Two Car Family - Here's My Plan, Does it Add Up

[TheGrudge]

I've come to the conclusion as I'm sure many of you have, that cars are a losing proposition.

My wife and I are in the market for a new car (we're looking at a van:o) and we're trying to get a good deal, but we're also trying to be mindful of the future as we don't want to end up in a sticky position down the road; say where we own two vehicles outright but they're both old and need to be replaced around the same time. After considering countless options and crunching the numbers I think I've reached a solution that makes sense for us, but I want to run it by the Red Flag pros on this forum to see if there's anything I've missed.

We currently have a 2004 Honda Civic that's paid for, and we are the original owners. It just crossed over the 100k mark and it's basically our back & fourth to work car. Given that it's a Honda and that our trip to work is 10k I'm not too concerned about it's longevity. I plan on driving it into the ground.

Our other vehicle is older and we're looking to replace it with a van - likely also a Honda. I've always been a proponent of purchasing over leasing but here's my thought:

We lease the van for 48 months resulting in a payment that's about $150 cheaper a month than financing. Of that $150 savings we would put $100 into an account each month. I'm thinking at worst, our Civic dies in 4 years at which point we'd have $4800 saved in a bank account. When that time comes, we would take the $4800 and whatever the Civic would be worth and slap it on the purchase of a brand new car that would be used as "Car B" - maybe a Yaris or a Versa (or cheaper) and pay it out over three years. Once that three years is up, we'd own the Yaris or Versa and keep it until it dies.

Basically, our main family vehicle would be a lease and every 10 years or so we'd have to stick out two car payments for a while, while we paid for "Car B".

That let's us always have a reliable family vehicle that gets cycled every four years at a lower payment, and a good secondary car for running errands that we would buy and then keep until the wheels fall off.

Here's what got me on this idea. Let's say we buy the van and pay it off over 5 years. When those 5 years are over it may only have one or two years where it can still be a primary vehicle and then it will be older and we'll want something newer and more reliable. Sure, we could sell the van at this point but to me, it only makes sense to finance if your going to keep the vehicle forever.

I know leasing gets a bad rep but I am warming to the idea of one lease and one purchased car at all times.

Thoughts?

[Rehan]

What's your main reason for getting a van rather than a second sedan?

I have a 2010 Odyssey and a 2012 Civic... My main comment to you is this: vans are expensive to buy, expensive to drive, and expensive to maintain/repair.

My Odyssey uses twice as much gas as the Civic (13 L/100km vs. 6.5 L/100km in city driving), and any maintenance or repairs on it are at least as expensive as on the Civic. And if you look at the history of reliabilty ratings from sources like Consumer Reports and Lemon Aid Guide, often times they are hesitent to recommend any minivan at all because they all have mediocre reliability.

In my case, I need to keep the van because we have 4 kids. But for anyone that doesn't have the actual space requirements for such a large vehicle, I would highly recommend getting something like a large sedan. Or a station wagon, if you want some cargo carrying room.

I had the minivan first, as our only vehicle, and then bought the Civic which has become our main vehicle that gets used 90% of the time. The van gets driven just 2-3 times a week, and it should easily last 10+ years without many repairs -- because now we're driving it 10,000km/year rather than 25-30,000km/year. And because I'm saving $2000/year in gas and there is less wear & tear on the van, the overall cost for owning/operating both of them (including insurance and expected depreciation & repairs) is only about $1000/year more than just the Odyssey alone.

[poedua]

I've come to the conclusion as I'm sure many of you have, that cars are a losing proposition.

My wife and I are in the market for a new car (we're looking at a van:o) and we're trying to get a good deal, but we're also trying to be mindful of the future as we don't want to end up in a sticky position down the road; say where we own two vehicles outright but they're both old and need to be replaced around the same time. After considering countless options and crunching the numbers I think I've reached a solution that makes sense for us, but I want to run it by the Red Flag pros on this forum to see if there's anything I've missed.

We currently have a 2004 Honda Civic that's paid for, and we are the original owners. It just crossed over the 100k mark and it's basically our back & fourth to work car. Given that it's a Honda and that our trip to work is 10k I'm not too concerned about it's longevity. I plan on driving it into the ground.

Our other vehicle is older and we're looking to replace it with a van - likely also a Honda. I've always been a proponent of purchasing over leasing but here's my thought:

I'll echo what Rehan asked you - why do you need a van exactly ?

