By on September 21, 2016

2016 Honda Civic sedan

It’s long past time to put the bike (myth) away.

Outside of certain urban centers, Millennials are cuckoo for cars. Jobs and families and lifestyles, you see. As more members of the youngest car buying cohort show up at dealers looking to sign on the dotted line, their method of payment is evolving, too.

According to Dealertrack figures published by Automotive News, one of the main reasons for the dramatic upswing in Millennial car buying — besides aging — is long financing terms and low, low monthly payments.

Dealertrack data shows that in 2015, buyers aged 18-34 made up 35 percent of new auto loans. As of July 31 of this year, the average loan term was 70.5 months, up from 68.9 months in 2012.

While automakers fling youth-oriented vehicles at Millennials, sometimes via embarrassing and tone-deaf advertising campaigns, the car-buying demographic is increasingly taking the short-term approach to ownership. Adjustable-term loans are still king, but leasing is on the rise.

Loans outnumber leases among Millennial car buyers by a ratio of 19:1, but that’s less of a difference than in past years. From summer 2013 to summer 2015, the ratio was 24:1. In July, 27 percent of lease credit applications were from Millennials buyers, up from 20 percent in 2012.

The increase in young people turning to leasing can be blamed on a number of factors. They include Millennials being turned off by the thought of a long-term financial commitment, and the fact that many in the age group have extra cash on hand from living with their parents.

A high approval rate among Millennial lease credit applications shows that only those who feel they can really afford it bother to opt for leasing.

Naturally, more young people are turning to subprime credit to finance their first car. That’s to be expected as young people with little or no credit go after new wheels. According to Dealertrack, 43 percent of this year’s subprime credit applications originated from Millennials, up 15 percent from the first seven months of 2011.

[Image: American Honda]

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114 Comments on “Millennials Like Cars (Full Stop) and Are Warming up to Leasing...”


  • avatar
    threeer

    So I guess in the future, we’ll simply rent everything and dispose of it in 24 to 36 months.

    • 0 avatar
      DukeGanote

      Or you can take the financed purchase option at end-of-lease (since you know how it was maintained) and drive it 15 years, with payments for the first 8. Did that with my 1998 Civic when cash (flow) was king.

    • 0 avatar
      CoreyDL

      Have you heard about the disposable -houses- issue they have in Japan?

      • 0 avatar
        b534202

        I know it but I don’t understand it. My brother-in-law in Japan got a house gifted to him from my father-in-law, and instead of living in a house free-and-clear, what did he do? He got a loan, knock the house down and built a new one. I think he’s just about 34-35 years old.

    • 0 avatar
      notwhoithink

      Well, why on earth would you ever need to own something? Just rent it, and then at the end of your life you’ll have nothing to show for it at all. But you won’t care, because you’ll be dead.

      • 0 avatar
        PrincipalDan

        Millennials like are more psychologically comfortable with “Oh, I don’t own a car. I just lease one.”

        • 0 avatar
          psarhjinian

          They have to be comfortable with it, because they’re also getting the chance to be comfortable with things like “precarious employment”, “low wages”, “the gig economy”, “mountains of debt”, “unpaid internships”, etc.

      • 0 avatar
        DukeGanote

        At the end of your life you can’t take anything with you anyways. Cars, excluding the occasional outlier, aren’t an investment.

      • 0 avatar
        Higheriq

        Because going through life like a vagabond without actually making a commitment to anything shows complete indifference. Why get up and go to work every day? Why go to school past the age of 18? Why have kids? the list goes on.

    • 0 avatar
      DearS

      I think it makes ok (not great) financial sense to pay $200 a month for a car for 39 months with no money down like on the Cruze for $180 per month. That is around $7000 for 3.25 years of use. I plan to spend at least $200 per month on depreciation and maintenance on a used car.

  • avatar
    benders

    Does this mean car sharing might need to beat out leasing for customer satisfaction before it can really take off? Everyone talks like the choice is between opening a car or car sharing but maybe the lease market will be first disappear. Or will we see Ford-style deals where leasing gives you occasional access to other cars?

    Seems to me that leasing has many of the same downsides as car sharing but with the big advantage of having “your own” car. You’re only purchasing transportation, not a vehicle. Maintenance shouldn’t ever be a concern. Excess miles can be expensive.

    • 0 avatar
      Kyree S. Williams

      Yeah, I would lease something, but I drive waaaayyyy too many miles. The Golf SportWagen that I bought in April of 2015 now has just over 35,000 miles on it, and will soon be outside the bumper-to-bumper warranty.

      • 0 avatar
        duffman13

        This. I would lease, but at 25k a year (90-100 miles of driving 5 days a week), the lease payment is within $25 of a 5-year note. Not exactly a huge difference and in the latter scenario, I own the car.

    • 0 avatar
      a5ehren

      Do you have a link about the Ford thing? A program where I could (say) lease a Focus for my commute and go borrow a Flex for cheap/free from a dealer when needed would actually be a nice incentive.

  • avatar
    VoGo

    90% of babies in the US are born to Millenials, and carseats fit a lot better in a CR-V than a Schwinn.

  • avatar
    Drzhivago138

    I love cars, at least aesthetically. I just realistically can’t see myself owning any besides the one I have now.

    • 0 avatar
      CoreyDL

      Pity we’re in such a sorry state with current car aesthetics.

      • 0 avatar
        gtemnykh

        I hate how busy most modern designs look, Honda is particularly guilty, and Japanese makes as a whole to be honest. All the creases and “angry/aggressive” front ends, bleh.

