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Hi, I'm a senior and college and I'm kind of at a crossroads right now. My car is having problems with the engine and is about $2,000 total to fix all the issues with it. Granted right now I owe less than $2,000 for it and my car payment is about $179/mo (high as hell interest though). Now, I can fix the car but I don't want to put $2,000 on a car with 130,000+ miles on it.
One option is to lease or get a new car. I want my payments to be about $200/mo. Now, I can get a new car but as a college senior I don't see myself necessarily keeping the car too long as my tastes may change (aka I might be in a sunny state or pop out a child or two). So for me leasing is great since the cost is low, I drive less than 10,000 miles and I only want to keep the car for 3 years or less.
Of course I can buy the car, but I would have to keep it for 5 years for it to be worth owning the car and have a legal obligation to buy the car. Basically, over the next 3 years I am required to make a payment of some sort.
The way I can look at it I can spend $2,000 on car repairs on top of my car payment for a total of $3,700 within the next ear .
Or I can lease a car at $200/mo and with the same $3,700 and pay off a large chunk of the least for two years.
I am aware that I am "throwing away" money but I'm actually saving in the long run.
Any advice, I'm definitely open for consideration.
The way I can look at it I can spend $2,000 on car repairs on top of my car payment for a total of $3,700 within the next ear .
Or I can lease a car at $200/mo and with the same $3,700 and pay off a large chunk of the least for two years.
I am aware that I am "throwing away" money but I'm actually saving in the long run.
Any advice, I'm definitely open for consideration.
The difference is, if you fix the car you have you will own it free-and-clear in two years. With the lease you will have paid $3700 to drive the car for that period of time, but will have to continue making the monthly payment for the balance of the lease and at the end either buy the car, roll a new lease, or buy something else.
Year, make, and model of the current car would help, but generally speaking 130,000 miles is nothing in this day and age. You might get another 10 trouble-free years out of it.
Given your station in life, fixing the car you have probably makes the most sense. Wait to make a commitment to lease or buy something new once you've got school out of the way and are working at something that you think you'll be with for the duration.
In general I am against leasing but in some cases it can make sense even if the actual dollar amount is higher than the alternative.
I have seen many cases where folks fix the problem with their car only to have to repeat the process with something else in 6 months. Ultimately, they give up and just buy a new car.
Here is the way I look at it. So, with what you still owe and what is needed to fix the car, you are out of pocket 3700.At this point though, you will have no car payment with a perfectly running car. Now, if you lease a new car and put your 3700 into it, you will still have a total commitment of 7,200. (200 a month x 36 months which is a typical lease) On top of that, at the end of the lease, you will have nothing at all.
I would fix the car and drive it until you find a decent job after you graduate.
You do know leasing requires better credit than financing? So the odds of a college student qualifying is very slim considering financing is difficult also. In other words, you may have no choice but to repair it.
The difference is, if you fix the car you have you will own it free-and-clear in two years. With the lease you will have paid $3700 to drive the car for that period of time, but will have to continue making the monthly payment for the balance of the lease and at the end either buy the car, roll a new lease, or buy something else.
Year, make, and model of the current car would help, but generally speaking 130,000 miles is nothing in this day and age. You might get another 10 trouble-free years out of it.
Given your station in life, fixing the car you have probably makes the most sense. Wait to make a commitment to lease or buy something new once you've got school out of the way and are working at something that you think you'll be with for the duration.
^^this^^
in the end op you are not saving any money, in fact you are spending more money. like duster pointed out, you not only have to pay the lease, but the payments for the loan on the old car as well. the leasing company is not going to just pay off the old car when you trade it in, that money will get rolled into the lease, unless you plan to sell your old car, and then you need to come up with a down payment on the lease, and make the monthlies on two cars until you can sell the old one. sorry no savings there at all.
in the end op you are not saving any money, in fact you are spending more money. like duster pointed out, you not only have to pay the lease, but the payments for the loan on the old car as well. the leasing company is not going to just pay off the old car when you trade it in, that money will get rolled into the lease, unless you plan to sell your old car, and then you need to come up with a down payment on the lease, and make the monthlies on two cars until you can sell the old one. sorry no savings there at all.
I agree. I just spent $1,200 to repair my 2005 Ford Escape which has 105K miles on it. Money wisely spent versus any alternative and I could pay cash for a new car. You do not want debt at this point in your life.
Ok, I guess leasing is a bad deal. My car is shaking (the engine) really badly. Oddly enough it does this for a while, stops for a few months then continues again.
So my options now are to either buy a new car or fix my old one (that I'm still paying on). So if I fix my old one, it will be cool hopefully for a few months. BUT, the biggest problem is the amount repairs are. I can deal with one thing, but when I need a new CAM sensor, struts, battery (already replaced that), an alignment and possibly new tires it seems daunting.
I'm not sure if it's even the repairs themselves but the high cost of the repairs...at one time. I have school and internships to focus on and don't want to be stuck because my car hit the crapper.
The way I see it, the $200/mo payment I pay on my car is something I automatically calculate in my finances. It's like my cellphone bill where I need it to communicate. I still have money left after everything is said and done as discretionary spending and I'm not a big spender on anything else.
I like wheelsup's quote:
Quote:
I have seen many cases where folks fix the problem with their car only to have to repeat the process with something else in 6 months. Ultimately, they give up and just buy a new car.
I'm trying to reduce my risk in terms of fixing problems. If I get a car with a warranty, I don't have to worry for the next few years in terms of the power train.
Note that I have no other major debt aside from school loans.
BTW, my car is over 10 years old and is over 130,000 miles.
How much in school loans are you incurring? That debt is like a mortgage payment. I would not add further debt on top of that. How would you be paying the lease payment? More school loans?
Engine shaking? No warning lights on? Bad motor mount perhaps? But no way that would run $2,000.00.
...my car is over 10 years old and is over 130,000 miles.
Fix your car AND pay off the loan.
Keep driving the beater until you can also fill up a car replacement fund.
Find a reliable mechanic. Listen to him (or her).
WHEN it is time to replace the car... do that without a loan.
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). So for me leasing is great since the cost is low, I drive less than 10,000 miles and I only want to keep the car for 3 years or less. 
