Rent or buy car in medical school?

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ChrisMack390

ChrisMack390

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It looks like I'll be going to a school at which I will need a car. I had planned to buy a used one for a few thousand dollars, but lately I have been seeing some deals to lease a car for between 50 and 100 per month.

If I leased one I could get a new or newish car for 4800 dollars throughout med school, then either get a new lease or no longer have a car depending on where I go to residency. If I buy one I could likely spend less than 4800, though for a potentially less reliable car. The lease would also allow me to hold on to more of my savings for now.
 
It really depends on what kind of mileage you plan on putting on it. If you are pretty much just driving from school and back leasing might be up your alley. However, if you have long distance drives to make you might want to consider buying because the penalty ($0.20 to 0.30) for going over the allotted miles (10,000 to 15,000 miles) in the leasing contract won't make it cost effective anymore. Also, the car insurance (bodily injury, liability, comprehensive and collision) that you must keep on a leased car will be significantly higher than the state mandated minimums. For example, your deductible cannot be higher than $500. Not mention the routine maintenance you will have to pay for so you don't get smacked with a excessive wear and tear penalty when you return it.


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Leasing for $50/month means you have to put a ton of money down. So it ends up being like the same price.
I chose to lease simply because I wanted the warranty for if I had car troubles. But yeah, mileage matters, too. If you're going to be driving a ton, leasing is a bad idea.
 
Leasing is almost always a bad idea. Buy a decent car for 5-6 k and it should last you 5-7 years
 
I would lease, much more bang for your buck. My 335 is about 4800 a year, so def doable.
 
Spectre of Ockham said:
Buy one - leasing can be tricky to get rid of and have 1001 hidden clauses. Also how in the world did you posted 3000 messages in one year ?
Click to expand...

That's an extremely good question haha. I feel like I post a lot and I'm only a third there.
 
Spectre of Ockham said:
Buy one - leasing can be tricky to get rid of and have 1001 hidden clauses. Also how in the world did you posted 3000 messages in one year ?
Click to expand...

It's been 2 years since Jan 2015.

Also I have a full time office job 😛
 
I'd recommend leasing if you won't do too much driving. I leased with 10,000 miles annually and that's more than enough for me since I primarily drive to and from school and for errands/other typical daily things. It also allows me to make the approximately 90 minute drive to and from Chicago every now and then when I feel like it. The key is to find a good deal. Leasing for $50-$100/month is impossible without putting down a huge down payment. Keep your eyes peeled for deals. Near the end of the month is usually the best because the dealerships are trying to get cars out. I was able to find a really solid deal for 0 down, ~$170 per month on a 2016 car. Obviously came out to a little more with taxes and stuff, but not having to put down $1999 or whatever was huge for me.

Another important thing is to make sure you don't get screwed over by hidden fees or other things. I brought my roommate's mom (who's in sales) to the dealership and she asked pretty much every question possible at the dealership to get everything clarified and make sure there wasn't any hidden BS in writing or elsewhere.
 
ChrisMack390 said:
Err ya. I was thinking of leasing a Camry or something lol
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My wife leases a 2015 Prius for 235/mo and no down payment (that includes gap insurance, which is a must if you're going to lease). She's also on a lease to buy plan, so when the 36 months ends she can just buy the care and everything she's paid towards the lease just goes towards the total purchase price. Plus no interest on the car for those 3 years, so we'll actually end up paying less in the long run than if we purchased flat out.
 
Stagg737 said:
My wife leases a 2015 Prius for 235/mo and no down payment (that includes gap insurance, which is a must if you're going to lease). She's also on a lease to buy plan, so when the 36 months ends she can just buy the care and everything she's paid towards the lease just goes towards the total purchase price. Plus no interest on the car for those 3 years, so we'll actually end up paying less in the long run than if we purchased flat out.
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Lmao no you wont. You will end up paying a **** ton more, since a 2015 Prius is not worth anywhere near the same price three years and several thousand miles later.

