Thoughts on trading in a car for a check and leasing a new car to reduce bills

[TheGardener]

The best option is going from 2 cars to 1 car. Not only would you reap the proceeds from the sale, but you save on insurance, gas, maintenance, repairs, excise tax and inspection. But that might not meet your needs for a variety of reasons.

I don't like the lease idea. It is pretty well covered above. I'd only add that if you screw up the negotiation on the value of the car and how many miles you will drive during the lease period, you will be making a big mistake even bigger.

Have you checked into a home equity loan? While the interest rate will be higher than a car loan, it will probably be less than what you are paying for the new ac/heater unit. Another option is to take out a fixed rate second mortgage for 10 years. You could even look at refinancing your first mortgage and take out more money. Just run the numbers. This type of loan is sound because the life of the ac/heater should be 20 to 30 years. Compare that to the life of a car.

[edit] Caught up on the 0% on the ac/heater unit. When the year is up, you'll have to do something. That's why a loan tied to your home is a better option than playing around with car loans or a lease.

 

[TheGardener]

Maybe someone else has more or better experience, but the only time I've had to replace tires because they were old was my elderly father's car. For 3-4 years it was barely used (maybe 2000 town only miles a year), then when it started getting regular use again the tread began separating from the tire body, causing very loud thumping at highway speed. When they went bad it was very obvious. I wouldn't replace the tires solely because they were old.

#yourlifeandyourfamily'sdon'tmatter

Tires dry out whether you drive on them or not. It's not only about tread wear. If you see cracks in the sidewall of a tire, it has to be replaced. Otherwise it can blowout. Someone can die. I wouldn't want to be in your car or in the car you hit when you lose control, given what you said.

 

[RedShirt]

Why would you replace the tires before they're worn to where they need to be replaced? Unless they're dry rotting, this isn't like milk in a refrigerator with a best by date.

Actually, once a tire hits 10 years old or so, they tend to fail, regardless of mileage.

http://www.edmunds.com/car-care/how-old-and-dangerous-are-your-tires.html

 

[RedShirt]

The best option is going from 2 cars to 1 car. Not only would you reap the proceeds from the sale, but you save on insurance, gas, maintenance, repairs, excise tax and inspection. But that might not meet your needs for a variety of reasons.

I don't like the lease idea. It is pretty well covered above. I'd only add that if you screw up the negotiation on the value of the car and how many miles you will drive during the lease period, you will be making a big mistake even bigger.

Have you checked into a home equity loan? While the interest rate will be higher than a car loan, it will probably be less than what you are paying for the new ac/heater unit. Another option is to take out a fixed rate second mortgage for 10 years. You could even look at refinancing your first mortgage. Just run the numbers. This type of loan is sound because the life of the ac/heater should be 20 to 30 years. Compare that to the life of a car.

I like the idea of going to 1 car. I do take the bus into work, but I drive a couple miles to a parking lot to hop on the bus. There isn't a stop where I live. If it wasn't for the winter months, I could just ride a bike to the bus stop.

The heater and ac is currently at 0%, but only for 12 months. After 12 months, if not paid off, the interest rate hikes to a crazy number. The only way I'd consider getting a different loan for that is if we were unable to pay it off and our savings was empty for some reason.

Again, I'm not looking at this lease deal because I have to lower my bills, it just would be nice to have an extra $200 a month going to savings. But, it sounds like leasing would end up costing me more money in the longs run.

 

[TheGardener]

A lot of people don't like debt. But there are reasons for debt, like buying or improving a home. That's what you have done. You sound like a thrifty person to me. Still going down to zero in your savings is never a good idea. There's no free lunch on the improvement you've made in your home.

 

[RedShirt]

Maybe someone else has more or better experience, but the only time I've had to replace tires because they were old was my elderly father's car. For 3-4 years it was barely used (maybe 2000 town only miles a year), then when it started getting regular use again the tread began separating from the tire body, causing very loud thumping at highway speed. When they went bad it was very obvious. I wouldn't replace the tires solely because they were old.

