Cars--buy or lease?

[OldShooter]

...Just to clarify....she is the one paying for this and will be paying all cash ...

That's great. Just the initial experience of not having a car payment when virtually all of her peers are burdened with one will be like a vaccination that hopefully protects her for the rest of her life.

... 'm trying to teach her the value of money growing. ...

Great again! While you're at it, get her to understand that leasing is simply a particularly complicated and expensive way to borrow money.

 

[cyber888]

I've had 4 Audis. So far, always a good experience with all of them, better than the BMWs which has more electrical problems. I like the all wheel drive of the Audis.

She can get a cheap 2nd hand Audi like the A4, A3 or the A5 (2013 - 2018).
The 4-cylinder has some good turbos. I chipped my 2013 A4 allroad and it's pretty responsive, and no problem getting to 100MPH fast. It has been very reliable for the last 10 years. No mechanical or electric problems.

 

[captain3d]

Just to clarify....she is the one paying for this and will be paying all cash.....she came into some inheritance...

I don’t think that counts as paying.

 

[Sunset]

I hope for her sake she does not buy an Audi or BMW or she could face huge repair bills at some date, especially for the BMW's.

Toyota, Honda, Lexus, Hyundai, are good brands with lots of good models.

I've owned Toyota and Hyundai and been happy with both.

 

[Koolau]

I hope for her sake she does not buy an Audi or BMW or she could face huge repair bills at some date, especially for the BMW's.

Toyota, Honda, Lexus, Hyundai, are good brands with lots of good models.

I've owned Toyota and Hyundai and been happy with both.

Yep. Look at the Consumer Reports issues (just a month ago for the latest) that show car reliability as reported by CR readers. They represent more than a dozen aspects of reliability (engine, electrical, brakes, transmission, body integrity, etc., etc.)

Opening the page that includes a lot of Toyotas, you see almost all green (the best score) all up and down the page (reliability aspects reported) and across the page (model year.) That says lots to me. Some other car brands have truly abysmal records for many years in a row. Just a glance is enough to get the idea of which car brand to buy. Drilling down on the model may also help decide which year used-car to buy. YMMV

 

[retire48in2018]

My advice Is based upon following -

- cars are generally depreciating. Losing money in value as well as costs to maintain and use

-car choice is discretionary. From model to year to options

- car financing (lease or monthly) has been shown as one of the ways that middle income struggles to save enough money

So - I suggest a car that is no more than 1/2 of take home pay (regardless of source of money, i.e. inheritance). Especially early in work career - starts them in LBYM. My guess that probably means no Audi for a 21-year-old

 

[CRLLS]

Are Audi high cost maintenance and repairs in her entitled budget? I agree an Audi is not a good first car choice. Better to get 1-3 years old used more common vehicle. But problem now is used are near same prices as new. So see what deals you can find. I would avoid Audi or German cars, for the high maintenance costs. Not that any car maintenance is inexpensive, but German cars are worse.

I have a friend that owns and runs an independent auto repair shop. We were just talking a week or so ago. He said he would never recommend someone keeping a German car older than the warranty and absolutely no more than 100k miles. I'm sure there are plenty of exceptions, but the norm is certainly against them in his opinion.

A while back, a friend bought a new VW Passat. Before 2 year's time it started running poorly at less than 40k miles. I don;t recall exactly what the mileage was. It was really low. He took it back under warranty where the dealer admonished him for not adhering to the recommended 30,000 mile plug change. That's all it really needed. I mean, 30k? That's kinda of short for a recommendation let alone for actually wearing out in that time. He sold th car and swore that he'd never buy another VW again.

As for Hyundais being beneath your niece, well, I guess I am below her. on my 2nd Hyundai. Maybe she could look at the Genesis, Hyundai's high-class brand.

 

[ShokWaveRider]

I have leased our daily driver car for over 23 years. While I was W%$rking as I had a (Tax Free) car allowance and simply paid the lease with it.

When I retired, money was cheap, so as a result leasing was too ...... at least for me who gets a new car every 3 or 4 years, need it or not.

I still have a leased car, I got it when money was still cheap, there is 2 years and 9 months left on this lease.