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cbrons said:
Lmao no you wont. You will end up paying a **** ton more, since a 2015 Prius is not worth anywhere near the same price three years and several thousand miles later.

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Click to expand...

What are you talking about? If we purchase the car after 3 years (which is the plan), we'd be saving the interest from the first three years of payments that would be accruing if we had purchased flat-out. Lease-to-own and purchasing flat-out are the same base price of the car for us. The biggest difference is that if we had purchased flat-out we would have had zero interest for the first 12 months. With our lease we don't accrue interest for the duration of the lease (3 years) and all payments made on the lease go towards the base cost if we purchase after 3 years. We already did the math, it was cheaper for us to take the lease-to-own route than purchase a relatively new car. Not to mention lease payments are about $150/mo cheaper than if we had bought.

Also, unless you're buying from a family or someone you're close to, you're not going to get a "reliable" car for $1,000. There's no point in paying less for a car that could break down when you really need it and have to pay twice it's worth to get repaired or have to buy another car altogether.
 
Walter Lance said:
Its also not a POS American car...
Click to expand...
POS or not it still depreciates.
Stagg737 said:
What are you talking about? If we purchase the car after 3 years (which is the plan), we'd be saving the interest from the first three years of payments that would be accruing if we had purchased flat-out. Lease-to-own and purchasing flat-out are the same base price of the car for us. The biggest difference is that if we had purchased flat-out we would have had zero interest for the first 12 months. With our lease we don't accrue interest for the duration of the lease (3 years) and all payments made on the lease go towards the base cost if we purchase after 3 years. We already did the math, it was cheaper for us to take the lease-to-own route than purchase a relatively new car. Not to mention lease payments are about $150/mo cheaper than if we had bought.

Also, unless you're buying from a family or someone you're close to, you're not going to get a "reliable" car for $1,000. There's no point in paying less for a car that could break down when you really need it and have to pay twice it's worth to get repaired or have to buy another car altogether.
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I dont think yall put into consideration how much the car depreciates. Its definitely not worth anywhere near the same price after youve driven it for 3 years.

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cbrons said:
POS or not it still depreciates.

I dont think yall put into consideration how much the car depreciates. Its definitely not worth anywhere near the same price after youve driven it for 3 years.

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Click to expand...
Depreciation is not universal. It depends heavily on the item, brand, and wear and tear. Just because something outright appears cheaper doesn't mean its the better option financially.
 
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cbrons said:
POS or not it still depreciates.

I dont think yall put into consideration how much the car depreciates. Its definitely not worth anywhere near the same price after youve driven it for 3 years.

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Click to expand...

The depreciation doesn't matter for us. We plan on buying the car after the lease ends and driving it into the ground for the next 15-20 years. It's stupid to go the lease-to-own route if you only plan on driving it for 5-6 years. We're not planning on ever owning any car for less than 10-12 years.

I bought my current car in 2005 for 11k and plan on owning it for another 5 years or so. I've also put around $1,500 in maintenance into it total. In the long run I'll have owned my car for around 15 years and probably put 15k into it total, so it still comes out to around $1,000/year and is far more reliable than buying some old car from some guy for less than $3,000.
 
Walter Lance said:
Depreciation is not universal. It depends heavily on the item, brand, and wear and tear. Just because something outright appears cheaper doesn't mean its the better option financially.
Click to expand...

The average car loses about 60% of its original value in the first 4 years. So a 24,000 Prius when you begin leasing it at 235/month for 3 years with eventual buy in the contract means you spend 8,460 on the lease then buy it for about 15,550.

But the thing is, by that time the car is worth (conservatively) about 12,000. So no, its not a good deal, its an enormous rip off.



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ChrisMack390 said:
It looks like I'll be going to a school at which I will need a car. I had planned to buy a used one for a few thousand dollars, but lately I have been seeing some deals to lease a car for between 50 and 100 per month.

If I leased one I could get a new or newish car for 4800 dollars throughout med school, then either get a new lease or no longer have a car depending on where I go to residency. If I buy one I could likely spend less than 4800, though for a potentially less reliable car. The lease would also allow me to hold on to more of my savings for now.
Click to expand...

