YeuEmMaiMai Posted January 11, 2019 Share Posted January 11, 2019 What's to get? You get a new car every 3 years at a known cost with no hassles at lease end. Just turn it in and drive away with a new one. Of course it costs more than driving an older car. On average you're driving a car that's only a year and a half old and you're never out of warranty. You can easily fool yourself about the benefits and economics of driving an older vehicle. Unreliability and unanticipated repairs get old and expensive in a hurry, especially if you have no interest in fussing with DIY repairs and trouble-shooting and/or you do a lot of long distance travel in your car. stateside you are typically in a 3 year lease if you want payments that are reasonable. Here is the current legacy lease from Subaru (assuming perfect credit) Offer Details Now through January 31, 2019 Lease a new 2019 Legacy for $235/Month on a 36-Month Lease (Standard 2.5i model, code KAB-01). $2,645 due at lease signing. $0 security deposit. Offer Disclaimers MSRP $23,430 (incl. $885 freight charge). Net cap cost of $20,690 (incl. $595 acq. fee). Total monthly payments $8,460. Lease end purchase option is $12,418. Must take delivery from retailer stock by January 31, 2019. Other leases available on other models. Cannot be combined with any other incentives. Special lease rates extended to well-qualified buyers. Subject to credit approval, vehicle insurance approval & vehicle availability. Not all buyers may qualify. Payments may be higher in some states. Net cap cost & monthly payment excludes tax, license, title, registration, retailer fees, options, insurance & the like. Retailer participation may affect final cost. At lease end, lessee responsible for vehicle maintenance/repairs not covered by warranty, excessive wear/tear, 15 cents/mile over 12,000 miles/year and $300 disposition fee. Lessee pays personal property and ad valorem taxes (where applies) & insurance. Offer not available in Hawaii. See participating retailer for details. so let us run the lease financials (sans tax payments that are due every month as that varies by state here) 2645 up front 36* 235 = 8460 total lease payments over 3 years on a base model 11,105 that has a MSRP of 22,545 if current trends hold true, the car will depreciate by roughly 5.3K over that time, meaning that when they go to sell the car, it will be around 17.4K... A 2016 legacy 2.5i will net an average of 16.4K retail with under 30K miles as a 1 owner car (that is a 3 model year old car now) New it was around 21,745 see where the issue is? you are paying roughly 2.2x the depreciation value of the car as you are renting it. Not only that, they will sell the car and make even more off of the car you leased. another way to look at it is you paid half of what the car retails for just to have it for 3 years... Link to comment Share on other sites More sharing options...
BobbyR Posted January 11, 2019 Share Posted January 11, 2019 My Subaru lease is for 3 years as well. Average age of the car over the life of the lease is 1 1/2 years. If you buy a car and trade it back in after three years you take the same depreciation hit as with leasing, maybe even worse when comparing to a lease with a high residual. Of course, either way, the depreciation curve is steepest in the early years. That's the price of driving a near new car regardless of how you pay for it. As for the dealer reselling the car for more money, that's their business but, that said, it doesn't always work out that way for them. Residuals are the key and it's a common mistake to set them too high as leases are very competitive. It's not unusual for returned vehicles to be worth less than the residual and, when it turns out the other way (as in your extreme example), the car can always be purchased at lease end and resold privately. Some dealers will even allow you the implied equity on your next car if you've overpaid and the market value of the vehicle exceeds the residual value by a significant amount. Leasing isn't for everyone but it's not the clear loser you make it out to be. I wouldn't buy a car any other way. btw, leasing is not renting. No one rents a car for 3 years. Link to comment Share on other sites More sharing options...
YeuEmMaiMai Posted January 11, 2019 Share Posted January 11, 2019 uh, yes leasing is renting as you do not own it. care to try again? Link to comment Share on other sites More sharing options...
BobbyR Posted January 11, 2019 Share Posted January 11, 2019 What? They are different financial arrangements. Leasing involves borrowing. In neither case do you own the car so they do have that in common. Why the snark? Link to comment Share on other sites More sharing options...
YeuEmMaiMai Posted January 12, 2019 Share Posted January 12, 2019 No renting is no different than leasing....you pay a monthly payment in exchange for use of the car... a lease is just a longer term contract... Link to comment Share on other sites More sharing options...
laz Posted January 12, 2019 Share Posted January 12, 2019 When you can add it as a company expense leasing makes all the sense. Plus there is nothing better than the smell of a new car. --- Link to comment Share on other sites More sharing options...
