Lease new car?

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upstate90
Posts: 12
Joined: Sun Jan 17, 2021 11:24 pm

Lease new car?

Post by upstate90 »

I bought a new 2019 model car at the end of 2018 that I paid off in early 2019. Only have about 22k miles on it and due to the prices of used cars lately the KBB value on my car is roughly what I paid for it. 24-25k area. The reason I bought this car instead of leasing was because I was underwater on the trade in at the time and the lease payments for 36 months would have been way too high. The reason I bought that previous car was because I used to drive about 15-20k miles per year due to a much longer commute. My commute now is about 9 miles each way and I've been averaging 8-10k miles per year now. My thoughts for leasing is I figure I would get about a 20k check after the up front costs and have about 200-300 monthly payment. This way I would take the 20K and use toward home improvements or just invest it, and I wont have that much money tied up in a depreciating asset, as well as get a new car every 3 years and never have to worry about big repair costs. I have around $2,000/ month in free cash flow so a 200-300 monthly payment wont kill me. No debt besides mortgage.

1. If anyone here drives around 12k or less per year do you lease?

2. Am I crazy for even thinking about this when my car is paid off with only 22k miles on it?

Thanks.
Jags4186
Posts: 5784
Joined: Wed Jun 18, 2014 7:12 pm

Re: Lease new car?

Post by Jags4186 »

If you lease a car for $300/mo and zero down you’re paying $3600/yr in lease payments. Do you think a 2-3 year old car with 22,000 miles will have $3600 of maintenance and repairs a year?

I can tell you I have a 6 year old car with 70,000 miles and I’ve paid maybe $1500 in maintenance and repairs. My wife has a 10 year old car with 100,000 miles and we have spent a total of about $4000 in maintenance and repairs in those 10 years.
Tingting1013
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Joined: Mon Aug 24, 2020 5:44 pm

Re: Lease new car?

Post by Tingting1013 »

Jags4186 wrote: Wed Jun 09, 2021 7:43 pm If you lease a car for $300/mo and zero down you’re paying $3600/yr in lease payments. Do you think a 2-3 year old car with 22,000 miles will have $3600 of maintenance and repairs a year?

I can tell you I have a 6 year old car with 70,000 miles and I’ve paid maybe $1500 in maintenance and repairs. My wife has a 10 year old car with 100,000 miles and we have spent a total of about $4000 in maintenance and repairs in those 10 years.
The lease payments cover depreciation and maintenance (maintenance is covered on new cars).

Will that 2-3 year old car suffer $3600 in depreciation in a year? Depends on the car.
Jack FFR1846
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Location: 26 miles, 385 yards west of Copley Square

Re: Lease new car?

Post by Jack FFR1846 »

I have a much better idea. Go to DCU and get a second chance car loan on your current car. You get the cash to do what you want and don't pay the lease acquisition fee, dealer doc fee, lease turn in fee and high interest. DCU's second chance car loan is at the exact same rate as a new car loan.
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TJat
Posts: 57
Joined: Tue May 04, 2021 6:51 am

Re: Lease new car?

Post by TJat »

Are you assuming you will always have a car payment of a few hundred a month? The value of purchasing a car is that you don’t have a car payment after paying it off and can invest that savings for years. Leasing a car is not good from a financial perspective (except sometimes in the specific event of only needing a car for 2-3 years and you only want a new car).
Topic Author
upstate90
Posts: 12
Joined: Sun Jan 17, 2021 11:24 pm

Re: Lease new car?

Post by upstate90 »

Its a 2019 Subaru Crosstrek. Subarus tend to hold their value well and have the reputation for being reliable. From a strictly long term numbers perspective it would most likely make sense to keep. My thoughts boil down to the benefits of:

1. Taking advantage of current used car values, basically getting what I paid for it 2.5 years ago.
2. Getting around 20k up front to invest or use for home improvements.
3. Getting a new car every 3 years.
4. Never having a large repair expense.
Jags4186
Posts: 5784
Joined: Wed Jun 18, 2014 7:12 pm

Re: Lease new car?

