I’m trying out a new segment today where I answer a question from a reader with a Youtube video and a post. This week, RSG reader, Rania from the OC, e-mailed me to ask about buying vs. leasing a Prius.
Driving my leased Odyssey on weekdays is not paying off. So I’m contemplating buying a Prius for the weekdays. Financially it makes sense to get a $5k used one (my husband owns a small used car dealership and I can get a good deal) but I have a thing for brand new cars for mechanic reasons, cleanliness, and I’d rather spend the $300/month as opposed to $5,000 all at once.
So what do you think about the whole thing? Is it worth it? Should I stick to my van?
I’ve also included a full transcript of the video below. Let us know what you think in the comments – which option do you think makes more sense?
Hey, what’s up guys? Today I’ll be answering a reader question and it is, “Should I buy a new leased Prius or should I buy a used Prius?” Basically I got this question from a reader named Rania who lives in Orange County. She sent this email to me and I thought it would make for a good video for response so today I am going to be trying this out. Let me know what you think and if you guys have any questions you’d like to answer just let me know.
So, to paint the picture basically Rania tells me in her email that she is basically contemplating buying a Prius for the weekdays. She is already an Uber driver, she actually has an Audacy which is a minivan so she is on Uber XL and she says, basically driving the Audacy on the weekends is great, she is making lots of money but on the weekdays it’s just not paying off, she is not getting enough requests and with Uber X her car is a little too expensive for that since it does seat more passengers and doesn’t get as good as gas millage. So, she doesn’t think it’s a very good Uber X car.
She says, financially it makes sense she can go and get a $5000 used Prius. Her husband has small car dealerships so she can get a decent deal but she has a thing for brand new cars for mechanical reasons, cleanliness and she would rather spend $300 a month as opposed to $5000 for a used Prius. Basically the question is, if she’s going to do Uber X on weekdays, should she go with the $5000 used Prius or a $300 a month brand new leased Prius?
I get a lot of questions about Plus and XL and it is a little bit difficult to give specific advice for each market because, as I have discovered in my research and in some of my riding, it is very hard to tell, “Hey, is there enough request volume on Plus or Select or XL or whatever these other variants of Uber X. We know that Uber X is pretty decent in a lot of markets but it is hard to say whether it’s worth it so if you already have a car that’s an Uber XL or Uber Plus eligible obviously that’s the best situation because you don’t need to spend any money to test it. But before giving up on XL, I do think there are a lot of things that you can do. So for example, this reader said that she was having trouble getting requests on weekdays with her XL vehicle.
Now, you have to really put yourself so before you go and give up and buy a new car or used car in the first place, I would put myself in the shoes of someone who is requesting an Uber XL. On weekends, Uber XL is great because you get a lot of those requests, all those Uber X drivers probably know when passengers are trying to cram five people in your car and you have to politely tell them, “No”, they turn around and make them call on Uber XL. So, on weekdays, week nights, Friday, Saturday nights, I think that Uber XL requests and even Plus to some degree that it is pretty good. It is those weekdays though where during the middle of the day, you’re not going to find many people who for example if they need to go to lunch or whatever errands people are doing on Uber during the middle of the day, you don’t often find that six people are going to need to go or five people are going to need to go, but you do find opportunities with things like Airport runs for example.
I know that I called an Uber XL when I just had my wife and I but we had a bunch of luggage and we’re worried that if we had a smaller Uber X car then our luggage wouldn’t fit because we were needed to take golf clubs for example. So, in that scenario, I might take an Uber XL in something like an Airport run.
There’s little opportunities that if you’re driving XL, before you go and buy a new car maybe want to try some new times. Think about, put yourself in the shoes of a rider who might be requesting an Uber XL. When would they request this ride? Where would they be going? Because you’re right, if you’re just sitting at your house, or you’re sitting in some random area, trying to get XL requests in the middle of the day, it might be a little slow and that’s what this reader seems to be experiencing.
So, if you do decide that, “Hey, all right, whatever, this isn’t working, I need to make it work with an Uber X car, maybe I can switch to Uber X with a Prius and I’ll be able to make more money that way.” So, if you do decide to go that route, let’s say this reader does decided to go that route and now she is deciding, “Hey, do I want to do this brand new leased Prius for $300 a month or do I want to do a used Prius for $5000.” If she is going to just do X on weekdays basically which car should she get?
I would say for the $300 monthly, it’s definitely nice because you do get a brand new car and she has specifically mentioned that she doesn’t want to worry about maintenance and she doesn’t want to worry about some of those other items and obviously with a lease, you definitely get that. But there’s also there’s not a whole lot of return on your investment other than the satisfaction of driving a new car and not having to worry about all that, because as we know how leases generally work, you pay a few years upfront and then you have the option of buying the car once all the proms start to hit.
