patrick.net

IS the residual price you will pay, if you choose to purchase at the end of the lease, given up front ?

Seems like you mostly made out because the value of the HYundai held up so much better than predicted.

Waitingtobuy says

B is incorrect. The dealer doesnt make money off the lease. They make money off of A, selling the car. The leasing company makes money off the lease.

Incorrect

The leasing company through the Subaru Main Dealer and the bank is Chase. Nobody else.

No middle man.

marcus says

Waitingtobuy says

If the residual is $15K, and I sell it for $20K, then my costs are $328-$138 ($5K/36 months) or $190/month.

How often is there a spread like that ?

Very rare. Hyundai blew the residual calculation badly. My car only has 13,000 miles on it. Here are other Hyundai Sonata Limiteds like mine.
http://bit.ly/WaouVJ

Sounds like everybody wins - where have I heard that before. Wait, I hear that every day ;)

Waitingtobuy says

C is also incorrect. No dealer would buy a 3 yr old $23K car for $21K. More like $12-$13K, they mark it up $2K, and sell it on their lot.

They did multiple times from me.

This was many months ago people.

At the time they had no stock as I explained! They had upsides all over the place! They made thousands!

Subaru Main Dealer? You mean Subaru Motors Finance.
https://www.chase.com/online/auto-loan/subaru_motor_finance.htm

Chase makes the money financing, Subaru sells the car and makes money, and the dealer makes money on the sale, not the lease. They dont make money on BOTH the sale of the car and lease. Chase steps in as the financier, you rent the car from them.

Waitingtobuy says

Subaru Main Dealer? You mean Subaru Motors Finance.

https://www.chase.com/online/auto-loan/subaru_motor_finance.htm

Chase makes the money financing, Subaru sells the car and makes money, and the dealer makes money on the sale, not the lease. They dont make money on BOTH the sale of the car and lease. Chase steps in as the financier, you rent the car from them.

Which is why I said Subaru gave the dealer an additional $500 if I got the same vehicle

Stop hating people and start learning.

This is not rocket science.

Work the manufacturers. Work the dealers.

Don't let them work you.

Got it.

Still lost on the $23K to $21K. But I get the rest of your argument.

by the way the Subarau Forrester 2009 was top residual in it's class with the highest safety in it's class

very desirable car.

and AWD for $10K less than any4x4 or AWD car in it's class

Waitingtobuy says

Got it.

Still lost on the $23K to $21K. But I get the rest of your argument.

OK here is the $2K lost as you all so simply see it. WaTCH!

0.55 per x 4666 miles = 2566.3

yes gas ok 4666 / 24MPG x $3.35 = $651.29

CLOSE ENOUGH!!!

That's a 14k lease

My upside is way bigger than I can show you here. I am trying to show you at the bare minimum an individual can do this. A company can do better! That's the American way.

chanakya4773 says

But if we compare the costs to buying a car outright and owning and driving for 10 to 15 years, the latter will always make more sense financially because this how the math will look.

$190 per month * 15 years * 12 months = 34 K

versus 27 K

if we take inflation in to account, the number will be even worse for leasing because while i have paid the fixed 27 K, you will be paying more and more per month for the lease.

we have ignored the sales tax on your lease as well.

Why on earth would you tie up good money into a car? It's alway losing money. As an investor I can tell you it is always better to use other people money especially at zero percent interest!

My money should be making 6% to 25% minimally a year.

I can triple $25k at any time, why tie it up?

If you tie that kind of money up you lose way more me over ten years than me.

Stay liquid. Always lease. Let the bank give you the money for free.

The way my money works potentially if I did that I may lose $250k over 10yrs!

Thedaytoday says

OK here is the $2K lost as you all so simply see it. WaTCH!

0.55 per x 4666 miles = 2566.3

yes gas ok 4666 / 24MPG x $3.35 = $651.29

So if instead you drove a beater and paid yourself the $0.55/mile, you would come out even further ahead?

