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Prices Paid: Buying & Leasing Experiences Subaru Forester Lease Questions
369 messages, Last post on Dec 07, 2009 at 8:09 AM
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Replying to: gdtrfb (Feb 19, 2009 11:02 pm) I am constantly bombarded by my friends asking me why I just don't lease since I buy every year. My prejudice has always been that people who lease are people who don't have the good fortune of being in my financial situation or who are in business and can write off their leases. I may be wrong in my belief but no one as yet has been able to show me that I'm better off leasing than by purchasing outright. I have sought counsel here but obviously have not done a very good job at getting this point across. My contention is that I will do better purchasing a vehicle outright than by leasing, which has mileage limits, and many other negative factors for someone in my situation. You cited reasons why you like leasing and showing why you find it beneficial. I have no problem with any of the points and advantages that you cite, for you. But for me, those factors are irrelevant. I hope you see why in my rather long explanation of my situation. So what I need here from you or forum members is evidence that leasing is a better deal than buying outright. Assuming you and other forum members are correct in leading me to leasing, I find that no one in the entire auto universe offers a one year lease. The best I can do is a 24 month lease. The purchase year for me is unlike any year in my buying history. First, since the economy sucks so badly, no one had knocked at my door so I decided to keep my car last year and actually held this vehicle for almost 2 years now and I am really bored with it. I just love the Forester and am planning to buy it when I get around to selling my vehicle. I can purchase a Premium for around $22.4K outright. ALG leasing, the "bible" or residual values says that the Forester has a 69% value retention after 3 years. I believe that I should buy the Forester outright, do the unthinkable and keep it for two years, then sell it after 2 years. My point here is that after two years, I should be able to recapture more than 75% of my initial investment (~$16.5K) and be further ahead than by leasing for 24 months at the best leasing rate I can find. If my assumption is correct, I would have spent ~$6000 over 2 years for the use of the Forester. That would be $3K per year. Based on your recent leasing experience can you refute my example and logic so that you can convince me that your deal is better than my hypothetical?? I apologize for the length of this post, but if you can provide me with an opinion or better yet, facts, I would be deeply appreciative. Allow me to throw one more scenario that I just thought of. What if nobody knocks at my door or I am unable to sell my vehicle at the price I want.....would trading in and leasing be a good option? What should I do at the dealership to ensure a good deal? Thanks for your patience, Pete
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Replying to: pano1 (Feb 25, 2009 10:43 am) If you are comparing a zero down lease you have to compare a zero down bank loan also. A $22,400 sale price including sales tax of 8% would make the financed amount $24,192. That was based on a 5 year loan at 6% with a monthly payment of $467.70. Your total of the 24 payments should be $11224.80. Now here is where it gets fun. You should easily be able to lease a Forester Premium for $345 including 8% tax with zero down. $345 times 24 payments is $8280. The bank loan costs you $2944.80 more than leasing. According to my amoritization calculator you would still owe $14982.92 after 24 months. If the car is worth $16,500 (as you predict), you are only netting $1517.08 but since your out of pocket was $2944.80 more than leasing you actually LOST $1427.72. In this example leasing wins.
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Replying to: indianajohns (Mar 01, 2009 9:56 pm) If you negotiated a good lease and the numbers are good you will do better than purchasing. Even 7% Sales Tax on $22,500 is $1,575. So you are automatically in the hole $1,575 plus $2,880 in payment difference. That's $4,455. I don't see how you could make up that big of a difference when your loan payoff is $15,000. That would mean you'd have to sell the car for $19,456 to make a single dollar. I highly doubt a 2 year old Subaru with 24,000 miles would be worth that. The point of leasing is to lower your monthly payment by at least $100 a month and to lessen your sales tax burden. In most states the leasee pays sales tax only on the monthly payment instead of the actual sale price of the car. So on a 24 month lease at $320 you are only paying $537.60 total at 7%. Leasing makes sense under ideal conditions. But you do have to have a great money factor and residual AND a great negotiated sale price. You can't expect to lease any car for cheaper than buying it. Some cars have horrible lease numbers. |