Used car is hit or miss, you don't want to be dealing with mechanical issues...leasing may be the way to go, particularly if you can cover costs with federal loan
 
cbrons said:
The average car loses about 60% of its original value in the first 4 years. So a 24,000 Prius when you begin leasing it at 235/month for 3 years with eventual buy in the contract means you spend 8,460 on the lease then buy it for about 15,550.

But the thing is, by that time the car is worth (conservatively) about 12,000. So no, its not a good deal, its an enormous rip off.
Click to expand...

You should re-read the post you quoted - as much as you wish/think it is, deflation is not that universal.
 
cbrons said:
The average car loses about 60% of its original value in the first 4 years. So a 24,000 Prius when you begin leasing it at 235/month for 3 years with eventual buy in the contract means you spend 8,460 on the lease then buy it for about 15,550.

But the thing is, by that time the car is worth (conservatively) about 12,000. So no, its not a good deal, its an enormous rip off.



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Click to expand...

When did I say the Prius was new? While your lease amount is correct, your buy value is about 5k over what the base is on the car...

WheezyBaby said:
Expand on "depreciation is not universal"
Click to expand...

I think he meant depreciation rates aren't universal. A civic is going to hold it's value after 10 years a lot better than a luxury car will. They'll both depreciate, just not at the same rate.
 
Oh Jesus. The negative net worth med stud leasing the BMW in this thread is the case study from the millionaire next door.

OP, you'll almost certainly need a cheap reliable car for residency too. Here is your car:https://www.carmax.com/car/13528375.
(Or one of the 8 billion similar cars out there). Basically, you want a late model used car with 40-60k miles. Then, in your 3rd or 4th year as an attending, buy the next car for cash.
 
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WheezyBaby said:
Show me a new car that doesn't depreciate significantly as soon as it becomes used
Click to expand...

Best deal is buy a pre-owned with low mileage...my 1st car as an attending was a 1 year old vehicle with 2300 miles that was about 10-12K cheaper than sticker and came with warranty...amazingly, it was my 1st car that had power windows!
 
From a strictly financial perspective, leasing a car is worse than buying a gently used car. However, if you want the peace of mind of not having to learn about cars, and don't want to meet with different sellers every day who are trying to sell you a salvaged pile of garbage, and instead just want to focus on school and get from A to B without ever worrying about "what if my car breaks down and it costs me another $5k", then you should lease. It's a fixed cost for a fixed period of time, everything is covered by warranty, and you know this car works.

However, ultimately I would suggest that everyone learn a little about cars and figure out how to find that gently used car for $5k that won't break down on you. After med school, you're still making no money, so are you going to lease for another 4-6 years? Just take a few days and learn about cars, bring a friend, and buy a car. Unless you want to be feel like a baller and drive around in a brand new car.
 
Lots of my classmates have new/leased cars, and I suspect many of them are financed by mom or dad. Medical school is expensive no matter how you cut it, but if oyu're paying for it yourself you should try and limit your expenditures while remaining functional.

Leases are rarely a good deal. Being late because your $1000 POS broke down (again) is also a bum deal. My wife and I shared a car for the 1st two years and when I needed my own daily transport for rotations I bought a no frills late model with low miles on a short term. See what you can find for a few grand and don't let shine and chrome steer you into extra debt.
 
DocWinter said:
Lots of my classmates have new/leased cars, and I suspect many of them are financed by mom or dad. Medical school is expensive no matter how you cut it, but if oyu're paying for it yourself you should try and limit your expenditures while remaining functional.

Leases are rarely a good deal. Being late because your $1000 POS broke down (again) is also a bum deal. My wife and I shared a car for the 1st two years and when I needed my own daily transport for rotations I bought a no frills late model with low miles on a short term. See what you can find for a few grand and don't let shine and chrome steer you into extra debt.
Click to expand...

