To lease or not to lease...

[Michael Raphael]

So I will be moving back to Tampa soon for school and I want to be able to work, however, my job requires that I drive. With that said, do you think it is a smart investment or not to lease a 20k car? For anyone interested it is the Scion FRS or a Jeep Wrangler Sports.

I believe I need a car to do my work efficiently, can I do it without it, honestly I think I can, but it will take more work to transport myself around the entire city and definitely be harder to get clients that are farther out.

So I ask you, the forum, for guidance. What should I do?

Lease this car or not?

 

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[1step]

I dont know, do you need the money? I guess it will be $250-300 a month to lease the car.. Is that very much money to you? Will it pay for itself?

If it were me I would look at more economical cars than a Wrangler, Jeeps suck and get bad gas mileage. I assume since you are asking money is somewhat tight so I dont know why you would consider this car.. I dont think theres much of a need for all wheel drive in Tampa.

How many hours a week/month would having a car save you?

 

[Michael Raphael]

Well I am in University, apparently the school did not put me in housing so now I have to get an apartment and that increases my need for transportation. Perhaps I will just get a cheaper car or make very very good friends

 

[Runum]

Bicycle or cash car.

 

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[Milkanic]

Here you go

tampa bay all for sale / wanted classifieds "honda civic" - craigslist

 

[AmyQ]

To me, there are only a couple of situations where leasing a car makes sense to me (leasing though your business, you have so much money that the money lost on a lease is worth it, etc.)

A college student without a lot of funds is one of the last situations in which it makes sense to me to lease a car.

If you need a car, there are other options. You could get a loan from a credit union/lender and buy a used car. They will likely have a minimum amount (they want something of value to re-possess if necessary), but that should be around the 7k range, cheaper than a new car. If you income hasn't been stable for the last two years, they will also likely want a co-signer. Would your parents be willing/able to do that for you?

I admit that my perspective is skewed by the fact that I have never bought a new car or financed a car. I just can't see taking a big hit on depreciating asset such as a vehicle. Every single one of our employees drives a car that costs more than mine and my husband's combined. Houses and cars are typically your biggest fixed expenses. Making a bad choice about those two things will typically have a bigger impact on keeping you in the slowlane than any other financial choice you can make. People talk a lot about the "latte factor," but spending $5 a week on coffee = $260 a year. Less than one car payment for most.

 

[GuestUser8117]

Maybe ask james altucher in the AMA thread?

 

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[Michael Raphael]

Well heres my current situation. I may at minimum 3k a month. Guaranteed almost. On average I make 9k (profit not net). That has been the case since feb.

I really believe as the months go on this # will increase as I have been doing a lot more work (more clients), started other ventures, and what not. But I really don't know I am listening to all your advice. Truth is I am a spoiled a$$ bitch and I really just want something to look nice in. But I remembered something I read (think in MJ book) if you have to think twice about a purchase dont make it. Dont think twice about buying a cup of coffee, same feeling for a car. Ill just wait a few months and if I really do need a car I will figure something out. Students get 3$ cab rides

 

[SBS.95]

tampa bay all for sale / wanted classifieds "honda civic" - craigslist

I'd call that first guy. Could probably get him to go down to $2000-2200. It's a Civic so you know your engine's good forever, and it's a 5 spd so your transmission's good forever. Everything else is just extra.

 

[MMatt]

I would also agree with the statement of buying an used economy car with cash. You may look "cool" to some in a frs but if you save your materialistic desires for when you can afford a supercar I think you will feel more accomplished.

 

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[nitrousflame]

When it comes down to it, you really have two factors to consider when making your decision.

1) The mathematical factor. Simply run the numbers on your options. At the end of the day (or week/month/year/etc), how much time/money do you spend in the lease scenario vs the buy scenario? Try a bunch of different options and combinations here.

2) The emotional factor. This one is obviously not as cut and dry and ideally you would want to maximize both form and function, but with limited resources you will have to choose which is more important to you. Note: form comes at a premium.

 

[AmyQ]

Using a leasing company like D&M you could probably pick up a 07-08 jetta or something for under a hundred bucks a month. Which now begs the question, why the F*ck buy? The cash you spend on a shitty old high mileage $2500 civic could get you 25 months in a MUCH nicer and newer car with all issues taken care of. Lets be honest here, what is that civic really going to be worth 25 months later? Will it even run? How much money have you put in it?

This to me is a no brainer. I guess I am just crazy.

