Good afternoon/morning Reddit! My partner and I are discussing how to proceed with our leased vehicle. Our lease officially ends on Wednesday, August 5th and we need to come to a decision before then.
Here are the details: 2024 Subaru Crosstrek Premium. Dealer Market Value: $19,782. Taxes/Fees/Registration: $2314.14. Total Amount for buyout: $22096.14.
Our options are to buy it out with a $5000 deposit (we could do more, but this is our baseline), or to turn it in and lease a new vehicle. We both have 800+ credit scores and collectively about $50k in our savings accounts. They came back with a 6.49% APR on 48 months with $5k down at $407/month. A new lease would be $255/month with $3500 down for 36 months.
Would it be smarter to buy the car out, or to just lease a new one? We're plenty happy with it, but are trying to avoid the pitfalls of a "maintenance" payment that our older, previously trade-in cars were. To further complicate our decision, I may be relocating from the USA to Canada in about a year for work.
Thoughts on this, hivemind?
Buy it out at higher than market value or lease a new one? Or, hear me out, get away from this and just buy a car. Not here. Unrelated to lease. The disposition fee is going to be less than the difference you’re stating between buyout and market value.
Market value for this car is roughly $23-25k. The lease buyout before added fees/etc is actually quite a bit lower.
Why isn't "turn it in and buy a different vehicle" an option?
This is certainly an option. We were just attempting to keep our monthly payments below $300-350 and get a like make/model/year. This specific car is typically about $25k across most online platforms, and higher than our buyout amount of $19,782.
Dealer Market Value: $19,782.
is this the residual value? or the actual market value? whichever one it is, what is the other value?
My apologies. That is the residual value that was listed on the buyout. I mis-spoke.
Don't put money down on a lease
How much do you see your life changing over the next few years? Leasing is good for an ever-changing life (like you don't have kids now, but you see having kids in the future). You don't really want to lease a vehicle if you have kids, because the likelihood for damage is so much greater. See if you can get better financing through your bank or CU and walk into the dealership with a check if you can get better financing Also, never, ever, ever put money down on a lease. If you can't afford the payment with no money down, then you can't afford the lease. Or, take the money down and apply the difference each month to your payment. If you drive off the lot and get into an accident, that down payment is GONE.
The way you win at personal financing with cars is to not keep getting a new car every time your lease is up nor when you finished making payments. If you have the mindset that you'll keep the car for 10 years or 150K miles, even with extended maintenance costs as the vehicle gets older, it's still a better deal in the long run than buying/leasing a new car so quickly. Maintenance costs will be higher in the later years of the car. But even if you are putting $2000 a year towards fixing it, that's still a better deal than buying a new car. You didn't say how many miles are have been driven on that car. I looked up the cost of a used CrossTrek Premiums in my area on Carmax. Most go for between $25K to $26K with around 20K to 30K miles. Maybe one went for $27K. So $22K sounds like a good deal. Stop by your local credit union or bank and see if they can beat the interest rate that was offered. Or just refinance later or pay it off when you can. Assuming your jobs are stable, put even more down from your savings. TLDR: Buy the car. Even with maintenance, it's a better deal than buying/leasing a new one.