Learn me on a car lease for my kid????

[horn4life 3838]

Basically want to get my daughter (no pics) a Subaru, and want to keep the payment low and flexibility high.  I was going to just buy it, but  I am thinking that 3 years from now, she might want something different.  I will probably still buy the car with the option, but let's assume I am going to return her car, because that is where my questions lie, having never leased.

My dad was actually the one who suggested it initially, after he leased a Subaru. My Daughter has been working at REI since she was 16 and Subarus are pretty popular with the REI crowd.  What is extra cool is REI has an MSRP employee discount program, so she's getting about $1500 off MSRP at Austin Subaru.  If you are looking to buy or lease yourself, my Dad bought in Georgetown.  They were selling as MSRP whereas every other dealer was adding $1500.  So my daughter's car is about $3K less than a normal customer buying from Austin Subaru.  So what are the CONS of a lease return?

Pros for me are low monthly payments, no sales tax, and flexibility with the option of returning the car if there is something else she wants once she is making some money. The math sort of goes like this $18K residual value on $29.5K car, with $8K down.  Payment would be low $200's for 36 months, which is easily manageable for her most months and no problem to cover is she every runs short on cash.  Versus with tax a purchase would be like $390 over $60 months, which I would be fine with and I would split the note with for the next two years until she graduates with her nursing Degree.  Not paying the $1900 up front in sales tax is like 9 months of lease payments, so the lease option is attractive.  Since she is buying basically $3k or 10% under market value (discount + extra dealer markup) I figure the lease return price should not be underwater with the $8K down.

My Dad said the Finance Guy will ask you about wheel insurance and whatnot.  The kid has a big ass Golden Retriever that is going to likely do some damage to the interior or scuff the plastic door trim.  Seat covers should protect the upholstery.   I know that the lease covers "normal wear and tear" but WTF does that mean?  If I have any rash on the aluminum wheel is that $500 to replace it?  Scratches on interior door panel?  Just not sure what the potential liabilities might lie if we for some unlikely reason did decide to return the lease rather than buy it.  

Just want to know how the car dealer is gonna try to screw me in the end?  Or is my basic distrust of car dealers and salesmen making me worry too much on the back end?

Thanks in advance folks!

Edited June 16, 2022 by horn4life

[horn4life 3838]

anyone?

 

[ztejas 44233]

I don't have any car advice but I think it's so cool that you're accepting of your daughter's alternative lifestyle.

[TwiceHorn 32083]

Usually, the critical question on a lease is what the residual will be at the end of the lease.  Is it likely to exceed the value of the car at that point or be less than the value of the car.  If it's less, then you buy it and keep it or trade/sell it for something else and maybe see your/her way to a life without car payments.

Or, just fuck all that, and if the payments are cheap, and everyone's ok with starting over again in three years, that's ok too, but a recipe for lifetime car payments.

[DalTxHornFan 3130]

Both of my kids first cars were used cars that I paid cash for (well under $10K) so that I didn't have to pay the ridiculous insurance rates for collision coverage on new drivers.

We gave them better cars (still used ones, because that is all that I'll buy) when they graduated from college and they got off of our car insurance plan.

I don't like car payments, so I really am not a fan of car leases.  YMMV.

[Muny_Tex 315]

You need to also amortize the $8k down over the 36 month lease payment (i.e. $222/mo), in addition to your standard monthlies.

If you decide to give back the vehicle at end of the term you will not get any of that money refunded to you.

Leasing used to be awesome when you could do so with minimal up front costs, and just swap out for new cars every 3 years. Whereas the scenario you described above just sounds like some sort of accounting reach-around to make you feel like you’re saving money. It’s still primarily a sellers market right now, no one is doing anyone any favors.

Also, I’m not a lesbian, but I do know that Subarus tend to hold value better than just about any other vehicle at their equivalent price point..which therefore defeats a big portion of your perceived “lease benefit” because the depreciation is so much lower than most others.

Another thing to consider is it’s generally a bigger insurance pain in the ass dealing with a totaled lease compared to one you own…espec with so much money tied up in upfront costs.

If you want to spoil your daughter and have that much money to throw around, I’d recommend just buying it outright. If you’re rich enough to put $8k down on a brand new lease for a teenager you shouldn’t really care much about sales tax differentials.

[ChickenSandwich 9960]

For the dog. Worth it

https://www.canvasback.com/subaru-forester-cargo-liners.html

[deadshank 24654]

You’re daughter wants a Subaru and works at REI.   She sounds hot. 
 

 

[Guest]

Why not do what normal people do and get the "kid" a beater for $4-5k?

Either that, or money isn't part of the equation, like OP attempts to make it sound.

[South Austin 53228]

1 hour ago, deadshank said:

You’re daughter wants a Subaru and works at REI.  

No, he’s not the daughter. He has a daughter. 

[Vegas64 713]

1 hour ago, slorch said:

Why not do what normal people do and get the "kid" a beater for $4-5k?

Either that, or money isn't part of the equation, like OP attempts to make it sound.

2003 called and wants their Von Dutch hat and car market back.

