Car lease is up: buy it or get a new lease?

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deanmoriarty
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Car lease is up: buy it or get a new lease?

Post by deanmoriarty » Tue Oct 23, 2018 1:33 pm

Hi bogleheads,

Premise: I don't care at all about cars and I also don't know anything about cars, I'm not the person to shop around to get the best deal from a car mechanic, and I couldn't distinguish an engine from a clutch, so I can be taken for a ride quite easily, and I don't intend to improve on this side, my life is very full with meaningful activities and I want to keep it that way.

In January 2016, I went to a Honda dealer and leased a brand new 2016 Honda Civic, the cheapest option available (~$18,500). I got good financing (1% interest rate) and got away with a 36 month lease for $210/month for 36,000 miles total.

Fast forward 3 years later, I couldn't have been happier, I'm not a heavy car user and I'm at about 25,000 miles, and I've spent literally nothing with the car maintenance being new (maybe $200-$300 total between oil changes and some filter replacement). In the meantime, the money that I didn't spend buying the car upfront has been fully invested in the stock market, so I got some very nice return instead of being stuck in a car.

Now, my lease is up soon (January 2019), and I have the option to buy the car for a residual value of $13,000 (+ taxes). Am I correct in just wanting to buy it cash from the Honda financing company for $14,000 (including CA taxes) or should I look at the option of getting another lease?

Lease pros:

- Can keep the same low payment of ~200$/mo if I get another comparably cheap car like a basic Honda Civic (wouldn't do it otherwise), in other words it'd take 70 months of car leasing before having fully invested the $14,000 that I would otherwise spend immediately now
- Don't have to worry about big maintenance items coming up for my current car (new tires, more maintenance, etc.)
- Can keep stuff like gap insurance, which is included in the lease with Hondas
- I will keep the money invested in the stock market

Lease cons:

- I won't ever build equity in the car, unlike buying it outright which would allow me to sell it at a probably decent price at some point in the future
- I will have to keep comprehensive + collision insurance, which I would otherwise completely drop if I were to buy it
- I will not have the freedom to get rid of the car whenever I want

What would you do? Again, keep in mind that I don't care at all about cars, if it was more practical/convenient I would just Uber everywhere.

Also, my financial situation is pretty stable, I'm 32yo, income around $350,000 (but in high tech, so heavily dependent on the market trends) with an EF of 12 months living expenses and a portfolio of ~$1.1M (which includes all my assets, I happily rent and like not owning any physical asset, just gives me headaches).

Thanks!
Last edited by deanmoriarty on Tue Oct 23, 2018 1:41 pm, edited 1 time in total.

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wabbajack
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Re: Car lease is up: buy it or get a new lease?

Post by wabbajack » Tue Oct 23, 2018 1:38 pm

Keep leasing. You don't care about cars and don't want to learn how to fix one? Don't blame you - I wouldn't either if I never enjoyed driving them. The virtue of low monthly payments is that you're not just paying for the car - you're paying for the peace of mind that you will never *ever* have to worry about anything going wrong with the car.

I suspect many others will chime in and say you should buy it and keep it forever, but I suspect that you are the sort of person who doesn't want to deal with hassles of major maintenance items (60k, 100k, etc). Also I'm going to guess that you'd rather not go through the trouble of selling it in the future.

Keep leasing. I will be the first to tell you it's not the most financially efficient thing to do, but you are buying significant peace of mind.

UpperNwGuy
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Re: Car lease is up: buy it or get a new lease?

Post by UpperNwGuy » Tue Oct 23, 2018 1:42 pm

Keep leasing.

Jack FFR1846
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Re: Car lease is up: buy it or get a new lease?

Post by Jack FFR1846 » Tue Oct 23, 2018 1:44 pm

The first thing to know is that you can use the low miles to negotiate something for yourself. Perhaps to reduce the cost of a new lease. Those 11k unused miles ain't chump change. They're worth something. I think if nobody is willing to give you something worthwhile, buy the car. Plan to keep it only 2 years, then sell or trade it. You put very low miles on the car. If you plan to continue this, perhaps get a different lease package. I've seen "low mileage leases" advertised. Usually they're bait and switch or for exotic cars but I would think any car could be leased for 3 years, 24k miles unless the manufacturer is subsidizing a specific lease deal.
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Re: Car lease is up: buy it or get a new lease?

Post by bloom2708 » Tue Oct 23, 2018 1:46 pm

You sound like a "keep leasing" person.

The next 30k miles you will need to replace the tires, replace the front brake pads, get a new battery, do the 50k service items, etc.

Each of those require appointments, rides to/from work, selecting the price point of new items.

If you stick with another lease from Honda you might qualify for a customer loyalty type incentive.
"We are not here to please, but to provoke thoughtfulness." --Unknown Boglehead

deanmoriarty
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Re: Car lease is up: buy it or get a new lease?

Post by deanmoriarty » Tue Oct 23, 2018 1:47 pm

Jack FFR1846 wrote:
Tue Oct 23, 2018 1:44 pm
The first thing to know is that you can use the low miles to negotiate something for yourself. Perhaps to reduce the cost of a new lease. Those 11k unused miles ain't chump change. They're worth something. I think if nobody is willing to give you something worthwhile, buy the car. Plan to keep it only 2 years, then sell or trade it. You put very low miles on the car. If you plan to continue this, perhaps get a different lease package. I've seen "low mileage leases" advertised. Usually they're bait and switch or for exotic cars but I would think any car could be leased for 3 years, 24k miles unless the manufacturer is subsidizing a specific lease deal.
Good point. I certainly plan on negotiating some value for those miles when I go back to the dealer. I have proof with kbb.com that my current car has a higher value than the residual (+~$1,000 trade in, +~$3,000 sell to private party) and I'll let the dealer know that I can buy it at any time if they make me angry :twisted: .
Last edited by deanmoriarty on Tue Oct 23, 2018 1:49 pm, edited 1 time in total.

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White Coat Investor
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Re: Car lease is up: buy it or get a new lease?

Post by White Coat Investor » Tue Oct 23, 2018 1:49 pm

deanmoriarty wrote:
Tue Oct 23, 2018 1:33 pm
Hi bogleheads,

Premise: I don't care at all about cars and I also don't know anything about cars, I'm not the person to shop around to get the best deal from a car mechanic, and I couldn't distinguish an engine from a clutch, so I can be taken for a ride quite easily, and I don't intend to improve on this side, my life is very full with meaningful activities and I want to keep it that way.

In January 2016, I went to a Honda dealer and leased a brand new 2016 Honda Civic, the cheapest option available (~$18,500). I got good financing (1% interest rate) and got away with a 36 month lease for $210/month for 36,000 miles total.

Fast forward 3 years later, I couldn't have been happier, I'm not a heavy car user and I'm at about 25,000 miles, and I've spent literally nothing with the car maintenance being new (maybe $200-$300 total between oil changes and some filter replacement). In the meantime, the money that I didn't spend buying the car upfront has been fully invested in the stock market, so I got some very nice return instead of being stuck in a car.