        Also we should discuss the wholly lost concept of driving with your elbow resting on the sill. When’s the last time you drove a new car that you could do that in?!

        High trunks impeding rear visibility, fat pillars, etc etc. We’ve beaten this dead horse a million times, but dammit it needs more beating.

        • 0 avatar
          ttacgreg

          Yup, every time I hear someone online complaining that the ’16 Prius is ugly, I look at other ‘Yotas, Honda, and Nissans. Japan is on a strange styling kick lately.

      • 0 avatar
        dwford

        So true. Most cars these days look like a good looking car swallowed by the JC Whitney catalog.

      • 0 avatar
        Drzhivago138

        Joke’s on you, I like “ugly” or “overwrought” cars just as much as “simple” or “tasteful” ones.

  • avatar
    CoreyDL

    “and the fact that many in the age group have extra cash on hand from living with their parents.”

    Me: *Pulls up in driveway in new silver GLC and heads to basement*

    Dad: “The hell is that outside?” *Throws empty cardboard boxes down the stairs*

    0% chance of living at home rent free and leasing a new car.

    • 0 avatar
      krhodes1

      It is kind of amazing. Kid in his 20’s showed up at the last BMW Club meeting with an M2. Lives at home with Mom and Dad. But now he and the girlfriend are looking to buy a house, so the car has to go. I shudder to even think what he will lose on that. IIRC he’s asking $50K for it. Just to have bought one of the very first of those cars means he likely paid well over MSRP for it. And insurance on an M-car at 25?? Even here in Maine that doesn’t bear thinking about.

      I lived at home for a couple years rent-free after school – for sure my folks would have tossed my butt if I had come home with a brand new anything. Most I ever spent on a car in my 20’s was $9K for a 5yo Volvo wagon (after I got my own place). And only because I got my first professional job and would be driving all over New England, so I felt I needed something newer and more reliable than the ’82 Volvo I was driving at the time. That $9K seemed like a LOT of money 20 years ago – the monthly payment was the same as my half of the rent for my apartment.

      Though more scary is that fact that 1/2 the rent on that same apartment today would buy you that kid’s M2!

      • 0 avatar
        30-mile fetch

        Entitlement is an amazing thing. Sister in law and her husband moved in with the parents while their new house was being built and scoffed at the notion of paying rent. Needed the money for the new house they said, simply couldn’t afford to pay rent. Then in the last month they went out and bought a bunch of unnecessary sh*t like a pressure washer and expensive barbecue. Their recent car history also represents a minor fortune in lost personal capital.

        I held my tongue. Not my family. I don’t know how some people live with themselves.

      • 0 avatar
        Arthur Dailey

        @krhodes. with all due respect I believe that you would benefit from watching, this the Python’s 4 Yorkshiremen sketch:

        • 0 avatar
          krhodes1

          Your link doesn’t appear, but Google found it. Highly amusing. Ultimately I’m impressed that the kid has a job such that he could afford a $60K+ car at his age, but I question his priorities at that stage of life. But his life to live. I’ve certainly “wasted” more than my fair share of money on cars over the years. Enjoyed the heck out of the wasting.

          The “good old days” did have their advantages. My area is one of those places where renters are just getting screwed – house values have at best doubled in the past 20 years, but average rents are nearly quadruple. I paid $500/mo for that apartment in the late 90s, today it goes for just shy of $2K.

          • 0 avatar
            a5ehren

            You can afford a lot if Mommy and Daddy co-sign your loan application. Assuming they have money, of course.

          • 0 avatar
            krhodes1

            I doubt it – seemed like the typical bright young guy in a tech field making decent money a few years out of college. Just not quite enough for an $800-1000 car payment AND a mortgage. I’m guessing he and the girlfriend could probably swing the payments, but the bank won’t give them the mortgage due to the debt/income ratio.

            Given the area, Mom and Dad are probably quite well off though. And let’s face it, with very few exceptions, working class kids don’t covet BMW M cars even if they can afford one (oil patch workers until recently, for example). They want jacked up pickups or a muscle carMustangCamaro. A stereotype, but pretty universally true.

      • 0 avatar
        duffman13

        I had a come to Jesus talk with an 18 year old kid on reddit who wanted to buy a E9x M3 (the V8 one for those not familiar with the nomenclature).

        I explained that this car, at an average purchase price around $30k, is going to cost him easily $1000 a month to drive ($600 loan, $250-300 insurance, 16mpg premium gas). He said “I’m fine, I take home $1500 a paycheck.

        Sounds a lot like your M2 kid. I mean, yeah if you don’t have to pay rent and you still have 2/3 of your income to work with, a car like that doesn’t seem like a bad thing, but it just shows how bad some people are at long term planning.

        CSB: At 22, I was making around the same but had to have my sports car. Bought an RSX-S, which still cost me $500 between my loan and insurance, when gas was closer to $4/gallon too. I was really glad the thing still got 30mpg. I guess I wasn’t the smartest a decade ago either.

  • avatar
    gtemnykh

    This millenial’s car fleet age average is 20 years (2 cars, both exactly 20 years old), with a total value of under $10,000 and pretty low running costs. Don’t want to splurge and put a dent in the emergency fund in the modern age of here-today-gone-tomorrow employment. Plus I just prefer both the form and function of said older generation of vehicles.

  • avatar
    Stumpaster

    I think you got it wrong when you say that the extra income resulting from living with the parents allows them to lease. As if leasing is more expensive than buying and owning. It is not. If anyone kept service cost records for a 5-8 year average, you know, when that car you buy depreciates, gets paid off, and you still have another year or two without loan payments, you’d see that the averages which include regular maintenance are about what a lease would cost. Except that instead of fixing up a 6-8 year old car you have a new car every three years.

