4 ms·

If anyone has a link, that'd be helpful. Start in a state without such regulations. Or just ignore them until you're big enough to matter to regulators.

001sky 13y ago
Issue is lemons and adverse selection. New cars have probabilistic risk of defects. Used cars, not so much. Leasing depends (mathematically) on correct and reliable modeling of residual values. Once you get a starting pool of unknown risk [1], somebody is playing a fools game. Just a couple things to think about. https://en.wikipedia.org/wiki/Lemon_law https://en.wikipedia.org/wiki/Lemon_law https://en.wikipedia.org/wiki/Adverse_selection https://en.wikipedia.org/wiki/Adverse_selection Edit: [1] State lemon laws vary by state and may not necessarily cover used or leased cars, and other goods.
- ivankirigin 13y ago
  Modeling failure of a used car doesn't seem that different to me than a new car. There is a distribution, probably more expensive for slightly used cars. It can be modeled and incorporated into price.
  - sliverstorm 13y ago
    It can be modeled and incorporated into price. I don't have evidence, but I expect once you correctly account for the risk in your cost model, your pricing will be wildly unattractive.
    - ivankirigin 13y ago
      Yep, I haven't modeled this out. If anyone wants to do the legwork, compare the cost of a 2014, 2013, 2012, and 2011 basic package honda civic, and the maintenance cost estimate for the next year of each. I'd expect the depreciation from 2-3 years in life to be a small fraction of 0-1 years, with slightly higher maintenance.
      - sliverstorm 13y ago
        The problem isn't depreciation vs. normal maintenance. The problem is the occasional write-off of an entire car because the moronic previous owner didn't change the oil for the first 30,000 miles. For example.
        prostoalex 13y ago
        Requiring proof of regular maintenance or even owning the process of maintenance is pretty common for dealerships. http://us.lexusownersclub.com/forums/topic/70591-is-it-mandatory-for-a-lease-owner-to-perform-scheduled-maintenance/ http://us.lexusownersclub.com/forums/topic/70591-is-it-manda...
        sliverstorm 13y ago
        Ok, maybe if you buy only leased vehicles you could CYA enough. But this thread was about "used vehicles", no?
        prostoalex 13y ago
        Oh, sorry, I misunderstood the nature of risk you're describing. You referred to lack of maintenance by the previous owner, I thought you meant lack of maintenance on the vehicle while on the lease. A good mechanic would be able to at least quantify the risk level on a used car, it seems, with X-point test that most of "certified pre-owned" places conduct.

001sky 13y ago

Issue is lemons and adverse selection. New cars have probabilistic risk of defects. Used cars, not so much. Leasing depends (mathematically) on correct and reliable modeling of residual values. Once you get a starting pool of unknown risk [1], somebody is playing a fools game. Just a couple things to think about. https://en.wikipedia.org/wiki/Lemon_law https://en.wikipedia.org/wiki/Lemon_law https://en.wikipedia.org/wiki/Adverse_selection https://en.wikipedia.org/wiki/Adverse_selection Edit: [1] State lemon laws vary by state and may not necessarily cover used or leased cars, and other goods.

ivankirigin 13y ago
Modeling failure of a used car doesn't seem that different to me than a new car. There is a distribution, probably more expensive for slightly used cars. It can be modeled and incorporated into price.
- sliverstorm 13y ago
  It can be modeled and incorporated into price. I don't have evidence, but I expect once you correctly account for the risk in your cost model, your pricing will be wildly unattractive.
  - ivankirigin 13y ago
    Yep, I haven't modeled this out. If anyone wants to do the legwork, compare the cost of a 2014, 2013, 2012, and 2011 basic package honda civic, and the maintenance cost estimate for the next year of each. I'd expect the depreciation from 2-3 years in life to be a small fraction of 0-1 years, with slightly higher maintenance.
    - sliverstorm 13y ago
      The problem isn't depreciation vs. normal maintenance. The problem is the occasional write-off of an entire car because the moronic previous owner didn't change the oil for the first 30,000 miles. For example.
      - prostoalex 13y ago
        Requiring proof of regular maintenance or even owning the process of maintenance is pretty common for dealerships. http://us.lexusownersclub.com/forums/topic/70591-is-it-mandatory-for-a-lease-owner-to-perform-scheduled-maintenance/ http://us.lexusownersclub.com/forums/topic/70591-is-it-manda...
        sliverstorm 13y ago
        Ok, maybe if you buy only leased vehicles you could CYA enough. But this thread was about "used vehicles", no?
        prostoalex 13y ago
        Oh, sorry, I misunderstood the nature of risk you're describing. You referred to lack of maintenance by the previous owner, I thought you meant lack of maintenance on the vehicle while on the lease. A good mechanic would be able to at least quantify the risk level on a used car, it seems, with X-point test that most of "certified pre-owned" places conduct.