And, if you can triple $25k at any time...uhh...Start with $1, and repeat 30 times. Own the world. Report back.

robertoaribas says

I'm not sure... My cousin has the forester... Kind of soso inside to me... By the time I load leather etc on it, is it really that much cheaper than a 328i? Or a Volvo s60? The leases seem kinda close...

Three years ago, I bought an 06 loaded Mazda 3... Low mileage for 12k. Sold it after 2 years for 10k... But I had to replace the ac myself, and that and some other parts, even using my friends dealer account to order the parts, brought my ownership costs to about 200 a month...screw the discount car, I can just lease something nice for 400 a month...a little extra for a much nicer car and no hassles buying,selling, fixing it etc...

The new Forrester is bigger and has turbo option.

Subaru cost me nothing to maintain

It has not given me 1 day problem in over 6 years.

chanakya4773 says

agree with 0% interest but if i am paying 7 K for a typical 30K car every three years ( lease).

In 9 years i anyway am paying almost ~ 21 K ...not that liquid !

and you still don't have your own car.

No so what happens after 9 years?

You own it and trade it again for another.

But your not trading a 9 year old car are you? It's 3 years old.

Has the penny dropped yet?

chanakya4773 says

waitingtobuy: Thanks for doing the right math.

you are right that leasing makes sense when you have to buy cars very often and every three or four years. thats conventional wisdom.

I think you are benefiting in two areas : 1) sales tax -> $2430 and interest payments : $2262 , which is total of approx $4700 over three years.

you save $4700 per year versus (buying the car full down and selling and buying next new car in three years.)

But if we compare the costs to buying a car outright and owning and driving for 10 to 15 years, the latter will always make more sense financially because this how the math will look.

$190 per month * 15 years * 12 months = 34 K

versus 27 K

if we take inflation in to account, the number will be even worse for leasing because while i have paid the fixed 27 K, you will be paying more and more per month for the lease.

we have ignored the sales tax on your lease as well.

$190 includes sales tax. $27K doesnt, so add $2430 to this. Then figure $500/year for repairs, brakes, tires, etc. Now close to $37K.

In the meantime, in 15 years, you would have missed any technological innovations (a car bought in 1998 would not have an MP3 player, side curtain airbags, as many crumple zones, roof protection in rollovers, and no bluetooth). In addition, by 2025, gas mileage standards are doubling, so it's likely that new cars will get at least 50% better gas mileage, if not more. If you are spending $2000/yr on gas, that's $1000/yr over say 7.5 years (gas mileage advances on a trend line, not all at once) so that's another $7500.

In other words, you are not spending $27K over 15 years, but $44,500. Meanwhile, Im spending $34K (not considering inflation), driving a new car every 3 years that is safer and more fuel efficient, with the latest gadgetry. I've not even included the opportunity cost of the $29K. At 3% rate of return, another $16K

Waitingtobuy says

$190 includes sales tax. $27K doesnt, so add $2430 to this. Then figure $500/year for repairs, brakes, tires, etc. Now close to $37K.

In the meantime, in 15 years, you would have missed any technological innovations (a car bought in 1998 would not have an MP3 player, side curtain airbags, as many crumple zones, roof protection in rollovers, and no bluetooth). In addition, by 2025, gas mileage standards are doubling, so it's likely that new cars will get at least 50% better gas mileage, if not more. If you are spending $2000/yr on gas, that's $1000/yr over say 7.5 years (gas mileage advances on a trend line, not all at once) so that's another $7500.

In other words, you are not spending $27K over 15 years, but $44,500. Meanwhile, Im spending $34K (not considering inflation), driving a new car every 3 years that is safer and more fuel efficient, with the latest gadgetry.

SHAZAAAM!

What do you think the horse power of your 15 year old car is?
Will your car be parking itself?

If you are a person who cannot afford $23k car but have good credit. LEASE!

Get a Subaru it's not the flashiest but the residuals will make you smile when you keep trading it over and over again.