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Replying to: indianajohns (Mar 01, 2009 9:56 pm)  indianajohns and stoopy Thank you so very much for taking the time to try to enlighten this leasing? virgin. As I read your responses, both of you keep talking about getting a loan and the associated costs that go with it. Maybe I'm misreading you. I am paying cash for the car. I will pay the taxes and other fees. I know that indianajohns says that I must compare with taking a loan and stoopy talks about lowering the cost of my loan. My point is that I am paying cash not taking a loan. So I fail to see why I must compare taking a loan in order to get a straight forward answer, so I must assume that there are complex accounting mechanisms that I am overlooking. What am I missing here? I'm paying, say $25K cash for this car, selling it at what ALG says is over 75% of MSRP in 24 months. That's $18750. Net difference is $6250 or $3125 per year. Are you fellas telling me that I can lease for 24 months for less than $6250 total cost??? If you can find me this kind of lease, I would do cartwheels and would agree that leasing is cheaper than buying outright. I don't think that any human on this planet could lease for 24 months at the cost that I cited. Fellas, I am not the brightest bulb in the pack, but I fail to see the argument that you are making. I am showing you what I believe is very simple math. You guys are saying that it is much more complex than I am showing. I am deeply appreciative of the time that you are spending trying to help me see your point of view. I apologize for being so dense, so could you please make one last effort, showing me the folly of my math and logic?? Thanks again, Pete |
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Replying to: pano1 (Mar 02, 2009 9:29 pm) I can purchase a Premium for around $22.4K outright. ALG leasing, the "bible" or residual values says that the Forester has a 69% value retention after 3 years. I believe that I should buy the Forester outright, do the unthinkable and keep it for two years, then sell it after 2 years. My point here is that after two years, I should be able to recapture more than 75% of my initial investment (~$16.5K) and be further ahead than by leasing for 24 months at the best leasing rate I can find. If my assumption is correct, I would have spent ~$6000 over 2 years for the use of the Forester. That would be $3K per year If we go by your ridiculous 75% residual, we get the following 24 month lease: MSRP on your Premium w/All Weather: ~$24.7K Cap cost (selling price): $22.4K with 0 reduction (down) Money factor: .0016 (current best, but not the best in general) Tax: 8% Monthly payment: $170.45/month ($4,080 over 24 month) if your $22.4K includes acquisition fee and $198.26 ($4,758 over 24 month) if it does not (then you need to add it to the selling price).
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Replying to: ursus (Mar 03, 2009 6:26 am) I don't know for sure what all your math means. I also have no knowledge of some of the terms that you are using since I am so ignorant of the leasing process and certainly make to pretense that I do. But, I do have some knowledge about resale values of vehicles. Why is it ridiculous to expect that I should be able to sell a vehicle with a $25K MSRP for ~$18+K after 24 months? IF ALG numbers can be believed, they say that after 36 months that same $25K car should be worth ~70% or $17.5K after 36 months??? So why is it ridiculous to believe that I couldn't get a thousand dollars more than that after only two years?? As mentioned above I have no clue about the numbers and logic you are using but am I correct in assuming that you are saying that IF my assumptions about ALG numbers are correct that the lease for 24 months would cost less than $5K for 24 months?? Please understand that what is easy for you leasing experts is a complete mystery to me and that I just don't get the logic of leasing. That's why I came here for help in getting me to see the logic of leasing. Problem is that the more you good folks try to help me, the dumber I get. What really confuses me is all the jargon that you folks use. I just can't see why talking about money factors, cap costs, residuals, etc has any bearing on this discussion. I have cited at length that I can buy, then sell a new Forester for ~$6K at the end of two years. What I am asking is what would a 2 year lease cost me under the most common lease arrangement that you have heard of ?? I am betting that whatever that lease arrangement is would cost me much more than my $6K estimate. Thanks for your patience, Pete
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Replying to: pano1 (Mar 03, 2009 9:19 am) For most cars, a private party re-sale of anything above 50% of MSRP is a real bonus, after three years... The Forester might do better than that, but the chances of it being above 70% after 24 months is about nil, IMO.. That stated, I don't think the current Forester lease program is all that great... It's a fair deal, but not spectacular. The one thing that you do get with a lease, is guaranteed resale.. You know you can walk away from the car at the end of the lease, even if it's worth less than the residual.. regards, kyfdx |
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Replying to: pano1 (Mar 03, 2009 9:19 am) I did read your posts, but you keep changing numbers and the trim you want. That's why I gave you an example on the numbers you had before. kyfdx explained why 75% residual is a ridiculous number. Adjusted cap cost = cap cost (or selling price) + added costs (ex: acquisition fee) - down payment Money factor = corresponding interest you pay on your lease (0.0016 x 2400=3.84%). There are on-line lease calculators where you can just input you numbers to see the cost of your lease. |
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Thanks for your patience, input and kindness stoop. Pete |
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