Car lease ending soon, I have questions

Baba

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Okay, really one main question: Should I lease another (cheaper) car, after this one? Please read:

I know the knee-jerk answer right now is to buy out your leased car, in this climate, because you'll have equity in it, and dealers still aren't discounting new cars, so you'll get hosed on a new purchase/lease, and buying it is what I'm planning to do, but I thought of a new wrinkle to this whole thing:

Leasing a less expensive car when my lease is up.

So, I drive a 2020 Volvo XC60. when my lease is up, the buyout amount will be $30,250 + interest rate/fees/extended warranty, etc. At 60, or even, gulp, 72 months, (which I DON'T want to do), that's going to be well over a $500/$550 payment, maybe even $600+ (I got a great deal before the pandemic and my payment is well under $500.00)

I don't want to do that, if I can help it. I also don't need this car. I don't need a crossover, and I don't need this "level" of vehicle. A well-equipped Honda/Toyota/Hyundai/Kia would be just fine.

So, I was thinking, would I make out a little bit better if I were to buy my lease out, and trade it in on a new lease, on say, a Honda Accord Sport or a Kia K5 GT, at $32k +/-? The trade in value on mine will be around $37k at the end of the lease, so maybe I could use the equity as a down payment on the lease of a cheaper vehicle, and bring those payments down.

What say you?
 
Have you checked your buyout price against the current fair market used price?

I would try to disintermediate myself from the dealer personally. On a used car deal like this, they are double dipping.
 
I'm personally completely against leases. They were originally invented when someone realized that with the typical 5-year financing, people tended to buy 3 new cars every 15 years. But with a lease, the dealers could get those buyers to theoretically go through 5 cars in the same time period.

I did a lease back when I was younger, and really wanted the car, then I bought it out. All of which were financially not the best way to use my money.

Now, I always buy, not lease, slightly used vehicles. Let the other guy take that 1st year depreciation hit.
 
^^^ I always buy used cars 2 to 3 years old that are depreciated nearly 50%. I picked up a 911 tt x50 with 13k miles on it like that.
 
^^^ I always buy used cars 2 to 3 years old that are depreciated nearly 50%. I picked up a 911 tt x50 with 13k miles on it like that.
I got the truck I have now for 10K less than what it would've cost me new (NOT the sticker- NEVER pay sticker unless it's a type of vehicle in such high demand that the dealer simply will NOT offer any discounts, and then, only if your net worth is at least $1M. Yes. $1M), and it only had 4900 miles on it, and was 2.5 years old. Still had some of the original warranty.

When you get past the desire to use a vehicle as some sort of status symbol, doing what good financial gurus claim, you should never buy a new vehicle. You're just pissing away money due to the initial depreciation.
 
^^^ Or go work at a stealership for a few months… Lol.

At one point in my life I had a dip in jobs, knew some car guys so got hired on as an Internet consultant, but they quickly tried to turn me into a salesman, so I bounced.

I know what they do behind closed doors…
 
^^^ Or go work at a stealership for a few months… Lol.
That reminds me...
I've gotten to know a few mechanics at the local Ford dealer, so I tried something I saw someone do on a video, in which they went into a dealer shop and did a quick survey on how many techs would buy the V8, or one of the Eco-Boosts, or the other engine (can't remember which it was at the time- there were a total of 4) in a new F-150. And same as in the video, the vast majority (like 80%) of them chose the V8, simply because of reliability. They just didn't see them come in to the shop nearly as much as the others.

And even though it's less economical re fuel mileage, factors like that could mean the more reliable engine is actually the better value.

But the best thing to do is run the numbers yourself. And to do that, you have to know how you will drive the vehicle, and for how long you will keep it.

My late brother was really good at this. He knew he would keep his F-150 for 10 years, he would buy a new one that was leftover, at the end of the year so he'd get a good discount, he knew how many miles he'd put on it, and he stuck to his plan. He didn't care what color it was, or how it was equipped, (A/C & power windows, and NOT a bunch of "bling" crap) but only that it had the Eco Boost. I didn't agree with him on everything (he also spent a grand on the Extended Service Plan), but I really couldn't argue with his results, because not only was his overall cost-of-ownership/mile driven pretty damn low, he had started doing this while in his 20's! What kid does that sort of thing? It's too bad most of us don't realize these types of financial choices make really good sense until we're much older. (Things that should be taught in schools.)
 
Go with your gut Baba. Personally, I'd walk away from this lease and get into a new lease with the car that fits your needs rather than purchase / trade in. That's the benefit of the lease is you aren't stuck with the car once its paid off, and you don't even have to wait THAT long!