Now, my lease is up soon (January 2019), and I have the option to buy the car for a residual value of $13,000 (+ taxes). Am I correct in just wanting to buy it cash from the Honda financing company for $14,000 (including CA taxes) or should I look at the option of getting another lease?

Lease pros:

- Can keep the same low payment of ~200$/mo if I get another comparably cheap car like a basic Honda Civic (wouldn't do it otherwise), in other words it'd take 70 months of car leasing before having fully invested the $14,000 that I would otherwise spend immediately now
- Don't have to worry about big maintenance items coming up for my current car (new tires, more maintenance, etc.)
- Can keep stuff like gap insurance, which is included in the lease with Hondas
- I will keep the money invested in the stock market

Lease cons:

- I won't ever build equity in the car, unlike buying it outright which would allow me to sell it at a probably decent price at some point in the future
- I will have to keep comprehensive + collision insurance, which I would otherwise completely drop if I were to buy it
- I will not have the freedom to get rid of the car whenever I want

What would you do? Again, keep in mind that I don't care at all about cars, if it was more practical/convenient I would just Uber everywhere.

Also, my financial situation is pretty stable, I'm 32yo, income around $350,000 (but in high tech, so heavily dependent on the market trends) with an EF of 12 months living expenses and a portfolio of ~$1.1M (which includes all my assets, I happily rent and like not owning any physical asset, just gives me headaches).

Thanks!
You can certainly afford to lease a Civic on your income without having to worry about whether it is a smart financial move or not. Feel free to get another one.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

RickBoglehead
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Re: Car lease is up: buy it or get a new lease?

Post by RickBoglehead » Tue Oct 23, 2018 1:55 pm

I just leased my first car, because if I lease it for 3 years and then buy it, I will have spent several thousand dollars less than if I bought it outright to begin with due to the huge incentives leasing had.

If your car is worth more (private sale) than the residual, you could simply buy it and sell it, unless a new lease from Honda would have huge incentives not to do that (unlikely).

But the reality is that with such low mileage, there is absolutely no reason to not keep the car for another 3 years at least. Very low mileage, excellent condition. Buy it and be done with it.

I don't agree with two of your lease cons:

2) You would drop both comprehensive and collision on a 2016? You're crazy.

3) You would not have the freedom to get rid of the car whenever you want - sure you would. Put it up for sale, get an offer, pay off the lease, take the buyer's cash, and done.

deanmoriarty
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Re: Car lease is up: buy it or get a new lease?

Post by deanmoriarty » Tue Oct 23, 2018 2:02 pm

RickBoglehead wrote:
Tue Oct 23, 2018 1:55 pm
I don't agree with two of your lease cons:

2) You would drop both comprehensive and collision on a 2016? You're crazy.
Thank you for your suggestion. Can you explain a bit more your reasoning about comprehensive and collision? Dropping them would mean insurance savings of ~$400/year. Why do I have to spend that much every year? It's not like I'd use it freely anyway due to the high deductible (I currently already have a $1,500 deductible) and the fact that the premium would just go up if I use it.

Realistically, I'd file a claim just if/when something hits the ~$5,000 damage or above, so I'm really paying $400 a year to protect against a damage in the $5,000-$13,000 range. Do I really need to do that? I could instead convert those $400 towards a higher umbrella policy, which would seem a better use for my money.

Paying out of pocket for a $13,000 emergency would overall be a relatively small drop in the bucket considering my other assets, so I'm tempted to just take my chances.

I must admit, I have never been a fan of paying even $1 for insuring against something that cannot ruin me in the worst case.

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Re: Car lease is up: buy it or get a new lease?

Post by RickBoglehead » Tue Oct 23, 2018 2:22 pm

deanmoriarty wrote:
Tue Oct 23, 2018 2:02 pm
RickBoglehead wrote:
Tue Oct 23, 2018 1:55 pm
I don't agree with two of your lease cons:

2) You would drop both comprehensive and collision on a 2016? You're crazy.
Thank you for your suggestion. Can you explain a bit more your reasoning about comprehensive and collision? Dropping them would mean insurance savings of ~$400/year. Why do I have to spend that much every year? It's not like I'd use it freely anyway due to the high deductible (I currently already have a $1,500 deductible) and the fact that the premium would just go up if I use it.

Realistically, I'd file a claim just if/when something hits the ~$5,000 damage or above, so I'm really paying $400 a year to protect against a damage in the $5,000-$13,000 range. Do I really need to do that? I could instead convert those $400 towards a higher umbrella policy, which would seem a better use for my money.

Paying out of pocket for a $13,000 emergency would overall be a relatively small drop in the bucket considering my other assets, so I'm tempted to just take my chances.

I must admit, I have never been a fan of paying even $1 for insuring against something that cannot ruin me in the worst case.
If you don't mind being out $13,000, then drop it. Me, I wouldn't want to lose that. Paying $400 x 3 (3 more years) vs. losing $13,000 of value is an easy decision for me.

deanmoriarty
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Re: Car lease is up: buy it or get a new lease?

Post by deanmoriarty » Tue Oct 23, 2018 2:47 pm

RickBoglehead wrote:
Tue Oct 23, 2018 2:22 pm
deanmoriarty wrote:
Tue Oct 23, 2018 2:02 pm
RickBoglehead wrote:
Tue Oct 23, 2018 1:55 pm
I don't agree with two of your lease cons:

2) You would drop both comprehensive and collision on a 2016? You're crazy.
Thank you for your suggestion. Can you explain a bit more your reasoning about comprehensive and collision? Dropping them would mean insurance savings of ~$400/year. Why do I have to spend that much every year? It's not like I'd use it freely anyway due to the high deductible (I currently already have a $1,500 deductible) and the fact that the premium would just go up if I use it.

Realistically, I'd file a claim just if/when something hits the ~$5,000 damage or above, so I'm really paying $400 a year to protect against a damage in the $5,000-$13,000 range. Do I really need to do that? I could instead convert those $400 towards a higher umbrella policy, which would seem a better use for my money.

Paying out of pocket for a $13,000 emergency would overall be a relatively small drop in the bucket considering my other assets, so I'm tempted to just take my chances.

I must admit, I have never been a fan of paying even $1 for insuring against something that cannot ruin me in the worst case.
If you don't mind being out $13,000, then drop it. Me, I wouldn't want to lose that. Paying $400 x 3 (3 more years) vs. losing $13,000 of value is an easy decision for me.
I guess my point is that it's not such an obvious choice as you state it. If one is cautious, paying for collision and comprehensive is not necessarily a no-brainer choice: if you consider the opportunity cost of a lifetime of $400/year payments that would otherwise be invested and compound in the market, at the end of a 30-40 years period you could have self insured yourself and probably paid out of pocket those very few times you really needed it, still coming out ahead with a very good probability (in 16 years of current driving history, I never filed an insurance claim even once).