[poedua]

Here's what got me on this idea. Let's say we buy the van and pay it off over 5 years. When those 5 years are over it may only have one or two years where it can still be a primary vehicle and then it will be older and we'll want something newer and more reliable. Sure, we could sell the van at this point but to me, it only makes sense to finance if your going to keep the vehicle forever.

I know leasing gets a bad rep but I am warming to the idea of one lease and one purchased car at all times.

Thoughts?

Just so I'm clear..........lease the van for 4 years ...buy it out at the end of the lease ......pay it down for another 5 years...once paid off, drive it for another year or 2 ....is that it ...you'd have the van for 11 or 12 years in total ?

[mau108]

Get a year or 2 old Dodge Caravan and call it a day. They are cheap second hand, relatively cheap to maintain, and apparently pretty fuel efficient too.

That honda minivan is going to cost you a lot up front and over time as well. I'm pretty sure the features you have on the Oddessy you can get on the Caravan too (sorry not looking at a minivan currently on in the near future :P)

[TrevorK]

Basically, our main family vehicle would be a lease and every 10 years or so we'd have to stick out two car payments for a while, while we paid for "Car B".


One downside to leasing is that you are responsible for certain damages/wear and tear items and you could end up with a large bill upon returning the vehicle to the dealer. Because you appear to be attempted to budget for this you may want to talk to people who have experience leasing and see what sort of costs they have had upon returning their vehicle.

I myself have never leased but I know of others who have that had to pay bills upon return of the vehicle. While I try my best to take care of my vehicles there are things potentially out of my control that could happen (parking lot bumper damage, etc) that I will have to fix/pay to fix upon returning the vehicle.


Or am I completely misunderstanding it and you plan to buy out your leased vehicle at the end of the term?

[izzyzz]

Perhaps a mini minivan like Mazda5 will do for your purposes? Better on gas and cheaper than a regular minivan.

[l69norm]

I think it will depend on the number of km that the new van will accumulate per year and how close it is to the lease mileage limit. Too low and you are paying for km you never use, too high and you get dinged for the overage.

[niroopg]

Perhaps a mini minivan like Mazda5 will do for your purposes? Better on gas and cheaper than a regular minivan.

Or a Nissan Rogue. Economic Moderate SUVs or Crossovers are the way to go. Pretty much covers all the utility of a van

[jferreir]

That's an interesting idea, but it doesn't really address the pitfalls of leasing...

My biggest gripe with leasing is that you never actually own the vehicle. Although the monthly payments might be less, they will never amount to any real equity. Sure, you don't have to worry about major repairs, but you do have to worry about mileage limits and general wear and tear items. If you're involved in an accident and the dealership disputes the quality of the repairs, then that can also be quite costly. You should keep this in mind given the context of the purchase. Assuming this will be the primary family vehicle, do you want to worry about dings and scratches from the local supermarket, or the total kilometers for that family vacation you were planning? In my view, you do not gain any peace of mind through leasing if you constantly have to worry about mileage, general wear and tear, and the inevitable surprises at the end of the lease. Furthermore, if you decide to buy the vehicle after the lease has expired, then you will certainly pay more than if you had financed it outright. Leasing just doesn't make sense from a financial perspective.

Leasing only makes sense if you want to drive a new vehicle every 3-4 years, or if you can write it off as a tax expense. Otherwise, it will always cost you more than financing. Ultimately, you need to take a step back and evaluate your priorities, and then decide if leasing is right for you. Good luck!

P.S. I know some people lease a vehicle simply because they can't afford to finance it. I wouldn't recommend this as it encourages one to live beyond their means, while still preventing them from building any equity; it's financially short-sighted.

[rdx]

Perhaps a mini minivan like Mazda5 will do for your purposes? Better on gas and cheaper than a regular minivan.

Agree, but depends on how old those 4 kids are. The third row will not fit people over 5'10" and it will not be comfortable sitting on a regular basis. Not sure how much more leg room on Odyessey and Sienna though. Other than that, Mazda5 is almost half of the price of the Odyessey/Sienna and the gas mileage is rated at 6.7 City 9.5 Hwy.

[TheGrudge]

Wow - thanks for all the replies everyone. We have a Murano right now and it's not cutting it. We have two kids and a 90lbs dog and my wife constantly complains about not having enough space. Friends our ours have a van and it is quite handy.

Basically because vans are costly I was thinking of leasing the van for four years. When the lease is up, we'd lease something else. I know we'd always have that payment.
Then, car B would be our running around car. We'd BUY that and drive it into the ground so hopefully only have to buy "car b" every 10 years. Car A would be a continuous lease.

