Picking up a car lease -- info needed

Parent Cafe
1

<p>My son is moving to LA. He has shipped his motorcycle – but thinks he wants a car. He can afford a car, up to $500/month, so that’s not an issue.</p>

<p>He thinks the best deals out there are taking over a lease with 2 years or so left on the lease, and he’s going online looking at various sites with lease swaps posted.</p>

<ol>
<li><p>Is this the sort of thing that should be managed through a dealer? He’s new to the state and never owned a car before (only the motorcycle).</p></li>
<li><p>Where is the best place to find short term leases of slightly used cars? </p></li>
<li><p>What would you recommend your son/daughter do for wheels in this situation?</p></li>
</ol>

2

<p>

After housing cars are the black hole of most people’s finances. For my kids I’d suggest BUYING a used car and driving it until it dies … this strategy is, by far, the best economic deal if you need a a car … and even then, Zipcar rentals have made owning a car less of a neccessity for anyone who lives near public transportation and does not need a car to get to work everyday.</p>

3

<p>I agree. It’s what I tend to do myself, and I can afford to buy new and keep it 4 years. </p>

<p>He probably does need some sort of actual vehicle beyond the motorcycle (it’s hard to take the golf clubs on the bike). Even though he will be living only 3-4 miles from work, and he could get by with the motorcycle, he wants a car. And I don’t think there is simple public transit, especially as he’ll be working a LOT!</p>

4

<p>I have been driving a used car the last 2 years, and unfortunately when you buy a used car you’re taking a gamble and on that one we definitely lost. The car before that was great but we don’t know much about cars and got lucky that time, this time we were not in good shape. I was anxious the entire two years that the car would break down and I would be in trouble, and finally this past weekend my boyfriend and my dad were checking out the car for me and deemed that it was no longer safe. </p>

<p>My plan was to buy another older used car and drive it until it dies, which I think is a perfectly reasonable thing to do in many circumstances, but we decided we don’t want to deal with the stresses or risks anymore. I don’t want to ever deal with the “until it dies” part again, because that is expensive and scary, to me. The dying process didn’t happen quickly in one fell swoop, it was a year of debating back and forth whether or not each repair was worth it and wondering how long each repair would last. We probably put a few thousand dollars more into the car than we should have over the span of those two years, because if that “ONE” problem would go away, the car would be PERFECT!!! Until the next problem showed its face three months later, and so on.</p>

<p>I just signed up for a two year lease for a VERY nice brand new ford focus for $250 a month. It’s within budget and now I don’t have to worry about anything at all. Some people are against leasing, and I can see why, but I am happy with it for now-- will re-evaluate in two years. We leased directly through a licensed ford dealer.</p>

<p>And a cautionary tale, if you ever do buy a used car or from anybody that isn’t a legitimate dealer, you have to walk in armed with knowledge. My sister tried to buy a car from a guy who’d placed an ad in the paper a few weeks ago and it turns out he didn’t properly own the car and my sister couldn’t take the title to register it. She’s been carless now for weeks and the police had to get involved, we are waiting to find out if she’ll ever be able to take the title, and they told her she technically committed a crime by taking the car. All would have been fine if she’d had a clue what she was doing, but she didn’t.</p>

5

<p>I would buy the car, not lease it. With the mileage restrictions on leases and if he goes over those, it is very expensive. Just because he can “afford” to pay $500/month, I wouldn’t suggest it. There are financing deals all the time for 0% or .9% or whatever. I would suggest he look into a hybrid of some sort. I know that Hyundai guarantees their battery for the life of the car and would suggest looking there. We typically pay cash for our vehicles but for the first time in almost 20 years we have a car payment because we got 0% financing and it would have been silly to pay cash. Leasing is just a horrible option all the way around unless you put very low miles on your vehicle and want a new car every 2 or 3 years.</p>

6

<p>If he can afford up to $500/mo. he can buy a new car of his own. Tell him to stop dreaming about the “look how cool I am drivingthis fancy car” cars that he would lease for that, and get himself a new reliable not so freaking fancy vehicle. It will have a service plan and some kind of resale value if he decided against driving it for the next umpteen years. Since he plans to use the motorcycle most of the time, he can put a sticker on the back of his depressingly economical and not cool enough for his pals car that reads “My other car is a Name-of-motorcycle-here”.</p>

7

<p>Liking it HappyMom … </p>

<p>“my other car is a motorcycle, and a surfboard, and a snowboard, and a golf cart”</p>

<p>I am practically certain all the movers picked up to take to LA was a queen bed and sports equipment!</p>

8

<p>Don’t forget to factor in cost of auto insurance for son’s budget. He may be able to afford to pay $500/mo. car payments but not $400/mo. insurance expense on top of car payment. Auto insurance is expensive for single young guys.</p>

9

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<p>Wow… I couldn’t imagine paying $400/mo in car insurance! I pay $450 every six months for my truck…</p>

