OT: Lease vs Buy Car | The Boneyard
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OT: Lease vs Buy Car

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Since we have some finance types/smart analytical folks here, I thought I’d post this scenario to get thoughts from anyone inclined to reply:

My lease on a ‘22 Subaru Legacy sedan is up next month. residual value $22K (actually slightly below market value) and I’m deciding whether to buy it or lease another car. I only drive < 10-12K/yr so within most lease parameters but I can’t help but think of the inevitable maintenance/repair costs that I would pay with a purchase as compared to another leased car. also throw in the mix that Subaru has discontinued the Legacy sedan after ‘25 model year and I worry about parts availability, maybe not initially but in the coming years. is this a legitimate concern?

I appreciate anyone who wants to give their opinion. thanks in advance.
 
You are probably fine with buying the Legacy. Parts should be available for many years. I have a 1999 Isuzu Trooper sitting at our cabin. I’ve had no problems repairing it except for one time I had to get a replacement door handle off eBay when one wore out. Most parts you’ll need are universal and not Legacy specific. Vehicle specific parts are fairly rare.

However, despite what the smart money will say, I love having newer cars for everyday drivers. With your low usage, leasing is appealing. If I could stay in the 10-12k range for annual mileage, I’d always lease. I like the reliability and technology. I also just like new cars.

You might want to see what lease programs are out there that appeal to you first though. With inflation the way it is, sticker shock may make buying the Legacy a better option. I haven’t been watching car prices closely lately. An acquaintance of mine recently bought a Kia Sportage X Pro Prestige. It’s a loaded Sportage with off-road tires, cooled seats etc. I think it’s really cool. I was shocked to see it is a $43,000 car when I looked it up. A Kia Sportage shouldn’t be that expensive in my brain, but that’s where prices are now. It’s a nice vehicle and all, but a Kia Sportage was always a budget ride.
 
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Only lease if you know exactly how many miles a year you will drive, and you have a job/business that legitimately allows you to write off auto expenses. Or you're vain and need a new car every 2-3 years and don't give a damn about throwing $$ away.
 
Cars have become ridiculously expensive. The average new car is now over $40k, to @Hoophound's point about the Kia Sportage. As for leasing, you are essentially financing the depreciation on the car. There are online forums where insiders calculate the good and bad lease deals based on internal interest rates built into the leases, unrealistic residual values, etc. If the car depreciates faster than expected, you may win with the lease. The legacy, as a sedan, almost certainly depreciated pretty rapidly. Not a lot of demand for Sedans, hence the discontinuation of the model.

I don't like paying interest, so I'd avoid most leases, but then I'd also avoid most financing. I'd look at what you can get for $22k and see if there's anything you'd rather have than the Legacy. Leasing may give you "peace of mind" but did your Legacy actually need anything but oil changes and tire rotations? Most cars don't. Brake pads will be needed. Tires are an expense and on our New England roads, suspension components around 80-100k. But cars go 100k easily with minimal repairs now.
 
I've leased cars for years (co stipend)...it's nice to have new and under warranty. But if you don't drive a ton, as Husky said, there isn't a ton of repairs.

You might be shocked at the lease payment numbers for a new car, because of the interest rates. I bought out my last lease because the payment for the same vehicle would have gone up by some crazy number, because of the change in interest rates from when I leased it to when the lease was up. A lease at 1% v 6-7% is a very diff number. Plus, you've already incurred the depreciation

Don't worry about parts. I have an 2007 Saab which was much lower production and not made since 2011...and I can order many parts online. By the time it might become an issue for you, you will be onto another vehicle.
 
Since we have some finance types/smart analytical folks here, I thought I’d post this scenario to get thoughts from anyone inclined to reply:

My lease on a ‘22 Subaru Legacy sedan is up next month. residual value $22K (actually slightly below market value) and I’m deciding whether to buy it or lease another car. I only drive < 10-12K/yr so within most lease parameters but I can’t help but think of the inevitable maintenance/repair costs that I would pay with a purchase as compared to another leased car. also throw in the mix that Subaru has discontinued the Legacy sedan after ‘25 model year and I worry about parts availability, maybe not initially but in the coming years. is this a legitimate concern?