We look after our vehicles well and usually go about 20k a year. I've leased before and have never had any trouble with condition.

[GSpeed]

Wow - thanks for all the replies everyone. We have a Murano right now and it's not cutting it. We have two kids and a 90lbs dog and my wife constantly complains about not having enough space. Friends our ours have a van and it is quite handy.

Basically because vans are costly I was thinking of leasing the van for four years. When the lease is up, we'd lease something else. I know we'd always have that payment.
Then, car B would be our running around car. We'd BUY that and drive it into the ground so hopefully only have to buy "car b" every 10 years. Car A would be a continuous lease.

We look after our vehicles well and usually go about 20k a year. I've leased before and have never had any trouble with condition.

why don't you check out the chevy orlando if your set on a van? 7 seater, amazing mileage.. 3 year bumper and 5 year powertrain warranty and not expensive at all

[TheGrudge]

why don't you check out the chevy orlando if your set on a van? 7 seater, amazing mileage.. 3 year bumper and 5 year powertrain warranty and not expensive at all

This is going to sound awful but I'm grossly opposed to anything GM makes/does/says/thinks and feels. :evil:

[thrifthunter]

Leasing only makes sense if you want to drive a new vehicle every 3-4 years, or if you can write it off as a tax expense. Otherwise, it will always cost you more than financing.

Nope, it's not that simple.

[TheGrudge]

Nope, it's not that simple.

Agreed. Even if you finance both cars there will likely be a time in your life where you have overlapping payments for a while. I haven't heard any compelling evidence here to invalidate my lease one/buy one theory.

The lease will be a new vehicle every four years and have a low(er) payment than financing, and the purchased car will only be once in a blue moon as we plan on driving it into the ground.

The other option would be to finance both but that, for us, is more expensive and leaves us with an old van at the end that we likely won't want to keep for 10 years. If it were a car then that would be a possibility but a van....not the greatest "second" vehicle.:D

[mr_raider]

Redo your calculations as follows:

Keep each car for 8 years, finance each over 4 years, and stagger them to avoid simultaneous payments. Compare that to financing one car and leasing another. But extend your calculation period out to 16 years for 4 lease cycles vs two finance cycles. Now factor in the lower insurance prices from years 4 through 8. Tell us what you get.

From what I gather, you are obliging yourself to lease the 2nd car because you are afraid you wont have enough money to fund the downpayment for the replacement of the civic. In other words, one of your cars may be too expensive for what you can afford.

[kingrukus]

Get a 2-3 year old Dodge Caravan.

[TheGrudge]

Redo your calculations as follows:

Keep each car for 8 years, finance each over 4 years, and stagger them to avoid simultaneous payments. Compare that to financing one car and leasing another. But extend your calculation period out to 16 years for 4 lease cycles vs two finance cycles. Now factor in the lower insurance prices from years 4 through 8. Tell us what you get.

From what I gather, you are obliging yourself to lease the 2nd car because you are afraid you wont have enough money to fund the downpayment for the replacement of the civic. In other words, one of your cars may be too expensive for what you can afford.

I see your point and how it could easily work, but I'm not fully on board. In your plan, you're constantly paying a finance payment that never ends, and you have the potential in the last 4 years of ownership for more repairs. My plan has a lease payment that never ends but it's lower than a finance payment and even if you add the time where I'd have two payments, it would be little more than your single finance payment.

Granted, your plan would work better on buying cheaper vehicles but financing anything over 4 years is pricey.

And frankly I wouldn't trust a Dodge or GM product when the warranty runs out.

[poedua]

Agreed. Even if you finance both cars there will likely be a time in your life where you have overlapping payments for a while. I haven't heard any compelling evidence here to invalidate my lease one/buy one theory.

The lease will be a new vehicle every four years and have a low(er) payment than financing, and the purchased car will only be once in a blue moon as we plan on driving it into the ground.


The other option would be to finance both but that, for us, is more expensive and leaves us with an old van at the end that we likely won't want to keep for 10 years. If it were a car then that would be a possibility but a van....not the greatest "second" vehicle.:D

Why not buy both and drive both into the ground ?

Because, frankly, I don't see how lease / buy is significantly cheaper ' in the long run ' ( in reality, it may even be more expensive ) than buy / buy.

These days a new car should EASILY LAST to 300,000 km simply by doing normal ' expected ' maintenance.

And, for some folks ( who drive 25,000 km a year ) that could be as long as 12 years of ownership.....compare those ownership costs to 12 years of leasing ( 3 X 4yr lease )

[TheGrudge]

Why not buy both and drive both into the ground ?