10

<p>hops_scout–very common with unmarried men under 26 in major metro areas!!</p>

11

<p>SteveMA, then I’m real happy to stay right where I’m at! I live close enough to St. Louis to normally fall into the “metro area” but not for car insurance ;)</p>

12

<p>What he should do is go to insurance companies’ web sites and use the on-line rate estimates to find out what the insurance will be for each kind of car he is considering.</p>

13

<p>Auto insurance is expensive everywhere in Florida. Somebody has to pay for the personal injury attorney TV ads!</p>

14

<p>Here’s the thing. He wants a car without a long term committment. He <em>could</em> spend $500/month. He intends to spend $200-300/month. He has it in his head that the thing to do is pick up the payments on an existing lease. He’s located a few possibilities – a Jetta with 23000 miles and 24 months left on the lease and a BMW 328 with 24 months left but only 600 miles/month. Either of those would be under $300/month.</p>

<p>Aside from all the issues with a lease – what about picking up the remainder of a lease?</p>

15

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<p>I live in the OP’s son’s area, and fit his personal data, and insurance isn’t anywhere near $400/mo. Unless he’s planning to drive a Ferrari, he can expect something about a third or less.</p>

16

<p>Given what you’ve stated, I’d buy a used car - not lease, and not buy new. Leasing is essentially just renting a car and it’s expensive. If he buys new he’ll be on the steep part of the depreciation curve and if he thinks he might only want it for a couple of years (which I doubt will end up being the case - I think he’ll want a car from here on out unless he moves to NYC or DC), then he’ll lose a lot of money.</p>

<p>Many dealers have some warranties on their used cars and if he buys it from an established dealer, not a small fly-by-night corner lot dealer that’ll disappear within the year, he should be fine on it. To get an idea of what he could get with his budget he could go online to ‘Carmax’ and see what they have to offer. He could even buy a car there and sell it back to them after 2 years if he wants.</p>

<p>He definitely should pay attention to insurance costs. I can’t imagine it being $400/mo but it won’t be cheap.</p>

17

<p>My recollection of a similar transaction done by a friend (in Los Angeles, through Lease Trader) is that the leaseholder approves the transaction - not much different that taking over an apartment lease. The benefit is that you may save the upfront costs, and benefit from the existing warranty, if any remains. He may want to consider some of the short term advertised specials on new car leases, which seem to be at an all time discount locally, e.g. Cadillac, 36 months, $1700 drive off, $270/month.</p>

18

<p>Leases can be a way to own a car short term and pay less then if you are buying it, but there are a lot of things to consider, especially taking over the lease:</p>

<p>-How many miles are on the car and how many miles does the lease allow? If for example the car is a 36 month lease (3 years) and allows 10k a year, it is allowed up to 30,000 miles. ) and there is 18 months left and the car has 25k on it, it might not be a good deal because if you run over the mileage cap, you get slammed, pure and simple. I couldn’t tell from your example, though the BMW sounds dicey (600/month mileage can turn out to be pretty low, if he does any kind of driving). </p>

<p>-The other key thing with a lease is maintenance and keeping the car in top shape physically (dents/dings/scratches/upholstery). If he is someone who is careful, parks it carefully, cleans it, waxes it, and so forth, he might be okay, but you have to be careful, what seems like a minor scratch can turn into $$$, leasing firms are known to get you on non ordinary wear and tear (that they decide). </p>

<p>I realize he feels like he doesn’t want to be tied down, but another option is to buy a late model used car coming off lease (depreciation has already taken its toll) and finance it, he may be able to get decent payments on it, and own it and not have to worry about mileage or wear and tear at the end…</p>

<p>If he was looking at those deals, go with a Jetta, not a BMW, a young guy, especially if he is under 26, would get hit with the 328 because it is considered “sporty” which a jetta is not, plus BMW’s tend to be high on stolen car lists which raises the cost of insuring them as well. Whatever he decides to do, he should get a quote on insurance, keep in mind with a lease or financed he will need to have comprehensive and collision on it, which makes it a lot more expensive and factor that in.</p>

19

<p>I will say that his apartment is less than 4 miles from his office, and he has the bike. If he doesn’t do a lot of weekend road trips, the 600/month might actually work for him – but I can’t imagine paying a big premium for the Beemer and having not-enough miles. </p>

<p>(Full disclosure: My H and I both currently drive BMWs, both purchased with 10K miles on them. H is driving the same model that S is looking at!)</p>

20

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<p>I have always thought, economically, the exact opposite. A lease involves a fixed payment, ie the same payment every month for a fixed time period. So for example you are paying $400 per month for 3 years. In that example, your first month you have a brand new car, while for your last payment you get a 3 year old car. Which payment gives you a “better deal”? Renting a brand new car or a 3 year old car for the same money? So in my mind, taking over a 3 year lease after 1 or 2 years at the same payment is rarely if ever a good deal.</p>

<p>The exception might be if the lease payments were bought down by a large initial down payment. In that case you could get a good deal by taking over the remaining (small) lease payments.</p>