Cars in Retirement

[Idnar7]

We purchased a GMC Terrain three years ago thinking that might be our last car (me 67 dw 65). Now after three years of payments our mileage is only 15570. The dealer called us about buying our car back. They are offering 19k+ trade in and suggesting we lease instead with our low mileage. We have a 60 month loan. We could upgrade to an Acadia for $30 less a month for three years and get $5800 back on the trade. On one hand we could keep our car, have it paid in two years, with only 25k miles on it. Or we could lease, pay for three years, and get a new lease. My wife can't drive at night and we just don't travel that much anymore. Leasing just seems like it would simplify our life. A friend of mine bought an old widows car with low mileage and had nothing but problems. Seem they age just as fast if not driven. I think I am leaning towards the lease, but would like contrary opinions. We could trade in and buy, but to keep our payment the same would require a $10k down payment, and we would still have a low mileage car to deal with. Thanks for responses as to whether at some age, lease makes more sense.

 

[harley]

Not in my opinion. You currently have a low mileage vehicle that will be paid off in 2 years, leaving only maintenance as an ongoing cost. If you lease you will be paying for the rest of your life (or until you decide to go without a car). Keep what you have, take decent care of it, and you'll save an immense amount over the remaining (10, 20, whatever) years of your life.

Also, be aware that the dealer isn't offering anything for your benefit, just for his. Take any offer with a large block of salt.

 

[Ready]

Owning a car outright and keeping it for many years is generally going to be the lowest total cost of ownership because the depreciation after about three years becomes minimal. With leases, you are paying the depreciation on a new car every three years, which on a typical lease is about 40% of the purchase price.

With that being said, you are not talking about a lot of money here, and if you don't think you will be driving more than 10 years or so, it's probably not that big of a deal to go ahead and lease the car if you would prefer a newer model.

Just be careful that you understand all of the terms of the lease, and all of the hidden fees - disposition fee, acquisition fee, over mileage fee...And make sure you negotiate the purchase price of the car first, and then calculate the lease payments once you have determined the purchase price. You will need to know the money factor and residual to confirm they are giving you the correct price and not padding the numbers to make extra profit.

 

[Fedup]

We keep cars forever, but my advice is to do what makes you happy. It doesn't always have to be a sensible decision.

 

[aja8888]

I have found that the only way a leased car makes any sense if you use it for business and drive the maximum allowed miles. Otherwise, it's not a wise way to obtain a vehicle.

Sounds like the OP is best off keeping his low mile car.

 

[brett]

Bad deal. Why part with your vehicle if it has low mileage, you like it,and it will soon be paid.

You are giving up an asset and acquiring a liability. The only person who wins is the car salesman and of course the dealership.

 

[ocean view]

Keep your current vehicle. Insurance and registration on new cars is always painful (at least for me). I like it when these costs decline every year. To reset that clock every three years would be no good.

 

[bbbamI]

Like Ready said....be careful that you understand all of the terms of the lease.

About fifteen years ago we leased a car for three years. I don't remember why we did it...guess we thought it was the right thing to do at the time.

But knowing we would 'give it back' at the end of the lease made me paranoid about any tiny ding. About a year before our lease was up, an uninsured motorist ran into the car. No one was hurt, but the cost to fix the damage was over $5k (our insurance paid). In our contract, the vehicle would be looked over closely to see if any damages needed to be repaired when the lease expired. I was sweating bullets while they went over the car with a fine tooth comb. Fortunately, it passed with no additional charges.

 

[brucethebroker]

I agree with the keep the car crowd-pay it off and keep it. Payments on a lease, plus down payment, etc., usually run about $300 plus (4k a year) on a lease (from ads I've seen). Once your current vehicle is paid off, it is hard to believe you would ever pay $4000 for repairs in a single year (I haven't, in 45 yrs of ownership), let alone for 3 years in a row (repairs vs. new lease).
Somewhere, from a financial planner, I read the following: "The cheapest car you will ever own is the one currently parked in your driveway".

 

[DrRoy]

Owning a car outright and keeping it for many years is generally going to be the lowest total cost of ownership because the depreciation after about three years becomes minimal. With leases, you are paying the depreciation on a new car every three years, which on a typical lease is about 40% of the purchase price.

+1. The trade in/lease deal is financially better for the dealer (and worse for you) or he wouldn't have offered it. I vote for keeping your car.

 

[Bamaman]

When working, I administered some of the largest lease fleets in the U.S. I also taught dealerships how to sell leasing.

Most leases are done at MSRP--at very high profit margins. And not all leases are created equal since some have acquisition fees and fees when you turn them in. Dealers very often hit a "HOME RUN" when they convert a purchaser into a lessee. Many people know how to negotiate the purchase of an automobile, however very, very few know how to negotiate to get the lowest lease payment.

If you like your GMC Terrain, just keep it.