In particular, I'm not only counting 3 years, since I'm assuming that for me all the cars that I will ever own will have a residual value of > $10,000 at any given time, so it wouldn't make sense to drop it after some point and that's more a life-long decision.

Insurances are not in the business of giving you free money and they bank on collectively "tricking" customers when it comes to the specific ratio of premium cost and probability of a claim, at least that's my not-too-informed opinion. If they truly priced the premium to make it actually cheaper for you to pay their premium rather than self insure, they would simply go out of business (and that's why they are known to drop customers after they file too many claims, because the customer is "getting ahead" vs them), so everything is calibrated towards you paying a higher premium than if you were self insuring over a long period of time, so for stuff that doesn't ruin you that's not necessarily the smartest idea.

Obviously things completely change for incidents that could dramatically affect my net worth (e.g. umbrella, home insurance, car liability insurance) so insurance there is more of a necessary evil, but I would certainly appreciate some additional data that would make me change my perspective.

Thegame14
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Re: Car lease is up: buy it or get a new lease?

Post by Thegame14 » Tue Oct 23, 2018 3:05 pm

with your income and your mentality, I would keep leasing, it is a drop in the bucket to your income, for your to have piece of mind of not worrying about a small expense vs your very very very high earnings.

RickBoglehead
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Re: Car lease is up: buy it or get a new lease?

Post by RickBoglehead » Tue Oct 23, 2018 3:06 pm

Being cautious has no relevance when a driver is texting and t-bones you. And then sues you because you "drove in front of me".

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Re: Car lease is up: buy it or get a new lease?

Post by monkey_business » Tue Oct 23, 2018 3:07 pm

You can certainly easily afford a new Civic lease. I would only point out that the reason is a bit silly. Tires, batteries, and brakes, are not "major maintenance" items. They last a relatively long time and are trivial and cheap (compared to leasing a new car) to replace.

Battery - quick visit to a place like AutoZone that will install a new one for free. Cost of a battery is ~$120.
Brakes - should last for many years, if not, next time you go for an oil change, have them replace then. Cost about $200 per axle and usually only ones go bad at a time.
Tires - 1 hour appointment with a tire shop. Depending on tires, $400-700. Should last 4+ years.

Other items on a new Civic would be transmission fluid change and brake fluid flush, and air filters. Again, every 3-4 years, and about $120 each. Get them done while servicing the car. Air filters are trivial and cheap to replace as well.

I get not keeping a car for a long time in order to avoid actual repairs, so for example getting rid of it before 10 years or 100,000 miles. But worrying about maintenance expenses when the car is 3 years old seems odd.

deanmoriarty
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Re: Car lease is up: buy it or get a new lease?

Post by deanmoriarty » Tue Oct 23, 2018 3:10 pm

RickBoglehead wrote:
Tue Oct 23, 2018 3:06 pm
Being cautious has no relevance when a driver is texting and t-bones you. And then sues you because you "drove in front of me".
If a driver sues me, how would a collision insurance help me exactly? I'm not being snarky, genuinely asking, since that might change my mind if it offers additional protection against a terrible event such as a driver suing me on top of what a traditional liability + umbrella would cover.

If it's just for the damage to my car and the unlikely event that the other driver's insurance wouldn't pay me even after I involve the cops, we already established I don't care about that: I'm stating that with my profile the cumulative damages to my car caused by the people who will t-bone me and not pay, over my life time, will be statistically lower than a $400/y inflation-adjusted stream of payments, so I self insure. And if I'm wrong (in other words, if I'm something insurances would call "anomaly"), the difference will likely be minimal and barely affect my net worth.

Thanks

niceguy7376
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Re: Car lease is up: buy it or get a new lease?

Post by niceguy7376 » Tue Oct 23, 2018 3:33 pm

OP,
Do you have umbrella insurance since you have significant assets?

If you do, did you check if they will provide the same coverage if you cancel collission and comprehensive?

psteinx
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Re: Car lease is up: buy it or get a new lease?

Post by psteinx » Tue Oct 23, 2018 3:58 pm

OP, you make ~$350K/year, and are spending ~$2.5K/year on your current lease. Assuming you stay in the same ballpark, vehicle-wise, the lease/buy decision won't have a particularly significant impact on your finances either way.

Yeah, you could probably lower that ~$2.5K/year by buying a car - perhaps your current lease, and maybe save a bit more on insurance too. But the costs don't go to zero (there's still the time value of money), and if you keep the car longer - 6, 10, 15+ years, then the depreciation will get progressively smaller, but maintenance will increase. Maintenance is not just a burden, dollar-wise. It has a time cost.

Contrary to what one poster up-thread suggested, my experience is that getting cars into dealers or other places for service is not fast and easy. There's time to make an appointment, time to drive to the facility, time either waiting there (for something that often takes longer than expected), or to arrange a loaner vehicle or ride(s) away from and back to the facility. Your time and inconvenience has a cost, higher for you perhaps than a retiree or the like.

All that said, if you WERE going in for a new vehicle, consider one with more of the latest safety gear. The completely base Civics of 2016 did not have it, I think, unless you went with an available, not very expensive upgrade.

deanmoriarty
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Re: Car lease is up: buy it or get a new lease?

Post by deanmoriarty » Tue Oct 23, 2018 4:02 pm

niceguy7376 wrote:
Tue Oct 23, 2018 3:33 pm
OP,
Do you have umbrella insurance since you have significant assets?

If you do, did you check if they will provide the same coverage if you cancel collission and comprehensive?
Very good point, I haven't checked since I still have collision and comprehensive due to my lease contract not having expired yet. If it wasn't possible for me to have the Umbrella without those, that would certainly be a deal breaker and I would keep them. I'll make sure to call Geico before turning them off.

Thanks

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Re: Car lease is up: buy it or get a new lease?

Post by inbox788 » Tue Oct 23, 2018 6:07 pm

monkey_business wrote:
Tue Oct 23, 2018 3:07 pm
You can certainly easily afford a new Civic lease. I would only point out that the reason is a bit silly. Tires, batteries, and brakes, are not "major maintenance" items. They last a relatively long time and are trivial and cheap (compared to leasing a new car) to replace.

Battery - quick visit to a place like AutoZone that will install a new one for free. Cost of a battery is ~$120.
Brakes - should last for many years, if not, next time you go for an oil change, have them replace then. Cost about $200 per axle and usually only ones go bad at a time.
Tires - 1 hour appointment with a tire shop. Depending on tires, $400-700. Should last 4+ years.

Other items on a new Civic would be transmission fluid change and brake fluid flush, and air filters. Again, every 3-4 years, and about $120 each. Get them done while servicing the car. Air filters are trivial and cheap to replace as well.

