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90-95% of cars that you lease WILL NOT be worth more retail than a bank estimation residual with 3yrs/36K miles on the car and im pretty sure just about all 3 years old off lease car values a WILL NOT be within $1000 of a brand new model.
We leased a 2014 Highlander for two with the $25K residual. In 2016, they were going for $30K+ on dealer lots but we could never make money buying it ourselves and selling it. For starters, add the 6% sales tax. That's $1500 right off the top. Add the low price people expect from private party sales and not much is left.
You shouldn't own any new car period, you don't have the finances. Doing the lease or buying the car is another reason why people like you and others struggle financially to get ahead.
Quote:
Originally Posted by beachmouse
Subaru is an odd duck right now in that demand is significantly higher than manufacturing capacity- new ones sit at the dealer’s lot shorter than any other brand- and their parent company is fiscally conservative and doesn’t know how long the good times will last and is not in a rush to sink big money into another plant right now. There’s a Subaru dealership near me that adds $2k to all the stickers as ‘market price adjustment’ and I don’t know what people pay from there in the end but I see their decal on a lot if area Outbacks so that number doesn’t scare off too many buyers.
Our 2007 Outback (110k miles and timing belt replaced at 95k) also apparently could still sell for a stupid amount for a ten year old car that was $24k new- lots of people like the raised wagon years rather than the current puffier move CUV look
I purchased a 96' Legacy Wagon LS for about $3400 many years ago, they were tanks. I told it back in 05-06' for $2700. I never fixed the car nor changed the brakes on it. Had the same set of tires since I only put 40k mi on the car. They hold value well and they drive better than Honda or Toyotas of similar age.
I can't get past this part. I cannot fathom how that can truly be the case.
It is the truth in some cases. Used Subarus, used Toyota Tacomas, a few others hold their value absurdly well.
Subuaru makes fewer cars than it can sell. You rarely see lots full of inventory. They keep demand high, allowing them to forego laying huge amounts of cash/incentives on the hood to lure buyers.
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Originally Posted by notnamed
No, that’s why I said around $40 giving the bank a 44% over the $1k depreciation. That’s a pretty healthy margin.
Used carmax because although their prices can be a bit higher than other dealers the no haggle model means those are pretty close to what they sell for(they do cut prices a little as the cars rot on lot).
Retail market value is relevant in this case as there is no real trade in. At the end of the lease you just have the option to buy the car at what works out to be a substantial discount, around 40% off. That gives you more than enough room to then sell it privately or trade in and still make money.
Bottom line is even if $1k depreciation is the best case scenario, no one is selling a 3 year old off lease Crosstrek for anywhere near what the residual value was set at. So if you’re only paying for depreciation, tax, and interest in a lease these things should easily be under $100/month deals if residual was set correctly.
Sure there is.
Whether you lease or finance or pay cash the value of the car is the value of the car. If you go in with a 2014 Crosstrek nearing your lease term, and want to trade it in on a new car, you can do so. It works the same as any other trade; the dealer sends the payoff to the bank and applies any extra to the new car. The only real difference is that some of the sales tax is structured differently.
Many times when I was selling cars someone would have a lease and they would be absolutely paranoid about this door ding or mileage overage or whatever when lease termination came around...To get the deal done, if the value was close to the residual or payoff, the Used Car manager would often simply buy it into inventory (obviously the value had to be right) and the customer would go away happy knowing that there weren't any unknowns waiting for them. It wasn't unusual for them to have an extra $500 or $1000 in equity towards their next car either. That's one of the big reasons dealers like leases; it guarantees a crop of used cars in the future (assuming the residuals are correct) and a crack at repeat business. Contrary to popular belief, most of the time they don't make tons of money in the F&I department on a lease.
Everyone seems to be forgetting the third part of a lease, the money factor (interest, basically.) People don't talk about this as much. If Subaru has a higher money factor with higher residuals, then the payment will be higher without the low value at the end of the lease.
But even if you drive the car until the wheels fall off, overlooking resale value ... But resale values can vary widely among models within the same brand. ... It's nearly impossible to negotiate a good lease. ... But individuals get a tax break, too.
90-95% of cars that you lease WILL NOT be worth more retail than a bank estimation residual with 3yrs/36K miles on the car and im pretty sure just about all 3 years old off lease car values a WILL NOT be within $1000 of a brand new model.
And this thread is about the 5-10% that are.
Subaru does have a higher money factor than most. Coupled with the high resale it makes more sense to buy even if you only plan to own for 2-3 years.
I did own one car that I drove for 2 years(bought used) and sold for a profit($1500 more than I paid). An 07 Subaru Legacy GT Spec B. But they made less than 400 of those so they had a bit of a collectible status among Subaru enthusiasts.
Say what? It's absolutely possible to negotiate good leases if you know what you are getting into with a lease and how it works and how to shop for one.
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Originally Posted by AngelaLeonard
... It's nearly impossible to negotiate a good lease. ... But individuals get a tax break, too.
Say what? It's absolutely possible to negotiate good leases if you know what you are getting into with a lease and how it works and how to shop for one.
I've some people post some amazing leases on the Lease Hacker site
Essentially like paying points on a mortgage to lower interest rate but they’re refundable. Basically you never want to put a down payment on a lease(why be invested in something you don’t own?)but using those security deposits buys you into a better rate.
Unless the car has a high residual value and a low money factor it makes little sense to lease a car compared
to buying. BMW is a great example of wanting to keep their leasing customers by artificially raising their
residual values. Nobody wants a BMW out of warranty because of the high cost of maintenance anyway.
60% of all BMW new car sales are Leases.
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