Paul Getty: “If it appreciates, buy it. If it depreciates, lease it.”

New Renter says

3) You mention you got a great deal due to Fukashima - how difficult is to to negotiate a similar deal without the assistance of a once-in-a-century disaster?

Just wait for Lindsay Lohan to be locked up or something

:):)

Waitingtobuy says

Paul Getty: “If it appreciates, buy it. If it depreciates, lease it.”

I would 'nt lease a house or eek buy more..

chanakya4773 says

Waitingtobuy says

In other words, you are not spending $27K over 15 years, but $44,500. Meanwhile, Im spending $34K (not considering inflation), driving a new car every 3 years that is safer and more fuel efficient, with the latest gadgetry.

So are you saying adjusting for sales tax and 0% interest , the depreciation curve on a new car over three years is better than a regular buy over. looks like the depreciation curve is getting pushed up for leasing because of sales tax and 0% interest and potential technological innovations.

Also Subaru have just updated the 2008 model in 2014 or close to that.

So depreciation was low, lowest in it's class. this made finance payments lower.

For example the same 23k loan on a lets say a Mazda would be 379 per month. making your upside much much lower. I wouldn't do it. $129 is a lot because it means it is depreciating faster than another 23k car in its class.

I can drive it for 9yrs and lose 28% but thanks to the tax system less, nothing wrong with that. It's called a business deduction because it's for business.

36mos with 14,000 shit the car is like brand new.

chanakya4773 says

Theday2day : Why are you promoting subaru so much ? Has subaru cornered all the suckers in the world who buy 3 year old cars at 90% original value ?

No, I'm telling you this car has not given me 1 day problem ever. Has the best all around 360 view and reasonable mpg.

It also has the best safety standard and residual in class.
It's a basic SUV that will not cost you $35k.

and if you lease it , shit it's like they are giving it away for free :):)

I've done multiple coast to coasts all with ease.

ha ha ha, I win I win I win!

edvard2 says

ha ha ha, I win I win I win!

Edvard, your so funny.

chanakya4773 says

according to this article :

http://wheels.blogs.nytimes.com/2010/12/15/bmw-and-subaru-have-best-resale-value-says-kelley-blue-book/

average subaru loses 60% value in first 5 years. so i am assuming it loses 40% in first three years. Something is fishy about your 90% resale value.

2009 model and not 2011 model.

They are identical.

Supply was low as described.

Nothing is fishy.

“Their dealers are clamoring for more product because they know they can sell more. But the flip side of that is that they are able to sell the product that they do have at or near full M.S.R.P., and that has a huge factor in resale value as well.”

My used Subaru 2009 hit the dealers court at $22500 in dec 2011.

The dealer told me he made over $5000 on everything.

chanakya4773 says

So you are using the example of a the car that you bought during the bottom of a recession for an once in a lifetime type deal to justify an average buy case ?

THE FACT is that on average subaru loses around 40% value in three years. your case was an outlier !

No, I',m showing you how to buy a leased car with higher than average residuals.

I was predicted to be at 18k, I got $21k + $500 from Subaru.

I got the best package on the car and the best residual. Try it!

I could have bought a number of cars, this was the best overall deal.

Still today it is the best. I've sat in every $25k SUV and this is the best.

@25k SUV's can be small inside with low capacity, the new 2014 is even bigger! compare the new Mitsubishi or Mazda or Chevy for the price and AWD you will see.

This car specs out at $35k with AWD compared to any other maker.

My next trade will be into a 55mpg SUV Subaru 2015 / 2016

or god help them!

although gas could be $8 by then :( I can't tell

2013 I predict we will see sub $3 soon and perhaps lower depends on the weather and
disasters.

2014 is a mystery

chanakya4773 says

Thedaytoday says

My next trade will be into a 55mpg SUV Subaru 2015 / 2016

or god help them!

How would you pay for the lost 40% market value in three years. who will eat that difference ? do you think some magic will happen ? this is not 2009 !

So you think I got $13800 on the car?