KartRacerBoy Posted January 12, 2019 Share Posted January 12, 2019 When you can add it as a company expense leasing makes all the sense. Plus there is nothing better than the smell of a new car. Yeah, my LGT smelled like old man farts. Even when I left the windows open in our garage. Link to comment Share on other sites More sharing options...
laz Posted January 12, 2019 Share Posted January 12, 2019 Yeah, my LGT smelled like old man farts. Even when I left the windows open in our garage. And this is why I don’t like used cars. --- Link to comment Share on other sites More sharing options...
KartRacerBoy Posted January 12, 2019 Share Posted January 12, 2019 And this is why I don’t like used cars. Come on. I was personalizing it. Link to comment Share on other sites More sharing options...
YeuEmMaiMai Posted January 12, 2019 Share Posted January 12, 2019 When you can add it as a company expense leasing makes all the sense. Plus there is nothing better than the smell of a new car. Well I have had my car in the shop so many times over the last 3 years for cold run issues that I have driven every new Subaru model since 2017 my (sans wrx) ...currently in a 2019 Impreza hatch with 3k miles on it... Link to comment Share on other sites More sharing options...
KartRacerBoy Posted January 12, 2019 Share Posted January 12, 2019 I'm thinking if you had so many issues, it's time to change brands. I'm not a brand loyal guy. Bought my 05 LGT becz it hag 250hp and manual. Suited my wants/needs. Really wanted a Volvo V70R with a manual instead but my wife's foot up my ass shut down that desire quickly. Although I kinda liked it. Link to comment Share on other sites More sharing options...
laz Posted January 12, 2019 Share Posted January 12, 2019 Well I have had my car in the shop so many times over the last 3 years for cold run issues that I have driven every new Subaru model since 2017 my (sans wrx) ...currently in a 2019 Impreza hatch with 3k miles on it... Sorry to hear. This is also a reason to lease. You know if it is bad it won't be your problem for more than 3 years. --- Link to comment Share on other sites More sharing options...
BobbyR Posted January 12, 2019 Share Posted January 12, 2019 No renting is no different than leasing....you pay a monthly payment in exchange for use of the car... a lease is just a longer term contract... That's true with real estate but a vehicle lease is a different matter. This is going nowhere. Think what you want. Link to comment Share on other sites More sharing options...
ArmyVetMP Posted January 12, 2019 Share Posted January 12, 2019 I myself could never lease. I drive right around 40,000 miles per year, and most leases only allow about 12,000 miles a year. Now, if I lived a lot closer to my job and didn't drive as much, I would consider it as the payments for a lease are generally lower than when you buy, and the idea of a nice new car every couple years is nice. But then again, I prefer to buy my cars, pay them off eventually and stop spending the $$ until I have to. It is more fun to save $300 a month than it is to constantly spend $300 a month on a car. Link to comment Share on other sites More sharing options...
Falcor Posted January 17, 2019 Share Posted January 17, 2019 We are on our 3rd lease for my wife's car (2011 Elantra, 2014 Crosstrek, 2016 Crosstrek). Works great for us and I don't have to work on it. We have 15,000 miles a year in the lease. You can prepay as many miles as you want. It's much cheaper than paying for them later. The lease is up on the Crosstrek in September. We are either going to buy it and sell it to my in-laws, or turn it in and get a 2019 Crosstrek. Link to comment Share on other sites More sharing options...
YeuEmMaiMai Posted January 18, 2019 Share Posted January 18, 2019 That's true with real estate but a vehicle lease is a different matter. This is going nowhere. Think what you want. go a head and enlighten us by explaining how a leas is not a rental... https://www.daveramsey.com/askdave/posts/10367 just like I pointed out above, you get bent over, do you ever wonder why you never see the interest rate on a lease? cause once you did, you would realize you were ripped off https://www.wikihow.com/Calculate-Finance-Charges-on-a-Leased-Vehicle I provided the numbers for a new Legacy lease, plug them in and then try to tell me with a straight face you did not rent a car and get bent over in the process Using their formula with a money factor of .00333 (you can ask your local dealer what it is) you are paying a finance charge of 107.62 a month for a 235 lease payment... Link to comment Share on other sites More sharing options...