Any other places to cut expenses? Cable TV (too big a package) or cell phones? Getting off cell phone contracts and switching to a MVNO can easily cut each phone line to a third what it was.

Glad to see you are not one of those types where a $500 "unexpected" bill causes total havoc, please excuse my initial misjudgment.

I've been looking on how to reduce bills everywhere and this was the only one that would have any significant monthly savings. We don't have cable/sat TV, and we use Cricket Wireless for cell ($70 a month for 2 lines).

I think I'll probably keep the Subaru. Part of me wants the Civic just for features like better gas mileage (I'm averaging 22 mpg in the Subaru), integrated bluetooth and a backup camera, but they are just wants, not needs.

 

[Murloc]

Gosh I'm a retard, I grasped just now that the AC is in the house and not the car.

Since you only have to drive a couple of miles, can't you get a cheap-ass used city car or something for cash?

 

[OutHouse]

Is this a dumb idea?

yes.

Pro Tip: LEASING IS PAYMENTS, STOP MAKING PAYMENTS.

 

[z1ggy]

OP, why must you keep the van? And I mean, that exact van. If you need a large vehicle because you haul children, then a used van or small SUV should do the trick still.

The advice of trading the van, for a 100% cash paid "beater", is the best idea if you truly need to reduce costs in a smart way.

 

[OutHouse]

That depends on maintenance bills. If you expect the Subaru to require a big ticket replacement soon, then a lease might be cheaper over the same period.
If over the next three years, the Subaru needs maintenance to the tune of 5k (assuming an optimistic 2.2k depreciation over 36 months), then a leased replacement with warranty will be a superior option.
So, a lunched engine, bad diffs or transmission, or recurring electrics issue can all incur the kind of cost that could flip this equation.

They key information is how much work you'd expect a 6-10 year old Subaru to require.

FAIL.

 

[edro]

Wow, buying a new Dodge was the mistake.

 

[_Rick_]

FAIL.

Please explain your reasoning.

A leased car has a relatively fixed cost p.a.
In this case, that cost is 7.2k over 3 years.

If the Subaru ends up being more expensive, either because it takes an unexpected hit in depreciation, or because it requires parts + work hours to keep it in working order, then the leased car ends up cheaper, and you should cash out on the Subaru.

Of course, the expected cost in keeping the Subaru is lower, than the expected cost of taking on a lease, but if there are subtle issues with the Subaru now, it might instead be time to cut your losses.

 

[RedShirt]

Please explain your reasoning.

A leased car has a relatively fixed cost p.a.
In this case, that cost is 7.2k over 3 years.

If the Subaru ends up being more expensive, either because it takes an unexpected hit in depreciation, or because it requires parts + work hours to keep it in working order, then the leased car ends up cheaper, and you should cash out on the Subaru.

Of course, the expected cost in keeping the Subaru is lower, than the expected cost of taking on a lease, but if there are subtle issues with the Subaru now, it might instead be time to cut your losses.

I think the main difference is after those 3 years. When that is done, I'd either have to pay 12k (plus tax) to buy the Civic, or go out and purchase/lease another car. If I keep the Subaru, my payment for that vehicle is still $0 a month.

Of course, my original question was about reducing my bills *now*, not 3 years down the road, but it's something to factor in.

 

[RedShirt]

Wow, buying a new Dodge was the mistake.

Rated "Very Good" by consumer reports. 10k cheaper than comparable Honda and Toyota (although, there is a reason for that). Some people like to buy new cars, if no one did, there wouldn't be any used cars.

 

[nakedfrog]

The next big maintenance on the Subaru is at 60,000 miles:

https://www.driverside.com/service-...forester-2009-23568-31464-57717?mileage=60000

It'll also need new tires soon, which will likely cost $500 or more. It all depends if I get the cheapest tires possible or higher quality tires.

That's about all I can think of for major expenses with the car in the next 20k miles. I've recently changed the brake pads.

