Why We Didn’t Buy Our Car

Posted by Monday, July 28, 2014 0 9

Ethan and I are proudly in possession of a 2014 Honda Civic CVT LX. And let me tell you, it’s a nice car you guys.

It has that new car smell. You can sync your phone to it via Bluetooth, so you can make calls, stream from Pandora/listen to my latest old-lady-audiobook, and have text messages read aloud to you (except not with an iPhone, cause Siri is just not having that).

We can also keep that phone charging with our snazzy USB port.

Oh and it has that rearview camera thing that makes it less likely (but not impossible) that you’ll hit something backing up. In addition to many acronyms, including an anti-lock braking system (ABS), electronic brake distribution (EBD), and vehicle stability assist (VSA).

Our ride basically came pre-pimped for us.

But here’s the thing. We don’t actually own the car. Technically. No we didn’t steal it. I’ll explain.

We did not purchase our car out right. Nor did we take out an auto loan to help buy the car. And we were also not given long-term use of the car by some crazy-generous family member.

What we did was lease that sweet Civic. And if you have a few minutes and an interest in knowing why that particular decision was right for us, and may be right for you too, I’ll give you six reasons.

Why We Got A Lease Instead

1. We Didn’t Have The Money Necessary to Make A Downpayment

To be perfectly honest, this car is the most expensive purchase either of us have ever made in our lives (with the exception of our NYU education, for which our parents footed the bill. Thanks guys!). The car itself comes in at a total MSRP of $19,780, (at the time this post was written) which is just car salesman talk for the price the car costs if you aren’t able to talk them down to a fair price.

Obviously we don’t have that kind of money. But you’re usually not required to put down more than 30 percent of that when you purchase a car, and make the rest in monthly payments to the dealership or an establishment that has kindly granted you an auto loan. And when the dealer we were doing our dealing with offered us the Civic at $17,088 we were like, “Fantastic. Yes. Let’s do that.”

Except when math comes over to tell you that, that downpayment is still over $5,000. So that wasn’t going to work for us.

2. We Wanted To Go New vs. Used

For some reason through this entire car buying process I wanted to go used, used, used, used, until the last minute. That was because initially I couldn’t get over the fact that the car was going to immediately, “depreciate in value” (something I just kept repeating because it was the one piece of information I knew) and a model just a year older would be significantly cheaper.

But I changed my mind because 1) auto loans for new cars tend to have lower interest rates 2) the Honda Graduate Program gave us a $500 off incentive to buy a new car or no down payment to lease a new car; and the first month’s payment covered by Honda (many other dealers have similar programs to try and hook you to their brand at a young age) and 3) we are both first time car owners and I would rather not have to worry about maintenance issues, which don’t usually come up in the first couple years of a car’s life.

And while it didn’t end up being nothing down when we decided to lease, all we did pay up front were the taxes and DMV fees: $345. So new ended up being less than used would have.

3. Three Years Happens To Be A Good Number For Us

We have a 36-month lease, the usual length of a car lease. Ethan is going to law school for 3 years, the usual length of law school. 36 months = 3 years. You see how nicely that lines up?

So, in a perfect world, in three years we will be in a financial position to either buy out the lease on Polly (that’s the car’s name by the way, sorry I neglected to mention that first) and purchase a second car or give up Polly (sad) and get two new cars. So we aren’t in an extremely committed relationship with Polly and we can break it off in three years if we’re not feeling it anymore.

And being in a good financial position by then is completely realistic because I will have been working during that time and Ethan will then be a lawyer. So that’s totally what’s going to happen. Cause if that’s not what’s going to happen I’m out. I’m just in this for the car leases.

4. Did You Know We Are In Our Early Twenties, i.e., Have Short Credit Histories?

I’m going to address this further in a later post, because it really deserves to be its own topic, but credit is just a scary and confusing thing that you don’t ever think about until it matters. Which is dumb.

But in this instance, we were actually as on top of it as we could be. We knew our credit scores going in and we knew roughly what to expect in the way of an interest rate on a loan or lease.

The only thing that we really couldn’t help that was raining on our credit parade was the length of our credit history. And that’s just because of logistics. We haven’t had credit cards and student loans (yay) long enough to have credit histories more than a few years. Because we are in our early twenties and no one let us get plastic at a young age. Sorry?

That means our interest rate on an auto loan was going to be higher because our credit scores are lower (again, we’ll cover all this more later). So with a not-small-enough down payment and higher monthly payments than we would like when taking out an auto loan to purchase a car, leasing (with the technically $0 down payment, the first month’s payment covered by Honda, and the rest of the monthly payments a price we can manage between the two of us) was the better option, again.

5. We Love Each Other, But That Doesn’t Make Us Stupid

I love Ethan and he loves me. And that’s great. That’s why we are totally cool buying a car together. Couldn’t be more thrilled about it. Having a blast.

Except he’s the son of a lawyer and I’m the daughter of an insurance agent and we’re not idiots. Property is property and two people owning one thing can, and sadly usually does, lead to problems. If it isn’t thought through before hand.

That is why before starting the car buying process we had already decided to write up a contract about what happens to the car if we decide to “consciously uncouple.”

And now that we are leasing a car, it makes it way less complicated, as you can’t divvy up something that you don’t own.

6. Insurance Companies Are Scared Of Ethan

Have you met Ethan? If so you know he is mild-mannered, responsible, a former RA, and, oh ya, loves kittens to an unhealthy level.

But on paper he is an insurance companies worst nightmare. They see him – an inexperienced driver, male, in his early twenties, and single – as having the worst possible traits a human could possibly have when driving a car.

So every quote we got from insurance companies was in the $600 a month range. And if you were wondering, yes, that is high for a two person policy. Except when you remember Ethan statistically wants to hit you with our car.

After shopping around and seeing roughly the same numbers everywhere, we knew that we were going to be devoting a good chunk of money to our monthly insurance payment and therefore, had to keep that in mind when thinking about how much we could pay for this car over all every month.

Now, luckily, we got a great quote from USAA, who thinks that with his good grades and the fact he is taking a defensive driving course, he is only $94 more dangerous than me alone. Great job honey.

So that’s why we went lease. And we feel good about it. And Polly feels good about it too. If you have any questions on leasing or the car buying process send ’em my way and I will tell you all the information I have retained on the subject before it slips away.



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