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I've been doing this blog for years and I read a lot of other related personal finance blogs.  I love it.  One of the common themes that you'll see among the personal finance blogging community is to buy a car, whether it new or used, and then keep it for a long time.  This is great advice and advice we lived by for a long time.  But not anymore.  See, we leased a new pickup truck.

Have I gone off the rails?  Nope, I'm still of sound mind.  Am I going to be shunned by my fellow bloggers? Man, I hope not!  So, why did we do it, then?  Well, because the numbers made sense.

Here's some of the factors that went into our decision to lease a new truck.

We'd been tossing around the idea of something different

We had a 2007 Buick Rainier that was our family car and the tow vehicle to our travel trailer.  Although it had only 94,000 miles, the age and declining value and wanting something more reliable had given us thought to getting something more current.

The transmission problem happened

Last month I talked about how we had a rather expensive fix to the car, to the tune of $600 for replacing a cracked transmission cooling line.  We dodged a bullet as the damage could have impacted the transmission itself, which would have cost an additional $2,000 at the very least.  That's nearly 40% of the Kelley Blue Book value of the car, and as the risk factor (in my mind) went up, the overall risk crossed a threshold that I just don't feel comfortable with.

We didn't feel as comfortable towing

If I had a buck for every time someone came up to me, surprised mb-money201308that we towed a 23′ trailer with the Rainier, I'd have a good chunk of change.  Each time I explained that the Rainier had the towing package and that we were well under the threshold.  Still, it was obvious that it was not designed with towing as the primary function.  With towing a couple of thousand miles over the course of a year, we just felt it was putting too much stress on the engine and transmission as the vehicle got older.  We had no problem when it was just running solo, but for towing, it was losing our confidence.

We wanted a GM

Our family runs fiercely loyal to GM products as both sides of the family have current and past ties to GM, so this is sort of a'must have' for us.

We wanted something equal or greater for towing purposes

At the very least we wanted something that would tow what the Buick did and possibly more as we wanted to make sure to keep our options open as our trailer ages as well.  GM no longer manufactures a mid-size SUV that has the same towing capacity, so it was either a full size SUV or a pickup truck.  The full size SUVs were just way too much for us and any potential number crunching made it out of our league.

Residuals on trucks are really high (and they hold their value)

Our first option was to look at something used.  I actually talked to someone who specializes in finding used vehicles and he said that the market for trucks is next to impossible.  Anything decent gets nabbed up quickly and often goes for above ask.  On a few different used trucks I found, we'd be paying $5-10k down and paying about $350 per month.  For five years.  On something that was at least 3 years old and had 30-50k mileage.

Residuals on trucks are really high (so we leased a new pickup)

Wait a minute, wasn't that my last bullet point.  Yes!  But because residuals are high, the lease payments are lower on new trucks.

Ultra low mileage works for us

I'm driving the pickup and between my everyday mileage and the towing, we're well below even the 10,000 miles which gives us the best monthly rate.

We get ALL of the rebates and employee discounts

On a lease, you're paying the difference between the current price and the expected residual value.   There were some really good rebates, plus we got employee pricing (thanks to our family member situation), and the great thing about it is that we get the full amount of those discounts, even though we're only paying a portion of the value.  In simplistic terms, say you buy something with a sticker price of $30,000 and the discount is 10%.  If you bought it, you'd get $3,000 off and owe $27,000.  Now, say with a lease the expected residual value is $20,000.  With regular pricing, you would owe $10,000 in lease payments, but with employee discount, you're paying based on the $27,000.  In other words, you get the same $3,000 discount but it goes quite a bit further against a lease versus a buy.  Much bigger bang for the buck.

We're fully covered for insurance

One of the turn-offs I had for a lease was that in many cases, if you're in an accident and the car is totaled, your insurance will pay out what they feel is the value, but if you owe more than that, you're responsible for the difference.  With our lease arrangement, the leasing company provides that gap coverage as an item in the lease.

We calculated the off-seting costs

If we purchased something, whether it be new or used, we'd bear the cost of the depreciation.  Even if we kept the Buick, it would likely depreciate by a couple thousand more dollars over the next three years.  Additionally, anything used would require maintenance and repair that I'm hoping we don't have to pay.  We should not have to get new tires or brakes, and anything mechanical will still be covered under warranty.  So, while our real cost for the lease payment is around $265 per month, I estimate that depreciation and repair costs on the Buick would have been around $125 per month if we kept it for an additional three years.  This makes the ‘real' cost $140 per month.  Which I think is a great deal for a brand new Chevy truck.

I leased a long time ago, and it went very well.   I probably would have continued on except that I was, at the time, in a job that had my racking up lots of miles.  Now, that could very well happen again as circumstances change,  but for us in this situation, I think we made the right choice.

Readers and fellow bloggers, what do you think?  Did I make a compelling argument for leasing in our particular situation or am I going to be forever shunned? 🙂  Leave your thoughts in the comments below.