I get not keeping a car for a long time in order to avoid actual repairs, so for example getting rid of it before 10 years or 100,000 miles. But worrying about maintenance expenses when the car is 3 years old seems odd.
https://www.youtube.com/watch?v=uuEbJv03J1I
https://www.youtube.com/watch?v=yD6nh9GO_KQ

OP, you probably overpaid for those oil changes and got ripped off with the air filters, especially if they were done at the dealership. DIY the air filter and find an independent mechanic for routine maintenance. You only drive 20k some in 3 years. If half of those are highway, your brakes won't need to be done for another 5 years. On a new car, I had my first brakes replaced at 60k+ (one of the fronts was making a little noise at the wear sensor; the rears had 4mm+, but I changed them anyway so they're done -- might have gone to 100k if pushed).

Tires on a new car are another story, the manufacturers go cheap so they're not going to last as long as the replacements. The time it takes you to do major service (again, find independent mechanic though references/yelp and avoid dealer) and new tires isn't going to be that different from returning the car and negotiating another deal. The costs involved will be day/night. IMO, you don't drive enough miles to serially lease. Optimal mileage to lease is 36-45k every 3 years. Cars these days should have no trouble reaching 60-100k miles, which in your case is 3-5 leases. Folks who drive too little or too many miles are better off purchasing IMO.

You've got the latest 10th generation Civic design, right? Barely any changes since then if you get a 2019. If you're upgrading features (different car, safety, etc.) then it's a good time to switch, but it will cost you more.

deanmoriarty
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Re: Car lease is up: buy it or get a new lease?

Post by deanmoriarty » Tue Oct 23, 2018 8:20 pm

inbox788 wrote:
Tue Oct 23, 2018 6:07 pm
https://www.youtube.com/watch?v=uuEbJv03J1I
https://www.youtube.com/watch?v=yD6nh9GO_KQ

OP, you probably overpaid for those oil changes and got ripped off with the air filters, especially if they were done at the dealership. DIY the air filter and find an independent mechanic for routine maintenance. You only drive 20k some in 3 years. If half of those are highway, your brakes won't need to be done for another 5 years. On a new car, I had my first brakes replaced at 60k+ (one of the fronts was making a little noise at the wear sensor; the rears had 4mm+, but I changed them anyway so they're done -- might have gone to 100k if pushed).
Thank you very much but, as said in the original post, DIY is really not my thing. Even if it's easy to do in practice, I don't want to fill my head with procedures I couldn't care anything about... I consider having near-zero maintenance taken care of a "luxury" that I like to splurge on :-)

inbox788
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Re: Car lease is up: buy it or get a new lease?

Post by inbox788 » Tue Oct 23, 2018 8:37 pm

deanmoriarty wrote:
Tue Oct 23, 2018 8:20 pm
inbox788 wrote:
Tue Oct 23, 2018 6:07 pm
https://www.youtube.com/watch?v=uuEbJv03J1I
https://www.youtube.com/watch?v=yD6nh9GO_KQ

OP, you probably overpaid for those oil changes and got ripped off with the air filters, especially if they were done at the dealership. DIY the air filter and find an independent mechanic for routine maintenance. You only drive 20k some in 3 years. If half of those are highway, your brakes won't need to be done for another 5 years. On a new car, I had my first brakes replaced at 60k+ (one of the fronts was making a little noise at the wear sensor; the rears had 4mm+, but I changed them anyway so they're done -- might have gone to 100k if pushed).
Thank you very much but, as said in the original post, DIY is really not my thing. Even if it's easy to do in practice, I don't want to fill my head with procedures I couldn't care anything about... I consider having near-zero maintenance taken care of a "luxury" that I like to splurge on :-)
Then an independent mechanic can still change the filter for you and likely will charge you far less than the dealer. Just make sure whoever is doing it isn't trying to charge your $100+ for doing something that takes about a minute. Anyway, if you want to splurge, and let the dealer charge your what they're asking, it's your money.

Your car is worth $1000 more than the residual, and with the low mileage, add another $1000. The dealer will gladly take that off your hands and make some more money on the new car you lease (and easily making another $2000 selling your used car for $17k). If you go the re-lease route, let us know what kind of deal you're able to strike up.

https://www.carmax.com/car/16533891

You might benefit from using a car broker or Honker for your next vehicle.

BTW, I wondered how much Uber would cost per mile and one site said about $1, so that's $25000 or around $8k/year, which is much more than leasing or purchasing, maybe about double. Cost per mile for older cars go down with depreciation, which still is a major cost for newer used cars and maintanance/repairs aren't usually an issue yet.

ClaycordJCA
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Re: Car lease is up: buy it or get a new lease?

Post by ClaycordJCA » Tue Oct 23, 2018 11:16 pm

Don’t the lease terms require dealer servicing of the vehicle? If so, independent mechanic for service is not an option.

Nissanzx1
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Re: Car lease is up: buy it or get a new lease?

Post by Nissanzx1 » Tue Oct 23, 2018 11:31 pm

With your income and net worth I honestly find it silly to make any car payment at all on a vehicle. You can make enough money for a new civic in like a week and a half.

Long term it's not the smartest to rent. Look at owning your residence some day. Lowers overall cash flow costs and you will still have the value of the asset to calculate in your net worth.

Just buy a new one every 4 years and swipe it on your credit card for reward points ;)

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Re: Car lease is up: buy it or get a new lease?

Post by lazydavid » Wed Oct 24, 2018 10:28 am

Given your low mileage and general disinterest in cars, I would be inclined to buy your current Civic at the end of the lease, and trade it in on a new one--leased or purchased--whenever you feel like it. That could be at the same time or years later.

Aside from the loss you'd take on turning in your current one (due to the low mileage), there's also not much to argue against leasing again. Obviously there's tons of middle ground, but taking your ~70 payment break-even, here are the outcomes 6 years from now:

1. You don't own a car, but the average age of the cars you've been driving for the past 6 years is 1.5 years, covered under warranty 100% of the time. You haven't paid for anything but basic maintenance.
2. You own a 9-year old car worth about $6k, but have been paying out-of-pocket for all maintenance and repairs for 6 years, which reduces the net payback somewhat. The average age of the car you've been driving for the past 6 years is 6 years, and out of warranty 100% of the time.

In your situation, I would take option 1 all day long and twice on Sunday. You're essentially paying an extra $1k/year ($1.4k including insurance) to eliminate all repair and most maintenance expenses, while driving a substantially newer car and investing a portion of the purchase price for a while.

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Re: Car lease is up: buy it or get a new lease?

Post by DiMAn0684 » Wed Oct 24, 2018 10:39 am

ClaycordJCA wrote:
Tue Oct 23, 2018 11:16 pm
Don’t the lease terms require dealer servicing of the vehicle? If so, independent mechanic for service is not an option.
Don't think so, looked at a bunch of 2-3 yr old lease returns when I was car shopping, and most didn't show dealer maintenance on CarFax reports.

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Re: Car lease is up: buy it or get a new lease?

