Subaru Outback Forums banner
  • Hey everyone! Enter your ride HERE to be a part of December's Outback of the Month Challenge!
1 - 11 of 11 Posts

·
Registered
Joined
·
3,222 Posts
Discussion Starter · #1 ·
I haven't leased a car before, so this is kind of new territory for me.

I know that financially, long term, it appears that financing/purchasing is the best way to go. However, I'm curious about the bigger picture, long term.

For example, I know from my past experience, my Outback I purchased had a negotiated price of around 28,500, plus taxes and a few fees. That essentially turned into around a $940 payment for 36 months. In the end, it became $33840. I've now driven this car for just over 6 years (72 months), which breaks down to $470 per month so far.

During that time, I've also done all required maintenance, so for intent of comparing apples to apples, I'll exclude all 30k services and newer. So essentially, that leaves the spark plug service, potentially the cost of tires, alignments, balancing, belt replacements, and in my case going forward, a timing belt service. I would also exclude any type of transmission-type service as well.

I'm sure I have to do maintenance with a lease, but I imagine anything beyond the 36k (or any 36 month term with 12k a year) won't be warranted or necessary.

I'm kind of thinking that in the long run, even though you'd "always" have a car payment, you're kind of "ahead" - you don't have to worry about tires, brakes, rotors, plugs, things breaking (you're under warranty if something does happen)... You don't have to worry about wear and tear, so to speak. It becomes someone else's problem rather than yours.

What are your thoughts? Do you negotiate a lease just like you would a purchase price or are they harder to negotiate.

Thanks. I'll gather more thoughts in a few.
 

·
Registered
Joined
·
59 Posts
With a lease you pay forever and never own anything. Its not financially sound, but plenty of people come up with all kinds of reasons that make them feel good about it for them. There's nothing wrong with that, but its a personal decision for you alone.

A 940/mo payment on an economy car brand like the Outback means you were on the edge of being able to afford that, way to close on the edge for me. You would not have put down 20%, maybe not even 10. And probably had to pay additional for gap coverage. Thats just hit after hit.

If I were you, build a bigger downpayment, the bigger the better. My last two vehicles were 50% and 30% down.... and wait for 0% interest packages. Subaru cycles them around.

You have a car, with no payments. Start putting your old payment into a car fund... and ****. You'll have a whole new Outback in cash in 3yrs or less, and not play dealer/bank games.


Sent from my iPad using Tapatalk
 

·
Registered
Fresh Out of Outbacks!
Joined
·
14,499 Posts
With the car you own, you have the option of keeping it long enough to pull the average monthly payment down into the basement if you keep it long enough. No guarantee it will work, but you can try.

That average is kind of meaningless unless your cash flow is compatible with the actual spending rate- making payments in the beginning, then saving & spending on repairs later. A lot of people can't manage that last part.

My perception is that the best way to "win" with an auto lease is to stop caring about what car you'll get. Just trust that they are all reasonable transportation. Instead, you look for the good deal. There's a dealer near me offering $2600 down/$68 a month, a net cost of $164 per month. That's hard to beat. Find a couple of deals in that territory, and then look at what cars are actually behind them and pick the best one. Does not usually work if you start from picking the car first.
 

·
Registered
2014 3.6R Limited
Joined
·
1,210 Posts
The 1 flaw in your equation is you need to back out the amount you can sell your car for now and then figure the monthly cost!

I haven't leased a car before, so this is kind of new territory for me.

I know that financially, long term, it appears that financing/purchasing is the best way to go. However, I'm curious about the bigger picture, long term.

For example, I know from my past experience, my Outback I purchased had a negotiated price of around 28,500, plus taxes and a few fees. That essentially turned into around a $940 payment for 36 months. In the end, it became $33840. I've now driven this car for just over 6 years (72 months), which breaks down to $470 per month so far.

During that time, I've also done all required maintenance, so for intent of comparing apples to apples, I'll exclude all 30k services and newer. So essentially, that leaves the spark plug service, potentially the cost of tires, alignments, balancing, belt replacements, and in my case going forward, a timing belt service. I would also exclude any type of transmission-type service as well.

I'm sure I have to do maintenance with a lease, but I imagine anything beyond the 36k (or any 36 month term with 12k a year) won't be warranted or necessary.

I'm kind of thinking that in the long run, even though you'd "always" have a car payment, you're kind of "ahead" - you don't have to worry about tires, brakes, rotors, plugs, things breaking (you're under warranty if something does happen)... You don't have to worry about wear and tear, so to speak. It becomes someone else's problem rather than yours.