I appreciate anyone who wants to give their opinion. thanks in advance.

The car is 3 years old. You'll have no problem finding parts for another 10+ years. And even then it's just about searching a little. There's always parts around. I just bought a new starter for a 17-year-old car. Took me 2 minutes to find once I had the part number.
 
I'll second the comment of not worrying about parts due to the model being discontinued. Most of those parts are common with other Subaru models. Also, Subarus are plenty reliable with the boxer engines and transmissions.
My wife's late friend used to tell me about a common, but serious, problem with Subaru at about 60k miles. Something with piston rings(?)
Some of my friends owned Subbies in 1971-72 until they had more money. It was a 4 speed on the column if memory serves.
 
My wife's late friend used to tell me about a common, but serious, problem with Subaru at about 60k miles. Something with piston rings(?)
Some of my friends owned Subbies in 1971-72 until they had more money. It was a 4 speed on the column if memory serves.

You might be thinking about the notorious head gasket issues with Subarus.
 
My wife's late friend used to tell me about a common, but serious, problem with Subaru at about 60k miles. Something with piston rings(?)
Some of my friends owned Subbies in 1971-72 until they had more money. It was a 4 speed on the column if memory serves.
Probably thinking of the PCV valve. $20 part - can be a DIY if you’re so inclined.
 
Or you're vain and need a new car every 2-3 years and don't give a damn about throwing $$ away.
Even if this is the preferred route it makes sense to work out total cost of owning (usually with very favorable interest rates from the dealership) vs leasing, understanding that the upfront and monthly costs would be higher with owning, but at time of trade-in (vs lease end) you have a substantially higher value of giving up the vehicle you own than the one you leased.

The easiest answer is the best path economically to own a reasonably new, reasonably quality car is to be the owner after the initial lease ended, then keep that car for eight to ten years. There are other factors (including ego, financial situation) that may take you elsewhere but over an adult lifetime the difference between always (by owning or leasing) have a car in years 1-4 of the vehicle's life compared to keeping a car for eight to ten years (until maintenance is not economically feasible) can be upwards of a couple hundred thousand dollars.
 
Even if this is the preferred route it makes sense to work out total cost of owning (usually with very favorable interest rates from the dealership) vs leasing, understanding that the upfront and monthly costs would be higher with owning, but at time of trade-in (vs lease end) you have a substantially higher value of giving up the vehicle you own than the one you leased.

The easiest answer is the best path economically to own a reasonably new, reasonably quality car is to be the owner after the initial lease ended, then keep that car for eight to ten years. There are other factors (including ego, financial situation) that may take you elsewhere but over an adult lifetime the difference between always (by owning or leasing) have a car in years 1-4 of the vehicle's life compared to keeping a car for eight to ten years (until maintenance is not economically feasible) can be upwards of a couple hundred thousand dollars.
Very sound advice here. leasing first allows you to see if you like the vehicle and be sure it doesn't have any issues. There are cars I thought I would buy after lease, but didn't want them after driving for 3 years. If you like the car, haven't had any issues and have maintained the vehicle, it's a good buy after lease candidate.
 
there was a period of time when Subaru had major issues with head gaskets blowing. Ask me how I know.
That was my initial thought too - but that was around 100-125K when the warranty expired.

I think that’s no longer an issue. How expensive is a decent gasket?
 
From a tax standpoint it makes no difference if this is your personal vehicle.
From a banking standpoint, analytics suggest most people go for a new car 3 years after the prior loan ends, but for leases it varies.
From a Subaru owner standpoint, they are great on parts, easy to repair, but their 10/100k Gold is like a crap shoot on buying - it varies from dealer to dealer so you might want to call around and get pricing since it warranties an awful lot.
 