Post by Dottie57 » Wed Oct 24, 2018 11:04 am

deanmoriarty wrote:
Tue Oct 23, 2018 8:20 pm
inbox788 wrote:
Tue Oct 23, 2018 6:07 pm
https://www.youtube.com/watch?v=uuEbJv03J1I
https://www.youtube.com/watch?v=yD6nh9GO_KQ

OP, you probably overpaid for those oil changes and got ripped off with the air filters, especially if they were done at the dealership. DIY the air filter and find an independent mechanic for routine maintenance. You only drive 20k some in 3 years. If half of those are highway, your brakes won't need to be done for another 5 years. On a new car, I had my first brakes replaced at 60k+ (one of the fronts was making a little noise at the wear sensor; the rears had 4mm+, but I changed them anyway so they're done -- might have gone to 100k if pushed).
Thank you very much but, as said in the original post, DIY is really not my thing. Even if it's easy to do in practice, I don't want to fill my head with procedures I couldn't care anything about... I consider having near-zero maintenance taken care of a "luxury" that I like to splurge on :-)
I do the same. My dealership is a mile away. I’ve had few significant problems. No problems with repairs that were made.

P.S. someday try a Toyota Corolla.

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Re: Car lease is up: buy it or get a new lease?

Post by BolderBoy » Wed Oct 24, 2018 11:23 am

deanmoriarty wrote:
Tue Oct 23, 2018 1:33 pm
What would you do? Again, keep in mind that I don't care at all about cars, if it was more practical/convenient I would just Uber everywhere.
I'm trying to figure out whether your, "I don't care about cars", position includes, "I don't care about driving a new car vs an old car, just want a reliable car"?

If you are only concerned with relative reliability, then clearly - buy this auto and drive it until it is no longer reliable, then BUY a new one, repeat. You can have auto shops deal with the maintenance and repair issues along the way. If ABSOLUTE reliability is the issue (you never want to visit a repair shop), then continued leasing of NEW, in-warranty autos is your only and best solution.

Leasing is usually wasting money for the leasee but you can certainly afford the convenience cost of having a leased auto.
"Never underestimate one's capacity to overestimate one's abilities" - The Dunning-Kruger Effect

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Re: Car lease is up: buy it or get a new lease?

Post by DiMAn0684 » Wed Oct 24, 2018 11:34 am

BolderBoy wrote:
Wed Oct 24, 2018 11:23 am
Leasing is usually wasting money for the leasee but you can certainly afford the convenience cost of having a leased auto.
It's not the most efficient way of having a car, but I'd not call it a waste. Financially, buying that Civic and driving it for a few more years would probably make the most sense, but it's really up to OP to decide whether the savings (I'd estimate ~$1000/yr) are worth the effort.

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Re: Car lease is up: buy it or get a new lease?

Post by b42 » Wed Oct 24, 2018 12:25 pm

I have a 2017 Civic EX w/ Sensing lease, and my thinking is similar. For about $10k, I can essentially rent a new car for 3 years with a warranty. I get two free oil changes, so my only expenses should be the yearly inspection and an extra one or two oil changes (currently drive about 10k miles a year).

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Re: Car lease is up: buy it or get a new lease?

Post by wabbajack » Wed Oct 24, 2018 1:52 pm

Nissanzx1 wrote:
Tue Oct 23, 2018 11:31 pm
With your income and net worth I honestly find it silly to make any car payment at all on a vehicle. You can make enough money for a new civic in like a week and a half.

Long term it's not the smartest to rent. Look at owning your residence some day. Lowers overall cash flow costs and you will still have the value of the asset to calculate in your net worth.

Just buy a new one every 4 years and swipe it on your credit card for reward points ;)
With his income and net worth, I find the complete opposite. Leasing costs more than owning in strictly dollar terms, but by a trivial amount.

I also recommend against owning your residence unless you have kids and schools matter to you. Staying flexible to move with career opportunities (OP is 32yo) and doesn't have dependents AFAIK.

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Re: Car lease is up: buy it or get a new lease?

Post by deanmoriarty » Wed Oct 24, 2018 1:58 pm

wabbajack wrote:
Wed Oct 24, 2018 1:52 pm
Nissanzx1 wrote:
Tue Oct 23, 2018 11:31 pm
With your income and net worth I honestly find it silly to make any car payment at all on a vehicle. You can make enough money for a new civic in like a week and a half.

Long term it's not the smartest to rent. Look at owning your residence some day. Lowers overall cash flow costs and you will still have the value of the asset to calculate in your net worth.

Just buy a new one every 4 years and swipe it on your credit card for reward points ;)
With his income and net worth, I find the complete opposite. Leasing costs more than owning in strictly dollar terms, but by a trivial amount.

I also recommend against owning your residence unless you have kids and schools matter to you. Staying flexible to move with career opportunities (OP is 32yo) and doesn't have dependents AFAIK.
Yeah, I'm not going to lock myself into buying an expensive house and then finding out that in a couple years I have to take another job opportunity 30 miles away, which in the Bay Area can correspond to 2+ hours of traffic, or out of state. I happily rent a one bedroom apartment very close to work, which allows me to put a lot of hours into work that would otherwise be wasted commuting. Part of the reason why I've been able to get a reasonable compensation is because of this, and because I change if I find a good opportunity, there's no house locking me to a particular area.

Plus, I am completely "domestically challenged" (just like with car maintenance), I love submitting a ticket to my apartment complex and getting my AC/fridge/toilet fixed without me having to learn house maintenance items that I couldn't care less about. If I had a house, I would have to be charged $200+ an hour by plumbers/electricians/... since I am not willing to put in the time to learn how to fix those things myself, not worth it.

Also, me and my girlfriend don't plan on ever having kids, and we both have some loose plans to retire in mediterranean Europe not too far in the future as soon as we finish "milking the bay area opportunities" (we're both immigrants from that area so we're familiar with the lifestyle).

Thanks

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Re: Car lease is up: buy it or get a new lease?

Post by rj49 » Wed Oct 24, 2018 2:33 pm

I'm in the same lease situation, with my first lease on a Corolla expiring in two months. I thought of buying, but then it's gotten a few scratches and fabric stains and I'm not in love with the car (especially with a redesigned model coming out in 2020). I also hate auto hassles and haggling, but fortunately there are good lease deals that make it easier to deal with (particularly since the rush from sedans to SUVs, higher interest rates, and the reported end of the post-recession car frenzy has ended). I also found the buying process easier by hanging out in the dealer repair department and waiting for a female who wasn't aggressively pursuing customers, instead of getting hooked by the male shark salesmen, and then I turned down all the add-ons they use to try to inflate the lease.

The key to why you and I should lease is that we look for simple but reliable cars without the demands of repair. I also like the idea of simply trying a new car every 3 years, especially with new features and hybrid/electric technology. When leases don't make sense is when you have poor credit so don't get the teaser deals, and when your aspirational desires lead you to lease something you can't buy. Or if you're like many Americans and rush to buy some $40,000 SUV (and then trade it in after a few years for something even bigger and costlier).

In the past I've bought sub-$20k cars and held them for 10 years or so, but now I'd rather spend my remaining years with some variety and fewer hassles in my driving life, so I'd rather pay $200 or so a month for a lease. I also drive for Uber and Lyft and can earn that money back in a few days of work (having a newer, cleaner car also impresses riders and adds to my ratings). If I were earning $350k, $200 a month is a drop in the bucket, and I think for a tech industry worker a new-looking Honda or other car makes a better impression than an aging car or a show-off Tesla or sports car.

