids who took over the lease and paid off the cars after graduation). I thoroughly compared leasing to buying each time, and talked to a couple of friends who work in auto finance, and there seemed to be very little difference in the long run, especially when the plan is to buy the car at the end of the lease. I obviously negotiated the price each time before even discussing the financing issue. The lease allowed us to have lower payments while kids were in school and worked out great.

I think the "never lease a car" people may be working on a somewhat outdated notion. It has worked out great for our situation.

mountain-lion
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Re: Car Lease for parents

Post by mountain-lion » Mon Jun 11, 2018 12:23 pm

MDfan wrote:
Mon Jun 11, 2018 12:17 pm
I think the "never lease a car" people may be working on a somewhat outdated notion. It has worked out great for our situation.
I'm guessing that they are coming from a "Cut automotive spending at all costs" world. Which is useful if you are in financial straights, or don't have a good situation with regard to your retirement, or even are just plain bad with money.

Which describes a lot of people, who indeed probably shouldn't lease, but that is far from everyone.

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djpeteski
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Re: Car Lease for parents

Post by djpeteski » Tue Jun 12, 2018 12:33 pm

denovo wrote:
Mon Jun 11, 2018 10:51 am
djpeteski wrote:
Mon Jun 11, 2018 7:02 am
You can do monthly payments with purchases.
I agree, but it is attractive to her for two reasons:

The first is that the payments are lower, she has more free cash flow.
The second is that she never has to worry about repair or maintenance. She gets to turn the car in prior to even the tires wearing out.

Would she better off taking some money out of her investments and paying cash, replacing her car every few years? You bet! However, it makes her uncomfortable, where she has no discomfort with the lease.

Like a lot of women her age she never really learned to handle money properly and has some pretty toxic views about money. Luckily she can easily afford the inefficiency.

If someone, in today's environment, had her attitude they could almost never retire. That person would only be comfortable living off of what SS provided, no matter what the size of their 401k.

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Alexa9
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Re: Car Lease for parents

Post by Alexa9 » Tue Jun 12, 2018 12:38 pm

If you look at the depreciation curve, it is ridiculous to lease a car for 3 years every 3 years. Worse is having to deal with car dealers so frequently. No offense to them but it is an awful experience. Roughly 3-10 years are the sweet spot of ownership. Pick up someone else's lease and let them take the hit if you're at all serious about saving money.

denovo
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Re: Car Lease for parents

Post by denovo » Tue Jun 12, 2018 1:12 pm

djpeteski wrote:
Tue Jun 12, 2018 12:33 pm
denovo wrote:
Mon Jun 11, 2018 10:51 am
djpeteski wrote:
Mon Jun 11, 2018 7:02 am
You can do monthly payments with purchases.
I agree, but it is attractive to her for two reasons:

The first is that the payments are lower, she has more free cash flow.
The second is that she never has to worry about repair or maintenance. She gets to turn the car in prior to even the tires wearing out.



The lower payment and cash flow is a financial fallacy, because with the lease you have a monthly obligation for the rest of your life or if you stop driving. Not the same if you purchase and keep a car for a decade. Re repair;maintenance, that's what sons like you are for. :happy
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ncbill
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Re: Car Lease for parents

Post by ncbill » Tue Jun 12, 2018 2:43 pm

djpeteski wrote:
Tue Jun 12, 2018 12:33 pm
denovo wrote:
Mon Jun 11, 2018 10:51 am
djpeteski wrote:
Mon Jun 11, 2018 7:02 am
You can do monthly payments with purchases.
I agree, but it is attractive to her for two reasons:

The first is that the payments are lower, she has more free cash flow.
The second is that she never has to worry about repair or maintenance. She gets to turn the car in prior to even the tires wearing out.

Would she better off taking some money out of her investments and paying cash, replacing her car every few years? You bet! However, it makes her uncomfortable, where she has no discomfort with the lease.

Like a lot of women her age she never really learned to handle money properly and has some pretty toxic views about money. Luckily she can easily afford the inefficiency.

If someone, in today's environment, had her attitude they could almost never retire. That person would only be comfortable living off of what SS provided, no matter what the size of their 401k.
Yup.

Leases are convenient if you want to drive new & not worry about out-of-warranty repairs.

Maintenance is minimal, sometimes included with the lease.

So transportation becomes just another fixed monthly expense...no surprise "lumpy" negative impact to cash flow or assets.

You should expect to pay a little more for the above...though there is always something "on sale" in the leasing world if you're flexible.

basspond
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Re: Car Lease for parents

Post by basspond » Tue Jun 12, 2018 3:43 pm

If they had a refrigerator that went out would you have them rent one since their days on earth are numbered? Buy one that is in their budget and get one with all the driver assist options.

mountain-lion
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Re: Car Lease for parents

Post by mountain-lion » Tue Jun 12, 2018 4:17 pm

basspond wrote:
Tue Jun 12, 2018 3:43 pm
If they had a refrigerator that went out would you have them rent one since their days on earth are numbered? Buy one that is in their budget and get one with all the driver assist options.
Refrigerators don't need regular maintenance the way cars do. Further, in the late state of these folks' lives, they may not need the entire life of the vehicle, therefore may not need to pay the entire depreciation cost of the vehicle immediately, at the expense of available cash, which they could use for something else which might be usable for more immediate gratification. And immediate gratification isn't such a bad thing if you don't have a huge amount of time left.