Post by Jags4186 »

Tingting1013 wrote: Wed Jun 09, 2021 7:45 pm
Jags4186 wrote: Wed Jun 09, 2021 7:43 pm If you lease a car for $300/mo and zero down you’re paying $3600/yr in lease payments. Do you think a 2-3 year old car with 22,000 miles will have $3600 of maintenance and repairs a year?

I can tell you I have a 6 year old car with 70,000 miles and I’ve paid maybe $1500 in maintenance and repairs. My wife has a 10 year old car with 100,000 miles and we have spent a total of about $4000 in maintenance and repairs in those 10 years.
The lease payments cover depreciation and maintenance (maintenance is covered on new cars).

Will that 2-3 year old car suffer $3600 in depreciation in a year? Depends on the car.
Who said maintenance is covered on new cars? Some manufacturers include it, most don’t. Most cars don’t need maintenance beyond oil changes, windshield wiper blades, and air filters.

I don’t care if OP leases, I’m just saying I wouldn’t volunteer for a car payment if I currently didn’t have a car payment and a perfectly good, practically new car. Seems like a good opportunity to get used to not having a car payment. I haven’t had one for 4 years. I don’t miss it.
Tingting1013
Posts: 1359
Joined: Mon Aug 24, 2020 5:44 pm

Re: Lease new car?

Post by Tingting1013 »

Jags4186 wrote: Wed Jun 09, 2021 8:02 pm
Tingting1013 wrote: Wed Jun 09, 2021 7:45 pm
Jags4186 wrote: Wed Jun 09, 2021 7:43 pm If you lease a car for $300/mo and zero down you’re paying $3600/yr in lease payments. Do you think a 2-3 year old car with 22,000 miles will have $3600 of maintenance and repairs a year?

I can tell you I have a 6 year old car with 70,000 miles and I’ve paid maybe $1500 in maintenance and repairs. My wife has a 10 year old car with 100,000 miles and we have spent a total of about $4000 in maintenance and repairs in those 10 years.
The lease payments cover depreciation and maintenance (maintenance is covered on new cars).

Will that 2-3 year old car suffer $3600 in depreciation in a year? Depends on the car.
Who said maintenance is covered on new cars? Some manufacturers include it, most don’t. Most cars don’t need maintenance beyond oil changes, windshield wiper blades, and air filters.

I don’t care if OP leases, I’m just saying I wouldn’t volunteer for a car payment if I currently didn’t have a car payment and a perfectly good, practically new car. Seems like a good opportunity to get used to not having a car payment. I haven’t had one for 4 years. I don’t miss it.
Just because you don’t have a car payment doesn’t mean you’re not paying for the car. The car depreciates on you every year. Whether you pay it implicitly (with a purchase) or explicitly (in a lease).
Jags4186
Posts: 5784
Joined: Wed Jun 18, 2014 7:12 pm

Re: Lease new car?

Post by Jags4186 »

upstate90 wrote: Wed Jun 09, 2021 7:58 pm Its a 2019 Subaru Crosstrek. Subarus tend to hold their value well and have the reputation for being reliable. From a strictly long term numbers perspective it would most likely make sense to keep. My thoughts boil down to the benefits of:

1. Taking advantage of current used car values, basically getting what I paid for it 2.5 years ago.
2. Getting around 20k up front to invest or use for home improvements.
3. Getting a new car every 3 years.
4. Never having a large repair expense.
1) If you can sell your used car and get an equivalent new car for the same price, or within a few $100, that’s a good move.
2) You car isn’t a bank
3) That’s fine if you can afford it. Most people have cars that are too expensive for their income. A paid off car is a luxury for “regular” folks
4) What makes you think you’ll have a large repair expense? Unless you damage your vehicle, there is little reason to think you’ll have a big ticket repair. The most expensive thing you’ll pay for is new tires at around 50,000 miles. Thats about $600.
Jags4186
Posts: 5784
Joined: Wed Jun 18, 2014 7:12 pm

Re: Lease new car?

Post by Jags4186 »

Tingting1013 wrote: Wed Jun 09, 2021 8:04 pm
Jags4186 wrote: Wed Jun 09, 2021 8:02 pm
Tingting1013 wrote: Wed Jun 09, 2021 7:45 pm
Jags4186 wrote: Wed Jun 09, 2021 7:43 pm If you lease a car for $300/mo and zero down you’re paying $3600/yr in lease payments. Do you think a 2-3 year old car with 22,000 miles will have $3600 of maintenance and repairs a year?

