When does it make sense to lease a car?

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Padlin
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Re: When does it make sense to lease a car?

Post by Padlin »

How about getting a new car and keep trading it in when it gets to something like 5 years old or some predetermined mileage, like 50k?
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dodecahedron
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Re: When does it make sense to lease a car?

Post by dodecahedron »

RickBoglehead wrote: Mon Jun 07, 2021 6:11 am IMO, an elderly person should not rely on a 10 year old vehicle.
I am 67 and have two Honda Accords over 10 years old (one is 2003 and the other is 2007.) Mileage on the older one is about 70,000 and on the newer one about 85,000. (Most of miles on both of them were put on by my late husband prior to his death in 2013.) For environmental and lifestyle reasons, my daughter (who lives with me) and I try to drive them as little as possible but enough to at least keep them in good running order. (She bikes a lot, I walk and take the bus a lot.) The cars are convenient when I have a lot of stuff to transport or when the route to where I am going runs through places that are unsafe to walk, particularly at night.

Despite their age, they are both quite reliable. We have them serviced at the trustworthy service shop at the dealership where we originally bought them new (which my late husband trusted). Other than replacing tires and batteries and routine maintenance, I have not had major issues with either. I have a good relationship with the folks at my dealer, which is located within reasonable walking distance (3 miles) in nice weather, is also on a direct bus line to my home, and they are happy to shuttle me to home or work or pretty much anywhere I would want to go. They are also willing to dropoff on my car in my driveway afterwards, saving me the time of returning to pick it up.

Unlike the OP, I do have reasonable bus service available and ride-sharing (Lyft/Uber) is also available here. Also, lots of grocery stores have offered delivery service even before the Pandemic, and I expect even more will continue to do so after the Pandemic. I have AAA, but have only needed them for dead batteries (our fault--leaving door not fully closed and then not driving for a few days) and the occasional flat tire.

A more elderly relative in another state who enjoys driving and drives a lot more than I do (including long road trips, which I simply refuse to do--I will take a bus or train rather than drive any significant distance) will be turning 90 this year and replaced her 2005 Prius early last year. It was in good running order but she likes all the safety features on the new Prius. She decided to do a three-year lease on a new Prius because she had sensible concerns about how much longer she should be driving (or whether she would even be alive that long) and liked the idea that the lease would put a fixed checkpoint at which she would be forced to reconsider whether to keep the car or give up driving. She is now almost halfway through the lease and is pretty content with her decision and her options going forward. She lives just a couple blocks from her dealer and they pick it up and drop it off when the car needs service.
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Petrocelli
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Re: When does it make sense to lease a car?

Post by Petrocelli »

burt wrote: Tue Jun 08, 2021 5:35 am
The 10 year old car I'm currently driving has about 80,000 miles. I don't drive much.
Given your driving habits, I would never lease because you would be paying for miles you don't use. I would wait until prices adjust, and buy a 2-3 year old Toyota or Hyundai coming off lease.
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msi
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Re: When does it make sense to lease a car?

Post by msi »

burt wrote: Tue Jun 08, 2021 5:35 am I just want reliable transportation with little effort put into maintenance. It's bad enough I have to get oil changed and put gas in it.
As others have said, it's not just a financial decision. I'm willing to pay more for reliability and convenience.
That's definitely one time it makes more sense to lease. You want a lower hassle experience, you put a premium on convenience, and you can afford for it to not be a purely financial decision.
CascadiaSoonish
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Re: When does it make sense to lease a car?

Post by CascadiaSoonish »

I'm about to sell our 14 year old Acura with 170K miles on it and switch to a battery electric car, most likely on a lease. With the manufacturer incentives it really narrows the TCO compared to fueling and maintaining the older car. Purchasing a new BEV doesn't make sense with the current gen technology being rapidly improved and the subsequent steep depreciation on the used market. Purchasing a used BEV isn't a good deal at this particular moment due to the temporary car supply crunch.

But other posters in the thread are correct by my math. Keeping the old Acura would probably be cheaper overall. And we only drive 3K miles/year at most so the dealer will get a cherry condition BEV back in three years. But I can live with that. Financially the difference is maybe a few thousand dollars over the life of the lease, I get to reduce fossil fuel usage, fewer repair/maintenance trips to the shop, and a nicer driving experience. The intangible benefits outweigh the spreadsheet values in my mind. Others may feel differently.
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Petrocelli
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Re: When does it make sense to lease a car?

Post by Petrocelli »

CascadiaSoonish wrote: Tue Jun 08, 2021 11:55 am I'm about to sell our 14 year old Acura with 170K miles on it and switch to a battery electric car, most likely on a lease...

And we only drive 3K miles/year at most so the dealer will get a cherry condition BEV back in three years.
If you drive only 3k a year, you should not lease under any circumstances. If you buy a Tesla Model 3, you could probably trade it in for close to what you paid for it.
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CascadiaSoonish
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Re: When does it make sense to lease a car?

Post by CascadiaSoonish »

Petrocelli wrote: Tue Jun 08, 2021 2:58 pm
CascadiaSoonish wrote: Tue Jun 08, 2021 11:55 am I'm about to sell our 14 year old Acura with 170K miles on it and switch to a battery electric car, most likely on a lease...

And we only drive 3K miles/year at most so the dealer will get a cherry condition BEV back in three years.
If you drive only 3k a year, you should not lease under any circumstances. If you buy a Tesla Model 3, you could probably trade it in for close to what you paid for it.
Yes, you're correct in that I would come out ahead by keeping the old Acura rather than leasing a new car. But going back to OP's question on when it made sense to lease a car, my point is that taking advantage of manufacturer-subsidized leases on less marketable cars (BEV sedans) vs ongoing upkeep of a high-mileage older car, the spread is greatly reduced. In my case my spreadsheet says my TCO is maybe a couple grand higher over three years to lease than to maintain and run the current car, and that's assuming a major mechanical issue doesn't come up. So the leasing premium isn't a big deal in the grand scheme of things in this specific case. Others may make decisions based purely on the numbers, others may be in a different situation, still others may be trying to justify leasing a McLaren rather than a base model EV sedan.
La Maison
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Re: When does it make sense to lease a car?

Post by La Maison »

I buy cars at the end of a 1 year lease from the dealer. A compromise? Thoughts?
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Petrocelli
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Re: When does it make sense to lease a car?

Post by Petrocelli »

La Maison wrote: Tue Jun 08, 2021 6:32 pm I buy cars at the end of a 1 year lease from the dealer. A compromise? Thoughts?
I think that's a great idea. You may want to push even further out to 2 or 3 years, depending on the car.

Last year, I bought my daughter a used BMW 330i with about 8,000 miles on it for $25,000. There are good deals to be had on lease returns.
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hudson
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Re: When does it make sense to lease a car?

Post by hudson »

burt wrote: Tue Jun 08, 2021 5:35 am OP here.
Thanks for the replies. Lot's of info for me to consider.
Some additional information:

The 10 year old car I'm currently driving has about 80,000 miles. I don't drive much.
I gain no pleasure from driving. For me a car is strictly functional.
Whether purchase or lease, the new car will not be a luxury model. Toyota?
I just want reliable transportation with little effort put into maintenance. It's bad enough I have to get oil changed and put gas in it.
As others have said, it's not just a financial decision. I'm willing to pay more for reliability and convenience.
burt,
Give leasing a try. The next question is how to get the best lease deal.
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