I agree that a 2,500 civic may not be the way to go, but I am not sure why you think all of the issues would be taken care of. If you lease a used car, you are responsible for all repairs not covered by a bumper to bumper warranty for the duration of your lease Used Car Leasing | Used Car Buying Guide - Consumer Reports

Jettas have high costs of ownership and are expensive to repair. The website for DM leasing states that all of their cars have " the same manufacturer’s warranty as if you purchased the vehicle yourself." Frequently Asked Auto Leasing Questions - FAQ | D&M Auto Leasing This means that the OP would be on the hook for most repairs since the 2008 Jetta warranty isn't bumper to bumper and doesn't cover a number of things five years out.

Also, I wouldn't want to hassle with mileage limitations. I bought a used Honda 5 years ago. The cost per month to drive it, including repairs (which have only been maintenance) has been $166/month. Since I own it, my insurance costs/requirements are lower as well. DM leasing requires gap coverage in addition to other insurance that I don't currently carry.

 

[Kak]

It is all part of the negotiation. They will tack on a bit for a maintenance plan or you get a CPO car.

 

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[AmyQ]

It is all part of the negotiation. They will tack on a bit for a maintenance plan or you get a CPO car.

Cool. As I mentioned, I have never leased or financed, so I don't know a lot about it. Hopefully, you will share your final numbers (interest, maintenance, tax, insurance, etc.) with us when you get your lease done, so we can learn. I won't be buying a car for at least two years, but am open to doing it a new way if the numbers add up.

 

[Kak]

You will pay a premium to lease overall. It will cost more money in the long run. But with our growth trajectories paying less in the present is a plus. Time value of money is different for us than a job holder.

 

[AmyQ]

Perhaps we are just at different phases in our companies and car uses/costs.

Five years ago, we were in bootstrapping phase. We lived on $1300 a month to keep our business going for one year and poured all of our income, money and profits back into the company. A monthly car payment would have killed us.

I think we both want the OP to have as much money as possible to invest in himself and his business, we just have different approaches. I could have used the cash I paid for my car to invest in the company and leased. As you point out, it would have cost less in the short term. However, now that we are in a growth phase, money is just as important, and having very low fixed costs gives us a tremendous amount of freedom to have the mind frame and financial ability to take risks. Admittedly, being risk averse is one of my worst qualities, so everyone doesn't need that mental freedom, but the financial freedom is great to have. My husband loves the fact that some of our employees drive a Jag, a Mercedes and a BMW because he knows that their freedom has been limited by those choices.

You clearly have a different and well thought out philosophy on cars. I am not saying that mine is correct, just another approach.

 

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[vtlambo]

It is all part of the negotiation. They will tack on a bit for a maintenance plan or you get a CPO car.

Kak, not sure if you've seen Momentum BMW in Houston, but they offered a great maintenance plan. My parents got a 750LI a while ago and brakes just got covered (would've been $1500 otherwise).

 

[Kak]

Perhaps we are just at different phases in our companies and car uses/costs.

Five years ago, we were in bootstrapping phase. We lived on $1300 a month to keep our business going for one year and poured all of our income, money and profits back into the company. A monthly car payment would have killed us.

I think we both want the OP to have as much money as possible to invest in himself and his business, we just have different approaches. I could have used the cash I paid for my car to invest in the company and leased. As you point out, it would have cost less in the short term. However, now that we are in a growth phase, money is just as important, and having very low fixed costs gives us a tremendous amount of freedom to have the mind frame and financial ability to take risks. Admittedly, being risk averse is one of my worst qualities, so everyone doesn't need that mental freedom, but the financial freedom is great to have. My husband loves the fact that some of our employees drive a Jag, a Mercedes and a BMW because he knows that their freedom has been limited by those choices.

You clearly have a different and well thought out philosophy on cars. I am not saying that mine is correct, just another approach.

Much different approaches. I truly would never lease or ever dream of having a payment on a car if it was being paid for by a job. I am of this mindset now because I have a business, my time is detached and it will not do anything to my freedom. I 100% agree.

If I was an employee I'd want the cheapest lifestyle possible so I can quit as easily as possible. Now that I have a business making money, it is different. Id rather not have the hassle of a shit car. Plus I enjoy nice things, nice experiences, nice dinners and I can afford them within reason.

OP... If you currently hold a job, ignore everything I said. Get the civic.

 

[Kak]

Kak, not sure if you've seen Momentum BMW in Houston, but they offered a great maintenance plan. My parents got a 750LI a while ago and brakes just got covered (would've been $1500 otherwise).

I have heard great things about momentum and sewell.

 

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[Michael Raphael]

Kak I do have a job haha, my business. I do web development and app development and work with company's and do software stuff. But it pays well. For instance today I made 3k, and I had another meeting that might get me another 4k next week. SI am not saying this to brag I just want to lay down the facts to make the best case.