 

[Badger]

In 2011 we bought a beautiful F150 for my wife when she retired. It is the first new vehicle in many decades and we paid cash for a really good deal. She only has about 17k miles on it now and it still looks show room new. It has no problems and at the present annual mileage rate we expect to keep it for at least a decade more. By then she will be 80 and maybe not driving by then. Who knows. By then it may only have 40k and if we take care of it then it should have a good resale value. I can't imagine leasing a car.

Cheers!

 

[marko]

We keep cars forever, but my advice is to do what makes you happy. It doesn't always have to be a sensible decision.

+1
There's a quote from Oscar Wilde about "knowing the cost of everything but the value of nothing"

 

[marko]

We keep cars forever, but my advice is to do what makes you happy. It doesn't always have to be a sensible decision.

+1
There's a quote from Oscar Wilde about "knowing the cost of everything but the value of nothing"

 

[Out of Steam]

Would you actually want to drive an Acadia? It's a very large vehicle, basically on FWD car underpinnings, and without a V8 engine to haul it around.

Of course, I'm speaking as someone who has owned one SUV in my life and decided after about four years that I didn't really like driving a big vehicle.

 

[iloveyoga]

No leasing here. We pay cash and keep our vehicles as long as we can, keeping in mind we like safe and nice vehicles to drive.

 

[racy]

Ric Edelman (of The Truth About Money fame) recently leased a new vehicle after always advising that buying was the better deal. The reason he gave for leasing now was the rapid pace of technological improvements in the auto industry and that cars will lose value much faster.

And, OP, at 67 you can do what you please!

 

[Sittinginthesun]

Nothing wrong with leasing if it fits in your budget and you enjoy driving a new car. People on financial forums love to hate on leasing but I lease my car, a very nice German SUV, for a few reasons. Main ones are:

1. I am a car guy and enjoy the latest models, technology, safety
2. I like driving a car under full warranty (haven't paid a repair bill in a long time)
3. I don't drive too many miles so I can lease with the lowest mileage allowance.
4. My total annual car expenses are less than 2% of my income
5. Why tie up my cash in a depreciating asset?

In your situation I wouldn't just jump into another GM product but why not go test drive some other brands? A new Honda CR-V for example which gets GREAT reviews, excellent crash test results, etc.

 

[oscar1]

Finish paying off your current car and save your money for a rainy day (there will be many rainy days). I enjoy driving down the road knowing my car is paid for while the poor schmuck next to me struggles to pay the payment, insurance, gas and upkeep on his Keep-up-with-the-Jones unpractical impulse buy. At some point you will want to simplify with few auto-debits dipping into your cookie jar every month. Enjoy your golden years with financial simplicity.

 

[marko]

Nothing wrong with leasing if it fits in your budget and you enjoy driving a new car. People on financial forums love to hate on leasing but I lease my car, a very nice German SUV, for a few reasons.

Same here. A new Mercedes every 24-36 months. A splurge but...

 

[Ready]

It's clear that most people believe owning is financially more prudent than leasing. But as Racy said, at 67 perhaps it's time to stop worrying about that stuff and just do what makes you happy.

We've spent our entire lives worrying about these financial details. At what age do we just get to do whatever we want even if it's not the most financially sound choice?

 

[brett]

You have already incurred the bulk of the depreciation expense. Why give that benefit to someone else?

We drove our Camry for eighteen years prior to giving it to our son. We did not need two vehicles in retirement. Our Accord is ten years old. We have owned it for seven. We expect to drive it for another ten years. We are not willing to play the tradeup game.

 

[travelover]

............ At what age do we just get to do whatever we want even if it's not the most financially sound choice?

For me, that would be when I can be sure I can afford ten years in an Alzheimer's care unit without bankrupting my spouse.

 

[imoldernu]

98 Town Car 118K/mi., 96 Cadillac SLS...89K/mi.
Total miles/yr for both cars about 2500. Cost has been almost nil until this year. Incompetent garages have cost about $2500 without fixing the nuisance problems.
The farthest point we drive to is Walmart, about 1 1/2 miles away, and my camp on the lake, ten times a year 25 miles away.
I expect we'll pour another $3000 to $5000 in repairs.
Not too many cost effective options that I can see.
That's about the worst of my problems at this time...

 

[Jerry1]

Thanks for responses as to whether at some age, lease makes more sense.

Financially - probably not. Leasing makes sense financially in certain circumstances but that has more to do with miles driven versus age.

If you're deciding this based on money, just keep your current car. If you, on the other hand, prefer a new car every three years go for it. It's nice to keep up on technology and it's nice to have options. For example, you may not like the Acadia. With a lease, no problem, get something different when the lease is over. As you age, you may want a different style of vehicle. Right now, I'm leasing a pick-up truck. I moved this year and it was very helpful. Next lease, I may go back to a sedan. Want to try out that new electric car (Bolt)? Leasing is less risky if you don't like it.

I've leased for the past 15 years or so. I really like a new car every two years. I'm struggling with continuing leasing as I move into retirement because financially it doesn't work out. Personally (non-financially), it works out great.