I mean, with leasing it’s definitely not a bad option, you do at least know your cost upfront. You say, “Hey, I am spending $300 a month on this lease.” If you have good credit you might be able to get a good rate or whatever it is, how it works with the leases, you know that you can get a fixed cost where with Uber X if you’re buying a car, you really don’t know what your exact monthly cost is to later down the road or when you buy or finance your cars so that’s another benefit of leasing. But really if you are going to go the leasing route, I think you really want to make sure that you get your money’s worth which is why I don’t think leasing would make a lot of sense in this situation.
Since Rania already has a car that she drives on the weekend, she has her XL vehicle that’s doing really well and not many drivers out there have that XL eligible vehicles so she has already had an advantage there. But she needs something to fill in on those weekdays days. And if you go and lease a car, there’s two days a week, two of the busiest days a week basically, that you’re not going to be able to use it because you’re going to want to do that XL vehicle. So really, if you are going to go and lease it, you have to think about like, “Hey, I really want to get my money’s worth. I want to drive as much as possible, as often as you can.” Because often leasing is going to be more of a temporary type solution. If you go with a traditional lease and you’re going to lease the car for two or three years or if you go to a company like Breeze that allows you to lease a brand new vehicle for $200 a week which is obviously expensive or $179 a week, whatever they charge, which is obviously expensive, it’s expensive to lease a car weekly because you end up paying close to $800 a month, $250 upfront but it’s a great temporary solution.
If you’re only going to be driving for a few months or if you want to try out Uber X, it’s a lot less risk than going out and buying a car or leasing a car. And then also, of course, you really won’t have any maintenance issues with a lease. So there’s definitely benefit, but in this case, I actually think it makes more sense to buy a used Prius especially if you have the money. Obviously if you have the money to go and put a $5000 payment down on the Prius, it sounds like she has a couple of advantages because, number one, she has the $5000 and then number two, her husband owns a used car lot, so you might as well take advantage of that fact, you know you’ll be able to get a great deal on a great car. And the other thing though that I like about $5000 Prius in this situation is that you’re not going to see a lot of depreciation and what I mean by that is since you’re only going to be driving this on weekdays, probably not even five days a week, maybe three to five days a week, you’re not going to be putting a ton of miles on the car and you’ve already bought it at a used price. So, it’s a used car, so you don’t see that initial loss of value when you buy a new car, you drive it off the lot, you know you lose 20% to 30% of the value.
So what I mean by you don’t see a lot of depreciation loss, is that with this used Prius of $5000, let’s say you go and ride Uber X for a year, two years or six months or whatever you do, when you go to resell that car, you’re not going to get much less than $5000. Maybe you’ll get $3000 or $4000 so you haven’t really lost a whole lot of depreciation even if you are putting a lot of miles on that car. Because especially with cars like Prius’s and I am pretty partial to the Asian made cars not just because I am Asian but because I like Toyota’s and I like Honda’s and I’ve had really good experience with them too.
My last car was my grandparents Lexus which is basically a Toyota and my current car is a Lexus which is also same makers, Toyota. And I found that as long as you’re doing kind of the required oil changes and general type very light maintenance, there’s really not a whole lot of problems that come up and I find that a lot of similar owners have told me the same thing whereas I know people with other foreign makers, if it’s a German car, I mean, my wife’s car is a German brand and she seems always, not always, but she definitely seems to be having more problems than mine and we actually have the same age car. Mine’s is a 2004 and hers is a 2004.
I really like a lot of these solid Asian made Hyundais, Accord, Honda Accord, Toyota Camry, Toyota Prius is obviously great because of the gas mileage and I am little biased towards the Toyota but I think that they’d last till 200 or 300,000 miles very easily without you having to do major maintenance like replacing a transmission or anything you know busting or breaking, it’s going to be a $1000 job or $2000 or $3000 job. That’s really the major risk with buying a used car because you really want to avoid any of those big, you don’t want to spend $5000 and then you have to pay $2000 for a new transmission because boom, right there off the bag, you’re going to come up behind if you would have leased.
Obviously some of this evidence is anecdotal but I do think in this situation used Prius is going to make the most sense because you can really go out there. Take advantage of those weekday Uber X rates where your profit margins aren’t going to be as high as on XL but at the same time the cost of operating your vehicle is going to be a lot lower because, first of all, you didn’t pay much for it. $5000 if you can get a decent running Prius is not a lot and then obviously since you’ll be getting such a good gas mileage and we know that gas mileage is the driver’s number one expense, that will be almost cut in half, if you’re getting 50 miles per gallon or whatever Prius, the model Prius you get, ends up getting in gas mileage.
Hopefully you guys enjoyed this video, hopefully you guys enjoyed my advice. If you have any questions that you want answered on the YouTube channel, then definitely let me know. And if you guys are just checking out the YouTube channel for the first time, definitely leave a comment, like the video, give me a thumbs up or subscribe and we have tons more of content. If you guys like video content, we’ve got tons of videos, 10, 20, 30, 40, 50 videos, adding more 2 to 3 new videos every single week. So, definitely look forward to hearing from you. All right, take care.
-Harry @ RSG