To lease or not to lease ...

Nelsormensch — Thu, 24 Jan 2008 10:28:33 -0800

Two year lease (new, used or swap) vs. buying a used car with the definite intention of getting rid of it after two years? Swarm of details ahead, apologies for the length. I checked out some previous threads, but most of them were about getting out of a lease.

I moved from the US to Canada about two years ago and I brought my car with me. This car can't be registered in BC for a few silly reasons and it's on its last legs anyway, so my girlfriend and I are looking for something "new." My gf is currently on a learner's permit (recent university grad, transit was more than sufficient previously), so we need a car she can practice and take a road test with. Due a number of bad experiences with classes, she's (understandably) utterly opposed to Young Drivers, et al. In general, we drive very little (maybe 5-6 times/month) with the only major spikes in usage being a weekend to Seattle every few months. She's not very comfortable with a larger vehicle, so we'd be definitely looking for something small. A Mini or SmartCar would be perfect, but they ain't cheap (recommendations on similar, but less expensive cars would also be great).

An auto coop would be perfect for us and we know of at least two in the city. However, BC has a graduated driver's license system and the auto coops require that all drivers have the fully graduated license. So until my gf can get a full Class 5 BC driver's license (about two years), we need something else.

At this point, we're trying to decide if it would be better to lease something for two years or buy a used vehicle and get rid of it after two years. A lease will likely be more expensive, but there's less of a chance of catastrophic failure. You can perform all the due diligence possible, but there's always a chance the transmission could fall out of something used. I imagine the chance of what would be lower on a new-ish lease, plus it should still be under warranty.

We're perfectly amenable to the idea of leasing something used or taking over someone else's lease, but it seems like all the used/swap lease sites I've found are for the US. I saw this one, but the BC offerings were rather unimpressive.

I realize insurance will be high on a new lease vs. a old car, but I can either get the lowest usage class of insurance or just get per diem insurance. If there's a massive difference though, that would be something to consider.

In general, the budget for a used car purchase would be about $5k and about $7.5k over 24 months for a lease. Given how little we drive, it doesn't seem like a good idea to take out an auto loan on something more expensive (either new or new-ish), plus the thought of borrowing money on something that only depreciates in value is a little bothersome. We've both got great credit and solid, relatively lucrative jobs, so an auto loan is possible. But in general, we'd rather pay back our student loans and travel vs. have a fancy car and the loan that goes with it.

I realize this is long and a bit rambly; thanks for getting this far and any insight/opinions/ideas would be much appreciated.

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To lease or not to lease ...