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I am currently leasing a 2007 Honda Accord. Due to my questionable driving skills, I have front end damage since I have hit the garage wall and the deep freeze while attempting to exit the garage. (Can't drive OR manage my personal finances. I am, however, a really good lawyer, I swear.) My lease is up in May 2010. I will be way under on the mileage but I will either have the front end damage or need to repair it. I am considering my options. Is it best to buy the car at the end of the lease even though the initial owner has clearly not taken good care of it? Should I lease another car and try to get a similar payment? Should I buy a new car that costs less (either a Honda Civic or a Toyota of some sort)? Or, last option, should I look at a relatively new used vehicle? I really don't know the financial benefits of any of the above. I've always been focused solely on the payment and keeping it within a certain range. Ideally, I would have a convertible Lexus, but I have grown financially responsible enough to know that isn't happening. |
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I wouldn't lease again. It's little more than renting the car. Getting into a recent-model, used car is a good choice. The worst part of the depreciation was paid by the original owner (about 25% the second it left the lot). Have you seen Dave Ramsey's Drive Free, Retire Rich video? It paints broad strokes, and the 12% annual return it quotes in the latter half is ridiculous, but the message about making car payments vs. owning is good. What it also does is illustrate (again, with broad strokes) how to break the cycle of car payments into owning. It may require a couple of years of driving around in an older car, but if you earmark the amount you were paying as a car payment, then the proceeds from the sale of your older car, plus those savings, will get you into a better car -- which you own. I would suggest focusing not on keeping the car payment within a certain range, but getting the payment down to zero. If not this time around, then soon. As for the front end damage on your current car, I'm guessing it's cosmetic, since you're still driving it. When the time gets close to when you need to decide whether you're turning the car in, or buying it, you can get an estimate for the repairs necessary and run the numbers to see how it stacks up against your other choices. Final note: I drive a 2004 Corolla, and it's a great little car. I imagine the smaller models are fine, too. There's a reason why Toyota and Honda aren't getting federal bailouts! My first husband was in car sales for Honda and he taught me well - Honda and Toyota. Best cars available. I considered a VW Jetta for a bit because I wanted to get something I could run on biodiesel fuel, but that is more than I can commit to right now. I am still leaning toward sticking with this car and getting the warranty stuff fixed and dealing with the dent in the front. Oh, my clumsy driving. I will definitely watch that video!
(Oct 25 '09 at 07:39)
Frugallawyer
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