Agree. Leasing is almost always a poor choice, less because of depreciation but more because you lose any bargaining power (given most people are GOD AWFUL at bargaining with car dealerships) and are stuck buying a vehicle that has depreciated (yeah, yeah, I get it, depreciation isn't something that happens at the same rate to every vehicle. Fine. Doesn't matter) for what is probably an inflated price. If you stop leasing the car and walk away, you simply lose that money and are forced to reinvest in a purchase or another lease because, well, you don't have a vehicle anymore.

A far more prudent option, if buying a car new seems too much of an investment, is to buy a car for $5000 or $10000 that is reliable (Prius and Toyota Camry come to mind) and drive them into the ground. If the car breaks down in four years and you feel like buying another car, you've spent $1250 or $2500 per year plus insurance, so you'll likely do better than your lease on that front. If you do drive it into the ground for 10+ years and you take care of the vehicle, you beat out the lease price by quite a bit.

Even buying a new car (that you plan to drive into the ground) isn't a terrible idea as, again, $20,000 / 10 years (or more years if you're smart) comes out to $2000/year + insurance, which is less than many car leases. You still have to pay repairs, but if you're smart, you'll just make the car last and if you pay it off over 3 years (because you really shouldn't generally buy a car that you CAN'T pay off in 3 years), your car payment just vanishes into the ether one day.

My boyfriend and I, during residency, currently share one 2004 model that has been paid off for many years, so our only real expense is registration and insurance, which is pretty great.

Basically, just don't lease.
 
cbrons said:
Why dont you just be sensible and buy a $1,000 ****ter that can get you from point A to point B? Youre a broke as F med student.

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Click to expand...
I say this in every one of these threads. My friends and family have been driving 1-2k cars for a long time. Mines still good 6 years after getting it with minimal maintenance costs. It does the same damn thing a newer civic or whatever else does.
 
cbrons said:
Why dont you just be sensible and buy a $1,000 ****ter that can get you from point A to point B? Youre a broke as F med student.

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Click to expand...

I'm concerned that I'll end up spending a bunch more on maintainance and repairs and/or not have a car when I need it.
 
Dude, honestly just lease it. Some cars lease insanely well. Find out the residual value on the car, get base money factor, if they have a multiple security deposit option utilize that to buy down the money factor, and most importantly negotiate the selling price. Again Negotiate the selling price. I can't tell you how many stupid people walk into a dealership and start talking monthly payments, just stupid and you will get hosed. If you want, post your deal on the forum or PM me and I'll tell you if you have a crappy deal or not. Yeah, my parents are paying for my lease (to the dude who was mocking me, no I don't have negative equity and I am not leasing it myself), but I do negotiate all the deals in the family and get us BMW/Lexus/Benz for Toyota prices (most dealers think I am a car salesmen and hate dealing with me...but I def get the best deals every time).

As for dealerships, I find the easiest way to structure out your lease is on an Excel and fax/email the internet sales guy or MANAGER directly (DO NOT DEAL with car salesmen or SAs, they don't know jack crap and they don't make the deals). You need to know your numbers inside and out: MSRP, invoice, money factor, residual value, MSD to buy down the rate inside and out. The more knowledge you have the better position you are. Don't get stuck on one dealership or one car, or you will get hosed. Watch out for "fees" like Doc fees which are extremely high in some states (Ca is good about this at like a standard 85 but states like Ga or FL are extremely high at 799...and again that is all profit to them). Do not pay any other fees. Licensing and gov fees vary but expect 400 on this (mandatory).

Again, highly suggest you lease because your income is $0 right now and it is the cheapest way to get the most for your money in the short term. When you get a job in residency, you can start making a higher payment toward owning the car...but again leases are cheaper in the short run and you are poorer in the short run.