Big maintenance? It's an oil change, engine air filter, cabin air filter, spark plugs, and plug wires. Everything else is "inspect" or "check fluid level". That's like $100 of stuff.


Actually, plug wires aren't even on there. That makes it even cheaper.

 

[RedShirt]

OP, why must you keep the van? And I mean, that exact van. If you need a large vehicle because you haul children, then a used van or small SUV should do the trick still.

The advice of trading the van, for a 100% cash paid "beater", is the best idea if you truly need to reduce costs in a smart way.

I typically buy new with the intent to keep for 7-10 years. It's what I did with the Subaru and what I plan to do with the Dodge (unless there are major issues, we plan on keeping it for 10 years).

If I was in a bind and had to get more cash, then sure, I'd consider selling the van. What I'm looking here is just a way to reduce my bills some so I can save more each month. It looks like leasing would save me money ***now*** but it'd cost me too much ***later***, although when I run the numbers, it's a bit closer than a lot of people in this thread seem to think.

 

[RedShirt]

Big maintenance? It's an oil change, engine air filter, cabin air filter, spark plugs, and plug wires. Everything else is "inspect" or "check fluid level". That's like $100 of stuff.


Actually, plug wires aren't even on there. That makes it even cheaper.

Unless there is anything wrong with any of it (which I doubt there will be). Might have to replace some fluids, but I don't expect more than that.

 

[nakedfrog]

Unless there is anything wrong with any of it (which I doubt there will be). Might have to replace some fluids, but I don't expect more than that.

But how much do they charge for that? And how long do you expect it to take you to get up to 60k? Why not do most of the inspecting yourself, or just take it to a trusted independent mechanic and have them inspect everything for seventy or a hundred bucks?

 

[RedShirt]

But how much do they charge for that? And how long do you expect it to take you to get up to 60k? Why not do most of the inspecting yourself, or just take it to a trusted independent mechanic and have them inspect everything for seventy or a hundred bucks?

That's what I intend to do. By "big" maintenance, I meant something other than oil change and tire rotation. Perhaps this was not the best choice of words. The biggest upcoming expense for the Subaru will be new tires. It should take me about 2 years to get to 60k.

 

[RedShirt]

So I decided to run some numbers. The cost of the lease is $7000 (0 first month payment). If I were to put aside the money I'd save each month, I'd have $7400 in extra savings over those 3 years (not factoring in any interest). The difference in gas mileage basically negates monthly lease sales tax.

Let's also guess that I'd have $1000 in extra maintenance costs on the Subaru over the Civic. Factoring that in, if I were to buy the Civic at the end of the lease, it'd cost me approximately $3500 plus any upfront extra fees (like registration) vs keeping the Subaru. This all assumes that I can trade in my Subaru to pay off the van in full.

If I had any large unexpected maintenance cost over the next 3 years, that $3500 could be a lot smaller. The chances of this happening are small, but possible.

 

[Jumpem]

Drop one of the vehicles and share a single one.

 

[SketchMaster]

I typically buy new with the intent to keep for 7-10 years. It's what I did with the Subaru and what I plan to do with the Dodge (unless there are major issues, we plan on keeping it for 10 years).

I'll follow up Z1ggy's question with: Why do you *need* a van?

Do you need it for towing? Do you have a lot of kids? Big dogs? What do you need a van for?

So I decided to run some numbers. The cost of the lease is $7000 (0 first month payment). If I were to put aside the money I'd save each month, I'd have $7400 in extra savings over those 3 years (not factoring in any interest). The difference in gas mileage basically negates monthly lease sales tax.

Let's also guess that I'd have $1000 in extra maintenance costs on the Subaru over the Civic. Factoring that in, if I were to buy the Civic at the end of the lease, it'd cost me approximately $3500 plus any upfront extra fees (like registration) vs keeping the Subaru. This all assumes that I can trade in my Subaru to pay off the van in full.

If I had any large unexpected maintenance cost over the next 3 years, that $3500 could be a lot smaller. The chances of this happening are small, but possible.