What are your thoughts? Do you negotiate a lease just like you would a purchase price or are they harder to negotiate.

Thanks. I'll gather more thoughts in a few.
 

·
Registered
Joined
·
3,222 Posts
Discussion Starter · #5 ·
With a lease you pay forever and never own anything. Its not financially sound, but plenty of people come up with all kinds of reasons that make them feel good about it for them. There's nothing wrong with that, but its a personal decision for you alone.

A 940/mo payment on an economy car brand like the Outback means you were on the edge of being able to afford that, way to close on the edge for me. You would not have put down 20%, maybe not even 10. And probably had to pay additional for gap coverage. Thats just hit after hit.

If I were you, build a bigger downpayment, the bigger the better. My last two vehicles were 50% and 30% down.... and wait for 0% interest packages. Subaru cycles them around.

You have a car, with no payments. Start putting your old payment into a car fund... and ****. You'll have a whole new Outback in cash in 3yrs or less, and not play dealer/bank games.
I'm not entirely sure what you mean here. I was in a rush on a break at work when I typed above, so I suppose I should go a little bit more in-depth with the financing I did. I was/am in a position where, if I elected to, I could pay for the car outright and skip the financing section. However, Subaru does offer the 0% options quite often, and I took advantage of one of the 0% offers. At the time I purchased, they had a 0% offer up to 36 months requiring no money down, so I financed the entire amount at 0%. Essentially, I got an "interest free" loan from Subaru (via Chase, their financing lender, who happened to be my primary bank anyway) for 36 months. If/should they require a down payment of some kind in order to acquire said 0% deal, I would have done that. Again, the reason I didn't care about the higher payment is because it was 0%, so I left my money in the bank making a little bit interest rather than writing the check. At no point did I "go over my head" in terms of payment, and I had the money set aside to pay for the vehicle - I was never in jeopardy of NOT making the payments. I did not have/need gap coverage.

With the car you own, you have the option of keeping it long enough to pull the average monthly payment down into the basement if you keep it long enough. No guarantee it will work, but you can try.

That average is kind of meaningless unless your cash flow is compatible with the actual spending rate- making payments in the beginning, then saving & spending on repairs later. A lot of people can't manage that last part.

My perception is that the best way to "win" with an auto lease is to stop caring about what car you'll get. Just trust that they are all reasonable transportation. Instead, you look for the good deal. There's a dealer near me offering $2600 down/$68 a month, a net cost of $164 per month. That's hard to beat. Find a couple of deals in that territory, and then look at what cars are actually behind them and pick the best one. Does not usually work if you start from picking the car first.
Yeah, I suppose. I really like the brand, so I'd be stuck between an Outback or a Foz, so to speak. The mileage driven for me isn't a concern - my car isn't the family "vacation car" anymore, and my commute round trip is 20 miles daily.

I think what I'm looking at is the compounding of all the maintenance type things in addition to the unexpected expense. When you own a car for a very long time, there's a *chance* however slight that it will be worth literally zero dollars in terms of trade in value, but driving said car would also represent a potential savings every month. In my example before, I posted that I had a car payment for around $900 for 36 months... That means if I was in a similar situation going forward, I'd also be saving any time that there were no car payments.

I suppose the overall factor is everything added in and then dividing. For example, the timing belt service including all the other "things" (water pump, idlers, tensioners, thermostat, etc.) that go with it I'm expecting to cost between $1000-$1200 at the dealership. Tires I believe cost me around $500 after all the mounting and balancing fees last time I did it, and I seem to need a new set around every 4 years. Brakes and rotors were somewhere up there too last time.

My point in all this is that I'm wondering if all the repair, maintenance, and payments have a break even point at some point, or if it stays close.

I'd rather spend $350 a month on a lease payment and have a $350 payment all the time rather than a $900 payment for 36 months and then 0 for the next 72 months. That would, in the long run, equal a $300 payment over the course of 9 years, and I'd have the benefit of not having to do any repairs (anything that came up would be in the 3/36 bumper-to-bumper), always having the newest tech, features, and safety things (like EyeSight, for example), and not any of the major maintenances anymore either. A big one would be the CVT, for example. People seem to be torn over the long term longevity of the CVT. Assuming the part breaks out of warranty, there are people saying that the repair bill is around $2000 for a torque converter or valve body failure compared to an excess of $8000 for a new (complete) CVT. While it's true Subaru has "chipped in" via a goodwill discount or stipend in the past, I'm not sure of this going forward, especially because they've extended the CVT warranty to 10/100.