BobbyR Posted January 18, 2019 Share Posted January 18, 2019 go a head and enlighten us by explaining how a leas is not a rental... https://www.daveramsey.com/askdave/posts/10367 just like I pointed out above, you get bent over, do you ever wonder why you never see the interest rate on a lease? cause once you did, you would realize you were ripped off https://www.wikihow.com/Calculate-Finance-Charges-on-a-Leased-Vehicle I provided the numbers for a new Legacy lease, plug them in and then try to tell me with a straight face you did not rent a car and get bent over in the process Using their formula with a money factor of .00333 (you can ask your local dealer what it is) you are paying a finance charge of 107.62 a month for a 235 lease payment... When you borrow money for any reason there is interest to be paid and the only way to avoid it is to pay cash which ties up your capital. You are only getting "bent over" if the rate is too high relative to other lenders. Both lease and finance rates are clearly spelled out by lenders (at least in Canada). The dealer website where I lease my Legacy (see link below and select a trim level) shows rates (between .99 and 2.99%) that are almost identical for leasing and financing over similar periods. With leasing, all that really matters is the price of the car (which you negotiate), the residual and the interest rate. These things determine your monthly payment which will be mostly principle. If the residual was set too low you can buy the car at a great price under the terms of the lease agreement (dealers hate it when that happens). None of this bears any resemblance to renting. You could just as well argue that renting a house is the same as buying it with a mortgage because both involve monthly payments. https://www.budds.subarudealer.ca/WebPage.aspx?WebSiteID=309&WebPageID=22184&Range=Legacy&ModelYear=2019# However, think what you want. Link to comment Share on other sites More sharing options...
laz Posted January 18, 2019 Share Posted January 18, 2019 I believe that is the key point, you have the option to buy the car after your lease ends, whereas it is very rare where you can buy your house after leasing it for a few years. You also have the option ti buy the car at any point during your lease. For me leasing works great. --- Link to comment Share on other sites More sharing options...
dgoodhue Posted January 18, 2019 Share Posted January 18, 2019 go a head and enlighten us by explaining how a leas is not a rental... https://www.daveramsey.com/askdave/posts/10367 just like I pointed out above, you get bent over, do you ever wonder why you never see the interest rate on a lease? cause once you did, you would realize you were ripped off Dave Ramsey is wrong in his response about interest rate, it is not disclosed directly but can easily be calculated. You can ask for the money factor which one can basically calculates the interest rate from that number. One can easily use google for lease calculations. When I looked into leases the interest rate was about 1% higher than the traditional 5 year loans rates. One doesn't have to negotiate lease as a payment. You can still negotiate it for the price if the depreciation and money factor are fixed (which it should be). I am sure dealers like leases in that the general population isn't that great with math and the numbers gets the average people confused. Link to comment Share on other sites More sharing options...
dgoodhue Posted January 18, 2019 Share Posted January 18, 2019 FYI The current Outback lease they are offering ~0.5% interest and it has $595 acquisition fee and $300 deposition fee (usually waived if you continue leasing). The conventional loan rate 0% right now. Link to comment Share on other sites More sharing options...
YeuEmMaiMai Posted January 19, 2019 Share Posted January 19, 2019 I believe that is the key point, you have the option to buy the car after your lease ends, whereas it is very rare where you can buy your house after leasing it for a few years. You also have the option ti buy the car at any point during your lease. For me leasing works great. In real estate it is called rent to own .... not offered on all properties and if it is, typically a poor choice Link to comment Share on other sites More sharing options...
laz Posted January 19, 2019 Share Posted January 19, 2019 In real estate it is called rent to own .... not offered on all properties and if it is, typically a poor choice That is why I said very rare. I know all about rent to own. But you can’t compare leasing a car to leasing a house. At the end of my lease if I want to I can buy it for 20k or return it. I never put down more than $500 and I pay $350 a month for 12k miles every year. It is not my only car so I split the mileage between cars. I have returned my prior lease early (2 1/2 years in) with 45k miles (almost 10k more) with a car that is not 100% and leased another one without any penalty or hassle. For me that works great. --- Link to comment Share on other sites More sharing options...
YeuEmMaiMai Posted January 19, 2019 Share Posted January 19, 2019 Again renting is renting car or real estate it does not matter, buying a car at the end of a lease is beyond dumb decision financially.... talk about over paying for something.... Link to comment Share on other sites More sharing options...
laz Posted January 19, 2019 Share Posted January 19, 2019 Tell us how you really feel? It’s an option that has its pros and cons and I am glad it exists. Does it work for everyone? No. Does it work for me. Yes. What was your point again? --- Link to comment Share on other sites More sharing options...
dgoodhue Posted January 19, 2019 Share Posted January 19, 2019 I priced for my ex for leasing and doing a buyout vs buying outright for both a TDI sportswagen and Forester in 2014. It was just over $1k more expensive to do lease and buyout. For me the additional fees was not worth it and bought car outright even though at time monthly payment was the reason (I expected to be in a better financial situation in 2 years) is why I was considering doing the lease. Personally I would not go into lease contract with the idea of buying it out. Also Interest rate on used cars is usually more expensive. I wouldn’t go as far as saying it is an beyond dumb financial decision. Link to comment Share on other sites More sharing options...
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