Because, frankly, I don't see how lease / buy is significantly cheaper ' in the long run ' ( in reality, it may even be more expensive ) than buy / buy.

These days a new car should EASILY LAST to 300,000 km simply by doing normal ' expected ' maintenance.

And, for some folks ( who drive 25,000 km a year ) that could be as long as 12 years of ownership.....compare those ownership costs to 12 years of leasing ( 3 X 4yr lease )

You're right, I can't argue that, but for our family vehicle I don't want something that's over 6 years old. For our second car I don't care, but for the main family vehicle I want something relatively new and reliable that I can throw the kids and dog into. If I were buying a car I'd probably finance both because once the new car is paid off in four or five years I could just make it our second car and go from there. Since we're looking for a van though it doesn't make a ton of sense. In five years I'd be driving a 6 year old van to and from work.

I suppose if I picked up 5 or 6 people on the way and charged $50 a month it could work though...hmmmm.....:D

[l69norm]

.... In five years I'd be driving a 6 year old van to and from work. ..D

Gas wise for a 10km commute, you are probably only looking at an extra $25-$30 a week for gas for a van vs. small car, say about $1000/yr.

I would think that the extra costs associated with a new lease would be higher than that ($4K over 4 years)

[Ballroomblitz]

Here is my official plan.

Purchase/lease a brand new car for the first vehicle, keep your existing car as a second low mileage beast. After 4 years buy out the lease on first vehicle, plus add another 1 to 2 years to recover from the buyout as the next purchase lease is five or six years from the starting point. After 5 or 6 years purchase/lease another vehicle while keeping the first purchased as a low mileage backup.

So every 5 or 6 years 1 vehicle enters the fleet…one gets to be the second car in the fleet & one gets sold or retired.

Maintain cycle spacing and you will always have 1 good vehicle and 1 secondary vehicle.

For buying or leasing I do not see much of a difference in that sometimes you can write off a lease, or can get a very good rate. The plan is always to PURCHASE the vehicle at end of the lease, so NEVER a worry about extra charges on return. During the lease period everything is under manufacturers warrantee…so no big concerns there.

[poedua]

You're right, I can't argue that, but for our family vehicle I don't want something that's over 6 years old. For our second car I don't care, but for the main family vehicle I want something relatively new and reliable that I can throw the kids and dog into.

But, you said you only drive 20k a year - that's a measly 120,000km on a 6 year old car - so, it still has at least 60% of it's useful life left after only 6 years.

Frankly, the notion that a 2012 Honda mini-van isn't reliable beyond 6 years / 120,000 km is a nonsensical one IMO. With ' normal expected maintenance ' a 2012 Honda Odyssey should easily last you to 300,000 km / 12 years with out running into any ' atypical ' issues IMO.

If you're dead serious about wanting to keep your vehicle ownerships costs over the next 10 - 20 years to an absolute minimum, you may want to rethink some of your assumptions - i.e dumping a vehicle after only a paltry 6 years / 120,000 km.


If I were buying a car I'd probably finance both because once the new car is paid off in four or five years I could just make it our second car and go from there. Since we're looking for a van though it doesn't make a ton of sense. In five years I'd be driving a 6 year old van to and from work.

I suppose if I picked up 5 or 6 people on the way and charged $50 a month it could work though...hmmmm.....:D

Nothing wrong with that.

And just to clarify....do you and your wife EACH do 20,000 km a year ( 40,000 )...or is it 20,000 km in total a year between you ?

[Rehan]

2012 Honda Odyssey LX (new): $30k
2008 Honda Odyssey LX (80k km) trade-in value: $15k
2004 Honda Odyssey LX (160k km) trade-in value: $4k
(trade-in values are from canadianblackbook.com)

During the first 4 years, it depreciates $15k; during the next 4 years, it depreciates $11k. So if the difference in maintenance and repairs is more than $1000/year in years 5-8 vs years 1-4, then it makes sense to get a new van. Other advantages of getting the new van include better safety features, better fuel economy, newer styling, less downtime for maintenance, and more peace of mind. Even if the repairs on the older van don't cost over $1000/year, the OP may want a newer van for those other reasons. It's not as clear-cut a decision as some of you make it out to be.