I love the no worry driving, without maintenance, a no hassle warranty etc., I did trade my last car 1 year prior to the lease ending as the used car prices were great and I got an upgraded model of the same car (that I am/was happy with) for exactly the same lease price (Not sure how they did it, but they did).

In a couple of years' time, if money is not so cheap, and leases become silly expensive, then I may buy this one and keep it.

 

[Aerides]

The biggest factor here to me is her age - other than that we know little about her. The car I wanted at 21 was not the car I wanted (or needed) at 27, so I'm not sure sinking her money into buying one is the best for her for now, especially if she's looking at a new Audi or higher end purchase that will use up north of $30k of her stash.

Better she invest and build that, imo. I'll go against consensus and say a 3 year lease on a new reliable model car - IF it's a good price - might be the best idea for her current situation.

 

[Koolau]

My thoughts on cars for young'uns is to buy an inexpensive used car that is safe and reliable. Think 8 year old Toyota Camry or Honda CRV with average or preferably less miles. Pay cash (I don't even know if you can lease a used car - probably not.)

"Under" insure it for collision but not comprehensive. OVER insure for liability.

Teach 'em how to check oil, how often to change oil, how to watch for leaks, how to wash/wax, etc.. Teach 'em how to drive it in the real world. Never be in a hurry, always drive defensively, think of it as transportation and NOT a statement. Heh, heh, end of sermon that I gave to my kids so YMMV.



Full disclosure: Two of my kids followed my advice. The other now drives a Tesla that he has put 70K on, so I'm pretty proud of all of them.

 

[OldShooter]

... Teach 'em how to check oil, how often to change oil, how to watch for leaks, ...

One of DS's best learning experiences, which he acknowledges, happened when he ran his first vehicle, an old truck, out of oil and seized he engine. I took him to a junkyard owned by a friend, we put a replacement engine into my Suburban and drove home. We dropped the engine in the driveway next to the dead truck and I wished him luck. Two benefits; he is careful with his vehicles and he does not fear any project.

 

[COcheesehead]

BMW's are known to generate "legendary" repair invoices!

She should stay away from anything German.

I had four BMWs. Less maintenance $$$ than our US made cars/SUVs.

 

[wdberry62]

Always buy, never lease and always pay cash for a vehicle.

Leasing is a bad financial option for a couple of reasons: 1) Lease agreements don't have to disclose the interest rate you're paying, which is always higher than if you were to purchase the car and finance it yourself and 2) The basis for the amount you are financing during the lease (based on anticipated residual value) is always higher than the actual value of the vehicle. Studies have shown that on average for a 3 year lease, you're paying the equivalent of a 14% interest rate for financing the value of the vehicle during the lease term.

 

[aja8888]

I had four BMWs. Less maintenance $$$ than our US made cars/SUVs.

It's a shame your personal experience doesn't fit the rest of the owners.

 

[COcheesehead]

It's a shame your personal experience doesn't fit the rest of the owners.

?
Really we spent almost nothing on BMW maintenance because it’s included. Please offer evidence on your assertion - in detail.

 

[COcheesehead]

Always buy, never lease and always pay cash for a vehicle.

Leasing is a bad financial option for a couple of reasons: 1) Lease agreements don't have to disclose the interest rate you're paying, which is always higher than if you were to purchase the car and finance it yourself and 2) The basis for the amount you are financing during the lease (based on anticipated residual value) is always higher than the actual value of the vehicle. Studies have shown that on average for a 3 year lease, you're paying the equivalent of a 14% interest rate for financing the value of the vehicle during the lease term.

This is wrong. The residual value is known at the time of purchase and as of late,
including my personal experience, is less than the lease amount. Many on here have posted as such, being able to buy their end of lease vehicles for less than residual.

 

[FREE866]

Now shes leaning more to a Ford Ranger mini pickup truck

 

[aja8888]

?
Really we spent almost nothing on BMW maintenance because it’s included. Please offer evidence on your assertion - in detail.

I said repair invoices, not normal maintenance.

I'd post some of my next door neighbor's repair invoices (faulty electrical stuff not warrantied), but I'm in Birmingham, AL right now. If I remember in two weeks when i get back home, i'll see if I can accommodate you. Incidentally, I have spent no money on repairs for my Hyundai in 86,000 miles since it's still under warranty for the expensive stuff and everything has been peachy over those miles.

