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A comment on Startup Idea: Used Car Leasing. Parent comment

Re:Startup Idea: Used Car Leasing by 001sky on Tuesday November 05, 2013 @06:46PM (#6679383)
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/Adverse_selection

Edit: [1] State lemon laws vary by state and may not necessarily cover used or leased cars, and other goods.

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Re:Startup Idea: Used Car Leasing by ivankirigin on Tuesday November 05, 2013 @06:51PM (#6679414)
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.
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Re:Startup Idea: Used Car Leasing by sliverstorm on Tuesday November 05, 2013 @07:07PM (#6679520)
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.

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Re:Startup Idea: Used Car Leasing by ivankirigin on Tuesday November 05, 2013 @07:25PM (#6679625)
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.
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Re:Startup Idea: Used Car Leasing by sliverstorm on Tuesday November 05, 2013 @08:57PM (#6680024)
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.
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Re:Startup Idea: Used Car Leasing by prostoalex on Wednesday November 06, 2013 @01:35AM (#6681152)
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-manda...

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Re:Startup Idea: Used Car Leasing by sliverstorm on Wednesday November 06, 2013 @09:22PM (#6687064)
Ok, maybe if you buy only leased vehicles you could CYA enough. But this thread was about "used vehicles", no?
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Re:Startup Idea: Used Car Leasing by prostoalex on Thursday November 07, 2013 @10:11PM (#6694182)
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.
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