[TheGrudge]

2012 Honda Odyssey LX (new): $30k
2008 Honda Odyssey LX (80k km) trade-in value: $15k
2004 Honda Odyssey LX (160k km) trade-in value: $4k
(trade-in values are from canadianblackbook.com)

During the first 4 years, it depreciates $15k; during the next 4 years, it depreciates $11k. So if the difference in maintenance and repairs is more than $1000/year in years 5-8 vs years 1-4, then it makes sense to get a new van. Other advantages of getting the new van include better safety features, better fuel economy, newer styling, less downtime for maintenance, and more peace of mind. Even if the repairs on the older van don't cost over $1000/year, the OP may want a newer van for those other reasons. It's not as clear-cut a decision as some of you make it out to be.

Yep. And I've looked at relatively new "used" vehicles. They don't really start dropping significantly in price until their 4 years old. And with financing the way it is you can pay 3% on a new 30k van or 6 or 7% on a 3 yr old 24 k van that has less life left in it.

I guess the point I'm trying to make with this post is that to me, it makes more sense to lease one and buy one. If you finance you may have three or four years without a payment but for 5 years you paid $200/month more to get there. If it all roughly averages out in the end why not lease one and buy a cheapy for #2. I know there are cheaper options but I'm coming off a used vehicle purchase and it's been okay, but I do like the piece of mind of newer. I want blu-tooth, safety, reliability, styling...etc. for our main family car. Car #2, you'd be surprised what I'd drive. I'm hoping our Honda can go another 10 years.

[poedua]

Yep. And I've looked at relatively new "used" vehicles. They don't really start dropping significantly in price until their 4 years old. And with financing the way it is you can pay 3% on a new 30k van or 6 or 7% on a 3 yr old 24 k van that has less life left in it.

I guess the point I'm trying to make with this post is that to me, it makes more sense to lease one and buy one. If you finance you may have three or four years without a payment but for 5 years you paid $200/month more to get there. If it all roughly averages out in the end why not lease one and buy a cheapy for #2. I know there are cheaper options but I'm coming off a used vehicle purchase and it's been okay, but I do like the piece of mind of newer.

I want blu-tooth, safety, reliability, styling...etc. for our main family car. Car #2, you'd be surprised what I'd drive. I'm hoping our Honda can go another 10 years.

Well, if you want a Honda van with bluetooth, you'd want the EX trim line, and even after assuming a $1,500 discount, you still looking at somewhere around $38,000 taxes in for a 2012 EX.

The only trim line close to $30K is the LX - but this has manual doors etc. etc. - not a trim line most people want.

If you want a mini-van just to last you for 6 years / 120,000 km, then virtually any mini-van will do IMO - i.e you can get a Dodge Caravan for a lot less than an Odyssey.

All that being said, why not go ' all in ' on leasing........i.e just lease a new mini-van AND lease a new sedan every 4 years for the next 16 - 20 years ?

[TheGrudge]

All that being said, why not go ' all in ' on leasing........i.e just lease a new mini-van AND lease a new sedan every 4 years for the next 16 - 20 years ?

I thought of that, but by leasing one and financing the other you at least get a large gap between double payments. That's my reasoning anyway.

I guess my mantra is, if you're buying a vehicle to keep for 10 years then finance; if not then lease. I dont' want to keep our main family vehicle around too long, I want it to be new. For car B though....I'm going to try and hit 500,000k !!:D

[poedua]

I thought of that, but by leasing one and financing the other you at least get a large gap between double payments. That's my reasoning anyway.

I guess my mantra is, if you're buying a vehicle to keep for 10 years then finance; if not then lease. I dont' want to keep our main family vehicle around too long, I want it to be new. For car B though....I'm going to try and hit 500,000k !!:D

OK then, so you lease a new mini-van every 4 years ( 80,000 km ) for the next 16 - 20 years or so, and buy a new sedan you can drive for at least 20 years - 25 years ( 400,000 km+ at 20,000 km / year ).

And since it's a 4 year lease on a mini-van, and since monthly cash flow is an issue, you don't need the relatively better reliability / durability of a Honda Odyssey over a paltry 80,000km, just go for a cheaper ' bare bones trim ' Dodge Caravan lease instead....a cheaper ' trouble free' van for 80,000 km.

But again, as I said, I don't see why leasing BOTH isn't an option, as it would give BOTH you and your wife AND KIDS the most current re-fresh of safety and technology and reliability every 4 years ( which you said is important ) and leasing both may be just as cost effective as lease / buy over the next 20 years or maybe even cheaper....obviously, you'd have to run the estimated joint ownership costs for the next 20 years under both scenarios to see how the numbers stack up. And, even if it IS most expensive, as Rehan alluded to earlier, the added cost may be justified by the fact you're getting the most current safety / technology every 4 years.