So again:

MSRP:
Invoice:
Selling price: Should be around invoice.
Incentives: sometimes these are hard to find, Edmunds typically lists them though. Be careful most dealers try to keep these for themselves. Work the deal then apply the incentives.
Other "fees": Watch out for doc fee as that is pure profit.
Residual amount: Ask them.
Money Factor: Ask them.
MSD (note, I don't know if every manufacturer does this, I only have experience with BMW, Mercedes, Lexus, Infiniti, Porsche who do)
Taxes:
Drive off: DON'T PUT ANY MONEY DOWN, AGAIN DON'T PUT ANY MONEY DOWN ON A LEASE, AGAIN DON'T do a capital cost reduction, stupidest thing you can do on a lease. Only thing you should pay at drive off is acquisition fee which runs like 800 (again only experience with brands above).
Monthly: this is last and should be last, you NEVER, NEVER, NEVER, NEVER, NEVER, NEVER ever shop by monthly payments or you will get hosed like there is no tomorrow

Follow everything I say, and you will be all set. Again, if you need any help post here or PM me. Cool.
 
failedatlife said:
Dude, honestly just lease it. Some cars lease insanely well. Find out the residual value on the car, get base money factor, if they have a multiple security deposit option utilize that to buy down the money factor, and most importantly negotiate the selling price. Again Negotiate the selling price. I can't tell you how many stupid people walk into a dealership and start talking monthly payments, just stupid and you will get hosed. If you want, post your deal on the forum or PM me and I'll tell you if you have a crappy deal or not. Yeah, my parents are paying for my lease (to the dude who was mocking me, no I don't have negative equity and I am not leasing it myself), but I do negotiate all the deals in the family and get us BMW/Lexus/Benz for Toyota prices (most dealers think I am a car salesmen and hate dealing with me...but I def get the best deals every time).

As for dealerships, I find the easiest way to structure out your lease is on an Excel and fax/email the internet sales guy or MANAGER directly (DO NOT DEAL with car salesmen or SAs, they don't know jack crap and they don't make the deals). You need to know your numbers inside and out: MSRP, invoice, money factor, residual value, MSD to buy down the rate inside and out. The more knowledge you have the better position you are. Don't get stuck on one dealership or one car, or you will get hosed. Watch out for "fees" like Doc fees which are extremely high in some states (Ca is good about this at like a standard 85 but states like Ga or FL are extremely high at 799...and again that is all profit to them). Do not pay any other fees. Licensing and gov fees vary but expect 400 on this (mandatory).

Again, highly suggest you lease because your income is $0 right now and it is the cheapest way to get the most for your money in the short term. When you get a job in residency, you can start making a higher payment toward owning the car...but again leases are cheaper in the short run and you are poorer in the short run.

So again:

MSRP:
Invoice:
Selling price: Should be around invoice.
Incentives: sometimes these are hard to find, Edmunds typically lists them though. Be careful most dealers try to keep these for themselves. Work the deal then apply the incentives.
Other "fees": Watch out for doc fee as that is pure profit.
Residual amount: Ask them.
Money Factor: Ask them.
MSD (note, I don't know if every manufacturer does this, I only have experience with BMW, Mercedes, Lexus, Infiniti, Porsche who do)
Taxes:
Drive off: DON'T PUT ANY MONEY DOWN, AGAIN DON'T PUT ANY MONEY DOWN ON A LEASE, AGAIN DON'T do a capital cost reduction, stupidest thing you can do on a lease. Only thing you should pay at drive off is acquisition fee which runs like 800 (again only experience with brands above).
Monthly: this is last and should be last, you NEVER, NEVER, NEVER, NEVER, NEVER, NEVER ever shop by monthly payments or you will get hosed like there is no tomorrow

Follow everything I say, and you will be all set. Again, if you need any help post here or PM me. Cool.
Click to expand...
...but where does step score factor in???
 
Always buy every thing you can.
 
Surprised to see such strong opinions on hear re buying a used car. Of course it's cheaper to buy a used car. But it's not THAT much more to lease a brand new car.

It's also cheaper to have a 10 year old crappy acer laptop than it is to have to a MacBook, iPhone and iPad.

Cheaper to have 3 roommates than get a 1 bedroom apartment.

Cheaper to go to an in state Med school than nyu

Cheaper to eat ramen every night than eating out

Always find ways to save, but if having a nice new car is important to you, lease the damn thing.
 
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