My intent is for this thread to serve as a repository of information and opinions on the pros and cons of different ways to finance vehicles. There are a multitude of ways to pay for vehicles and a variety of issues that arise with respect to high income individuals.
I'll start with my current predicament:
My current car is a 12 year old BMW with 92 thousand miles. It's been reasonably reliable but things are starting to wear down and when they need fixing, it tends to be close to 1k per visit to the mechanic, depending on the issue needing to be fixed. I've enjoyed my car, but found out during my ownership tenure that i don't really care about the car i drive as long as it gets me from point A to point B, is reasonably comfortable, and above all else is reliable (See link below) . My plan is to replace this vehicle with a reliable Japanese sedan at some point over the next calendar year before my current car hits 100,000 miles and becomes a money/time pit.
My self proposed budget is 25k which I think will buy a moderately equipped new or used Honda accord which should work well given my priorities.
Among the options I'm considering:
-Paying cash for a gently used car and driving it for 7-8+ years (supposedly the least expensive option, but by how much in the 20-30k price segment of vehicles?)
-Paying cash for a new car and driving it for 10+ years ( but NOT until the "wheels fall off"...I think my time is too valuable to be stranded on the side of the road commuting to work)
-Leasing a new car with purchase at the end of the lease term if I like the car ( no major reliability issues arise)
-Leasing a car and continuing to lease cars with the option to write off a portion of the payment in 2 years when I have the option to buy into my practice as a partner.
I bought my current car at auction for 25k 9 years ago and when I add up the cost of non- routine maintenance over the last several years the total cost comes out to $264 per month averaged over the 9 years of ownership. (25k initial purchase+$3500 in repairs= $28,500) That figure doesn't include the $100 full synthetic oil changes, brakes, tires, and the 50¢ per gallon difference for the required premium fuel.
Right now I'm leaning toward leasing (under good terms) just to be free of maintenance issues and the time suck that comes with fixing them.
I'm also just out of training and would be able to divert more savings towards a house down payment while we rent an apartment for the first year. (Fortunately I am free of the enormous student loan burden that affects so many recent graduates)
Other related discussion topics may include:
As docs transition into retirement and are withdrawing from accounts in the 25-33% tax bracket, does it still make sense to pay for cars with cash? Does a lease become a favorable option as a retiree given the tax implications?
How much is your time worth? If you're having to miss x number of clinic/surgery hours dealing with car maintenance issues, what does that lost time cost you?
As a doc who owns his own business, do the business write off implications favor leasing for certain types of vehicles? (See link below)
For those that make the argument that leasing gives you the latest safety features, is there any data to support this? ( new safety features= less chance of bodily harm if in an accident)
A few helpful links I've come across:
Vehicle reliability database:
http://longtermqualityindex.com
Buy vs lease as a business owner:
http://blog.turbotax.intuit.com/tax-tips/buy-or-lease-your-new-business-vehicle-67/
Please chime in with your thoughts, experiences, and opinions
I'll start with my current predicament:
My current car is a 12 year old BMW with 92 thousand miles. It's been reasonably reliable but things are starting to wear down and when they need fixing, it tends to be close to 1k per visit to the mechanic, depending on the issue needing to be fixed. I've enjoyed my car, but found out during my ownership tenure that i don't really care about the car i drive as long as it gets me from point A to point B, is reasonably comfortable, and above all else is reliable (See link below) . My plan is to replace this vehicle with a reliable Japanese sedan at some point over the next calendar year before my current car hits 100,000 miles and becomes a money/time pit.
My self proposed budget is 25k which I think will buy a moderately equipped new or used Honda accord which should work well given my priorities.
Among the options I'm considering:
-Paying cash for a gently used car and driving it for 7-8+ years (supposedly the least expensive option, but by how much in the 20-30k price segment of vehicles?)
-Paying cash for a new car and driving it for 10+ years ( but NOT until the "wheels fall off"...I think my time is too valuable to be stranded on the side of the road commuting to work)
-Leasing a new car with purchase at the end of the lease term if I like the car ( no major reliability issues arise)
-Leasing a car and continuing to lease cars with the option to write off a portion of the payment in 2 years when I have the option to buy into my practice as a partner.
I bought my current car at auction for 25k 9 years ago and when I add up the cost of non- routine maintenance over the last several years the total cost comes out to $264 per month averaged over the 9 years of ownership. (25k initial purchase+$3500 in repairs= $28,500) That figure doesn't include the $100 full synthetic oil changes, brakes, tires, and the 50¢ per gallon difference for the required premium fuel.
Right now I'm leaning toward leasing (under good terms) just to be free of maintenance issues and the time suck that comes with fixing them.
I'm also just out of training and would be able to divert more savings towards a house down payment while we rent an apartment for the first year. (Fortunately I am free of the enormous student loan burden that affects so many recent graduates)
Other related discussion topics may include:
As docs transition into retirement and are withdrawing from accounts in the 25-33% tax bracket, does it still make sense to pay for cars with cash? Does a lease become a favorable option as a retiree given the tax implications?
How much is your time worth? If you're having to miss x number of clinic/surgery hours dealing with car maintenance issues, what does that lost time cost you?
As a doc who owns his own business, do the business write off implications favor leasing for certain types of vehicles? (See link below)
For those that make the argument that leasing gives you the latest safety features, is there any data to support this? ( new safety features= less chance of bodily harm if in an accident)
A few helpful links I've come across:
Vehicle reliability database:
http://longtermqualityindex.com
Buy vs lease as a business owner:
http://blog.turbotax.intuit.com/tax-tips/buy-or-lease-your-new-business-vehicle-67/
Please chime in with your thoughts, experiences, and opinions
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