Car Advice

[bmarie]

Here's the deal- we have two vehicles. One is a 2008 Nissan that we financed and still owe about $6,000 on. The other is a 2012 Honda Civic that we started a 3-year lease on last year. I am not looking for anyone to tell me that it was dumb to do a lease... I already know that. We currently have one child but are expecting twins in the spring... in order to accommodate this major life change, we are in desperate need of making some huge adjustments. One thing that it just seems like we will have to do is to go down to one vehicle. It will be tricky, but doable since both my husband and I work about 5 miles from home and live in a city with great public transportation. The way I see it, we will be saving about $400+/month this way (payment, insurance, parking pass, gas). I have talked to Honda about options for getting out of lease and it sounds like it would cost us about $2,000. Based on that, I originally though that keeping the Honda was our best option and selling the Nissan (and pocketing around $4,000 for savings)... now I'm not so sure since we are so close to paying off the Nissan, which we would then have no car payment. So I guess my question is, what makes the most sense financially:

1) Keep Civic and avoiding $2,000 penalty for breaking lease. Selling Nissan and getting $4,000 in cash. Once lease is up, assess our situation and purchase a decent used vehicle

2) Break Civic lease and bite the $2,000. Keep the Nissan and pay down the remaining balance we owe within 2 years then keep for the life of the car, with remaining years without payment.

I really appreciate any helpful advice on this. We are not "car" people and have always tended to purchase new cars on a whim and for the convenience. This time around, we really want to make a calculated and responsible decision.

Thanks!

[MoneyTips4U]

Here's the deal- we have two vehicles. One is a 2008 Nissan that we financed and still owe about $6,000 on. The other is a 2012 Honda Civic that we started a 3-year lease on last year. I am not looking for anyone to tell me that it was dumb to do a lease... I already know that. We currently have one child but are expecting twins in the spring... in order to accommodate this major life change, we are in desperate need of making some huge adjustments. One thing that it just seems like we will have to do is to go down to one vehicle. It will be tricky, but doable since both my husband and I work about 5 miles from home and live in a city with great public transportation. The way I see it, we will be saving about $400+/month this way (payment, insurance, parking pass, gas). I have talked to Honda about options for getting out of lease and it sounds like it would cost us about $2,000. Based on that, I originally though that keeping the Honda was our best option and selling the Nissan (and pocketing around $4,000 for savings)... now I'm not so sure since we are so close to paying off the Nissan, which we would then have no car payment. So I guess my question is, what makes the most sense financially:

1) Keep Civic and avoiding $2,000 penalty for breaking lease. Selling Nissan and getting $4,000 in cash. Once lease is up, assess our situation and purchase a decent used vehicle

2) Break Civic lease and bite the $2,000. Keep the Nissan and pay down the remaining balance we owe within 2 years then keep for the life of the car, with remaining years without payment.

I really appreciate any helpful advice on this. We are not "car" people and have always tended to purchase new cars on a whim and for the convenience. This time around, we really want to make a calculated and responsible decision.

Thanks!

Let's just do a little math to see where that gets us.

A 2-year-remaining lease at around $250 a month would be $6,000 in the long run. You would pay $6,000 in 2 years, and have nothing to show for it at the end of the lease. Even the $4,000 from your other car would still mean you would need another $2,000 to pay off the lease, and in the end, you would have no car.

If you cut the lease, paid $2,000, you would still have your old car, and in the end you would pay $8,000 (lease cut-off fee + paying off older car).

So, basically, 2 years from now, pay $2,000 and have no car.

Or, pay $8,000 and have a car completely free and clear. A good one at that.

I would go with option number 2, assuming that you think you could manage the $8,000 over the next 2 years.

[disneysteve]

I agree with the previous reply. I can't imagine any question to which the answer is "lease a car". Get rid of it. Pay off the one you actually own. Don't ever lease a car again. And when it comes time to buy your next car, come here and ask for advice BEFORE you make a purchase. Good luck.

[bmarie]

Thank you- that's what I was thinking too. At the end of the two years with the second option, we'll have a car free and clear without payment vs. nothing at all to show for it. I will never lease again! Thanks!

[iliketosavemoney]

Transfer your lease?

Hi bmarie,

I haven't used it myself but I heard you can transfer your lease to someone else.
One of the popular sites I've heard about is Lease Trader.

Maybe this might be a better option to get rid of your lease instead of paying $2000.

Good luck

[siggy_freud]

Nothing wrong with leasing under the right circumstances. Those being, short term, on very-low depreciating cars.

As an example, my least costs me $217 a month, and saves me over that in gas, so it's a wash in terms of what it costs me.

For the first few years on a car all you're paying is depreciation anyways, unless (again) it's a low-depreciating vehicle.

I happen to lease a vehicle (Volt) that was being leased at a near loss to the company just to get more on the road. That's not to say a lease is a good thing, but I think it's a bit broad to label them all as bad.

[gostumpy]

Nothing wrong with leasing under the right circumstances. Those being, short term, on very-low depreciating cars.

As an example, my least costs me $217 a month, and saves me over that in gas, so it's a wash in terms of what it costs me.

For the first few years on a car all you're paying is depreciation anyways, unless (again) it's a low-depreciating vehicle.

I happen to lease a vehicle (Volt) that was being leased at a near loss to the company just to get more on the road. That's not to say a lease is a good thing, but I think it's a bit broad to label them all as bad.

(joking)

So what you're saying, is leasing is good if it means you don't have to pay for gas?

[disneysteve]

For the first few years on a car all you're paying is depreciation anyways

Only if you buy a brand new car, which I also wouldn't recommend.

I just bought a "new" car in June - a 2006 Toyota Camry to replace my 1998 Toyota Camry (bought used).

My wife's 2000 Toyota Sienna (also bought used) is nearing the end of its life (with us at least). We'll probably be looking for something in the 2009 or 2008 range to replace it.

[kaleida]

Nothing wrong with leasing under the right circumstances. Those being, short term, on very-low depreciating cars.

As an example, my least costs me $217 a month, and saves me over that in gas, so it's a wash in terms of what it costs me.

For the first few years on a car all you're paying is depreciation anyways, unless (again) it's a low-depreciating vehicle.

I happen to lease a vehicle (Volt) that was being leased at a near loss to the company just to get more on the road. That's not to say a lease is a good thing, but I think it's a bit broad to label them all as bad.

Saving gas... compared to what? A gas-guzzling SUV?

What if you compared it to a fuel-efficient used hybrid that you could have bought with that $217/month... then are you still saving on gas?