When you transfer the title to the car, you have to pay a sales tax. Plus you’ll have liscense plate fees and insurance costs. You may need proof of insurance to transfer the title.
Those ratings aren’t that useful, because they are the % of MSRP that the vehicle retains, not % of price paid. That’s a big difference for some cars, which routinely sell for 25% below MSRP.
IMO, what you should do is contact lease swap stores and dealers and ask if they will do a short-term lease (dealers) OR pick up the remainder of a lease someone else no longer wants (lease-swap).
Do NOT do this with an on-line place - they’re known for scams. Find an actual brick-and-mortar lease swap store and shop there. Look for one with a lease expiring at the time you want to dump the car, not years later. You don’t want to have to find someone else to assume the lease. You should be able to do this for $200-300 per month, easy.
There may also be specialty leasing stores in the Chicago area. We have one here in SW Ohio that carries all makes and models and leases out vehicles themselves. They then sell them when the person leasing them returns them, but you can easily negotiate a short-term lease with them for a previously leased car…
That’s an idea. If I found a good car for $200/month it would be a good option. I can’t seem to find any brick-and-mortar lease swap stores, though, only the online places like Swapalease and Leasetrader.
Swapalease.com has a brick-and-mortar store in our area, though they don’t advertise it on the web.
I’d also call a few dealers and ask about short-term leases or long-term rentals. We had some visitors from Australia who a local Ford dealer set up with a 9 month rental of a Taurus that had been used as a demo vehicle. The dealer got $350 per month from that deal, which more than covered their cost, and they had no more difficulty in moving the car at the end of the lease.
I know even $350 per month may sound expensive, but it is worth it, IMO, vs. trying to negotiate a purchase and then having the hassle of selling the vehicle afterwards. In addition, the tax/title/registration can add up to a significant amount if you’re buying. Chicago’s sales tax rate is 9.75%, so if you buy a $10,000 vehicle, you’re looking at $975 in taxes plus title and registration (figure another $75 or so). That’s $1050 you won’t get back, or 3 full months of a rental deal like I mentioned. Add in the depreciation of the vehicle you buy (which will be worse as the depreciation increases with # of owners), and pretty soon you’re at the same cost or worse than renting, but with all the extra hassle…
I’ll look into that. But you’re saying that even with the big companies like Swapalease and Leasetrader, I risk getting ripped off if I do it online?
And your maths make sense, especially for a $10,000 vehicle. I just found a 2002 Corolla for a little under $5,000, though. Maybe that could work out cheaper than a lease, but of course there is some extra hassle. Thanks again 
You’re probably a bit safer if you find a larger company, but the real key is that whatever route you take for a lease takeover, you want it to be arranged through a dealer of some sort. Its fine, IMO, to use an online company IF they arrange paperwork through a local dealer. You do not want a place that allows individual owners to release themselves directly and the site takes a cut and stays out of the transaction completely. I don’t know how leasetrader works, but Swapalease has a few stores and can work with the dealers/manufacturers. Their local store here is a Better Business Bureau member with an A+ rating and they’re owned by one of the major dealership chains. I’d trust them to get the paperwork right… Plus if they screwed up, I’m just a short hop from beating down their headquarters’ doors…
The 2002 Corolla might be a good pick. You’re unlikely to loose that much in resale value, but remember there is a value loss associated simply with the number of owners a vehicle has had. A 1 owner 10 year old vehicle generally sells for more than a 2 owner 10 year old vehicle, and definitely more than a 3 owner 10 year old vehicle. Buyers get suspicious on the number of owners a vehicle has had, particularly if an owner only keeps it a short period of time. That could make it harder to sell later. An idea there might be simply to write up a statement now that you intend to own this vehicle only for 9 months for the reasons you’ve stated, and get it signed, dated, and notarized. Then you could show that to potential buyers as proof that you never intended to keep it for a long time, and you aren’t simply selling it because it is a lemon. If you have a bank you’re doing business with in Chicago, they’ll generally notarize something like that for free… otherwise you can generally find a notary for $10-20.
One last point with a 2002 Corolla… it should be a good car, but at that age, be prepared for a few repairs now and then. If it hasn’t had its timing belt changed, there’s $400… if it needs struts, there’s another $1000… new tires? $350… You might get lucky and have to put nothing into it, but I’d budget $1000 and hope to have most of it left afterwards.
The notary sounds like a really good idea! I’ll look into that.
And a helpful reminder about the potential repairs. Factoring $1000 for that into our budget sounds reasonable.
I looked a bit around swapalease.com and leasetrader.com. There wasn’t all that much in my area. I did find one car with a lease expiring about when I leave, for $240 a month plus $600 in transfer fees. That comes to about $300 a month, which isn’t hopeless, especially not for a 2008 model car.
But how do leases work exactly? I would have to get my own insurance? And if there are any problems with the car, would I be responsible or would the leaser take care of that? Or maybe the factory warranty would take care of everything a full coverage insurance would not?
Contacting a couple of car dealership about a short term lease might also be a good idea. Would you have asked a dealer about that after looking at his used cars, or would it be better to go to a different dealer to discuss a potential lease?
