Top Tips for Buying/Leasing a Car during Covid

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Despite daily disinfection and mask protocols, public transportation still feels like a risky option right now, and many families are weighing their options when it comes to buying or leasing a car. The uptick has been a dramatic one: Cars.com reported that through June, walk-ins at New York City-area car dealerships were up 38% this year, compared to an overall nationwide increase of 6%. If you’re in the market for a four-wheeler, read on for tips from PSP members on everything from no-contact car purchases to handling the risks of street parking. And if you’re still deciding, first check out our article on To Own or Not To Own A Car in New York.

 

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In this article:

Buying vs. leasing

Purchasing options

Insurance

Final thoughts and resources

 

 

In terms of buying vs. leasing, some members report that owning the car outright provides more peace of mind:

 

“We are in Park Slope and also pulled the trigger on getting a car. We went the used car route as during this time of economic uncertainty I just wanted to buy a car outright that would get me from A to B. To me having a monthly payment of my head and backing out of a deal just seemed like a huge headache. I didn't so much choose my dealership, rather I tracked down the car I wanted (VW rabbit) as they are reliable old things, and we are only expecting our first kid so didn't need a large car. My point being, I found security in buying a car outright and sticking to a budget. Naturally that comes with maintenance and the unforeseen thing that maybe a lease would cover better, but on the whole having my own car and not worrying about people bumping it makes me sleep easier at night.”

 

“We own, even though the monthly loan payment works out to be more than what a lease payment would be.

 

What it came down to for us was damage from street parking. If the car gets scraped or dinged (ours has and yours will too), we didn't want the end of a lease cycle to come around and get hit with a bunch of charges from the dealer for the damage, let alone if there was anything more significant than a scrape or ding.”

 

 

And buying a used or certified pre-owned car can provide a much better deal:

 

“We own our car, but we didn't buy new.  We got a certified pre-owned so our payment is much less than anything you would get with a new owned or leased car.  We don't get that new car smell but we also don't freak out over the scratches accumulating on the bumpers.  

 

Most certified pre-owned cars are just returned leased vehicles.  The dynamics of car ownership are a lot different in NJ and there are a lot of folks there who lease, so the dealerships there tend to have a nice stock of CPO vehicles.”

 

“I can say that buying a USED car - even w financing - is preferable financially to leasing. For the same monthly expense, you can have an asset that you can sell or trade in for another car several years down the line. Plus you don't need to worry re dents etc (beyond appearances) the way you would for a lease. 

 

In general, a new car depreciates by 30%+ the second you drive it off the lot. I can't really speak to the other aspects of leasing v buying but from a financial perspective the best bet is to buy used... either way, good luck!”

 

 

Others find that the pros of leasing outweigh the cons:

 

“We have leased for the past 3 years, parking on the street in Park Slope with a Honda CRV.

 

Given that we didn't really use the car during the week, we were able to get a really good lease rate with a low mileage lease.  Yes, much cheaper than buying and wasn't ready to make the full commitment a few years back. 

 

Pros:

Great to have a car to get away on the weekends and visit family in NY, NJ especially in summer and winter (I also got really tired of moving carseats in and out of rental cars)

Far cheaper (monthly payments) than buying a new car and probably many CPO ones

Other than oil and tire rotation, everything else covered within the lease agreement (under warranty)

 

Cons:

Parking (moving the car 2X/week for alternate side rules is a PITA, but just set reminders in your phone to move the car and you should be alright; you can also get the ASP suspension rules from NYC DOT; holiday's are your friend OR rent a spot)

    NOTE: We live closer to 4th ave where there is a lot of building taking place which is making the parking situation worse than ever

Damage (our car was hit twice while parked, bad enough to require a trip to the auto body; in one case we found out who did it, in the other case, we had to pay the deductible for it to be fixed)

Not building equity, money is sunk and lost at the end (unless you buy the lease out)

 

Perhaps one day I will be prepared to buy a car, but for now, I prefer leasing.   If you expect to put a lot of miles on or aren't careful, then buying may be the way to go.  

 

We leased the car through an auto broker, best decision I ever made (a separate, but related topic).”