Hyundai also included free oil changes and tire rotations for 3/36!

My old 2003 BMW 330ci was a fine car until the oil pan started leaking like a sieve and the crappy Getrag transmission main shaft bearings stated to howl like a stuck pig. The oil pan gasket is expensive to change since the subframe needs to be dropped along with everything connected to it. I sold the car as is, but it was a nice machine. Oh, the convertible top hydraulics went out several years ago and it was a royal PIA to change the pump. Lots of other stuff along the way....

 

[COcheesehead]

I said repair invoices, not normal maintenance.

I'd post some of my next door neighbor's repair invoices (faulty electrical stuff not warrantied), but I'm in Birmingham, AL right now. If I remember in two weeks when i get back home, i'll see if I can accommodate you. Incidentally, I have spent no money on repairs for my Hyundai in 86,000 miles since it's still under warranty for the expensive stuff and everything has been peachy over those miles.

Hyundai also included free oil changes and tire rotations for 3/36!

My old 2003 BMW 330ci was a fine car until the oil pan started leaking like a sieve and the crappy Getrag transmission main shaft bearings stated to howl like a stuck pig. The oil pan gasket is expensive to change since the subframe needs to be dropped along with everything connected to it. I sold the car as is, but it was a nice machine. Oh, the convertible top hydraulics went out several years ago and it was a royal PIA to change the pump. Lots of other stuff along the way....

Invoices for repair vs maintenance. OK. LOL. The tune changes.
I never paid a repair bill for any of my four BMWs. All covered under warranty. I really did not have any issues. A 20 year old car will have repairs, of course.

 

[JoeWras]

A fascinating discussion!

If she is set on Audi or BMW, I say "lease," so they are covered under warranty.

Others should be buy.

I hope OP can convince her to save some VTI, and go with a nice used Camry, but I'm going to guess that will be difficult. A 21 year old knows everything after all .

Now that I'm managing 3 cars, 12 to 15 years old, with a combined mileage of 450k, I've learned a lot about reliability. I've read a lot of mechanics' forums. I'm sorry to say, but the reputation about expensive repairs with German cars is warranted. This is a concern mostly after 80k, 8 years or so. Hence the suggestion to lease if she wants one.

 

[FREE866]

A fascinating discussion!

If she is set on Audi or BMW, I say "lease," so they are covered under warranty.

Others should be buy.

I hope OP can convince her to save some VTI, and go with a nice used Camry, but I'm going to guess that will be difficult. A 21 year old knows everything after all .

Now that I'm managing 3 cars, 12 to 15 years old, with a combined mileage of 450k, I've learned a lot about reliability. I've read a lot of mechanics' forums. I'm sorry to say, but the reputation about expensive repairs with German cars is warranted. This is a concern mostly after 80k, 8 years or so. Hence the suggestion to lease if she wants one.

just to clarify, the $$$ wouldn't be coming out of VTI....would come from a money market.....and per my last post now shes looking at a Ford Ranger...its like a mini pickup truck.....used....Consumer Reports ratings are actually pretty good

 

[JoeWras]

just to clarify, the $$$ wouldn't be coming out of VTI....would come from a money market.....and per my last post now shes looking at a Ford Ranger...its like a mini pickup truck.....used....Consumer Reports ratings are actually pretty good

That's a huge turn around! And a wise one too.

 

[FREE866]

That's a huge turn around! And a wise one too.

Really? Happy to hear that

what makes you say that though?

 

[mebden]

just to clarify, the $$$ wouldn't be coming out of VTI....would come from a money market.....and per my last post now shes looking at a Ford Ranger...its like a mini pickup truck.....used....Consumer Reports ratings are actually pretty good

Hey FREE I have a 2020 Chevrolet Colorado and love it and its smaller pickup like the Ford Ranger

 

[JoeWras]

Really? Happy to hear that

what makes you say that though?

Well, a Ford Ranger is 180 degrees different than an Audi!! Hence the turn around.

I'm not a Ford guy, but I still like the direction. These vehicles are widely available with a huge pool of parts and mechanics available to repair, if required. This keeps costs down and readily available.