For example, there are good lease rates now. I'd be looking around $229/mo for a Forester according to their website, $249 for an Outback. Even if you factor the down payment into the equation, you're still coming in around or below the $300/mo mark. And you'd never have to deal with the exhaust system, oxygen sensors, catalytic converters failing, spark plug changes, etc. It just seems "simpler" even though there's the price premium of not building equity in something that is going to depreciate anyway.

Let me just reiterate, I'm not expecting to save any money with a lease, I'm just expecting that it's probably not as far off in terms of long term ownership as people on other websites have made it seem...
 

·
Registered
Joined
·
3,222 Posts
Discussion Starter · #6 ·
The 1 flaw in your equation is you need to back out the amount you can sell your car for now and then figure the monthly cost!
That's true. So you'd be in the line of thinking that it would be better to just buy the car however I do it (financing, outright, etc.) and then apply equity towards the new one. That makes sense.

I don't know if I'm a pushover, or I don't push hard enough, or I just am ignorant, but I generally always get a lousy trade-in deal. Some of it is "acceptance" - for example, dents, dings, etc. When we traded in my wife's Legacy it had a lot of dings on it from acorns that fell from a public tree above our driveway. Garage parking isn't possible, and I can't park on the street overnight (town laws say all cars must be in driveway) and I couldn't cut down said tree until it became a risk to property/persons. It is gone now, but the dents were there. They took a lot of value off the car because they assumed it was hail damage. We ended up negotiating on a price around 1500 under the "good" KBB value, which was acceptable because they essentially gave me around 1000 credit towards parts/accessories for her new car which we used to purchase and install trailer hitch amongst other accessories.

Family also traded in an older model Outback for a newer one a few years ago and they refused to come up over $1000 for trade value on it, mostly because it had 150k miles. He ended up trading somewhere else for a little more trade value.

My point is I don't want to read too much into the whole equity thing, because as I've found out, there's a lot of things that are deductions or reduce value from the GTP. I have a big dent on my trunk lid from a bike rack that DQ's me from the GTP. So while "13k" sounds great on the GTP site, if the reality is 10k, you're still eating a lot more depreciation for a relatively young car.

Let's assume they give me 10k for my ride now, we'd be looking at around a return of 10k/36 months or around 200 per month back, making that car payment above closer to 750 rather than 950.
 

·
Registered
Fresh Out of Outbacks!
Joined
·
14,499 Posts
Yeah, I'd agree that a lot of leases are not so far off from the monthly average of owning in terms of actual spending, for a given new car.

Look at taxes and insurance- they can be different from owned vs leased, and in some states the taxes can be wildly different between them. Enough to turn the tide. Also factor in that gray area of wear & tear damage. A grocery cart ding that would have previously cost you 5 minutes to make an angry social media post is now a $100 must-fix incident in many lease deals.
 

·
Registered
Joined
·
59 Posts
I'm not entirely sure what you mean here. I was in a rush on a break at work when I typed above, so I suppose I should go a little bit more in-depth with the financing I did. I was/am in a position where, if I elected to, I could pay for the car outright and skip the financing section. However, Subaru does offer the 0% options quite often, and I took advantage of one of the 0% offers. At the time I purchased, they had a 0% offer up to 36 months requiring no money down, so I financed the entire amount at 0%. Essentially, I got an "interest free" loan from Subaru (via Chase, their financing lender, who happened to be my primary bank anyway) for 36 months. If/should they require a down payment of some kind in order to acquire said 0% deal, I would have done that. Again, the reason I didn't care about the higher payment is because it was 0%, so I left my money in the bank making a little bit interest rather than writing the check. At no point did I "go over my head" in terms of payment, and I had the money set aside to pay for the vehicle - I was never in jeopardy of NOT making the payments. I did not have/need gap coverage.







Yeah, I suppose. I really like the brand, so I'd be stuck between an Outback or a Foz, so to speak. The mileage driven for me isn't a concern - my car isn't the family "vacation car" anymore, and my commute round trip is 20 miles daily.



I think what I'm looking at is the compounding of all the maintenance type things in addition to the unexpected expense. When you own a car for a very long time, there's a *chance* however slight that it will be worth literally zero dollars in terms of trade in value, but driving said car would also represent a potential savings every month. In my example before, I posted that I had a car payment for around $900 for 36 months... That means if I was in a similar situation going forward, I'd also be saving any time that there were no car payments.



