I’m a long-time Car Talk listener from WBEZ Chicago and am wrestling with my car scenario for the next 3-4 years. I need to figure out if I should stay with my 177,000-mile 1997 Rav4 MT (I LOVE this car) or lease a 2014 Mazda 3 i Sport MT hatchback. I wanted to see if I am doing the right cost-benefit analysis for this because my ultimate goal is to keep monthly payments as low as possible in order to keep more cash available to pay tuition up front (instead of using a loan and incurring interest immediately). I will drive less than 10K per year and will bike to class more often than not, even here in wintry Chicago. Lastly, if I decide to lease, I want to know if I’m going about it the right way.
This post could get long and wordy, so I broke down the situation for each car below:
1997 Rav4: From a recent inspection at a local shop, I anticipate no more than $2000 for deferred repairs over the next 12-15 months. Because the car is paid off and the insurance premium is super low, I can save a lot of money by staying with this reliable AWD tank over the next year if I can avoid the deferred repairs. However, the car is older and may have other, more critical repairs that could keep me away from class/studying. That would be a big opportunity cost.
2014 Mazda 3 5-door i Sport: I choose this car and trim over the Focus SE 5-speed and Impreza Sport 5-speed because of, among many things, its ALG-awarded residual value. When comparing local dealers’ negotiated purchase prices, I’ve gotten as low as a walk-out price of $17,766. Can I use that price to then negotiate a lease, or are dealers only able to begin with the MSRP instead ($18,945)? The rest of the current incentive includes 36 months at $159 with $2359 down. I calculated the equivalent interest from the money factor to get 1.5%. The car will have warrantied maintenance and better fuel economy, but it’s only FWD and has way less cargo volume than my beloved Rav4.
I’m trying to negotiate a better lease (only $99 per month, less money in the down payment, and gap insurance), but where do I draw the line in the sand? Honestly, I hate this process and think it’s sad that the US market doesn’t offer more fuel efficient options (especially hybrids) for manual transmission. I guess this happens when we represent less than 3% of the domestic auto market
I look forward to any thoughts and appreciate your interest!
Have a great holiday!