New Med Student: Keep 1997 Rav4 or Lease 2014 Mazda 3?

Hey everyone,

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 :frowning:

I look forward to any thoughts and appreciate your interest!

Have a great holiday!

With the glowing terms you describe your RAV by, I would stay with it till forced to change with higher repair bills which will at that time make up your mind for you. It pays to make a plan when that happens as you have, but I would hang in there with the RAV and be saving money as long as you feel comfortable. Have a back up plan to make classes with rides from friends if you fear a break down.

I would stay with the Toyota. I doubt that you will put more than a few thousand miles per year on it. If you come close to 10,000 miles per year, you Re driving often to work or taking long trips. I can’t imagine you have time for long trips. If you hit 200,000 miles in 4 years, I would be surprised. I’d even be surprised if you reach 190,000.

By all means keep your Rav4. Leasing is the most expensive way to have a car, buying and keeping the least expensive. Why put yourself on the never-ending high $$ lease treadmill now, when you’re still a student?

I went to Northwestern. The RAV4 is the perfect car for Chicago winters.

You have a car that you love and isn’t having problems and you’re just starting med school… and you’re asking whether you should get rid of it and lease something?

Keep the Rav4. Never ever ever ever lease a vehicle unless money is no option. Under the assumption that you’ll be buried in school bills when you complete med school, KEEP THE RAV4!!!

It sounds like some con man (otherwise known as a “car salesman”) has convinced you that it makes economic sense to trade your Rav4 for a lease. In truth, the best economic decision you can make is to not spend any money that you don’t absolutely have to… and that means keeping the RAV4. Not spending money unless absolutely necessary is ALWAYS a better decision than spending money.

Besides, any car you have to lease you cannot afford. At the end of the lease they come take the car and you have NOTHING, NADA, ZIP, zero equity, no car… and then they examine the car and charge you to the nose to get any dings repaired. And if you DO get a ding you will NOT have the option to live with it… you MUST get it professionally repaired. And you’d better not decide to take a trip in a lease… if you violate the mileage limit you’ll pay through the nose.

I’m with the crowd. Even if the RAV4 ends up needing a few more repairs, you’re likely to spend less than moving to a newer car. If you do move to a newer car, leasing will cost you more than buying.

Since you have manual transmission on your Rav 4, I’d stick with it. As long as you keep the routine maintenance up to date per the owner’s manual, there’s a pretty good chance it will serve you well without needing any major repairs at all in the next 3 years. The type of repairs you should probably budget for over the next three years – beyond routine maintenance and things like tires – would be drive shaft replacement, water pump, and timing belt (if your car has one.) Maybe plan to need a new radiator.

If you had an automatic transmission in the Rav 4, then it would be a toss-up. Maybe even leaning toward the lease. If it was a 97 sporting an automatic transmission, it wouldn’t be at all a surprise to find you’d need a transmission rebuild soon. That would cost a lot. But the manual transmissions are super-reliable, often lasting the life of the vehicle. Stick with the Rav 4.

I was in your position 45 years ago when I went to graduate school to do the coursework for a doctorate. I was driving a 1965 Rambler at the time. In those days, a four year old car with 80,000 miles was considered well on the way to the end of its useful service life. I elected to keep the car. In fact, I was driving the car two years after I completed my degree. The money I saved allowed for the down payment on a house.
I am certain that your RAV-4 should make it through your term in medical school.

A lease has never looked very economical to me. Immediate gratification seems to be the only plus in leasing.

Another vote for keeping the RAV4.Leasing should not be an option until your medical practice can benefit from the tax write-offs. Good luck- the RAV4 could run for years with minimal expense. And keep up the biking.

I suspect you like the Mazda3 and are trying to justify getting it. Leasing is a baaaad idea. If you can’t afford the payments needed to buy the Mazda in a reasonable pwruod of time, you really can’t affford it. Taking on more debt right now is not a good idea.

So I’m with everyone else. Keep the Toyota. I’m worried by all this deferred maintenance. What is it? Putting off some maintenance is no big deal, but deferring required maintenance is a very bad idea. You should sit down with a good mechanic and discuss which items need doing right now, no more waiting, and which are minor. Unfortunately, the unimportant items are likely to be the cheap ones. Getting your RAV4 caught up on its maintenance and repairs is not likely to be cheap. You could find out from the mechanic which are safety items. Those you have to do or park the car for good. Other maintenance items will evwntually kill the car, but aren’t big safety issues. Or they’ll cause it to fail a smog test if you’re in one of those tests. Those items you might decide case-by-case whether they’re worth the cost. Eventually you’ll have an inoperable pile of scrap, not a vehicle, and you’ll newd to go shopping.

When you finally do need another vehicle, a lease on a new car should be out of the picture. If you insist on new, you can probably get loan rates that are pretty good. Even with your med school debts I bet there are plenty of banks who think you’re a good prospect (unless you have problems in your past). Historically, it was always a lot cheaper to buy used, but used car prices are still quite high and that makes new cars more attractive than usual. Nothing wrong with the Mazda3. It’s a very good, sensible car. The new Honda Fit looks very impressive, a bit larger than the older ones, so better at highway speeds. Still enormously roomy, of course. And there are plenty of other sensible compacts at decent prices.

If you want awd, the Subaru Impreza isn’t bad at all, much nicer than previous generations. The Subaru SV CrossTrek is just a slightly raised Impreza with a few mods to make it slightly more suitable off road (not much, though.) There used to be an Outback version of the Impreza. The SV CrossTrek takes its place in the Subaru product lineup.

And good luck with med school. It does eventually end,

Keep the Rav4 for now and if you can fix as much of this “deferred” stuff as possible. Leasing is usually a way to get a lower payment but you either have to hand the car back after the 24-36 month term or buy the car at the residual value. Unless you plan to change cars every 3 or so years you’re better off waiting and financing or paying cash when you can afford to.

Well, you have a long road ahead of you and you will need a dependable car. The choice shouldn’t be brand new lease or a 17 year old car. I wouldn’t recommend a lease at this point. Keep the old one, but if you have to put money in to it, you might just trade up to a 4-5 year old car instead. My son was in the same position when he wrecked his during residency. He got a sporty one about 4 years old and that held him until a year into his first position when he bought new. There’ll be time for new later on.

Also, leased (rented) cars require full-coverage insurance, a hidden but considerable expense…

That 1997 RAV4 is looking pretty good

Stay with the Toyota. We have 2 Mazda3s in the family, and they are also excellent cars. But cash flow here should decide, and repairing a good RAV4 is a lot cheaper than paying for or leasing a new car, especially if you cannot write it off.

Keep the Rav4, but start putting the lease payments into a separate bank account/christmas club. When the time comes, use the money to fix the Rav4 or BUY a newer vehicle.

Well, WBEZfan, what say you?

If the RAV4 is solid now then I see no reason why it won’t make it to 300k miles if need be.

It would be interesting to know what the 2 grand in deferred repairs is all about. Maybe some of that stuff can be deferred indefinitely or possibly done cheaper elsewhere if really needed.

The decision as to whether or not to keep the Toyota is a slam dunk IMO. Keep the RAV4.