This blog post was written by Scotty Abramson, lead analyst on the Earnest growth marketing team and happy Metromile customer.
I work and live in San Francisco. After one awesome car-free year, I heard the call of Lake Tahoe, Big Sur, and Napa. It was time to get a car to better explore the region.
However, I grappled with whether to lease or buy a car. First I had to figure out how many miles I would be driving per year (around 10,000), the type of car that met my current needs (a sporty hatchback), and my car budget (between $200 and $300 per month). I realized a lease was probably the best fit for me. Then I became obsessed with understanding how a car lease actually works.
When you lease a car you are essentially paying the difference between the current purchase price and the price the manufacturer is willing to buy the car back for at the end of the lease. Divide that number by the length of your term, add interest, and you roughly have your payment.
After a week of intense car-lease shopping with multiple dealers, I signed a three-year contract for a VW GTI. So far, it’s been great and I love driving it. I even learned so much in the process I wrote a detailed blog about how I negotiated my lease to get the best deal.
As I this was my first time getting my own new car, I also had to get insurance. Given my expected low mileage per year, and my preference for handling transactions through my smartphone, Metromile made perfect sense for me. So far it’s been great—it was fast to get insured, it’s the right price, I can track my trips through the app.
So if you’re trying to decide between buying and leasing, it pays off to run the numbers and then negotiate every single cent. The same mindset should apply to your insurance. Happy driving!