 

 

These days you can streamline logistics by purchasing your car online:

 

“We had a good experience last summer - pre-COVID, obviously - with Carvana.com. They are [an online used car retailer with a national inventory], and they organize listings fairly conveniently, so that you can search according to various features, look at the details of ownership, blemishes, etc., check Carfax reports, etc. all through one interface. We knew roughly what we wanted (we were basically going for ‘next size up’ of the car we had, and had tried one out beforehand), and we were able to use their website to decide what our sweet spot was for price vs. newness, look for colors we preferred, find one that came from a warm, dry state where it probably didn't get much rust damage, etc. They encourage you to finance through them, of course, but it turned out to be doable to pay cash through our bank, although it required a 3-way phone call. We paid a few hundred dollars to have it delivered cross-country to the nearest affiliate dealer here, which was in Nassau County, and then the dealer contacted us about the timing and delivered it to us (to the nearest corner on the avenue, so as not to block our narrow street with the car carrier). It took a week or so to arrive, and might take longer now with everything going on, but it seems like a relatively low-interaction option; they're now advertising ‘touchless delivery,’ whatever that means.

 

One caveat is that Carvana seems to focus on newer used cars, up to 5-6 years old - presumably cause those have higher profit margins - so if you're looking for a cheap deal on something older, they may not suit you. It also wasn't particularly cheap, although it wasn't out of register with local prices (and we were willing to pay a bit extra to never, ever have to go to Bay Ridge Toyota again).”

 

“We just bought a used car last week through Carvana and it was a positive experience. 

 

We wanted the safest 2-3 year old small SUV within our price range. IIHS has top safety picks for different categories so we researched those carefully and then started with US News Cars to get more info about them since it had a lot of detail in one place. 

 

Found a 2018 Subaru Forester through Carvana and they dropped it off in front of our place last week. We got one with low miles that still has some of Subaru’s warranty left on it, and added the warranty Carvana offers to extend it. Didn’t have it inspected but they supposedly do a lot of that before listing it, plus we had 7 days to drive it around and make sure we liked it.

 

Was a little weird to buy a car without interacting with a human, but that can also be a positive.”

 

“I ended up going through Costco (which assigns a dealer based on zip code) and did the entire purchase by phone, text, and email! Super easy experience and I called another no -Costco dealer who was geographically slightly more convenient who told me they couldn’t match the price so that was reassuring. And I got EXACTLY the car and features I wanted which I confess I enjoy more than I wanted.”

 

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But there are socially distanced options through local dealerships as well:

 

“I've been calling dealerships to ask about how they are handling test drives and paperwork these days. Some are asking you to look at their inventory online and decide on a car (or three) that you are interested in ahead of time. They will email you the carfax and then, as long as you are within a reasonable distance, bring whichever car(s) you are most interested in to you to test drive. Other dealers seem to be doing a similar process for picking out cars in advance but you still need to go to the dealership to test drive. I've been told they have them ready for you to test drive when you arrive at the dealership, by appointment only. They each suggested we do some work on financing beforehand so you can expedite the process after you select a car. 

 

If you are open to leasing/buying a new car, there are a lot of incentives and deals right now, including deferred payments and low interest rates. We briefly considered that to avoid a test drive since we know the car we want, but ultimately still don't want to pay a new car payment.”

 

 

Or you can purchase from a private seller and transfer the title:

 

 

One member asked about title transfer logistics... "Can anyone walk me through the steps of transferring title (is it as easy as signing the back and filling out a form from the DMV website?), paying sales tax, and registering the car (any paperwork we need from the seller other than title)? Are there any steps necessary to ensure the car isn't subject to any loans or liens? Anything other things to watch out for?"

 

 

Members advised... "I recently bought a car through craigslist, without thinking through all the steps, but you've basically got it. The one other thing you will need, prior to registering, is proof of insurance. You fill out sales tax info on the DMV forms and pay the tax to the DMV. I wound up registering the car by mail through the Tompkins County DMV and they have a nice list of everything you need with links to the relevant forms: https://www2.tompkinscountyny.gov/dmv

 

When I bought my car local DMVs were not open so registering by mail was the only option, but it seems now they are, so the easiest thing is probably to have the seller drop the car off for you at the DMV since you can't legally drive it without plates. As for ensuring that the car is not subject to any loans or liens, that should show up on a Carfax report; hopefully the seller will provide you one, but otherwise it's worth the $40 for the peace of mind."