As for insurance, it's not just the value of the car you're insuring, but protection for your wealth if you hit someone and get sued (especially if you have substantial investments lawyers could go after). I've had many near-collisions with young bicyclists and skateboarders who don't use lights at night or ride sensibly, and I'd rather not be sued by their family if I accidentally hit someone. Insurance also usually includes some sort of towing/emergency service, handy if you're not handy with car maintenance or changing tires. You can also get medical coverage for yourself if you're in a serious accident, as well as lost wages, so like the lease price, is relatively insignificant compared to the benefits for a high-wage earner.

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Re: Car lease is up: buy it or get a new lease?

Post by Whew-Only10MoreYears » Thu Oct 25, 2018 1:47 pm

I can unequivocally say that you have to have auto insurance if you have an umbrella policy. We had to increase our limits on our auto insurance when we got an umbrella policy. When I queried my insurance industry expert (who I happen to be married to) as to why she told me an umbrella is a cap that sits on top of your other insurance and is only used once the lower coverages are exhausted. They she started taking about subrogation and 1st insured - yada-yada-yada and I stopped listening :D

Back in 2016 I was hit on the freeway in my 3 month old Explorer at an estimated 60-70mph by a man who was texting. Thankfully I was uninjured but the car was a complete mess. After 2 months of (insurance co paid) loaner cars and a cost to my insurance company of over $25,000 I got my car back!! Since it was only 3 months old (and below some magical percentage of replacement value) they decided not to total it. It was a company lease car but just imagine paying $25,000 out of pocket for a virtually un-saleable vehicle. That's what insurance is for.

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Re: Car lease is up: buy it or get a new lease?

Post by astondb4gtz » Thu Oct 25, 2018 2:00 pm

Good advice on leasing at:

https://forum.leasehackr.com/

No affiliation, just have gotten good info from there.

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Re: Car lease is up: buy it or get a new lease?

Post by JackoC » Thu Oct 25, 2018 2:20 pm

RickBoglehead wrote:
Tue Oct 23, 2018 2:22 pm
deanmoriarty wrote:
Tue Oct 23, 2018 2:02 pm
RickBoglehead wrote:
Tue Oct 23, 2018 1:55 pm
I don't agree with two of your lease cons:

2) You would drop both comprehensive and collision on a 2016? You're crazy.
Paying out of pocket for a $13,000 emergency would overall be a relatively small drop in the bucket considering my other assets, so I'm tempted to just take my chances.
If you don't mind being out $13,000, then drop it. Me, I wouldn't want to lose that. Paying $400 x 3 (3 more years) vs. losing $13,000 of value is an easy decision for me.
Virtually everyone 'minds' losing $13k. But you have to pay more than the expected value, $13k*probability, or else the ins co couldn't cover costs and make a profit*, to avoid it. The question ought be 'can you pretty easily *stand* to lose $13k'? Which realistically has two components. Do you have the financial resources to absorb a $13k loss without much effect?, and will it really bum you out if that happens even if you can afford it?

I admit I don't drop collision on cars soon enough because of the second consideration. A uninsured totaling the day after I bought it of any car I'd actually buy would be much less financial punishment than I took in yesterday's 3% stock market sell off. But an uninsured car loss would bug me more per $. I write this out partly to remind myself I really should drop collision on my 2015. :D

I admit that there are 'much's' and 'really's' in this formula that each person has define for themselves.

*generally. There could be exceptions where people can reasonably estimate, without doing anything nefarious, that the expected value of their claims is more than the ins co thinks.

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Re: Car lease is up: buy it or get a new lease?

Post by 02nz » Thu Oct 25, 2018 2:58 pm

Have you thought about leasing a PHEV/EV? I was looking at the Civic and other vehicles in the class, and then did the math on a Chevy Volt. I think it's likely to be about the same or cheaper as keeping the '16, and definitely way cheaper than leasing just about any other car.

$8500 one-pay lease for 30K miles over 36 mos. That's everything out the door, including almost 10% sales tax. You might well be able to do better than this, esp. as dealers clear out the '18s.
$450 SoCal Edison rebate (that's in SoCal, obviously, but your utility probably offers a rebate as well)
$1500 California CVRP rebate (income limit: up to 300K for joint filers)
Cost of charging: 30,000 miles will cost about $1200 to charge at home (using super-off-peak rates at night), in reality it's less than that since I also use free public chargers
Maintenance cost: $0 or close to it. Two services are included, and I won't need to change the oil much or at all (since I'm using the gas engine very little), and the brakes won't need changing (since I'm using the regenerative brakes most of the time).
Net cost over 3 years: about $7750

Deprecation: the '16 Civic will likely depreciate at least another $4000 or so over three years
Gas: 30,000 miles will cost about $3000 (assuming 34 MPG combined and $3.50/gallon)
Maintenance and repairs: About $1000, as you'll be out of the warranty period, could be less but could also easily be more if you're unlucky
Net cost over 3 years: about $8000

Other advantages of a Volt:
- Qualifies for HOV decals in CA. If you ever drive alone on freeways with HOV lanes, this is huge
- Extremely smooth and quiet in EV mode, quieter than most luxury cars
- Drives well, not as sporty as the Civic, but feels more substantial on the highway thanks to the weight of the batteries; acceleration is not Tesla fast but still way faster than most compacts
- Well-equipped even in base model, with Carplay/Android Auto (which your Civic doesn't have if it's the base model) and proximity keys
- Hatchback versatility

The Volt works well even if you don't know a thing about EVs or hybrids. IMO the only downside compared to the Civic would be the fifth seating position, which is a bit of a joke.

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Re: Car lease is up: buy it or get a new lease?

Post by DPT31 » Thu Oct 25, 2018 4:24 pm

astondb4gtz wrote:
Thu Oct 25, 2018 2:00 pm
Good advice on leasing at:

https://forum.leasehackr.com/

No affiliation, just have gotten good info from there.
Same here. I found a Chicago broker who was fantastic. basically I let him know what I wanted, price range, and over the next few days he got back to me with options. His family has been in dealerships for years so he knows everyone and got us a crazy deal. it was a no brainer. And the brokers do buying too. Had no idea until a few weeks ago when I randomly stumbled on leasehackr and 1 week later I had a super cheap CRV lease.

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Re: Car lease is up: buy it or get a new lease?

Post by deanmoriarty » Thu Oct 25, 2018 9:51 pm

02nz wrote:
Thu Oct 25, 2018 2:58 pm
Have you thought about leasing a PHEV/EV? I was looking at the Civic and other vehicles in the class, and then did the math on a Chevy Volt. I think it's likely to be about the same or cheaper as keeping the '16, and definitely way cheaper than leasing just about any other car.