    It’s even worse with the used cars. You buy an off-lease car with 30-40K miles, and you are a year or less away from buying new tires and brakes (while paying higher loan rates). Another 10K miles and you are servicing the engine belts, transmission and maybe discovering that the water pump is about to go south. That’s when they see a leak in one of your gaskets.

    Come on, admit it, Millenials simply act smarter by leasing than the “car guys”.

    • 0 avatar
      VoGo

      I kept records for an Accord over 10 years of ownership. It averaged out to $177/month with zero down. I would have never gotten that rate leasing.

      Leasing may be cheaper than buying for people who are going to trade in their car every 3 years anyhow. But if you choose to keep it for a decade or longer, buying tends to be a lot cheaper.

      • 0 avatar
        Astigmatism

        $199/month leases for Honda Accords aren’t exactly rare. I just checked my hometown paper, and sure enough, Colonial Honda is offering a 36/12 lease on an Accord LX for $0 down and $42/week, which works out to $182/month plus tax. A few extra bucks a month to drive a new car every three years is a deal that a lot of people are willing to make.

        • 0 avatar
          VoGo

          Your lease from Colonial Honda excludes tax, titles and applicable fees, whatever that is. Sounds like about $1,500 for your “zero down” lease.

          $1,500 over 36 months is about $42/month, meaning that your $182 lease is really $224. Over 10 years, that’s $5,600 higher than what I paid for an owned car. Not exactly a wash.

          And yes, theoretically my Honda’s drivetrain could have died in year 7, although it wouldn’t have cost me $5K to fix. But how often does a Honda I-4 5MT that is well maintained [email protected] out? Not likely.

          And owning the car meant I could customize it as I liked, insure it as I pleased and drive as many miles as I wanted. Try that with a lease.

      • 0 avatar
        FreedMike

        “It averaged out to $177/month with zero down. I would have never gotten that rate leasing.”

        Assumes you want to keep a car 10 years, though. And if your transmission or engine craps out on you in year 7…

        There’s no right or wrong way to get yourself into a car. It has to do with what’s better for the individual.

        • 0 avatar
          DukeGanote

          Zero down may not be possible in every State, for example Ohio now wants sales tax paid up-front, rather than month-by-month:
          http://www.tax.ohio.gov/faq/tabid/6315/Default.aspx?QuestionID=510&AFMID=11354

          • 0 avatar
            krhodes1

            Still perfectly possible to put no money down. The sales tax just gets capitalized onto the lease, which increases the payment. The difference is that you are now paying interest on the sales tax if you do that, whereas for states where you just pay tax on the payment you are not paying any interest on the tax.

            Maine is the same way, you pay the sales tax “up front”.

      • 0 avatar
        Arthur Dailey

        @vogo, except you could have for relatively the same price and not had to worry about driving a 10 year old car or the down time repairing it or the costs associated with the repairs. For instance how many timing belt changes did your Accord require?

        • 0 avatar
          VoGo

          Timing belt is every 100K miles. So it was a day out of service, and they did the water pump, spark plugs and a few other things.

          So, yes, an older car requires more maintenance than a new one. I am happy to rent a car once/year to save $5K.

    • 0 avatar
      Tinn-Can

      Yes… Please keep telling the punk kids that.. Daddy needs a new miata in a couple years…

    • 0 avatar
      krhodes1

      I think you would have to be leasing some pretty unreliable dreck for this to be true. Certainly, in my state JUST the excise tax and sales tax consequences (never mind the dealer doc fees, acquisition and disposition fees) of a new car every 3 years will far outweigh the maintenance costs over any reasonable period for any reasonably reliable car. And a lot of unreasonable ones too. The transaction costs around buying a new car are very high.

      Want to drive for cheap? Buy the oldest/cheapest car you can deal with and drive the thing into the ground.

      • 0 avatar
        thattruthguy

        The “transaction costs” on a O down / 199 lease are…0 down.

        Not familiar with all states, but my state only collects sales tax on leases each month on the payment. Annual license tax is figured roughly on the value of the car, so that’s higher for a nice new leased car than a depreciated beater.

        • 0 avatar
          jim brewer

          It’s hard to argue with some of the lease deals that are offered.

          That’s the main advantage of a lease: The transaction costs, not to be confused with depreciation, is minimized, or at least pre-negotiated.

          Transaction costs to me are basically the slippage between trading in at wholesale cost and buying at retail, plus associated taxes and fees.

          Also, as we all know, sometimes the manufacturer discounts on a lease exceed what happens to be available for a sale.

        • 0 avatar
          VoGo

          thattruthguy
          I went to the website, and it said that tax, title and fees were extra. You didn’t.

          It’s not $0 down.

          • 0 avatar
            ajla

            Yea, quoting dealer website or advertisement numbers don’t mean much to me.

            Here was comment just from today about that sort of stuff:

            thetruthaboutcars.com/2016/09/ask-bark-important-dealership-experience/#comment-8352929

            If someone wants to post their actual paperwork showing the $170/month, $0 down OTD Accord lease they have or their $7000 Versa purchase (similar to the way Jack did with his friend’s grandmother’s Buick or with the C-Max lease), I’ll pay attention. Until then it’s like me claiming that my Charger has hardly depreciated at all because the local Kia dealer says they’ll pay me $5000 over Blue Book on a trade in.