 

 

Speaking of plates and registration, members have advice on getting the logistics in order:

 

"We bought a car in MD last month and had it registered in NY. Follow the instructions on the website and the checklist of proper documents. Sending in the original title documents is nerve racking but keep the faith. I sent my stuff to the Ithaca DMV. My friend used the Atlantic Center DMV drop box. I would use the drop box to save on the mailing time and costs. It worked out for both of us. Though we didn’t get it right the first time, they sent the paperwork back in the mail and we made the corrections.

 

The DMV Facebook page is surprisingly responsive if you message them directly. Be persistent with your questions if they give you a copy/paste answer at first

 

it took us about 3 weeks to get our plates. Would have come sooner if I had signed with a pen instead of printing out a digital copy from a PDF."

 

 

"I would recommend the drop box at Atlantic. Bring your original bill of sale, photo copy of your license, and they will just give you a packet with all the registration forms needed and an envelope to seal it up. They can go in and get answers for you on the spot specific to your situation. I had to run and get my dl copied so they let you keep your license but everything else required originals. Other than that, it took about 15-20 min. For fees, you can add credit card info and they will fill the amount when they process the request, which was within a day for me. It seems like they are mailing plates and docs back locally because I got my plates and bill of sale back in a few days. Title arrived separately about a week later."

 

Given the risk associated with street parking, you’ll want to be mindful about insurance if you do buy:

 

“Comprehensive and collision insurance will cover you if someone hits your parked car or some other unlikely catastrophe (falling tree limb, water main break, flash flood) happens.  The problem is that these forms of insurance are generally unaffordable with no deductible, and the most likely things to happen to your car while street parked - bumper dings, small scratches, a mirror getting knocked off, etc. - all cost less to fix than your average deductible will be, or aren't worth fixing at all. ... So unless you can afford a big insurance bill and like filing claims, you're really carrying comprehensive and collision for unlikely events that seriously damage or total your car, not the minor stuff that happens pretty frequently.  For that reason, I carry both forms of insurance, but with a deductible that keeps my overall rates within budget.”

 

“I bundled my home insurance and car insurance with State Farm (it paid off to take an hour and call around) and netted out at $102 p/m for car insurance (as a new driver in the States). I thought that was a pretty good deal considering Geico initially quoted me $370 p/m. Lastly, your car is going to get bumped, you just gotta accept that BUT you can get things like bumper buddies etc if you want to try minimize that. I have been street parking for the last 5 months and even pre-COVID was finding spots so to me a garage was not necessary.”

 

 

And if you lease, check with your provider about damage allowances:

 

“FWIW I've had pretty solid luck with street parking but the alternate side suspension during Covid has been a huge help. Summers though are typically much easier anyway as many Bk residents seem to leave town frequently. I'm in Prospect Heights. I've been fortunate so far and have avoided any major bumper scratches though I do have inexplicable scratches on my hood. Different manufacturers have different damages allowances when returning a lease and I've found if your mileage is quite low on the return they may wave even more. Volvo has a shockingly low allowance though which sucks. But between careful parking when possible, bumper guards when in doubt, low mileage and some luck, you should be ok.”

 

“I park a leased car on the streets of Park Slope and got one scratch that i got charged 400 for upon return.  A body shop can usually fix stuff for pretty cheap just wait until the end- usually it has to be bigger than .25 inch to warrant a repair fee from the car company otherwise it’s considered wear and tear.  I think a 6 month lease takeover is the best idea, usually there’s a return fee.  Zip car is good for super occasional driving but I found its no replacement for your own car where you can leave stuff and just go when you want.  Just check all the terms.  Typically leased cars are also under warranty so I would not be too paranoid about mechanicals.  Just ensure it has a service history and check the warranty from the manufacturer.”

 

I don’t think it’s a bad idea to take over a lease but you probably should be prepared to pay for a bit of damage when you return the car. You’d have to be super careful about understanding the level of damage when you take the car from the current lessee and expect that with street parking you will have at minimum a ton of bumper damage. I’ve never leased a car but know every time my parents have they have gotten dinged for every ding. Bumper damage and paint scratches can easily add up. I’ve never encountered car insurance for owners or leasing that is like health the insurance where it covers each illness and injury in an attempt to make you whole. If it exists it will be mightily expensive.”

 


Members have the following recommendations when it comes to choosing your insurance provider:

 

"We got a car about a year and a half ago and I researched bunch of different insurance quotes .. GEICO was the lowest. The major difference between GEICO and any others I found is GEICO renews your policy every six months (as opposed to a year), so you have to watch and be careful that your rate doesn’t get raised above what another companies would be.