Leesbro63
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Re: Car Lease for parents

Post by Leesbro63 » Tue Jun 12, 2018 9:06 pm

In rethinking this, I'm not totally sure leasing is a bad choice here. First of all, ma and pa are used to driving a General Motors car. Assuming they get another one to be somewhat familiar and comfortable, these cars depreciate horrendously. The leases are usually subsidized. Due to their advanced age, it's very possible that neither will be driving at the end of 36 months. In fact, perhaps a set end date like that will be a good tool to convince one or both that it's time to stop driving. "Ya know folks, your lease is up soon. Maybe it's time that we turned the car in and we find another way for you to get around".

If they buy a car...say a Chevy Impala (the closest thing I can think of that's full sized "Detroit Iron" priced lower than Buick or Cadillac) and it has to be sold before 36 months pass, they'll probably still be out about as much as the net cost of a low mileage 36 month lease. I believe the refrigerator analogy in the post just above isn't applicable. Refrigerator replacement takes up a much small portion of the family budget and they generally don't require thinking about and maintenance like a car until they are much older. And at the end of 36 months, they're worth only a few hundred dollars as a used appliance and generally are given away with the property or to someone else. In other words, a new frig every 10-20 years is an incidental financial thing. A car is more than that, for most middle class Americans.

I understand the general reasons that leasing is more expensive and causes people to get stuck in the new car treadmill. But this might be an exceptional case where a $10,000 cost of a 3 year lease (my guess) on an Impala might make more sense than shelling out $30,000 and maybe or maybe not recouping enough of that later on. It's essentially truly renting a vehicle for a short-ish period of time, which is more or less what is needed in this situation.

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cheese_breath
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Re: Car Lease for parents

Post by cheese_breath » Tue Jun 12, 2018 9:36 pm

Alexa9 wrote:
Sat Jun 09, 2018 4:40 pm
Your parents are at about the too old to drive age honestly. I'd be looking at nursing homes, not a new car.
I spend 20+ hours per day with DW in her nursing home. Unless you plan to do the same you might as well take them out behind the barn and shoot them. It would be more merciful.
The surest way to know the future is when it becomes the past.

mouses
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Re: Car Lease for parents

Post by mouses » Wed Jun 13, 2018 2:52 am

Alexa9 wrote:
Sat Jun 09, 2018 4:40 pm
Your parents are at about the too old to drive age honestly. I'd be looking at nursing homes, not a new car.
Boo. Ageism. You have no idea what kind of driver the Mom is, nor even if she needs to go into a nursing home.

rakamaka
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Re: Car Lease for parents

Post by rakamaka » Wed Jun 13, 2018 7:55 am

Ugly: lease car
Bad: buy a new car
Good: buy 2-3 yr old used/CPO car

leasing a car is a financial transaction same as buying whole life insurance.

mountain-lion
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Re: Car Lease for parents

Post by mountain-lion » Wed Jun 13, 2018 10:41 am

rakamaka wrote:
Wed Jun 13, 2018 7:55 am
Ugly: lease car
Bad: buy a new car
Good: buy 2-3 yr old used/CPO car
Over the long term, leasing is almost always more expensive than buying. But it isn't always ugly--and the special circumstances in this case make leasing more attractive than many other situations.

This situation is a short-term situation. If one can reasonably expect to only need the car for threeish years, then leasing solves several problems, without many of the downsides that often come with it.

Remember: These folks won't be driving long enough to drive their car until the wheels fall off.

They could buy, and then in three years, sell; that may reduce the total amount they spend. But if they do a single payment lease, the difference will be relatively low. And there is a lot of hassle in buying and selling like that. A lease reduces that hassle, and that value may be worth it for some people (especially those who for whom negotiation is a pain).

And they won't tie up their cash in a car. Having the extra cash available may be useful. Remember, they are selling the car relatively soon after they buy it.
leasing a car is a financial transaction same as buying whole life insurance.
With all due respect, this is not true. The money it takes to own a car is a consumptive spending--and once you get past a Nissan Versa (~$13K), all of that extra is for more than just transportation, and have to be evaluated not just on utility, but on the pleasure, convenience, and utility it brings the spender.

Whole life insurance is not consumptive spending, and therefore doesn't fall into the same bucket.

If you are just starting out, have money problems, don't have good savings and aren't in a good place financially or whatever, then leasing is almost certainly not the best financial decision. But if you are in a good place financially, have a solid retirement nest-egg, and have otherwise met your financial goals, have discretionary money available to you, and like driving new cars, leasing is a reasonable choice.

Leesbro63
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Re: Car Lease for parents

Post by Leesbro63 » Wed Jun 13, 2018 11:28 am

Leasing is like taking a 5-6 year loan, with a “put” at 3 years. It’s not like whole life insurance vs term.

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