          • 0 avatar
            thattruthguy

            If you’ve found a way to drive a car without paying taxes, my hat is off to you. The only dealer wiggle room in that is the “fees”. So in my state, that pencils out to a monthly payment of $215 including sales tax on the monthly payment, plus about $300 annual excise tax because I’m driving a nice new car instead of a crappy looking beater that isn’t significantly taxed. If you want to account for “fees”, take whatever you think they are and divide by 36 or 24 to get the monthly value. In my state, state title filing is a token fee of $15; the big hit is that they collect the first year’s excise tax at the DMV after you leave the dealership.

            This is a transaction I’ve looked at backwards and forwards for 30 years when I go car shopping. Sometimes I’ve bought new, sometimes took a fabulous lowball lease deal, sometimes a used car. I’ve never financially regretted those leases, but I have occasionally penciled out my total cost on a used car and decided that I could have spent that money better.

            The mistake you’re making is thinking that a useful generalization is valid in 100 percent of cases, not just 93 or 97 percent.

    • 0 avatar
      ajla

      “Another 10K miles and you are servicing the engine belts, transmission and maybe discovering that the water pump is about to go south. That’s when they see a leak in one of your gaskets.”

      Lots of “car guys” know how to fix that stuff on their own though.

      Engine belts, transmission service, a water pump, and a leaking gasket?! Oh no, that’s going to take me eight hours and cost $90!

      • 0 avatar
        Arthur Dailey

        But that is not reality for the majority of the population. It might be for many on a website dedicated to vehicles. But it isn’t for most. How many single mothers, pensioners, those without a driveway let alone a garage, etc are able and/or willing to do that type of work?

        If the majority did, then there would not be so many auto repair shops in business.

        And as for keeping a car for 1+ years, what about rust? Let alone not having up to date safety features.

        And vehicular needs may change. Expanded family, pets, longer travel/commute, etc may result in changed needs.

        • 0 avatar
          ajla

          “How many single mothers, pensioners, those without a driveway let alone a garage, etc are able and/or willing to do that type of work?”

          I don’t know. However, I’m not any of those things and the comment I was responding to from Stumpmaster specifically said “Come on, admit it, Millenials simply act smarter by leasing than the ‘car guys’.” If you want to work the general population angle that’s fine, but he wasn’t doing that.

          “what about rust?”

          I live in central Florida so no rust worries for me.

          “And vehicular needs may change.”

          True. That is where savings from DIYing a used 3.8L H-body for 7 years over leasing a G6 then a Malibu then another Malibu comes in.

        • 0 avatar
          krhodes1

          @Arthur Daily

          With purchasing a car, if your needs change you can change cars on YOUR schedule, not the schedule forced by the lease contract. I got somewhat burned by this on the only car I leased, the first car I bought new. My needs changed, I had to get out of the lease early and it cost far more than if I had bought the car. But at the time, I had to be a payment shopper, having just bought a house and newly started in my career. The pain was greatly lessened by the fact that I drove the car a ton for work, so the mileage paid for the car, but still…

          At best, leasing is an expensive convenience for the majority of people. I think you have an overly pessimistic view of how much it costs to maintain an average modern car for 10+ years. I expect VERY minimal expenditure to keep my Mother’s 5yo Prius V for 10 years 120K+ miles, as an example. It’s been out of warranty for a couple years, just had the 60K service for $500, and a set of tires for $400. Otherwise an annual oil change. I won’t turn a wrench on that thing – to the shop it goes. Every year without a car payment is $5K in her pocket. Rust? On non-Mazda? Barely an issue at this point, and I would call it a non-issue for European cars. Cars got safe enough at the turn of the century, we are now WELL into lily-gilding.

          If you just want a new car every few years, great! Might as well lease, takes some of the mystery out of it. But don’t delude yourself by thinking you are saving any money.

          • 0 avatar
            thattruthguy

            The only problem with unloading a leased car is that you’re probably underwater on it til the end of the lease. That’s a financial loss you’d take on a new car owned outright if you sold after X months, too. But to sell it, you just write the lease agent a check for the balance (and pay sales tax on the check, in my state) or trade it in. It’s no different than conventional financing.

          • 0 avatar
            krhodes1

            There is no reason to be underwater on a purchased car – it makes sense to make a downpayment such that you never will be. It makes no sense at all to put money down on a lease, all you are doing is effectively pre-paying the lease, and if anything happens to the car to write it off you are generally out that money.

          • 0 avatar
            thattruthguy

            Whether you’re underwater or not on a financed/leased car, the dollar cost (loss) of selling it early doesn’t change. It’s the same total cost whether you pay the bill at the beginning or the end (barring interest and opportunity costs, which are another discussion). Since we’re discussing total cost in this thread, that’s the important fact.

          • 0 avatar
            Arthur Dailey

            @krhodes: Sorry about the missing link. Please see my post at the end of this thread re: our car costs.

            And in the rust belt, rust is a problem. You either have to get it Krowned every year or after about year 7 it will start to create not only cosmetic but also possibly safety problems such as corroded brake and fuel lines.

          • 0 avatar
            krhodes1

            I live just as much in the rust belt as you do, here on the soggy, salty coast of Maine. I have never had a corroded brake or fuel line on a European car, nor have I ever had to do any sort of extra rust proofing. One reason I keep buying them. The only car I have owned that had real rust issues was an ’82 Volvo, and it was 12 years old when I bought it. But even that car had perfect brake and fuel lines, as they don’t make them from cheap steel.

          • 0 avatar

            I live in NE CT rust is still a concern but it tends to be less of a problem then it used to be. Cars still rust it just takes longer. My Durango was 13 years old before any rust showed up. It now has a bubble on the QTR panel above the wheel and I had to replace the bumper that’s about it at 16 years old. My Volvo is rust free at 15. My mexico built Golf was tossed do to a rotten floor pan at 16 years old.