I can tell you I have a 6 year old car with 70,000 miles and I’ve paid maybe $1500 in maintenance and repairs. My wife has a 10 year old car with 100,000 miles and we have spent a total of about $4000 in maintenance and repairs in those 10 years.
The lease payments cover depreciation and maintenance (maintenance is covered on new cars).

Will that 2-3 year old car suffer $3600 in depreciation in a year? Depends on the car.
Who said maintenance is covered on new cars? Some manufacturers include it, most don’t. Most cars don’t need maintenance beyond oil changes, windshield wiper blades, and air filters.

I don’t care if OP leases, I’m just saying I wouldn’t volunteer for a car payment if I currently didn’t have a car payment and a perfectly good, practically new car. Seems like a good opportunity to get used to not having a car payment. I haven’t had one for 4 years. I don’t miss it.
Just because you don’t have a car payment doesn’t mean you’re not paying for the car. The car depreciates on you every year. Whether you pay it implicitly (with a purchase) or explicitly (in a lease).
OP just said his car is worth what he paid for it 3 years ago. So he has experienced 0 deprivation.
Tingting1013
Posts: 1359
Joined: Mon Aug 24, 2020 5:44 pm

Re: Lease new car?

Post by Tingting1013 »

Jags4186 wrote: Wed Jun 09, 2021 8:06 pm
Tingting1013 wrote: Wed Jun 09, 2021 8:04 pm
Jags4186 wrote: Wed Jun 09, 2021 8:02 pm
Tingting1013 wrote: Wed Jun 09, 2021 7:45 pm
Jags4186 wrote: Wed Jun 09, 2021 7:43 pm If you lease a car for $300/mo and zero down you’re paying $3600/yr in lease payments. Do you think a 2-3 year old car with 22,000 miles will have $3600 of maintenance and repairs a year?

I can tell you I have a 6 year old car with 70,000 miles and I’ve paid maybe $1500 in maintenance and repairs. My wife has a 10 year old car with 100,000 miles and we have spent a total of about $4000 in maintenance and repairs in those 10 years.
The lease payments cover depreciation and maintenance (maintenance is covered on new cars).

Will that 2-3 year old car suffer $3600 in depreciation in a year? Depends on the car.
Who said maintenance is covered on new cars? Some manufacturers include it, most don’t. Most cars don’t need maintenance beyond oil changes, windshield wiper blades, and air filters.

I don’t care if OP leases, I’m just saying I wouldn’t volunteer for a car payment if I currently didn’t have a car payment and a perfectly good, practically new car. Seems like a good opportunity to get used to not having a car payment. I haven’t had one for 4 years. I don’t miss it.
Just because you don’t have a car payment doesn’t mean you’re not paying for the car. The car depreciates on you every year. Whether you pay it implicitly (with a purchase) or explicitly (in a lease).
OP just said his car is worth what he paid for it 3 years ago. So he has experienced 0 deprivation.
Great, now what’s going to happen in the next three years?
boogiehead
Posts: 234
Joined: Wed Sep 27, 2017 11:45 pm

Re: Lease new car?

Post by boogiehead »

upstate90 wrote: Wed Jun 09, 2021 7:58 pm Its a 2019 Subaru Crosstrek. Subarus tend to hold their value well and have the reputation for being reliable. From a strictly long term numbers perspective it would most likely make sense to keep. My thoughts boil down to the benefits of:

1. Taking advantage of current used car values, basically getting what I paid for it 2.5 years ago.
2. Getting around 20k up front to invest or use for home improvements.
3. Getting a new car every 3 years.
4. Never having a large repair expense.
You do know that new car prices are inflated as well so this will reflect on your new lease unless your willing to downgrade on the car you drive.... based on your situation I see no reason to do this unless you really need the money for home improvement, otherwise I don't see you actually coming out ahead financially (many people forget every car transaction there are transaction fees associated, not to mention your insurance will probably go up to once you get a brand new comparable car). Stick with the KISS principle.
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