$8500 one-pay lease for 30K miles over 36 mos. That's everything out the door, including almost 10% sales tax. You might well be able to do better than this, esp. as dealers clear out the '18s.
$450 SoCal Edison rebate (that's in SoCal, obviously, but your utility probably offers a rebate as well)
$1500 California CVRP rebate (income limit: up to 300K for joint filers)
Cost of charging: 30,000 miles will cost about $1200 to charge at home (using super-off-peak rates at night), in reality it's less than that since I also use free public chargers
Maintenance cost: $0 or close to it. Two services are included, and I won't need to change the oil much or at all (since I'm using the gas engine very little), and the brakes won't need changing (since I'm using the regenerative brakes most of the time).
Net cost over 3 years: about $7750

Deprecation: the '16 Civic will likely depreciate at least another $4000 or so over three years
Gas: 30,000 miles will cost about $3000 (assuming 34 MPG combined and $3.50/gallon)
Maintenance and repairs: About $1000, as you'll be out of the warranty period, could be less but could also easily be more if you're unlucky
Net cost over 3 years: about $8000

Other advantages of a Volt:
- Qualifies for HOV decals in CA. If you ever drive alone on freeways with HOV lanes, this is huge
- Extremely smooth and quiet in EV mode, quieter than most luxury cars
- Drives well, not as sporty as the Civic, but feels more substantial on the highway thanks to the weight of the batteries; acceleration is not Tesla fast but still way faster than most compacts
- Well-equipped even in base model, with Carplay/Android Auto (which your Civic doesn't have if it's the base model) and proximity keys
- Hatchback versatility

The Volt works well even if you don't know a thing about EVs or hybrids. IMO the only downside compared to the Civic would be the fifth seating position, which is a bit of a joke.
Very interesting point, thanks. (Un)fortunately I live a pretty urban lifestyle, so my car is essentially parked in my apartment complex where I don’t have the ability to get power plugs or anything like that, an EV would probably be a negative from a practicality point of view in my case.

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Re: Car lease is up: buy it or get a new lease?

Post by Plz » Thu Oct 25, 2018 11:15 pm

Have you made a decision? I’m curious to see what you picked!

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Re: Car lease is up: buy it or get a new lease?

Post by inbox788 » Fri Oct 26, 2018 2:08 am

JackoC wrote:
Thu Oct 25, 2018 2:20 pm
Virtually everyone 'minds' losing $13k. But you have to pay more than the expected value, $13k*probability, or else the ins co couldn't cover costs and make a profit*, to avoid it. The question ought be 'can you pretty easily *stand* to lose $13k'? Which realistically has two components. Do you have the financial resources to absorb a $13k loss without much effect?, and will it really bum you out if that happens even if you can afford it?

I admit I don't drop collision on cars soon enough because of the second consideration. A uninsured totaling the day after I bought it of any car I'd actually buy would be much less financial punishment than I took in yesterday's 3% stock market sell off. But an uninsured car loss would bug me more per $. I write this out partly to remind myself I really should drop collision on my 2015. :D

I admit that there are 'much's' and 'really's' in this formula that each person has define for themselves.

*generally. There could be exceptions where people can reasonably estimate, without doing anything nefarious, that the expected value of their claims is more than the ins co thinks.
I'd hazard to guess that the annual probability of totaling a car is < 1%, and average accident rate < 2%. Someone chime in with better actual statistics if you've got a good source. How many people do you know that have totaled a car? Personally, not many. What about 2 in a lifetime? So if you have $400 x 40 years of driving, it costs you $16,000 in premiums vs. less than 1 totaled car. Anyway, I'd expect the actual risk to be even lower and the insurance companies are making the same calculations across their insured base. I should be dropping collision as well, but what has kept me from doing so is not the math, but the added benefit of someone else involved in the repair IF there is an accident, especially less than totaled. Plus, I've been used to paying it, and it buys a little peace of mind, albeit, getting more expensive and less return as the car depreciates. Once the value is less than $10k, psychologically, it probably gets easier to drop it, and at under $5k value, chances are many types of accidents will lead to totaling the vehicle for cost of repair alone.

Well this site seems to say it's higher than my estimates. And we don't know about the accidents aren't reported because they're below a certain cost threshold or other reasons. Anyway, looks like higher chance of accident, but lower chance of maxing out.
https://www.forbes.com/sites/moneybuild ... 859a6f4e62

Note, were only talking about collision, not liability or fatalities. Comprehensive costs and claims also impact the costs and decisions. Remember, it's not the cost of the insurance or the car, but the probability of accident and payout rate. If it only cost $2 for insurance, you'd cover a lot lower than $5k.

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Re: Car lease is up: buy it or get a new lease?

Post by JackoC » Fri Oct 26, 2018 1:44 pm

inbox788 wrote:
Fri Oct 26, 2018 2:08 am
JackoC wrote:
Thu Oct 25, 2018 2:20 pm
Virtually everyone 'minds' losing $13k. But you have to pay more than the expected value, $13k*probability, or else the ins co couldn't cover costs and make a profit*, to avoid it. The question ought be 'can you pretty easily *stand* to lose $13k'? Which realistically has two components. Do you have the financial resources to absorb a $13k loss without much effect?, and will it really bum you out if that happens even if you can afford it?
... I should be dropping collision as well, but what has kept me from doing so is not the math, but the added benefit of someone else involved in the repair IF there is an accident, especially less than totaled.
True, another point which also affects my thinking. And not just hypothetically because I've two significant collision claims in recent years. One was ~$2k of damage from uninsured driver, another a freak accident with us not even in another car, $7k, reduced to two $500 deductible payments. But also like you say, I just took it to a high end repair shop where Geico and rental car co's are set up, pretty hassle free. So it's worth more than the $8k in avoided cost. Avoiding having to get additional quotes and/or haggle and/or somehow decide if a lower quoting shop is going to do a noticeably worse job, that's all worth something.

I should still probably drop it at this point on what's now the older of two cars even at four years, the one which suffered $7k damage (which is still a bummer obviously since even with a good repair, which I think it was, experts can tell, so it creates another sticky situation what to tell future buyers who can't tell, and it doesn't show up in Carfax; I'll probably just sell it to my son at a discount at some point).

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Re: Car lease is up: buy it or get a new lease?

Post by Jack FFR1846 » Fri Oct 26, 2018 1:57 pm

Now for something completely different.

You make a freaking boatload of money. You pay virtually nothing for your car currently and you almost never drive it. Insurance is probably in line with what you leave in the tip jar at your local pizza joint. (I don't actually know if the Bay area has pizza joints....maybe Latte emporiums or something). It sounds like getting a car maintained is a chore.

I HAVE THE NE PLUS ULTRA SOLUTION FOR YOU!

Lease a Lexus ES350. It is even more boring than a Civic although far nicer inside and although it's just a Toyota Avalon, it has that "L" on the back. Lexus service is known for keeping you from waiting around for them as they will come get your car, leave you a vehicle for the day at your office (or Alphabet campus) and bring your serviced car back for you when it's done. Yes, they charge outrageous prices for this, but with the money you make, who cares?