That was my initial thought too - but that was around 100-125K when the warranty expired.

I think that’s no longer an issue. How expensive is a decent gasket?

Just the part was something like 800$ when I helped my buddy with his last summer. With labor it has gotta be 2,000+
 
I had a Mercury Sable that kept blowing head gaskets. Made me drop buying domestic for good. I've had my Camry for 11 years and after my last oil change, the tech pronounced my car to be in "perfect running condition". Probably the best thing I ever bought.
 
Another option is for you to buy or lease a car that's coming off its first lease. That is often the sweet spot because initial depreciation has already been paid for.

If you decide to keep your car, I might play coy about it and see if you can sweeten the deal a little bit. Given the fact that it has been discontinued, they're probably won't be a big demand for it so the dealership may be willing to give you slightly improved terms if you keep it. You can try asking for a reduced purchase price, or perhaps an extended warranty or even something as simple as free oil changes. If they say no, you still can execute on your existing purchase option. Just a thought.
 
Not totally relevant here, but we just bought a new car. Manufacturer has a 0% financing option available which we grabbed of course. At the dealership we meet with &I guy to get the paperwork done and he asks - "so do you want to put any additional down on the purchase (reduce the loan amount)?" Huhh???? No, that's fine thanks, I'll take free use of the funds.
 
Since we have some finance types/smart analytical folks here, I thought I’d post this scenario to get thoughts from anyone inclined to reply:

My lease on a ‘22 Subaru Legacy sedan is up next month. residual value $22K (actually slightly below market value) and I’m deciding whether to buy it or lease another car. I only drive < 10-12K/yr so within most lease parameters but I can’t help but think of the inevitable maintenance/repair costs that I would pay with a purchase as compared to another leased car. also throw in the mix that Subaru has discontinued the Legacy sedan after ‘25 model year and I worry about parts availability, maybe not initially but in the coming years. is this a legitimate concern?

I appreciate anyone who wants to give their opinion. thanks in advance.
You fit criteria but if it’s me, I’m for buying car for 22K. The average new car is 50K.

Leasing you only pay for the portion of the car you use it it ends and then you start over again.

And remember you are driving the most expensive part of the car’s life - that depreciation of the car happens most during the time you lease it and again, you are paying for all of it.

I would also go look online for cars that are 22K used - these aren’t many - but make sure that you want to used Subaru you are essentially buying off lease than another used car in this price range.

If you fund something you like better just hand keys back to the company you leased car from and buy the other used car.
 
Not totally relevant here, but we just bought a new car. Manufacturer has a 0% financing option available which we grabbed of course. At the dealership we meet with &I guy to get the paperwork done and he asks - "so do you want to put any additional down on the purchase (reduce the loan amount)?" Huhh???? No, that's fine thanks, I'll take free use of the funds.
Yes, that’s logical. The only reason I would say no problem w/ offer is people tolerance for longer car loans with uncertain financial future. I had zero % I paid off just to be done with it and not have that hanging over my head. I know financially a bad move but there is peace of mind with low monthly commitments.
 
Not totally relevant here, but we just bought a new car. Manufacturer has a 0% financing option available which we grabbed of course. At the dealership we meet with &I guy to get the paperwork done and he asks - "so do you want to put any additional down on the purchase (reduce the loan amount)?" Huhh???? No, that's fine thanks, I'll take free use of the funds.
was it Tesla in sep? what other car co is giving out 0% now?
 
Not totally relevant here, but we just bought a new car. Manufacturer has a 0% financing option available which we grabbed of course. At the dealership we meet with &I guy to get the paperwork done and he asks - "so do you want to put any additional down on the purchase (reduce the loan amount)?"
When I bought my last car, the guy asked if I wanted $1000 cash back or 0% financing. Then he says, "How about both? We'll make the cash back the down payment." I'm like, okay. I'm still trying to figure out the catch.
 

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