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You get lease on $22k car
Bank bets it will be worth $14k in 3 years(residual)
3 years later, retail value is actually $21k.
Thus you have opportunity to buy a $21k car for $14k. Or take it to carmax and probably walk away with around $3k considering trade in vs retail value.
Carmax will give you $10,500 for a $21 K car. How do you pocket $3K? Looks like you owe $3500. But I never understood Common Core math - so maybe it is different now
Only a SUCKER would buy a 3 year old car for 1k less than the new one. After the first 3 years you start to need maintenance/service items that will end up costing more than that anyway. Tires alone can cost 500 dollars plus and they've had 3 years of usage already.
Of course that's why it's CARMAX ads you're showing for the used subaru's. Carmax is for suckers. Just another example. They cost thousands above a normal dealer.
Tell me what the prices are on cargurus for a 3 year old subaru. 3 year old car should have a massive discount off new or it makes zero sense.
Obscene, but there are plenty for less than that. A few for 20k. There's a 2016 with 6k miles for 22k. Still WAY too expensive, but still cheaper than carmax. That car only makes sense to buy new.
Obscene, but there are plenty for less than that. A few for 20k. There's a 2016 with 6k miles for 22k. Still WAY too expensive, but still cheaper than carmax. That car only makes sense to buy new.
Yeah kind of the point. It’s a car with obscenely good resale. You can buy and drive for 3 years and sell it for virtually no loss. Turns leasing and used vs new proposition on its head.
I guess the saying that a car loses 20 percent of its value once you drive it off the lot isn't always true
Still fairly true.
A bad price for a used one is $22k at Carmax on a car that has a base MSRP with no options of $24,500. But then it's easy to get the limiteds for $22,000 as well which had a base MSRP of $27,000. Or for $22,500 you could get a 2017 Premium with 4,000 miles with more options that's also in the same area. Two years newer, 16,000 less miles, more options, $500.
Basically that car drove off the lot. Instead of being worth $26,000 (not sure on all the options, that's just for what's listed which is automatic, moonroof, BSM) it's advertised for $22,500. That's more then 80% of $26,000 but not tremendously more. It would just depend how much you negotiate on the deal. Just as on almost anything no one pays MSRP, you don't just find the first advertised price on a used car and pay the asking price. You look around and you negotiate. The Crosstrek does hold its value very well though. They didn't sell a lot of them so they're in short supply. They at least think they can get close to $22,000 for a three-year-old one with average miles that had an MSRP of $27,000 for a base model Limited to advertise them at that. Depends how much you can negotiate down and what the options are. With Navi a Limited is in the $30k range. Depending on how much you can negotiate down on new and used, I'd look at it.
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.
Actually you need to pay interest on the whole price of the car! The leasing company has to purchase the whole car from the dealer in order for the person to drive away in their leased car. Cost of capital is figured for that initial purchase then prorated for the lease.
I guess the saying that a car loses 20 percent of its value once you drive it off the lot isn't always true
Its not! Many cars sell for MSRP or above as used models (Ferrari models come to mind though the FF/Lusso seems to be the black sheep of that family, Porsche GT3/GT4 models trade at a premium also).
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
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