Seriously?

I will admit I am not suggesting one way is the only way to get a deal. You need to have a bag of tricks and improvise.

Your being very narrow minded.

I have demonstrated leasing can be very beneficial in many ways

some just have no style...and no imagination... Ipod not required!

Now thats a mother fucking car

It was an anomaly yes. One I capitalized on for 6 years!

how did i do that! I picked the car with the best inclass everything!!in 2008 for $23k

also this car was established and not a refresh or new model. only buy tried and tested.

and the next trade is not until DEC 2014 by which time the 2015 models better be available at 55mpg hopefully negating some of my loss! we will see.

if not I win if they do I win.

When I go to trade if the pattern breaks, which for 6 years it has not I will cease with Subaru. I doubt it though.

chanakya4773 says

Thedaytoday says

It was an anomaly yes. One I capitalized on for 6 years!

how did i do that! I picked the car with the best inclass everything! in 2006!!!!!!!!!! for $23k

also this car was established and not a refresh or new model. only buy tried and tested.

and the next trade is not until DEC 2014 by which time the 2015 models better be available at 55mpg hopefully negating some of my loss! we will see.

When I go to trade if the pattern breaks, which for 6 years it has not I will cease with Subaru. I doubt it though.

Are you now saying you bought a subaru for 23k in 2006 and sold it for ( residual) for 21k in 2009 when the economy was falling apart ?

no

it was also under 23 , my last one was, they were all around 22,500 or was less, end of 2008 not 09 close to crash or before

Subaru had some great deals I remember, they gave $2500 on top of trades for the new model, it might have been $3500 or something like that.

All the dealers had these at the time.

What I am saying is in this thread is you can do well owning a new car and own new without losing a shirt.

Just don't balloon it or finance but lease. Money is cheap.

Don't lease if you can't take care of it.

"The average vehicle, regardless of brand, is expected to retain only about 34 percent of its original value after five years. Consequently, a new car costing $50,000 today will be worth only about $17,000 after five years. It is a calculation that can take all the romance out of buying a new car."

So how did I do after 6 years. Way better!

chanakya4773 says

Waitingtobuy says

In other words, you are not spending $27K over 15 years, but $44,500. Meanwhile, Im spending $34K (not considering inflation), driving a new car every 3 years that is safer and more fuel efficient, with the latest gadgetry.

So are you saying adjusting for sales tax and 0% interest , the depreciation curve on a new car over three years is better than a regular buy . looks like the depreciation curve is getting pushed up for leasing because of sales tax and 0% interest and potential technological innovations.

Also you mentioned that your 15K residual was due to some error !

Also how long will 0% interest last ?

There isn't a difference in the depreciation curve for a sold vs leased car. A car is a car and coming off the lease should sell retail for the same amount of money as one bought. I didnt say anything about 0% interest. I said Hyundai's residual calcs were off. If it were on, it would be closer to the current retail price--maybe $17-$18K than $15K. Too bad for them.

There is a bit of an error in my and your calculations. I assumed I would make $5K off the transaction of buying at wholesale residual price and selling at retail. May or may not happen, but I feel confident I could make $3K. The link I included earlier only had one car out of 11 that was listed under $19,900. I followed along with your hypothesis that after selling my car, my payments would be only $190. It's more likely that they would be $245 ($328-$83) ($3K/36 months). I've sold a lease vehicle 4 times out of 5 leases and made a profit. (I sell for a living. Not everyone is good or wants to sell) $245/month * 15 years * 12 months/yr= $44,100. Equal to the 15 yr car.

But I also assumed that gas stays at $4/gallon. Doubt it will be in 2027. More likely $8/gallon. Makes that $7500 now $15K in fuel difference costs. And I didn't include return on investment of $16K. Assuming all of this pans out, your $27K car is now $68K!!!

All of this is a bit of conjecture since we dont know inflation's effects, return on investment, fuel costs, etc.

If the 2015 comes along at 55mpg I will lose on the front end and win on the back end.