Buy out my lease?

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Unearthed

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I'm not very good with my finances (Cmon, I did a lease!) and I was looking for a little advice. I have a 2008 Subaru Impreza which is ending its lease in May. I currently have 40k on the car and the lease allows 45k. I called today and if I bought the car right now it would be for $13,700 (Car, tax, and remaining payments). 4 year loan at 4.99% they offered would be $315 a month. My lease payment is $249. I do not know if I should buy this car...I have maintained very well and it's never had any problems. If I buy new we have very little liquid cash (an 18 month old will do that) and can afford about $325 a month. My credit score is about a 750, so I can get a good loan.

Any thoughts or advice for me?
 
I don't know what kind of savings you have, but you might be smarter to just turn the car in and buy something.

Remember that a new car, even if inexpensive, will have a full warranty and cost you next to nothing other than payments, insurance, and gas.
 
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Yeah...agree with dparm. If you have the need for a second vehicle, with the way car prices are, you can probably find a newer (maybe left-over 2010) car that you can buy for payments less than $315/month.

Can we have some more info - what are your needs for a car? Do you need just a basic econobox to get around, or do you need something larger, to get the family around in?
 
You most often always lose out when buying at the end of a lease. After paying the lease 2/3 years and then them refinancing the remainder into a loan you will be paying a few grand more than the car would have cost initially(MSRP) and then after the loan is done you would have paid even more money.

Unless you are able to talk them down, you may want to pass. Most often leasing companies/dealers want to turn the lease around to a profit very quickly instead of it sitting on their so you "could" technically benefit from this. Call the leasing company directly and "offer" a different buyout price and see if they bite.
 
On the other hand, a 2 year old Subaru is a pretty good bet as a used car. If it were me, I'd probably buy it out if the RV is less than the going rate for that car on the used car market. The ownership proposition is a good deal if the car is reliable because there is an end in sight to the payments. I think Subarus are pretty reliable, and if the car suits your needs (current and future) and the price is right, I'd buy it.

That's just me though, I'm 41 years old and have never purchased (for me) a new car. I always buy them 1.5 to 2 years old. With research, diligence and a reliable car, I've always come out ahead.

On the other hand, I've bought 2 new Honda's for my wife (a 2003 Acura TL and an 09 Odyssey) because the spread between a new car and a 1.5 year old Honda around here was almost nothing. I got no upside for buying used.

Just remember, I have experienced with a growing family, the female perception of the family's automotive "needs" changes. I had to trade off a perfectly good family sedan for a mini-van when we had our first child. You had better build some long-term consensus with your wife on this one as an impreza is a fairly small vehicle, and we all know how much junk accompanies even 1 child.
 
I swear this is the best forum for advice on any subject, oil or otherwise!

The Subaru has been my wife's car for most of the time we've had it. She puts about 10-12k a year on a car. I've driven it for the last 6 months just to rack up miles to get our moneys worth. We have a '10 Accord we take whenever the whole family goes out. Other than that she doesn't care what she drives...she used to have a 3cyl Geo Metro (haha). We got the Subaru because of the AWD, but I honestly think it's a little overrated. If I turn it in I was thinking about buying a Ford Fiesta...seems like a great little car for not a lot of money.
 
Originally Posted By: Anies
Unless you are able to talk them down, you may want to pass. Most often leasing companies/dealers want to turn the lease around to a profit very quickly instead of it sitting on their so you "could" technically benefit from this. Call the leasing company directly and "offer" a different buyout price and see if they bite.


X2. Depending on Subaru's assessment of the market value of your car, they may accept an offer that is lower than your "balloon" payment but still comparable to the profit they'd make by taking it back, certifying it, and reselling it. A dealer can negotiate this for you, especially if they're going to connect you to the lender (%$).

Lease buyout isn't always a bad deal. I negotiated my lease such that the cash buyout was $11K for a car with a solid retail value of $15K. All told, lease payments and buyout combined were just about equal to the amount I would have paid if I'd purchased and financed at 6%.

Particulars of your lease aside, the easy acid test is to ask whether or not you'd pay $13K for your car with your maintenance history from a private party seller or a dealership.
 
If the market value of the car is higher than RV on the lease sell it privately and pay off the lease. You'll come out with some extra cash in the end.
 
You're really willing to make vehicle payments for 7 years on a car that was probably less than $20,000 new?

Congratulations on helping your banker put his children through a good quality college. I assume you're also making payments on that new Accord to help your bankers' portfolio?

If I were you I'd focus more on making sure that 18 month old had a college fund. Let the Subaru go back, and then pick up an inexpensive used car that, if you must make payments, you can pay off in less than a year. Otherwise you'll be in a continuous cycle of being cash poor. By your own account you have very little liquid cash, and going into debt further is simply a bad idea.

And in the future remember that leasing is, almost always, a stupid idea.
 
Originally Posted By: Unearthed
I'm not very good with my finances (Cmon, I did a lease!) and I was looking for a little advice. I have a 2008 Subaru Impreza which is ending its lease in May. I currently have 40k on the car and the lease allows 45k. I called today and if I bought the car right now it would be for $13,700 (Car, tax, and remaining payments). 4 year loan at 4.99% they offered would be $315 a month. My lease payment is $249. I do not know if I should buy this car...I have maintained very well and it's never had any problems. If I buy new we have very little liquid cash (an 18 month old will do that) and can afford about $325 a month. My credit score is about a 750, so I can get a good loan.