I suppose the overall factor is everything added in and then dividing. For example, the timing belt service including all the other "things" (water pump, idlers, tensioners, thermostat, etc.) that go with it I'm expecting to cost between $1000-$1200 at the dealership. Tires I believe cost me around $500 after all the mounting and balancing fees last time I did it, and I seem to need a new set around every 4 years. Brakes and rotors were somewhere up there too last time.



My point in all this is that I'm wondering if all the repair, maintenance, and payments have a break even point at some point, or if it stays close.



I'd rather spend $350 a month on a lease payment and have a $350 payment all the time rather than a $900 payment for 36 months and then 0 for the next 72 months. That would, in the long run, equal a $300 payment over the course of 9 years, and I'd have the benefit of not having to do any repairs (anything that came up would be in the 3/36 bumper-to-bumper), always having the newest tech, features, and safety things (like EyeSight, for example), and not any of the major maintenances anymore either. A big one would be the CVT, for example. People seem to be torn over the long term longevity of the CVT. Assuming the part breaks out of warranty, there are people saying that the repair bill is around $2000 for a torque converter or valve body failure compared to an excess of $8000 for a new (complete) CVT. While it's true Subaru has "chipped in" via a goodwill discount or stipend in the past, I'm not sure of this going forward, especially because they've extended the CVT warranty to 10/100.



For example, there are good lease rates now. I'd be looking around $229/mo for a Forester according to their website, $249 for an Outback. Even if you factor the down payment into the equation, you're still coming in around or below the $300/mo mark. And you'd never have to deal with the exhaust system, oxygen sensors, catalytic converters failing, spark plug changes, etc. It just seems "simpler" even though there's the price premium of not building equity in something that is going to depreciate anyway.



Let me just reiterate, I'm not expecting to save any money with a lease, I'm just expecting that it's probably not as far off in terms of long term ownership as people on other websites have made it seem...
The miscommunication comes from the numbers you stated. 28,5 negotiated price, and the ultimately paid 33,5. Over a $5k difference. Way more than taxes should be, gotta be being bled by interest and/or gap insurance, other? Or gives that impression.


Sent from my iPhone using Tapatalk
 

·
Registered
Joined
·
3,222 Posts
Discussion Starter · #9 ·
Well, I stand corrected. I had a 0.9% interest rate. I also checked my bank account - I was earning around the same interest so I was essentially "even" for the loan amount.

I had no trade when I purchased so I paid the full 7% NJ sales tax when I bought. On 28,500 this is about 2,000 so that brings us to 30,500. I believe they also hit me with a documentation fee of around 299, and in NJ I had to register the vehicle for 5 years up front for around $500 (it's in the mid 90's per year), and then also purchased optional plates from the dmv to support a cause and that cost me around another $100. I'll have to go check the bill of sale but in the ballpark of the area of $32k sounded right.
 

·
Registered
2014 3.6R Limited
Joined
·
1,210 Posts
You need to do your math after 6 years....not 3 years!

That's true. So you'd be in the line of thinking that it would be better to just buy the car however I do it (financing, outright, etc.) and then apply equity towards the new one. That makes sense.

I don't know if I'm a pushover, or I don't push hard enough, or I just am ignorant, but I generally always get a lousy trade-in deal. Some of it is "acceptance" - for example, dents, dings, etc. When we traded in my wife's Legacy it had a lot of dings on it from acorns that fell from a public tree above our driveway. Garage parking isn't possible, and I can't park on the street overnight (town laws say all cars must be in driveway) and I couldn't cut down said tree until it became a risk to property/persons. It is gone now, but the dents were there. They took a lot of value off the car because they assumed it was hail damage. We ended up negotiating on a price around 1500 under the "good" KBB value, which was acceptable because they essentially gave me around 1000 credit towards parts/accessories for her new car which we used to purchase and install trailer hitch amongst other accessories.

Family also traded in an older model Outback for a newer one a few years ago and they refused to come up over $1000 for trade value on it, mostly because it had 150k miles. He ended up trading somewhere else for a little more trade value.

My point is I don't want to read too much into the whole equity thing, because as I've found out, there's a lot of things that are deductions or reduce value from the GTP. I have a big dent on my trunk lid from a bike rack that DQ's me from the GTP. So while "13k" sounds great on the GTP site, if the reality is 10k, you're still eating a lot more depreciation for a relatively young car.

Let's assume they give me 10k for my ride now, we'd be looking at around a return of 10k/36 months or around 200 per month back, making that car payment above closer to 750 rather than 950.
 
1 - 11 of 11 Posts
Top