my experience leasing a vehicle

I've been wanting to write about this topic for a while. Then I saw Andrea's post about her new vehicle and was re-inspired all over again.

So, let me set the tone by taking a quick walk down memory lane.

(Scroll to the bottom for my list of pros and cons)

A few years ago, my beloved Bleu Belle, a blue 2002 Honda Accord, finally gave out on me. I got that car in college, after my beloved Mustang Sally, a red 2000 Ford Focus, got totaled in an accident. Bleu Belle was a commuter car by every definition. I used it to travel back and forth to campus for classes 2-3 days each week while working a full time job the other 4-5 days. I didn't live far from the school or my job, but all the back and forth really took its toll after a while.

I took such great care of that car, but it already had over 100k miles on it when I bought it, so my meticulous maintenance routine only went so far. Over the years, I replaced or repaired the following parts: the radiator, the catalytic converter, the windshield, the power window motor, the battery, the starter, and lastly the transmission. It was... a lot. Still, paying a few hundred dollars here and there to repair a car that was paid off and fully mine, title in hand, was better than going into debt for a new one. I'd never had a monthly car payment, and I didn't want one.

Then, in 2017, 8 years after I bought the car, it was all over. The transmission started acting up again. The starter started acting up again, the engine was leaking, and I was having trouble with the ignition - all at once! I was so ready to just have it repaired again, especially since that's what I had always done, but the costs were adding up, and it wasn't just me anymore. By then I was married, and since we make financial decisions together, I couldn't just go and drop a large sum of money without J's input. He had the good sense to say it was time to let Bleu Belle go, but I needed another car right away (if only we lived in a city with a quality public transit system) and had done zero research on the kind of car I'd like to buy next.

A motor vehicle is a major purchase in my opinion, and I like to educate myself and make informed, considered, and well-thought-out decisions about major purchases. I didn't have time for all that. So... I did what all grown women do (if they're able) when they're making big decisions: I called my mom. She's leased cars in the past and had good experiences with the process. Thankfully she was able to give me some tips on how to negotiate the terms. I had always liked Jeeps, so J and I went down to the Jeep dealership and worked out a deal.

I'm now approaching the end of that lease term and feel like I have a fully formed opinion on the experience. Here are my pros and cons:

Pros

It's Temporary. What I liked about the idea of a lease is that it was temporary; if I didn't love it, I wasn't stuck with it forever, so no harm no foul. It's like you get to date the vehicle before deciding if you should marry it.

New Car Smell (without the new car price). I wasn't too concerned with specs or having the latest/greatest features, but I'll admit, it was nice getting a brand new model year car with the new bluetooth connectivity and that new car smell without committing to the full MSRP tag.

No Repair Costs. I couldn't tell you how much money I spent over the years to maintain Bleu Belle, but it was easily multiple thousands of cash dollars. Having a car note isn't fun, by any means, but I like the "security" that comes with having a new car. I know it won't break down on the side of the road. I know a random check engine light won't come on anytime soon, and if it does, it's all covered under the manufacturer's warranty, so there are no extra repair costs. Maintenance expenses like oil changes, fluid touch ups, brakes and tires may apply, but those are much more manageable and easier to plan for.

Cheaper Monthly Payments. The monthly payments on a lease are determined by a variety of factors, but it's mainly the use value over the life of the lease. If you buy a car, the monthly payment is determined by the purchase price. Monthly payments according to how much the vehicle is worth to "use" for a year or two will usually be cheaper than the monthly payments on a new vehicle purchase.

Cons

Mileage Limits. This is easily the biggest consideration when choosing to lease a vehicle. You can't just drive it wherever you want whenever you want. You're allotted a negotiable number of miles per lease year. I believe anywhere from 9k to 15k miles is standard. In a bigger commuter city like Atlanta, 9k miles would get eaten up in the third quarter depending on how far you live from your place of work. I opted for 12k/year, and it has been enough for my lifestyle. Though I must admit, I'm always paranoid about how much I'm driving and am constantly checking the odometer.

Higher Down Payment. This was something else I negotiated. When you buy a car, you (the buyer) determine the down payment. You can put as much or as little down as you want. Usually a significant down payment is required for any new lease. Around $3k is standard. I didn't put any money down to start my lease, but I was only able to swing that deal because I agreed to a longer lease term. My credit score also did some talking on my behalf.

No Equity in the Asset. Transunion.com explains this better than I can:

When you purchase a vehicle, it becomes an asset and you own it, though a finance company may have an interest in it if you have a loan. Because ownership of a leased car doesn't pass to you, it isn't your asset. 

Lease payments are, however, a monthly expense or liability. When you lease a car, your liabilities increase but your assets don't, so your net worth decreases.

Disposition Fee. I may have been able to avoid the down payment, but there's still a disposition fee when it's time to return the leased vehicle. The fee in my contract is listed at $395, but it will be waived if I choose to sign another lease on a new vehicle.

All in all, I've have a good experience with my first lease, and I'm still on the fence about what we'll do when this lease ends. I may lease again; I may buy a "forever" car; I may even go without a vehicle for a while. We'll see. Either way, I've got enough time to make an informed, considered, and well-thought-out decision.