      • 0 avatar
        thattruthguy

        That’s actually about $300 worth of parts.

        • 0 avatar
          ajla

          On what car? I had a 1989 Buick Electra up until 2014, here are links to those parts for that vehicle:

          Valve cover gaskets: 13.35
          tinyurl.com/hf8xg8b

          Transmission filter and gaskets: 25.68
          tinyurl.com/zsvfwlq

          Engine Accessory Belt: 15.25
          tinyurl.com/grwf4rz

          Delco Water pump: 30.68
          tinyurl.com/hqxzp8d

          So about $85.00 in parts. Add in fluids and I’m probably at $120. So about $30 over my original comment, but that’s without really shopping around for lower prices.

          For $300, I could probably add-in doing the timing set, intake gaskets, thermostat, radiator hoses, some vacuum lines, engine mounts, and the transmission mount.

    • 0 avatar
      Rochester

      Stumpmaster, my advice for you is to archive your comment, then re-read it in 20 years. The awkward realization of how stupid it is to convince yourself leasing cars is “smart” will be a moment of self-actualization.

      You don’t have to thank me. But you should.

    • 0 avatar

      My 5,000 dollar cars average under $100 bucks a month to own (not counting gas and insurance) but including purchase price and repairs/maintenance. . In states with property tax, leasing new can be very painful.

      • 0 avatar
        thattruthguy

        In states with property tax, driving a nice new car has a tax penalty that needs to be considered in the total cost of either driving a nice new car or a depreciated beater.

    • 0 avatar

      My 5,000 dollar cars average under $100 bucks a month to own (not counting gas and insurance) but including purchase price and repairs/maintenance. Mostly my labor but not always . In states with property tax, leasing new can be very painful.

    • 0 avatar
      Scoutdude

      Sorry but no, here is how my wife’s last car played out.

      2010 Fusion Hybrid purchased late Feb 2013, turned over 45k on the extended take home overnight test drive. Out the door price with tax title and license $18.5K

      Fall 2013 purchased used non-hybrid OE alloy wheels, 4 tire pressure sensors and 4 winter tires $500

      Winter 2015 replaced headlight bulb $10

      Spring 2016 Purchased 4 Michelin UHP A/S tires $600

      June 2017 Totaled 143K miles, put winter tires back on insurance pay out $8500.

      So 39 months, $10.5K 98k miles

      Cost per month $280 cost per mile $.093
      The $199 a month lease would have cost $8500 with tax and those extra miles would have cost up to $.25 each or $14,750 if not bought up front.

      Lease total $23,250 $600 per month $.245 per mile. And that is not including the tires that the leased car would have needed nor the more expensive licensing and insurance.

      Even if I had traded it in for the $6500 book value at the time it still would have cost half of that new car lease.

      Had we only driven it average miles per year our cost per month would have been $100-$125 per month or again about half the price of that new car.

      • 0 avatar
        thattruthguy

        In my state, the difference in annual excise tax between a 2010 car and a 2013 car was and is about $100/year. A buck’s a buck, but if that’s actually a deal breaker that keeps you from going new, I’m betting you have graver financial problems. Same for the difference in insurance. I’ve never noticed my insurance rate going down because my car was a year older. :)

        • 0 avatar

          Here in CT with 35-38 or higher millrates it matters alot.

        • 0 avatar
          Scoutdude

          No the extra cost was not a deal breaker for me, I just have other things that I would rather spend my money on than the daily transportation car. When I went to buy that $18K car my credit union approved us for a $50K loan. I also could have payed cash for that $18K car but at 1.99% interest it didn’t make a lot of sense.

    • 0 avatar
      Stumpaster

      So the responses to my comment are all about how much a lease could cost (and most of you don’t include taxes and bank/disposal fees), but none of you showed that you have a good record of real maintenance expenses over a long period of time. Those who tell me that the parts are cheap – yes they are, but only few people have the TIME, not so much the skills, to fix their cars in “spare time”. Add the cost of tools into equation and it gets worse. So when you add the real shop rates for fixing your favorite car, then come back and tell us how the lease compares to owning your favorite car.

      I have records for maintaining a Volvo 240 from 60K miles to 140K miles over 8 years. That’s $145/month just for maintenance. And that excludes smaller things that I did myself. Like replacing rotted out metal with carbon fiber (saved at least $2K on body shop costs), or restoring door liner panels with fiberglass, and replacing relays and hard wiring melting tail light circuits. And that’s for a “simple” old Volvo.

      • 0 avatar

        Here ya go actual numbers. This is for my 2000 Durango. Bought in 2009. Bought with 93,000 miles now has a 154,000. Numbers do not include reg title and plates as they are the same new and used in my state. Property tax is based on a millrate of 36 so would be much higher on a leased car. Insurance and gas also not included as they would be close on a new car. All work done by myself except AC evap. Car has never been towed and was only out of commission for more then 2 hours once when it was at the shop for evap. Owned around 100 months.
        Item cost
        Purchase 6300
        property tax 226.8
        Wheel cylinder 8.95
        Brake fluid 3
        Oil change 20
        Power steering hose 62
        Power steering fluid 4
        Oil change 20
        Transmission line repair 8
        fluid 20
        Serp belt 22
        Idler bearing 18
        oil change 20
        Tires 625
        oil change 20
        shocks 85
        ball joint 22
        oil change 20
        Evaporatror (done by shop) 950
        Battery 80
        Oil change 20
        expansion valve and dryer 48
        r134 20
        oil change 20
        r134 6.5
        misc wipers bulbs fluids 125
        property tax 210
        property tax 200
        property tax 190
        property tax 180
        property tax 120
        upper rad hose 18
        IAC 25
        air filter 14
        air filter 14 14
        window regulator 45
        bumper 125
        touch up paint 12
        oil change 20 20
        oil change 20
        brake pads 19
        current value -1500
        sum 8486.25
        per month 100 months 84.8625

