We’re in the market for a car for the KY home. Our choices are:
- Keep renting cars every time we go there
- Buy a used car
- Lease a new car
- Buy a new car
Dedicating a car to just sit around for about half of its life seems an extreme solution, but the economics are clear. I’ve run the numbers several times, and leasing a new car wins by a long way. It all starts with the new normal for car rentals. In years past $50 per day was a good estimate for car rental cost. Now, after COVID’s impact, it’s about $110 per day. If you’re going to be somewhere even one week per month, that’s $770 per month as the break-even point. Turns out that there are a LOT of leases below that threshold.
Leasing has 2-3 other factors going for it:
- Leases often include free or subsidized maintenance costs – the company wants to get the car back in good shape.
- A new car is going to have fewer problems than a used car. And have more advanced tech embedded.
- If/when the economics change, as they have the last two years, you get a chance to reconsider options in three years.
So with all that in mind, what car and what terms? This is what I’ve been communicating to dealers (a somewhat painful process):
- Not picky about colors
- 2021 or 2022 model year, don’t care
- Can work with a low mileage lease, like 10K per year
- Three year lease term
- Want to keep monthly cost around $300/month (wayyy under the $770 break-even point)
- Favor a mid-sized SUV
- Want the biggest/best engine, options and least up front payment, given everything else
Two things have been surprising. One, the difficulty in dealers/sales people understanding that clear (I think) set of terms. And two, the extreme lack of inventory – COVID has killed the supply chain for many vehicles.
After factoring ALL this in, the vehicle that is my most likely target is a Hyundai Tucson. It’s one of those bland small SUVs that probably doesn’t do anything superbly, but does everything well enough. And Hyundai seems to have the least supply chain problems and excellent lease programs. Their hybrid version gets 38 mpg (!), a seriously good feature.