His post, however, serves as a warning. DO NOT make the same MISTAKE that I did.
I recently wrote an article for money expert Clark Howard revealing the 13 things I learned about money in my 20s. My experience with leasing a car made the list.
Now, I want to explain why a money-conscious guy like me got a lease in the first place and why I’ll never do it again.
This story begins in May 2013. Shortly after my mortgage payoff, I decided that I wanted a new car. There wasn’t anything “wrong” with my old car. It was a bit cheap, I’ll admit. But it got me to work and back, which is all I needed it for. Living in the city of Atlanta, I didn’t really use my car once I got home.
Still, I decided that I would allow myself to buy a new car because I could afford it. If you can afford it, you can buy it. That’s one of my financial core values. I test drove a number of vehicles and ended up liking the Audi A4 the best. This is a car that retails for about $35,000. In retrospect, that seems a bit excessive for someone who only drives about 10 miles a day.
At the dealer, I planned to buy the car with cash. The salesman, however, talked me into a lease. He said the added maintenance package made leasing a better value and suggested I get the lease, then buy the car at the end of the lease. Having heard horror stories about leases, I was hesitant to sign on the dotted line. In the end, I went along with the lease.
I pulled off the lot and everything was great. I enjoyed driving my car. I recall uploading a picture to Facebook, which got a number of “likes” and “comments” from those closest to me. My friends couldn’t wait to go for a spin. I think my dog enjoyed the Audi A4, too.
Everything was going smoothly, even after I quit my full-time job in January 2014. I was able to continue making the payments without a problem because I had no mortgage payment. Looking back, I’m amazed that I was able to save more than 60% of my income during that time of freelance employment.
Longtime readers know that I gave up my mortgage-free lifestyle in order to return to my hometown a few months ago in May 2014. That’s when my relationship with my car turned sour. First, I now live in the middle of a vibrant city, DC. There’s little need for a car, except for the fact that I work an overnight shift when the subway doesn’t run. Secondly, the costs are outrageous. In addition to my $500/month car payment and a 10% city tax, it costs me $300/month to garage my vehicle. Parking was FREE in Atlanta.
After a few months of coughing up about $1,000 a month to drive, I decided it was time for the car to go. Unfortunately, my options are limited. With an Audi, using a website like LeaseTrader isn’t the best option. That’s because Audi would not take my name off the lease agreement. So, if the person who took over my lease defaulted, I would still be held responsible.
My best option was to sell the car. I took it to CarMax, which offered me $26,000 for the 2013 Audi A4 in great condition. Unfortunately, I owed way more than that. I ended up paying CarMax $4,779.37 to get rid of this car, which is equal to about 9 months of payments. I had 28 remaining on the lease, which had a 42-month term.
Obviously, had I bought the car with cash and sold it– I would have had to pay up as well. However, I think it would have been less than I ended up paying because my car had such low mileage– roughly 8,000 miles.
Now, I plan to ride the subway when possible. There is bus service that can get me to work at 2am, though it is inconvenient to where I live. I may take a cab some days or use Uber, which will still be about a third of the cost of maintaining the car. (Get a free ride by signing up for Uber using my link)
In the grand scheme of things, $4,779.37 isn’t a lot of money. No wait, yes it is! There are so many things I could have done with that money. That’s why this hurts so much. However, continuing to pay for the car, parking, insurance and gas– was taking a toll on me. The Audi A4 fit my old lifestyle, but not my new one. And come to think of it, driving an Audi never really fit my lifestyle. It’s not who I am. I’m way too cheap to be driving that expensive car!
To summarize, here’s my problem with leases. Life is unpredictable. You never know what curve balls it’s going to throw at you. Leases are contracts. They are unforgiving. Audi didn’t care to hear about how my circumstances have changed. They care about one thing: collecting payment. I encourage you to never lease a car. I have $4,779 reasons why I wish I didn’t. If you insist, make sure you investigate how you can get “out” of a lease before you drive off in your new car.