      • 0 avatar
        krhodes1

        If you have to pay somebody to fix it, an old Volvo is the wrong car for you, especially a 240. Durable, but not reliable particularly, and maintenance intensive in a way that cars simply aren’t anymore – it’s 1960s roots show, despite the “simplicity”. 7/940s are much, much better, being a couple decades more modern. I have owned a baker’s dozen of the things, 2s/7s/9s. Modern cars need a LOT less fixing, even higher end ones.

        I have all the service records for the 1983 BMW 528e that my stepfather then mother owned from new to 20+ years old. It needed far more scheduled maintenance in it’s first five years than my 2011 328i has needed in 5 years, and FAR more went wrong with it in the same time period. Cars have simply come a long, long way despite the added complexity. The 2011 had a couple of minor issues in the first 18 months under warranty, so far my 2016 BMW has had zero in 14 months despite being far more complex than the 2011.

  • avatar
    spookiness

    I’m not a millennial but I work/compete with them and went to grad school with them. I’m cheap, and lately have preferred boring-but-paid-for used cars, but I’d consider leasing. If you pick a car you subsequently don’t like, at least you know it will eventually be gone. Also, one type of car fits my lifestyle/location/commute where I am now, but I expect (hope) to be in a different job and different locale in a few years, which might call for a different type of um, “automotive product.” Yes, I know that term in quotes probably causes rage among car nuts, but I’m more rational about my needs now. And not into making commitments. I was a car nut, but now I’m happy just reading about other people’s adventures while my boring Ford gets the job done for what I need it to.

  • avatar
    eggsalad

    In January I bought a used ’13 Chevy Sonic for $11k. Nine months later it’s worth $6k. I’m down $5000 already.

    My local Toyota dealer is leasing Corollas for $3000 down, $85/month for 36 months. Total for the lease is about $6k.

    The reality of the situation is that leasing a new Corolla for 3 years is significantly cheaper than owning a used Sonic for 3 years.

    I know what I’m doing on the day my Sonic is worth $3k.

    • 0 avatar
      krhodes1

      @eggsalad

      Resale value is a lousy measure of value. Your car is going to hit $3K at some point, sure. But it is going to worth about $3K for a long, long time. And over that long tail in theory you will have no car payment and hopefully not much repair and maintenance expense. Depreciation is not linear, and even for a CHEAP car, the payments add up to a ton of money over the course of 12 months. That Corolla lease is effectively $168/mo, $2016/yr – and as I posted previously, not including taxes and fees, which in my state would add another MINIMUM $1500 over three years. How many years maintenance on a Sonic is $2016? I would expect the answer to be MANY for most people.

      I get it if the low, low monthly is the number you have to focus on for various reasons, but keeping the car you have for a long time is almost certainly cheaper. Especially given that modern cars really are very, very reliable and durable. Even cheap ones. And never put money down upfront on a lease – if anything happens to the car you lose that money, even if the car is nominally worth more than what is owed. Most insurance on leased cars will only pay out the lease. Keep the cash and use it to supplement the lease payments if you have to.

      For some round numbers on the costs that aren’t in the advertisements, in my state you pay 5.5% sales tax (on net of trade-in) and 2.4% excise tax (on MSRP+fees) on a new car. You then pay 1.75%, then 1.35% excise tax the next two years – this drops to .4% at year six and stays there forever. So those first three years HURT. The local Toyota dealer has a $499 “doc fee” on every sale, and they have a $500 acquisition fee, and another $500 disposition fee due at lease end. MAYBE you can get the disposition fee waived if you lease another Toyota, maybe not. I wouldn’t bank on it. Obviously in states that don’t have excise tax and/or tax on lease payments leasing is a better deal, but I think it very much the exception that repeat leasing is cheaper than buying and holding.

      • 0 avatar
        VoGo

        eggsalad,
        You overpaid. Don’t do that.

      • 0 avatar
        DearS

        $2000 in maintenance is coming in about 45-60k (4 years of driving for most) miles for my 13yr old Honda.

        I put 45k miles on my accord (in less than 2 years). Expenses:
        Battery: $200 (with new terminals)
        Tires: $650 (with alignment and warranty)
        Brakes: $250 (front rotors and pads, rear shoes)
        Oil Sensor: $200 (almost killed my engine)
        Coolant and Brake Fluid flush: $100
        Transmission Flush: $100
        Total: $1250 over 3 years worth of mileage.

        future expense: Shocks: $400
        Suspension: $400
        Future total Estimate: $2050

        I payed $6k including taxes. Total expenses till now are about $7k, with about $3000 in value left on the car. So it has cost me $4000 to drive 45,000 miles. A lease would probably cost twice as much total.

    • 0 avatar

      You hit the wrong part of the curve. It will be worth 5k for awhile and drop to 2-3k around 10 years old.

    • 0 avatar
      Rochester

      You bought a 3-year old Sonic for $11K. And now you’re complaining about finances? LOL. Please marry someone who can manage your finances for you.

