Which is smarter you think?

[hearts and roses]

Just a random question (of course, you know there is more to it):

1) Buy a 2004 Honda Accord (EX-all the bells and whistles) with 80,000 miles for $11,500 and pay an extra $1300 for an additional 3 year/36,000 mile warrantee on a 5 year loan at a rate of 6.7% with a monthly payment of $240.

2) Lease a brand new 2009 Toyota Corolla - with a full warrantee - with 12,000 miles per year, $1000 down and monthly payments of $248/month for 3 years.

easy child needs a car. She can only afford a monthly payment of $250 or less per month. In 3 years she will be 24 years old and if things go in the direction we think they are, she and her boyfriend will either be married or getting married or she will be traveling in Europe alone.

At the end of the Toyota 3 year lease, she can either finance the same car to buy or get into something other lease. She will not go over the allowed mileage.

If she buys the Honda, after paying the loan for 5 years she will have a car that is nearly 10 years old and after 3 years her warrantee will completely run out. Which would you choose?

 

[Shari]

I'm not sure which I'd do, but one thing I do know, I'd skip the extended warranty. They only cover major repairs, and there isn't much that they WILL cover that will add up to $1300+interest. You'd have to blow a motor or transmission for the warranty to pay for itself, and the liklihood of that happening when a Honda is 4-6 years old isn't too great if it is sound now.

One thing to keep in mind, also, is resale value. I know the older Honda's right now do hold their value as well as any car does.

 

[SearchingForRainbows]

Jo,

I don't have too much time right now, but my first reaction is to lease the Toyota. Of course, this is just my initial reaction - I guess I really need to think about it a bit more.

What I'm thinking is that once the warranty is up on the Honda and she has finished paying for it, being almost 10 years old, lots of things could go wrong. Heck, lots could go wrong after the 3 yr warranty is up. Plus, it already has 80,000 miles on it now. I'm guessing it won't be worth too much once easy child is done paying for it.

At least with the Toyota, it'll be fully covered for the time she leases it. After three years, if she likes it, she can buy it. Otherwise, I don't think she'll be any worse off than if she owns the Honda.

Hope this makes sense. I didn't have enough caffeine today. And, I've got to get difficult child 2 in from outside in a few minutes. WFEN

 

[hearts and roses]

WFEN - That's what I was thinking! easy child's being kind of a PITA.

 

[flutterbee]

Honda's run forever. I would buy rather than lease ALWAYS. And I would nix the extended warranty. You end up with deductibles and lots of things that aren't covered.

And with a Honda, I don't think you'd need it anyway. Seriously. You can't get a used Honda around here with under 250,000 miles for less than $5,000. There's a reason for that.

 

[flutterbee]

Oh, and anytime you buy a used car, have it checked out by a trusted mechanic and get a carfax report.

 

[flutterbee]

One more thing - brain dead today....

Even if she doesn't go over the allowed mileage on a lease, you get dinged for wear and tear - tires, brakes, etc. So, if you drop it off after the lease and it doesn't have brand new tires, for example, they ding you for the wear on the tires. Plus, after you paid all that money, there is still a large residual if you want to buy it.

Except for in a few cases, leases are really only good for the companies. I'd never ever do one.

 

[meowbunny]

I'd go for the Honda and skip the extended warranty after having it thoroughly checked out. Their resale is awesome, even for older cars with high mileage. Her insurance would be lower. She wouldn't have to worry about mileage, wear and tear, etc. and, if she moves, she'll get some money back rather than having to kick some in. She might have a few more repairs but probably not many if the car has been well taken care of.

 

[4sumrzn]

I would go for the Honda & it will be an owned car....they do run forever! I think leasing is a good idea for people that "want" to trade when the lease is up for something new. Buying the leased car puts you in another 3+ years of more payments that will probably be more than the lease amount was. By then you have the 6-10 year old car anyway.

 

[hearts and roses]

Thanks everyone - I think we are going to forego the lease afterall...and just look for something else. The same guy with the Honda has a 2005 Saab coming in with only 19,000 miles on it and it's only a $1000 more and still has the original warranty left on it. easy child's boyfriend used to be a Saab mechanic so he can fix it if we choose that one since repairs at the shop for a Saab are astronomical! I think we need to look more. Thanks again.