Any thoughts or advice for me?


Like others said, look at the value of your car on the used car marked, if it is close to your buyout, then buy the car out (provided you really want to keep it), if not return it. This is one side of the story.

The other, FORGET THE MONTHLY PAYMENTS, if you cannot afford a $14k loan or the loan will put too much financial strain on you, then whether you buy this car out or buy something else for the same price makes no difference. Buy something much cheaper, say in $5-6k range. There are tons of econoboxes in that price range that are in good shape and will serve you very well.
 
My mother just went through the same thing on her accord lease. The buy out was lower than what the same car was selling for used with double the mileage so she bought it out. Used car prices are really high partly due to all the clunkers that got destroyed. In fact, i think she could probably flip it and make a few thousand.

One thing to keep in mind when you return a lease, they will probably make you put a new set of tires on it along with brake pads and they usually have a third pary come to inspect it for damages. They are not as forgiving as they used to be for dings and what not not too mention they usually hit you with some sort of return fee.

In my mothers case it made sense to buy it out also she loves the car and would have leased or bought the same car.
 
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Originally Posted By: Pop_Rivit
You're really willing to make vehicle payments for 7 years on a car that was probably less than $20,000 new?

Congratulations on helping your banker put his children through a good quality college. I assume you're also making payments on that new Accord to help your bankers' portfolio?

If I were you I'd focus more on making sure that 18 month old had a college fund. Let the Subaru go back, and then pick up an inexpensive used car that, if you must make payments, you can pay off in less than a year. Otherwise you'll be in a continuous cycle of being cash poor. By your own account you have very little liquid cash, and going into debt further is simply a bad idea.

And in the future remember that leasing is, almost always, a stupid idea.


Ouch, patronize much? Fine line between advice and insult, look behind you, I think you just passed it.
shocked.gif
 
Here are some of the downside considerations. Here in Ohio a lease company will only title the car directly to the leasee at which time you must pay the state tax,$13,700 X 6% = $822. Then consider it will probably need tires soon ---another $500 give or take. Assuming that you can turn it around for a fast sale, you are still out the $822 you had to pay in state sales tax. ( Ohio will not title a car to a third party after a lease is terminated.) Of course you may live in a state with some different tax rules. Do the research before it bites you. Also -- does the lease have an end of lease return clause with a return fee? FWIW--Oldtommy
 
Originally Posted By: 2oldtommy
Here are some of the downside considerations. Here in Ohio a lease company will only title the car directly to the leasee at which time you must pay the state tax,$13,700 X 6% = $822. Then consider it will probably need tires soon ---another $500 give or take. Assuming that you can turn it around for a fast sale, you are still out the $822 you had to pay in state sales tax. ( Ohio will not title a car to a third party after a lease is terminated.) Of course you may live in a state with some different tax rules. Do the research before it bites you. Also -- does the lease have an end of lease return clause with a return fee? FWIW--Oldtommy


If I buy the car the actual car price will be $11,900+tax= $12,614. Then on top of that there is a $150 lease purchase fee. In all honesty now that I think about it the car will cost $12,750 because the rest of the money was the payments left until the end of the lease. I obviously won't finance those so it's actually a bit of a better deal then I thought.
 
Originally Posted By: 2oldtommy
Here are some of the downside considerations. Here in Ohio a lease company will only title the car directly to the leasee at which time you must pay the state tax,$13,700 X 6% = $822. Then consider it will probably need tires soon ---another $500 give or take. Assuming that you can turn it around for a fast sale, you are still out the $822 you had to pay in state sales tax. ( Ohio will not title a car to a third party after a lease is terminated.) Of course you may live in a state with some different tax rules. Do the research before it bites you. Also -- does the lease have an end of lease return clause with a return fee? FWIW--Oldtommy



That is exactly why I said a new car or certified used one might be smarter. He will have zero expenses, save gas and oil changes (and some companies even include those).

I suggest you sit down for an hour with your calculator and figure the two scenarios out.
 
So the subaru hasn't been an issue but you're thinking of getting a different gently used car?

Grishom's Law of used cars for sale says everything will be clunkers, as the good cars are kept by their current owners.

Unless you're doing something radical like getting a $2000 car, keep the subie forever, and cheap out on the next car.
 
If you like the car, have maintained it well and the buyout is lower than the car's value, it's a no-brainer. Buy it!!

I had a similar situation last August - my '07 Expedition's lease was up, the buyout was around $18K, and the previous week's auction price (as low as you'll find) on similar vehicles was around $22,500. So, I bought it.

Interesting note about sales taxes here in PA - all the paperwork goes through the Dept of Revenue, and, if they think you paid too little for a vehicle, they send you a bill for the taxes on the difference between what you paid and what the Book value is. Unless you can provide a copy of the Bill of Sale to prove the price, you have to pay the additional tax. Happened to me twice in the past 2 years; fortunately I had copies of the paperwork.
thumbsup2.gif
 
You have to forget what you've already paid if you're going to get out of the lease anyway. If it's a good deal, buy it.

But don't ever lease again!
 
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