Can you show us your math? I'm not seeing where you're getting these numbers... How are you going to be able to buy a Civic after three years of just $200/mo payments + $3,500 at the end of the lease?

Don't talk yourself into giving away a perfectly good car for another car loan, and you're just spending more money down the line; doubly so if you decided to buy the car at the end of the lease. Instead of "saving" $7,400 by spending $7,000, why not get rid of the van (if you don't *need* it) and save yourself $14,400! Take that and put it in a savings of some kind and grow it a bit. Honestly, I'd rather drive a Subaru over a Dodge any day, I see more 10+ year old Subaru cars on the road than I do Dodge cars.

If you only live a couple miles away from the bus stop, just bike to work on nice days, and carpool with your wife on the not so nice days.

To sum up: The best way to save money is to stop giving it to people for things you don't need.
To sum up more: Stop buying things you already own.

 

[waggy]

Shrug. i think the idea of trading in a car that is paid off. To take a lease is a bad idea.

I would like to see the numbers too. cause it just don't seem right.

 

[z1ggy]

I typically buy new with the intent to keep for 7-10 years. It's what I did with the Subaru and what I plan to do with the Dodge (unless there are major issues, we plan on keeping it for 10 years).

If I was in a bind and had to get more cash, then sure, I'd consider selling the van. What I'm looking here is just a way to reduce my bills some so I can save more each month. It looks like leasing would save me money ***now*** but it'd cost me too much ***later***, although when I run the numbers, it's a bit closer than a lot of people in this thread seem to think.

Sounds like you typically don't keep cars for 7-10 years if you're about to trade in your 2009 Subaru, especially when there's nothing wrong with it. Paying a few hundred for minor routine maintenance is much cheaper than paying $200 every single month for the next 3 years for a lease, plus depreciation.

Honestly, if you want to just save some money right now (whatever some means.. ) you're better off cutting costs in other areas then. Say, cut cable and only have internet or only go out to eat dinner once a month, instead of once a week. It's very rare that giving away something you own to pay for something you don't own turning out to be a good money move.

You still never said why you need that exact van, by the way. If you want to truly reduce costs with these cars... get out of your remaining loan.

 

[RedShirt]

I'll follow up Z1ggy's question with: Why do you *need* a van?

Do you need it for towing? Do you have a lot of kids? Big dogs? What do you need a van for?



Can you show us your math? I'm not seeing where you're getting these numbers... How are you going to be able to buy a Civic after three years of just $200/mo payments + $3,500 at the end of the lease?

Don't talk yourself into giving away a perfectly good car for another car loan, and you're just spending more money down the line; doubly so if you decided to buy the car at the end of the lease. Instead of "saving" $7,400 by spending $7,000, why not get rid of the van (if you don't *need* it) and save yourself $14,400! Take that and put it in a savings of some kind and grow it a bit. Honestly, I'd rather drive a Subaru over a Dodge any day, I see more 10+ year old Subaru cars on the road than I do Dodge cars.

If you only live a couple miles away from the bus stop, just bike to work on nice days, and carpool with your wife on the not so nice days.

To sum up: The best way to save money is to stop giving it to people for things you don't need.
To sum up more: Stop buying things you already own.

Payoff on the lease is a little under 12k. So, I make 7,000 in payments during the lease, and then if I were to use the money I saved during the lease to buy the civic, that'd be 7400. That'd make the remaining payoff 4600 (12,000 - 7400). If I have $1000 of extra maintenance costs with the Subaru, we need to subtract that $1000 as well, making the cost of the lease over keeping the Subaru $3600.

I could, at the end of the lease, turn it in, do another lease, purchase a beater, etc etc. If I were to buy a $5,000 used car instead of purchasing the civic at the end of the lease, the cost of that lease would be cheaper than keeping the Subaru.

It seems people seem to think that I'm upside down on my bills etc, and that I must free up some money. This is not the case. I don't need to justify why I want to keep the Van. It is not a need, but a want. I want to keep the van.