You're welcome.
Bogle: Smart Beta is stupid

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Re: Car lease is up: buy it or get a new lease?

Post by deanmoriarty » Fri Oct 26, 2018 2:00 pm

Plz wrote:
Thu Oct 25, 2018 11:15 pm
Have you made a decision? I’m curious to see what you picked!
Still deciding, I'm probably leaning towards going to the dealership and see what deal I would get on a new lease "just in case", while having as a plan just buying it outright and see how it goes.

deanmoriarty
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Re: Car lease is up: buy it or get a new lease?

Post by deanmoriarty » Fri Oct 26, 2018 2:02 pm

Jack FFR1846 wrote:
Fri Oct 26, 2018 1:57 pm
Now for something completely different.

You make a freaking boatload of money. You pay virtually nothing for your car currently and you almost never drive it. Insurance is probably in line with what you leave in the tip jar at your local pizza joint. (I don't actually know if the Bay area has pizza joints....maybe Latte emporiums or something). It sounds like getting a car maintained is a chore.

I HAVE THE NE PLUS ULTRA SOLUTION FOR YOU!

Lease a Lexus ES350. It is even more boring than a Civic although far nicer inside and although it's just a Toyota Avalon, it has that "L" on the back. Lexus service is known for keeping you from waiting around for them as they will come get your car, leave you a vehicle for the day at your office (or Alphabet campus) and bring your serviced car back for you when it's done. Yes, they charge outrageous prices for this, but with the money you make, who cares?

You're welcome.
Haha, can't tell if you're being sarcastic, but no thanks, I'm pretty frugal, financial freedom is the most important priority in life for me right now and I plan on achieving it before I turn 40 (hopefully even earlier if my current employer goes IPO!!), so I'm actually managing on living on ~$45k/y even in the bay area, and to be honest I don't feel I'm particularly missing out on any life luxury, including a Lexus or tipping above 18% :-)

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Re: Car lease is up: buy it or get a new lease?

Post by kjvmartin » Fri Oct 26, 2018 2:14 pm

deanmoriarty wrote:
Tue Oct 23, 2018 1:47 pm
Jack FFR1846 wrote:
Tue Oct 23, 2018 1:44 pm
The first thing to know is that you can use the low miles to negotiate something for yourself. Perhaps to reduce the cost of a new lease. Those 11k unused miles ain't chump change. They're worth something. I think if nobody is willing to give you something worthwhile, buy the car. Plan to keep it only 2 years, then sell or trade it. You put very low miles on the car. If you plan to continue this, perhaps get a different lease package. I've seen "low mileage leases" advertised. Usually they're bait and switch or for exotic cars but I would think any car could be leased for 3 years, 24k miles unless the manufacturer is subsidizing a specific lease deal.
Good point. I certainly plan on negotiating some value for those miles when I go back to the dealer. I have proof with kbb.com that my current car has a higher value than the residual (+~$1,000 trade in, +~$3,000 sell to private party) and I'll let the dealer know that I can buy it at any time if they make me angry :twisted: .

You should be able to apply the equity in your current lease toward the total cost of the next lease. I was in a similar situation under mileage with an immaculate condition Honda lease turn in. They may be reluctant to do this leasing the base model. Perhaps you could barter and get the EX or EX-L trim for the same price as your current base trim. Edit to add - this may not appeal to you since you're not a "car person" but the safety features alone in the EX are probably worth having. Literally could save your life one day.

Edit again to add, at least in my state, when you buy out a lease you have to do a bit of the legwork. DMV, transfer title, etc. Lot of waiting in line.

kjvm

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beyou
Posts: 2093
Joined: Sat Feb 27, 2010 3:57 pm
Location: Northeastern US

Re: Car lease is up: buy it or get a new lease?

Post by beyou » Fri Oct 26, 2018 2:33 pm

Whew-Only10MoreYears wrote:
Thu Oct 25, 2018 1:47 pm
I can unequivocally say that you have to have auto insurance if you have an umbrella policy. We had to increase our limits on our auto insurance when we got an umbrella policy. When I queried my insurance industry expert (who I happen to be married to) as to why she told me an umbrella is a cap that sits on top of your other insurance and is only used once the lower coverages are exhausted. They she started taking about subrogation and 1st insured - yada-yada-yada and I stopped listening :D

Back in 2016 I was hit on the freeway in my 3 month old Explorer at an estimated 60-70mph by a man who was texting. Thankfully I was uninjured but the car was a complete mess. After 2 months of (insurance co paid) loaner cars and a cost to my insurance company of over $25,000 I got my car back!! Since it was only 3 months old (and below some magical percentage of replacement value) they decided not to total it. It was a company lease car but just imagine paying $25,000 out of pocket for a virtually un-saleable vehicle. That's what insurance is for.
Yes you need insurance, you need the LIABILITY portion of auto insurance at a certain minimum level, to buy extra LIABILITY in the form of an umbrella. The umbrella has nothing to do with collision. If my insurance company insisted on collision to get umbrella, I would get a new insurance firm.

Also you said you would prefer to Uber, so why not do that and own/lease nothing ?
What about zip/rental cars for longer trips, Uber for local trips. This is the ultimate in no obligation transportation.

deanmoriarty
Posts: 188
Joined: Tue Jan 28, 2014 1:19 am

Re: Car lease is up: buy it or get a new lease?

Post by deanmoriarty » Fri Oct 26, 2018 8:07 pm

blevine wrote:
Fri Oct 26, 2018 2:33 pm
Whew-Only10MoreYears wrote:
Thu Oct 25, 2018 1:47 pm
I can unequivocally say that you have to have auto insurance if you have an umbrella policy. We had to increase our limits on our auto insurance when we got an umbrella policy. When I queried my insurance industry expert (who I happen to be married to) as to why she told me an umbrella is a cap that sits on top of your other insurance and is only used once the lower coverages are exhausted. They she started taking about subrogation and 1st insured - yada-yada-yada and I stopped listening :D

Back in 2016 I was hit on the freeway in my 3 month old Explorer at an estimated 60-70mph by a man who was texting. Thankfully I was uninjured but the car was a complete mess. After 2 months of (insurance co paid) loaner cars and a cost to my insurance company of over $25,000 I got my car back!! Since it was only 3 months old (and below some magical percentage of replacement value) they decided not to total it. It was a company lease car but just imagine paying $25,000 out of pocket for a virtually un-saleable vehicle. That's what insurance is for.
Yes you need insurance, you need the LIABILITY portion of auto insurance at a certain minimum level, to buy extra LIABILITY in the form of an umbrella. The umbrella has nothing to do with collision. If my insurance company insisted on collision to get umbrella, I would get a new insurance firm.

Also you said you would prefer to Uber, so why not do that and own/lease nothing ?
What about zip/rental cars for longer trips, Uber for local trips. This is the ultimate in no obligation transportation.
While I would love to just Uber, I still use the car a lot every day to drive to/from work since there's no convenient public transportation in the bay area, so Uber is really not an option.

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