 

Also, since your probably not going to be putting a lot of miles on the car, tell them you’ll be driving less than 5000 miles a year. Most quotes are for 15,000 miles a year (the average of what people drive). You’ll save money by telling them this. It brought my quote down over $100."

 

"My experience has been that there’s no one company that is consistently the best bang for buck regarding coverage. You have to shop

 

It helps if you bundle car insurance with your provider for home insurance or a PUP policy, as the insurance company will try harder to compete and try to keep you under the same umbrella. Might be a good place to start, and then take the rate and get other companies to compete. Definitely do this over the phone - you’ll get better deals than you’ll find on the web.

 

I’ve used geico and State Farm in the past (and still do). Service wise, they’re both decent."

 

"Take the Defensive Driving Course and you'll get an extra 10%."

 

"Most of the car owners I know have ended up with Geico, but it’s good to get quotes from several places. The type of car, drivers age, security features, driving record etc all have effects, but I’d say plan on around $100 a month."

 

"I've used Geico for years, and they've provided us the best rate/coverage in NYC when I priced out policies. One of the reasons for the good price is due to our limited use of our car (we drive ~7,000 annually, and less now with COVID), as we've always relied on public transit for commuting to work and only use our car for leisure activities. The only downside is when we were in an accident that was not our fault, but resulted in our car being totaled, I felt the reimbursement value they offered was a little low. They don't use Blue Book, but instead do their own analysis to find 'comparable' cars for sale in NYC to determine the value. I could have challenged it, but ultimately decided not to due to the extra hassle (in my logic, the lower rates for all the years more than offset this issue). Other than that they were great to work with when you do have a claim.

*We don't have a Tesla, but I've read that if you're considering one you should double check the Geico coverage as they don't always pay for you to go to a certified Tesla body shop leaving you with a gap in coverage for the repairs."

"A comment on liability limits:

I suggest upping the liability coverage to the max that Geico offers in NYC ($250k/$500k) for your direct liability and also for uninsured coverage, etc. When I was pricing out my Geico quote, I played with all the coverage options and found that they didn't move the needle THAT much, one way or another. I think the default Geico liability option was $50k/$100k which meets the legal requirement in NY State but isn't want I'd consider enough coverage. Their quoting tool is a bit annoying to do this, but you can change each selector and submit to reprice the quote, and then go back, change again, reprice, etc. If you spend an hour or so doing this, you can see how all the different options change your monthly total. It's not obvious which have a larger change than others. For example, increasing my deductible beyond $750 or $1000 didn't save me a lot. If you're not using your car to commute, you can skip the rental coverage because the limits don't cover renting a car in NYC anyway, and if we were to have a car in the shop for a bit, it might not require us to get a rental anyway because we don't need the car every day anyway. I think going from the default options to maxing out all the liability options raised my monthly price only $10/month. And we are at $120/month w/ then a discount for paying 6 months in advance.

One additional thing I learned about liability during this process and the interplay between my home umbrella liability policy and my auto policy:

Our home is insured with Chubb and as a part of that I have an umbrella liability policy. Before I owned my own car car, if I were to rent a car or drive someone else's car, this umbrella covered me. But now, once I owned a car, I would need to pay Chubb to extend this umbrella to cover my car and driving activities. To extend the umbrella to the car, they require that your car primary auto liability is at least $250/$500k and then they charge you a fee. The catch is that they waive this fee, if you get Chubb auto insurance. So I decided to quote Chubb auto as well, and was surprised that it was almost the same as the Geico Auto, such that Chubb w/ free umbrella extension was cheaper than Geico + paying chubb to extend the umbrella. However... and this was our issue....my wife is a new driver (license ~1 year, she grew up in urban environments and only recently got a license) and because she has not had her license for >5 years, there was a new driver premium that Geico didn't seem to charge at all (maybe ~5-10/month?) but Chubb did (like $175/month extra), making that insurance a non-starter option. (NOTE: Liberty Mutual and Progressive also charged a lot for the new driver.)." 

 

Pay attention to the little things when choosing your vehicle:

 

One thing to consider is how big your car seats are. We have a 10 MO and still have a rear facing seat. It interferes a bit with the front passenger seat in our RAV so you can't push the seat all the way back. Wife and I aren't tall (5' 8") and it was annoying for me when the car seat was behind the driver side.”

 

 

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