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  • Leasing or buying a car during medical school

    Up to this point, I would never have considered leasing a vehicle but we're wondering if this is the right financial move heading into medical school. Our cars won't make it through medical school and residency so we've saved up about $8k for a down payment. We have an infant and want something bigger (and safer) that may also accommodate another kid by the end of medical school. If we were to buy a car with this down payment, we're looking at a monthly payment of ~$220.

    However, I'm considering using that 8k to feed lease payments throughout the duration of medical school. With the vehicles we're looking at, our monthly payment would still be about $220 per month. The biggest reason we would lease is to try and mitigate the 7% Grad Plus Loan that we would use to pay off our auto loan. If we were to buy a car for about 20k, minus the 8k down payment, that 7% compounding on 12k would lead us to pay about 4k more by the time we begin hitting our medical school debt hard.

    I understand the additional costs with leasing a vehicle but I'm wondering if I'm missing something big here. Any advice would be greatly appreciated.

  • #2
    Don't lease. Hang on to your current cars and then buy an 8k cash car when they die. They might last longer than you might think. If your spouse is not working while you are in school you might consider going down to one car. We've just had one since medical school and my husband works as well and we have kids and it's been fine. We're still driving the 2008 Corolla we bought during medical school!

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    • #3
      Originally posted by behindthescope View Post
      Our cars won't make it through medical school and residency so we've saved up about $8k for a down payment.
      please clarify: make, model, mileage.

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      • #4
        Get a used Toyota/Honda minivan. With a growing family, you guys will like it a lot.

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        • #5
          Are you already in medical school or will you be starting next fall? If you’re starting next fall I would see if you could generate some income/savings in the meantime. As much as possible in fact. Is it possible for your spouse to work even part-time while you’re studying/training? Supporting a family plus buying vehicles with Grad Plus loans sounds like a recipe for a pretty deep financial hole by the time you come out of training.
          As for your question about vehicles financing vehicles with Grad Plus loans sounds like a bad idea. I would avoid that if at all possible by earning money, selling stuff you don’t need, or even borrowing money from parents if you and they are comfortable with that.
          Bottom line: take out as little as possible in student loans. The interest on them is high and compounds quickly.

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          • #6
            Originally posted by Peds View Post

            please clarify: make, model, mileage.
            '03 Mazda Protege (110k miles) and '11 Subaru Legacy (155k miles). We'll keep the Mazda but the Subaru is giving out on us with transmission issues.

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            • #7
              Originally posted by wideopenspaces View Post
              Don't lease. Hang on to your current cars and then buy an 8k cash car when they die. They might last longer than you might think. If your spouse is not working while you are in school you might consider going down to one car. We've just had one since medical school and my husband works as well and we have kids and it's been fine. We're still driving the 2008 Corolla we bought during medical school!
              With kids on the way, safety is often a priority. I wouldn't advocate spending 8k on a used car to put young children in. You're talking about either high-ish mileage, or older car.

              This being said with significant past experience working on cars as well as personal experience with a near fatal accident that could've been a lot less traumatic with a newer car with better crumple zones.

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              • #8
                The car industry really has scared multiple generations into needing the newest and best. The top of the line car you needed in 2010 is now a death trap.

                It seriously makes Apple's phone churning look like child's play.

                OP get something used that you can afford.

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                • #9
                  Originally posted by FishingMD View Post

                  With kids on the way, safety is often a priority. I wouldn't advocate spending 8k on a used car to put young children in. You're talking about either high-ish mileage, or older car.

                  This being said with significant past experience working on cars as well as personal experience with a near fatal accident that could've been a lot less traumatic with a newer car with better crumple zones.
                  I just don't get this line of thinking. How often do you replace your car then? Kids are young for 18 years. Our 2008 is perfectly safe for our kids. I didn't say to go out and buy a car from 1970. Anything in the last decade should be safe and you can find cars under 10k in that age range.

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                  • #10
                    Rebuilt transmission fine for a 9 yo car while you are poor.

                    My parents did that for their 12 yo honda.

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                    • #11
                      Originally posted by Lordosis View Post
                      The car industry really has scared multiple generations into needing the newest and best. The top of the line car you needed in 2010 is now a death trap.

                      It seriously makes Apple's phone churning look like child's play.

                      OP get something used that you can afford.
                      this is really well said.

                      also think Jim said it well in a blog post if you are really worried about vehicle safety the best thing you can do is live super close to school etc so you are never on the highway.

                      i think there is a safety threshold for sure but you can cross it for <$10k w/ no problem at all.

                      you figure US News ranks the Camry the safest car in America and you can get a 2013 w/ 88k miles for about $10k.

                      yeah i think you can drop $8k and get a totally safe car to get you through med school.

                      a 2013 camry w/ 88k miles is way nicer than what i'm driving right now fwiw.

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                      • #12
                        When we did the math in med school leasing with the plan to buy out the remainder at the end of the lease worked out the best for us. We wanted something new as we take care of cars and plan to hold them for awhile.

                        That car was a 2006 Corolla. Still driving it and it runs great. Lots big enough for my family of four - at least give some thought to not buying into the propaganda of a big tank being needed to “protect” your family. I take a perverse pleasure in having the crappiest car in the doctors parking lot. My oldest starts driving in a couple years and I keep threatening to give her my Corolla.

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                        • #13
                          Used car market is spiking unfortunately.
                          Since April, the price of used cars has surged. Some cars have even gained in value, which is highly unusual for an asset that usually depreciates. Turns out the usual suspects are behind this mystery: supply and demand.

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                          • #14
                            Originally posted by burritos View Post
                            Used car market is spiking unfortunately.
                            More reason to fix the transmission.

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                            • #15
                              My daughter drives a 1999 Honda Accord, 150,000 miles, still runs well

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