  • avatar
    carlisimo

    As a group, we’re old enough that we’re starting to have kids – and now that you have to keep them in rear-facing seats for 2-3 years, you might as well lease a large vehicle that sucks to drive and then go back to owning something more to your liking after that period.

    Also, we all want to live in cities but have come to terms with the fact that we can’t afford it (or they’re not great for school-aged children). Move to suburbs -> buy car.

    • 0 avatar
      28-Cars-Later

      “now that you have to keep them in rear-facing seats for 2-3 years”

      Come again?

      • 0 avatar
        zoomzoomfan

        Kids have to be rear-facing for a long, long time now. It’s based on height and weight and some kids are small enough that they technically need to be in a rear-facing car seat even past kindergarten or first grade.

        • 0 avatar
          Jimal

          Yeah, another one of those arbitrary guidelines from some regulatory authority. One day you’re a good parent, literally the next day you’re a monster and your children should be taken away. We’ve followed the old guidelines and turned our older daughter around in her seat technically before we were supposed to. We’ll do the same thing with the 8 month old when she gets bigger.

          • 0 avatar
            krhodes1

            Why don’t we just put kids in armored, padded cells with a feeding tube until they are 18?

            I’m not sure how any of us who were born in the ’60s and earlier managed to achieve adulthood with all the horrifically dangerous things we did growing up. If nothing else, all of us should have been abducted and murdered, since we were ordered to “go outside and play” (by OURSELVES, imagine that!) at every possible opportunity.

          • 0 avatar
            Drzhivago138

            @krhodes: That’s the definition of survivorship bias.

          • 0 avatar
            30-mile fetch

            Drzhivago,
            That’s what I was thinking, at least in regards to modern child seat recommendations. When my parents see us strap our kids into the Gracos they remark about how they don’t know how I survived my childhood in 1970s era car seats or how they survived theirs roaming unbuckled around the backseat of a 50s sedan.

            “Well, you never got in a wreck, did you?” was my reply.

        • 0 avatar
          28-Cars-Later

          Yeah, one more reason to check out elsewhere.

        • 0 avatar

          Here are the CT rules note the recommends are much longer.

          http://www.ctsafekids.org/child-passenger-safety/

          • 0 avatar
            Jimal

            I”m in Connecticut as well. I have to give it to them; at least they’re distinguishing between law and recommendations.

    • 0 avatar
      DukeGanote

      Why live in the city? I’ve visited both Manhattan and downtown Cincinnati recently, and, well, Cincinnati smelled cleaner, but nothing like the 2550 acre park near me. If I ever land a job downtown, I can walk 0.6 miles to a bus stop for a 40 minute ride there.

    • 0 avatar
      dal20402

      “Also, we all want to live in cities but have come to terms with the fact that we can’t afford it (or they’re not great for school-aged children).”

      This. This is what’s driving it. Millenials, speaking generally, like cities more than the previous couple of generations. But for a variety of reasons housing in the better cities is very expensive, especially housing big enough to fit a family. And many of the cities don’t have public schools of reasonable quality, so if you want to raise kids in the city you have to pay for private school on top of your expensive housing. Millenials with kids are being forced out.

      I’m not a millenial but live kind of like one because I got my grad degrees, married, and had kids late-ish in life. I share the millenial preference for cities. We are moving back to the city, but only because 1) I make pretty good money and 2) the city we’re in (Seattle) has much better public schools than many large cities. If either of those things weren’t true, we’d be staying in the burbs.

      • 0 avatar
        Arthur Dailey

        Largely a problem endemic to the USA. In the GTA many of the inner city public schools have a much higher academic standard and draw from a more affluent socio-economic group than do the schools in the suburbs.

  • avatar
    LS1Fan

    It’s the Computer Age guys.

    Contrary to what the Dave Ramseyites would preach, leasing is a wiser overall idea then buying a used car to own.

    Sure back in 2008 buying used was a better idea, because cars made in the late 90s didn’t have computers governing every aspect of the cars function. Today , not so much.

    Owning a used car doesn’t just mean being mechanically talented- it also means access to cheap and functional electronic components as well. And a laptop with factory communication software. None of that stuff is cheap to use, or accessible to the average Joe. Combine that with the escalating cost of parts replacements over time and general unreliability , and owning used isn’t an appealing or practical option.

    Compare that to leasing a car that you can trust it’ll be reliable enough to get you to work without funny smells or odd colored lights ,safe enough to protect your kids with modern crash safety features, and you can budget a fixed amount for transport costs no matter what.

    Best part ; after the lease is up you can give it back before it starts falling apart.

    I think there’s still a place for owning a car- as in owning a strictly fun car you don’t depend on and drive for the joy of it. As far as a point A to B car, leasing is a better option for the layperson.

    • 0 avatar
      Kenmore

      I don’t think it’s just millennials who are warming up to leasing. The old pride-in-ownership, DIY or DIE cohort to which I once belonged has melted away like the ice shelves.

      Pop can & plastic bodies, opaque, sealed system mechanicals/electronics, the “appliance” tag is more appropriate to mass-acceptance cars than ever. That’s fine by me so long as they reliably apply their appliancey selves to the task for as long as I own them.

      But as they grow increasingly complex and thereby compromised I no longer put much value on owning versus leasing. For the right deal I’ll be happy to begin leasing.

    • 0 avatar
      VoGo

      There would be value to what LS1fan claims if there was data that electronics were what fails in cars today. There really isn’t.

      If you want to lease a car, go for it. But don’t preach to people who know better that it’s a smart financial move.

      • 0 avatar
        Kenmore

        Was that for me?

        Hurr… I been in skoo-wul!