[bschoolprof 6343]

11 hours ago, Muny_Tex said:

You need to also amortize the $8k down over the 36 month lease payment (i.e. $222/mo), in addition to your standard monthlies.

 

This.  All you are doing with the $8K is buying down or "pre-paying" future rental payments.  That's money you will not get back.

Also, I'm not really following the sales tax factor. You still pay sales tax on a leased vehicle in Texas, I believe on the full purchase price of the vehicle, less any trade, but I could be wrong. I know this varies across states, but my recollection in Texas is that sales tax on the vehicle is not just based on (sales price - residual value) - it's on the whole thing.  

[South Austin 53228]

11 hours ago, DalTxHornFan said:

Both of my kids first cars were used cars that I paid cash for (well under $10K) so that I didn't have to pay the ridiculous insurance rates for collision coverage on new drivers.

I'll be in the market for a kid car this summer and I'm leaning toward this.  Plan A was to give her my car (currently about 7 years old) and buy a new one for myself.  But since the market for new cars seems like it sucks and won't get better for another several months, Plan A isn't looking so good.

[Guest]

22 minutes ago, Vegas64 said:

2003 called and wants their Von Dutch hat and car market back.

LOLz.  You can take shots at it all you want; but I'm not the one trying to pull off the financial magic( impossibility) here.

Edited June 17, 2022 by slorch

[elfenix 34753]

34 minutes ago, South Austin said:

I'll be in the market for a kid car this summer and I'm leaning toward this.  Plan A was to give her my car (currently about 7 years old) and buy a new one for myself.  But since the market for new cars seems like it sucks and won't get better for another several months, Plan A isn't looking so good.

i've got bad news about the used car market

[South Austin 53228]

1 minute ago, elfenix said:

i've got bad news about the used car market

I know the slightly-used car market is pretty shitty.  But I was thinking something like an 8-10 year old car in decent shape that she can drive her last two years of high school.  Do I need lube for that search as well?

[horn4life 3838]

46 minutes ago, South Austin said:

I know the slightly-used car market is pretty shitty.  But I was thinking something like an 8-10 year old car in decent shape that she can drive her last two years of high school.  Do I need lube for that search as well?

yeah... you do... but not as much!

 

thanks for the replies.  I probably should have clarified on the $8k and buying used cars.  IF the used car market were such that I thought I could get a great deal I would for sure go that route.  But she's 22 and after not caring so much about school in on her way in nursing.  $5000 of the $8000 was offered by my dad just to bite the bullet, and get her a vehicle that I don't have to worry about.  We travel more, and I am not always "up the road" to fix whatever might be going wrong.  Plus she want to be a traveling nurse for a few years and this, and this car would be good for anywhere and it's safe.  My 90 year old Dad T-boned an idiot and it probably saved his life, so he wanted to put some of the cash set aside for her into this car if she/I wanted.

I do realize that I am setting her up for a couple extra years of likely payments.  However, she's already got an externship at Austin Heart Hospital, and is gonna still work aa REI.  She loves the perks.  She has this Fall semester to become an RN, then will start the BSN program will be over for a month by this time 2024. She will make decent money as an RN as she gains work experience and the lower payment will be easy for her to cover at that point.  In fact, she's so independent that I doubt I will make more than a payment or two a year if I go the lease route.  I WILL get banged on the Insurance side, but not having to worry about her car breaking down while we are traveling, and knowing it's a safe car that will be worth more than she owes in 3 years seems worth it.  We are really only out of pocket $3,000 and whatever the extra monthly nut is on the insurance.  When I sell her car I will recover some of that small cost.

ANYONE know about what might be typical of what your or I might think is "normal wear and tear" that might be viewed as excessive?  I am just trying to think 3 years ahead when a possible lease return might happen.   Having never returned a lease car I have no fucking idea.  But don't want her to make the decision to return and find out there are $3,000 in charges for excessive wear that I would have thought were "normal wear and tear."

Thanks again!

 

[Guest]

Travelling nurse= approximate Number of miles per year?

That'd be a huge consideration in the whole process, IMHO.

[George 493]

I thought you weren’t supposed to put money down on a lease. If you drive off the lot and total it, your 8k goes up in smoke. 
 

additionally. You pay property tax (I think) annually on a lease. 

[dcbc 14644]

On 6/17/2022 at 8:51 AM, South Austin said:

I'll be in the market for a kid car this summer and I'm leaning toward this.  Plan A was to give her my car (currently about 7 years old) and buy a new one for myself.  But since the market for new cars seems like it sucks and won't get better for another several months, Plan A isn't looking so good.

I have Subaru for the kid's first car experience.  I bought a well worn 2010 Outback with a six speed manual, a 2" lift, all terrain tires, and a few known issues to be addressed for way less than the money down on that lease (even after repairs).  The kid loves it, and put a stereo in it.  My insurance rates still suck.  I can't imagine what I'd be paying on a new one.  Sounds like the OP is in a different situation, but out experience with an older one has been pretty good thus far.

Edited June 18, 2022 by dcbc

[royiv 9795]

15 hours ago, slorch said:

Travelling nurse= approximate Number of miles per year?

On the car or on her? Nurses are usually pretty high mileage.

[immamac 44379]

Just buy the car stop making this complicated.