Gave Up Company Car: Do I Buy or Lease?

[redraider11]

Hello Everyone,

I recently accepted a new job with the medical device company that I have been with for the past 5 years. This job comes with a nice raise, but I will be losing my company car that I have been blessed to use for business and personal miles. I sold my personal vehicle 4 years ago after I realized that there was no use for holding a depreciating asset in my garage that has no use.

I tried very hard to retain my company vehicle with this new position, given that I will be traveling just as much as my previous role (company will cover ubers, rental cars, and flights in new position). They were not able to accommodate this request. This new position is opening doors for my career and it is very possible that I will end up in a sales position within the next 1-3 years that will reinstate a company vehicle. I now need to purchase a new vehicle and am trying to weigh my options between buying (Cash or Finance) or leasing.

I have enough money to buy the vehicle outright, but I am hesitant to do so with the very real possibility of not needing this car for more than a year or two. My credit is perfect and the dealership has offered me 0% at 36 months to finance through them. This is an enticing offer that has me thinking that I could capitalize on putting the cash I set aside for a vehicle into a 4% HYSA and slowly pay my payments over the 36 month period. The only downside I see to this would be that I would own this vehicle and would have to do the work to get it sold when I eventually get a company car again. I hate working with dealerships and selling privately would be alot of work when I am traveling each and every week.

The other option I am just now beginning to consider is leasing. I grew up always believing that leasing was a giant waste of money. However, This is becoming appealing because I typically drive less than 10K miles in a year in personal mileage and I dont plan on having this vehicle for a long period of time. I also wouldn't have to fight with a dealership about resale value at the end of the lease. I am unsure if there are any penalties involved if I turn in the vehicle prior to the lease agreement end? Im obviously very new to considering a lease, so please point out any red flags or "gotcha" considerations that I may be missing.

Would really appreciate any and all advice in making this decision.

[lakpr]

I would suggest that you buy a car that gets you from point A to point B, without any frills. Since your new position will cover Ubers and rental cars and flights, use them for your business travel. You will need a car only for personal (non-business) transportation, so something like a 6 year old Toyota Corolla should do the job.

I would not advise leasing.

[bloom2708]

Buy. Leasing is the most expensive way to go.

A new Toyota Corolla Hybrid AWD LE is about $26k + taxes.

I would use your cash and pay for the car. The interest earned on $30k for 2-3 years won't alter your retirement calculations.

Eat out one less time per month and you'll save the equivalent or more and help your health.

[KATNYC]

I was in a similar situation when I changed jobs and had to turn in my 2020 company car.
The new company paid for taxi's, car rentals, flights etc.

We have an older vehicle that doesn't see more than 10,000 miles per year. Paid cash.

[VoiceOfReason]

It sounds like you had access to a fleet vehicle for your previous position. Many of those fleet companies will allow you to purchase the vehicle directly from them when it is being recalled. Or they allow you to purchase someone else's vehicle in the company when theirs is being recalled. The pricing is standard wholesale prices that you, allowing you to purchase them significantly less than you could at a dealership. Most fleets have very modest vehicles with a lot of safety features.

Have you looked into that option?

[mudman76]

If you like the fleet car buy it. You know it’s history and will probably get a good deal. I got a Carmax quote on mine and I offer to buy it for that price. The fleet company took my offer.

[cchrissyy]

i would buy something used so that when i resell it at an unknown time 1-3 years form now its value will be similar.
and i would resist having it be too nice of a car by reminding myself a fair share of my time in cars will be in rentals or ubers for the company, not this personal car.

[miket29]

don't get a lease with the idea of turning it in early. They usually want all the payments, if ending it early is something important to you then ask and make sure it shows up in the contract (eg. no verbal assurance "we let anyone who wants do that") See https://www.caranddriver.com/auto-loans ... ase-early/ for more about ending a lease early

Sometimes, though, they invite you to do so. Back during the pandemic when cars were selling for well over invoice I'd get letters from Toyota asking if by-chance I had thought of turning my car in early. More commonly they'll make you an early turn-in offer if you want to lease or buy another car from them.

[28fe6]

Does your situation allow you to go car-free?

There's no car cheaper than no car.

[Outer Marker]

Buy yourself a nice, reasonable, new car. Don't overcomplicate your life, and avoid leasing. Aside from being more costly, it's likely harder to get out of a lease after one year than to sell your car, should you come into a company vehicle again. If you want to resell, you can get a reasonably fair cash offer on the spot from Carmax or simlar. If you want put in a little effort, most of my used vehicles have sold on craigslist in less than 48 hours (though admittedly, they were sub $10K value). For what its worth, traditionally the best day to buy a car is 12/31, which is coming up. It's the trifecta of month end, quarter end, and year end quotas, so if you're not too picky and willing to take what's on the lot, that's a good day to buy. It may not be as true as it once was due to supply issues, but I do know some fellow car enthusiasts that got some very good year end deals. I would have bought a new Boxter back in the day if I'd known I could buy one that cheap. (btw, that does not count as a "reasonable" new car.)

[Buford T Justice]

It sounds like you had access to a fleet vehicle for your previous position. Many of those fleet companies will allow you to purchase the vehicle directly from them when it is being recalled. Or they allow you to purchase someone else's vehicle in the company when theirs is being recalled. The pricing is standard wholesale prices that you, allowing you to purchase them significantly less than you could at a dealership. Most fleets have very modest vehicles with a lot of safety features.

Have you looked into that option?

+1
Indeed. My family bought cars this way for years through an employee / family member.

[leland]

Two other items:
1) If you can buy after starting, check the new company's rental car rates - if you don't drive often and get a good rental rate (plus have a convenient location) you may be able to rent for when you need it personally, too. There were some posts here about some folks who had a far cheaper rental rate than purchase + insurance + maintenance.
2) Also investigate whether the new company will reimburse mileage. It still may not be worth it to drive personally, but going fuel efficient / EV and getting a nice reimbursement may be more convenient for you than Ubers/rentals.

[flyingcows]

If you don't drive much, why not just buy an almost fully deprecated used car that is 10-15 years old? Something around 5-10k that isn't going to lose significant value over the next few years

[FunOnABudget]

You mention that the company will cover Ubers, flights and rental cars. What about paying mileage for personal car use? Imagine yourself with 1000 business miles per month at 65.5 cents per mile... Get a beater and charge them for mileage.

[lakpr]

You mention that the company will cover Ubers, flights and rental cars. What about paying mileage for personal car use? Imagine yourself with 1000 business miles per month at 65.5 cents per mile... Get a beater and charge them for mileage.

Would it not count as income to the OP? I think it would, and therefore the alternative of having a separate car for personal trips + charging the company for Uber + flights is better

[DoubleComma]

You mention that the company will cover Ubers, flights and rental cars. What about paying mileage for personal car use? Imagine yourself with 1000 business miles per month at 65.5 cents per mile... Get a beater and charge them for mileage.

In our company 999 miles a month is the magic number. Average 1000 and you MUST take the company car; which includes charges back to you for any personal use of the company car, but the amount is modest ~$50 month.

If you go with the personal vehicle and submit mileage <1000 month that is acceptable, however you have to register you VIN with our fleet team and keep a copy of your insurance on file with them as well. Insurance minimum is $100k/$300k. Car must be within 5 model years, have 4 doors and minimum wheelbase of 110”. This guideline leaves a lot of choices, but a 15 year old beater is t one of them.

Don’t overlook if you are regularly using your personal vehicle for sales calls or other work needs, your auto insurance will be higher than comparable drivers who simply use their vehicle for commuting or recreational. It’s why they ask that question.