      • 0 avatar
        Arthur Dailey

        We have been through this debate many times before. As Jack has written it takes a lot of money to drive an old car.

        In many instances leasing is actually a better financial move. It provides a guaranteed monthly cos with no need to save for unexpected repairs, no fear of being late or missing work due to an out of commission vehicle. No long term maintenance costs such as rustproofing, plugs, changes of coolant/transmission fluid, alignments, or shocks. Possibly not even brakes. Just change the oil 2 or 3 times a year and drive.

  • avatar
    MWolf

    Whether to lease or buy is dependent on the individual. Don’t like maintenance or keeping an old car? Know that you won’t need a car after a couple years (due to moving or other major life changes)? Leasing might be a great idea.

    Drive a lot? Don’t mind maintenance? Plan on driving it for many years? Like ownership? Buying might be better.

    I tend to own. I can do my own general maintenance, and drive quite a bit. I don’t mind keeping a reliable car for a long time. Would I lease? Sure, under certain circumstances, like I have another car that is paid off and just want something newer that I won’t have to exceed mileage on or maybe just a little econobox for when I don’t need to drive the SUV.

  • avatar
    Arthur Dailey

    Sorry Steph but you need to factor in many other elements in order to reach logical conclusions regarding this. For example:

    1) What percentage do millenials represent in the overall population? Is this more or less than their percentage of vehicle purchases?

    2) Leasing may be increasing because manufacturers are returning to it. For part of the last decade some of the D3 left or restricted their leasing. And other companies such as Hyundai with their 24 month, zero interest leases are now heavily promoting leasing.

  • avatar
    Drzhivago138

    Millennial: It’s two “N”s, everybody. Just like “Millennium Falcon.”

  • avatar
    Jimal

    The only people I’ve heard say that Millennials don’t like cars are people writing articles, and self-described “disrupters” who are trying to take advantage of said Millennials by telling them that “cars are stupid and expensive and you want to be a part of the sharing economy anyway, right? Here, buy my thing.”

  • avatar
    Higheriq

    It always amuses me whenever I ask someone why they lease cars and the answer is “I hate that depreciation when buying”.

    [ALL they’re paying for is depreciation :) ]

  • avatar
    427Cobra

    As a borderline baby-boomer/Gen-Xer, I’ve always preferred daily-driving beaters, tho I’ve also had a “good” car (or two) on standby. This last go-round, I leased a ’13 Ford Edge Limited. I leased for several reasons: I don’t drive a lot of miles (<10k a year), the payment was lower than buying (less cash out of pocket), and I did not want to get stuck with a lot of technology that would be outdated in a few years. Leasing makes sense for a lot of people. I'm a perfect candidate for leasing… tho I doubt I'll lease again. I'm just too paranoid about mileage/condition… and what I'll get dinged on at turn-in. It's a mental thing… and if you're not happy with a vehicle, it's easier to get out of it if you've purchased it, vs. a leased vehicle. In the end, it's a personal decision… there is no right or wrong… just what's right for YOU.

  • avatar
    Arthur Dailey

    We’ve been through the buy versus lease song and dance so many times. So I will provide 2 examples from my vehicle shopping just this week.

    Looking to buy another vehicle and trade either a 2011 Hyundai or a 2005 Buick. Both bought new. I will not countenance trying to sell privately, have neither the time nor the patience.

    The Hyundai was bought 66 months ago. Total cost with tax and destination rounded to 24,750. Offered a trade in value of just under $5k. Cost of ownership $300.75 per month. Plus $125 annual rustproofing, winter rims. new set of tires, coolant change, brakes front and back. Let’s say $330 per month. I could have leased the same or a similar car for 48 months, returned it and leased a new one for another 28 months for a monthly cost of about $12 more.

    2005 Buick that cost $28,500 new, including tax and destination. Owned for exactly 10 years (120 months). Total cost of $237.50. Put in just over $3,500 in parts and service over the past 24 months. Offered less than $1k as a trade. Making a total ownership cost of $258 per month. In return had the wife stranded on the side of a highway, many trips to and from the garage, etc. For about $20 more could have leased a new ‘commuter’ sized car that would have had more safety features and that I would not have to worry about the kids driving.

    So how much per month is peace of mind worth?

    • 0 avatar
      ajla

      Lease your new car, be happy, and enjoy the peace of mind.

      I can bathe in Baruth-style automotive privilege so the numbers on leasing would likely never work out for me personally. But, I still bought a brand new car in the last 20 months just becuase I wanted one. Financial efficiency isn’t the end-all of life.

    • 0 avatar
      krhodes1

      The lesson here isn’t that leasing is cheaper, it’s don’t buy 2005 Buicks.

      I don’t know what to tell you, you obviously got a lemon, or you are just hard on cars. I have driven Saabs and Volvos that I bought with 150K+ on them and didn’t spend anything like that much to keep them for 3-4yrs/50-60K miles. I expect anything I buy new to cost me basically nothing for a decade (compared to that initial depreciation you are paying for over and over on a succession of leases).

      If you are more comfortable in newer cars great, makes some sense to lease if you are going to turn them over anyway. But if you think it is *cheaper* to continuously lease new cars than to buy something decent and hold on to it, you suck at real world math, or you suck at choosing which cars to buy. I guess you could luck into outrageously subvented leases over and over, but even then, I find it hard to believe the transaction costs would let you come out ahead.

    • 0 avatar
      Scoutdude

      The lesson here is that you should not keep a car past its economic service life, you should have gotten rid of the Buick either before any of those big bills occurred or at least after the first one happened.

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