(I also talked to Enterprise and Rent-a-Wreck about long term rentals, but they couldn’t offer anything below $700 a month.)
You would need your own insurance, but the positive side of leases is that they should cover all repairs, and in some cases all maintenance as well (depending on manufacturer). It really is similar to a long-term rental. Generally leases are frowned upon because they aren’t a cost effective way to get a car when compared to buying, but when you have a known short-term need, finding a lease or rental can be cheaper and less hassle compared with dealing with the purchase and selling of a car…
I see no problem with talking to the same dealer you already talked with about a used car, but if they think they can push you into a used car, they’re likely to try to do that, so you may not have any luck with them…
Yeah, that’s what I was thinking. Would probably be a good idea to go into a “fresh” dealership to ask about a lease then.
Any advice on how to pick a dealership for this? (I’m guessing that leases would generally be for newer cars so the dealerships I have singled out for having large used cars inventories might not necessarily be the best.)
If you do not need a car everyday and you will be living in the actual city and not the burbs, look at something called a ZIPCAR. Its like a rental car but they are parked all over the city and you can rent them like an hour at a time. You can just swipe your zipcard and rent it. Its what I would do if i were you.
Re: Hyundai. My elder daughter spent about 11 months in Chicagoland over the last two years. Bought a 3-yr old Hyundai from CarMax in TX, drove it to Chicagoland, maintained it meticulously through a Chicago winter (used public transport to commute to work in The Loop), and sold it back to CarMax for near break-even. No guarantees you can replicate this, but might be worth thinking about.
Wow! That’s impressive. Great to hear that it can be done
Absolutely, it can be done, but I wouldn’t depend too much on it. There are probably some mitigating factors in elcastorgrande’s case, namely:
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Hyundai’s reputation has been improving greatly the past few years. At the same time, they’ve been pushing fewer fleet sales, so they have experienced better resale value growth than many other companies. That sort of increase isn’t guaranteed to continue. For example, Ford’s reputation has greatly improved over the same timeframe, and many of their vehicles went from depreciating quickly to holding value as good as or better than their competition. For example, the Ford Taurus went from fairly quick depreciation in 2008 (not as bad as 2007 or earlier models, but still…) to holding value better than the competing Toyota Avalon in 2010. Ford’s general reputation didn’t just help the 2010 models, but also pulled up the value of earlier models… I’ve actually seen 2008 Tauruses with 80,000 miles on them with asking prices only $2000 less than they were selling for brand new, while 2 years ago they were on the used market for $6000 or so below what they’re asking for today (so the resale value has improved). Hyundai is VERY similar here, perhaps even more so - but that’s likely a one-time gain from that phenomenon and not guaranteed to continue.
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Used cars in general have been getting more expensive in the US. People still want and need transportation, but are getting stingier when it comes to opening their wallets. New car prices haven’t changed much in over a decade, but people kept putting out more and more $$$ to get fancier and fancier cars. Now they’ve reversed that trend and want a deal. The price of new cars hasn’t changed a whole lot, but the demand has increased significantly for cheaper, used transportation. As an example, the Ford Taurus I recently sold had a blue book value of $1030 last year. When I sold it, the blue book value was up to just under $2500. I enjoyed the increase, but I doubt the new owner has anything but a depreciating asset on their hands.
That same effect is one that elcastorgrande has been able to ride, and that wouldn’t come back to help you, either…
That said, there is no reason you can’t find something that should have minimal losses should you buy a vehicle. I have doubts you’d be able to beat a lease takeover price by much, if anything, and you would have the hassle of negotiating a sale later on. To make the sale easier, I would try to stick to something in the $5-6k range or cheaper… and I would definitely get that notarized statement of your intended short period of ownership - that’s probably worth something even to a dealer, but particularly for private buyers. I know my mind would be put at ease by such a statement and a clean mechanics check. Otherwise, I would pretty much never buy a used car from someone that had owned it for less than a few years at a minimum.
That’s a good explanation. It seems like the bottom line is that there’s a lot of luck involved.
I’m currently considering a 1999 Mazda 626. Very well maintained, one owner, 70k miles, slightly less than $5000. I am not crazy about sedans, but it seems like a good buy.
As for leases, I talked to a couple of dealerships, and noone will lease you anything for less than two years. So a takeover is the only option there. (I guess that might have been what you were saying all along.) The cars I have found on Leasetrader or Swapalease that fit my bill are all in Michigan, about five hours away by car, so that seems like quite a hassle. I am also a bit worried about having to pay for “excessive wear and tear” if I take over a lease – especially since I only have access to street parking. So I am leaning towards buying.
A serious cost will be insurance more than the depreciation. Especially if you are a new license in US. I recommend purchasing the a less expensive car without any collision or comprehensive, just liability. Look at insurance carefully with each option. I wasted at least $1000/yr in my twenties with full insurance.
LeaseTrader haws a land line telephone number on their web site. That typically indicates a legitimate operation. Swaplease provides a land line phone number and a street address; even better. You can always get burned on a transaction, and should make sure the cars is as advertised before assuming the lease. Make sure you understand the process and any legal documents before signing them.