1. I started my business Feb. this year.
2. I make minimum 3k a month
3. Month of June I made 0$ I was in hospital was mugged and jumped and messy docs lawyers and all healing process
4. This month alone I have made 9k, and have 4/5 prospects (not including one mentioned above) that are interested in my service. On average a client is 4k so thats 16-20k in itself. Will that happen by the end of July absolutely not its the 30. but that means in august I now have 4 +/- 2 that I just need to close and that doesnt include all the people I will go out and meet (I go business to business to get clients).

So yea I think I summed up how my business works. I put in roughly 15-20 hrs a week trying to get clients. In a week I avg 1-2 clients. Thats as of now 3-6k a week. But my business really has been booming this month.

Kak I agree with you I do want a nice lifestyle, I am trying to open a clothing company on the side because I just love nice shit. Enough said. When I am home I drive an MDX or Lexus, its just the lifestlye I live, so I rather no car than civic. Sorry I am spoiled I know. But I worked my a$$ off since I was 13 to get nice stuff. I am just used to it now. So with all that said and done, do you think I should get a lease on the FRS. I prob have horrible credit so will need a co-sign.

I honestly believe in the month of August I can make over 20k net and roughly 40% are expenses. Plus my lawsuit case haha but that is something else entirely.

 

[Kak]

But it pays well.

Here is my two sense about this. If you have to have a job to pay the bills there is absolutely nothing wrong with it. And this sounds like a job to me. You are trading your time for money.

If your ultimate goal is to start a company that divorces your time from your income, this current gig paying well has nothing to do with it. You should do everything you can to make your lifestyle cost as little as possible. This is why I think it is important to start young before you know any better. It will be much harder for you if you get accustomed to your cushy job.

 

[Mouse McCoy]

Kak, not sure if you've seen Momentum BMW in Houston, but they offered a great maintenance plan. My parents got a 750LI a while ago and brakes just got covered (would've been $1500 otherwise).

That's ridiculous! There's a reason why gearheads call it a car "stealership" for the exorbitant prices they charge for relatively simple things. I've changed brakes on my friends car, and I'm by no means a mechanic -- it was relatively easy and hassle-free (you need a C-clamp, though). It can be done in roughly an hour, but this was on a Mazda not on a BMW, YMMV (pun intended).

If you buy the parts yourself from somewhere like Rock Auto (RockAuto Parts Catalog) you could save a lot, in my experience. I guess that all depends on if your time is worth $700 an hour or whatever the price difference on these imported parts. I am aware yours was under warranty, but throwing out "it would have cost $1,500" just irked me.

 

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[Tom.V]

This thread, especially Kak's responses (thanks btw), have given me a new route to look into. I currently own a car, free and clear, with about 87k miles on it and can sell it for around $10k. I also have excellent credit, but need more cashflow at this point in time. When looking to lease a car should I visit a dealership or is there somewhere better to find CPO or quality used cars with affordable leasing options?

I just think it would be in the best interest for my business, as I will need a car but I just don't drive much anymore. Not to mention I have some things that need to be repaired on my current car, or will need to be replaced in the near future (100k miles is usually the sweet spot for repairs). From my take on this thread, leasing would be ideal for my situation as I would have a fixed amount to pay monthly and have instant cash upon selling my car. $3000 or less for 2 years? It just sounds crazy to me.

Either way, thanks for the thread, it has given me new options.

 

[Michael Raphael]

Glad I can make your life easier ungodly. Guess this thread was an important one to discuss. I think you should sell your car definitely before the 100k mark. You will get a lot more for it. Also clean it up for the photos, but you know that. You'd be surprised how many people don't though.

Sell, sell, sell!

As for Kak, as of now it is a job, but I am working on the side on App development, making 2 right now (a third soon), that will create passive income for me. So it is a business?

 

[Mouse McCoy]

I am working on the side on App development, making 2 right now (a third soon), that will create passive income for me. So it is a business?

Rather than a business, from my limited experience; it sounds more like they're seedlings of a money tree to me, Michael Raphael

 

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[Michael Raphael]

Mouse, you must secretly know me for years, cause you just found the key to my heart lol... haha but seriously yea that's the goal. My web development and stuff is just a way to finance my larger projects. Seriously, got a clothing company and books coming out soon. SO I am Uber excited about that. lol uber awesome word.

Yea money tree seedlings: Author! Apps! Clothing? not so sure on the last one, but fingers crossed. If you are experienced with manufacturing clothing please, please PM me.

 

[Kak]

Michael. I think you might talk to lovevharm about clothing