I have leased the exact same make/model of car for the last decade - Subaru Crosstrek. The technology on my latest is light years ahead of the first one I had - it can literally drive itself. In each instance I've been 25k over the mileage and they look the other way because I'm a returning customer taking another car off their lot. I like driving new cars. In my mind, you are always going to pay for 1. a roof over your head, 2. education (not just student loans), and 3. transportation; its just a matter of how much you wanna spend vs save for each.
 
A bit long, but I learned a few things here that may help. So, sorry, no TL;DR:

My best vehicle-purchase decision was when I needed a work truck for my siding crew. I went to the Ford dealer and told them I wanted a base F-150 (base in dealer-speak means essentially no options) with an 8' bed, and I wanted to spend no more than $10K (this was late 90's.) I also told the sales guy that I wasn't going to do any of this, "Lemme go see what my manager says" back-and forth bullshit. If he couldn't do the deal, just tell me, and we'll shake hands and I'll be on my way.

Well he comes back to me and says he's got the perfect truck, it's got like 29K miles, it's a 94, grey, 8' bed, with only A/C (even had roll-down windows, lol!) and it was 11 grand. I reached out my hand to say goodbye, and he was like, "What? You leaving?!" I referred him to my earlier comment.

And of course he pleads with me, asking me to give him one more shot, and go get his sales manager. So I agreed, knowing the only thing that would happen is that the next hour of my life would be worth at least $500 to me. So what have I got to loose?

Long story short, the sales guy gets pissed, and walked away (and I even knew him personally!) because I wouldn't even agree to $10K, because the tax would put me @ $10,500, and I said TEN was what I was willing to SPEND, and he pulled back and asked his manager 2 questions: "What do we have in this truck?" (meaning- what did they pay for it at auction, or allow in trade), and "Is this a deal we would make to 'move metal' at the end of the month?"

That last part is key. See, I know this dealership is mostly about how many vehicles they sell annually. They have plenty of repeat buyers who come in religiously every 2 years to trade in their 'only-driven-on-Sundays' low-mileage cars for a new one, they don't haggle, and they get all their service done at the dealer, so they make their real money on people like that. NOT people like me, who run a business, and watch things pretty closely, and do my own maintenance. They do know that I buy from them every so many years, but I want a deal, and that's the only time they're gonna see me, unless it's a warranty issue. But they have a use for customers like me also. A small dealership, or even a large dealership in a large market (like say Koons Ford in Annapolis, or Ted Britt in Northern VA), not so much.

So now the main manager comes up to me with his hand outstretched, introduces himself, and tells me "Ok, we can do that."

I'm all for every business making money, or something of value, on every transaction, so I wasn't trying to get something for nothing. Honestly, I had no idea if I could get a low-mile, late-model F-150 for 10 grand. BUT, I made that clear when I walked in. They could've told me to go pound sand, which in that case I would've looked for a used truck in the private market. Plus, I didn't absolutely need that truck. But it would've helped my business since the guy I planned to put in it had to share a car with his wife, so sometimes he had trouble getting to work. (However I didn't like it when I saw the truck in the grocery store parking lot one Saturday night, but that's another story, and one in which I didn't set out my intentions for the use of the truck to him beforehand.)

It really helps to know a little about how things work on the other side of the business, and I learned a few more things that night. Oh, and only after we had agreed, did I go get my wife from outside in my truck. Nothing negative about having my wife with me. I just didn't want them to know I had actually brought another person with me to drive the vehicle home. (Which may not have really mattered, but still.)
 
Okay, some of you guys are just typing out your own anecdotal, pre-covid opinions, and not giving me any answers about MY situation :LOL:

It's 2022, I wouldn't buy a used car right now, if you put a gun to my head. Have you seen what the prices are? New cars, most of them, are going for MSRP with many brands not offering any discounts, some are selling for over MSRP. Buying ANY car right now, new or used, sucks. Leasing isn't much better, but out of those three options, I'm leasing, not buying.

I'm looking at it from a monthly payment position. I work from home, and I actually have equity built up on mine, due to my miles, and what the used car market is, and I want nothing to do with maintenance, (I've been driving used cars for 30 years before this one), so, leasing again is no problem for me.

Should I buy mine, and deal with future maintenance, at $550-$600/month, or should I buy mine, get the $5k worth of equity out of mine, and trade it in, and lease a new, cheaper car, at a sub-$400 payment, and not have to worry about maintenance? That is the question.
 
“If you’re not willing to walk away, you’re not negotiating.”

asking eric cartman GIF by South Park
 
Go with your gut Baba. Personally, I'd walk away from this lease and get into a new lease with the car that fits your needs rather than purchase / trade in. That's the benefit of the lease is you aren't stuck with the car once its paid off, and you don't even have to wait THAT long!

The problem with this is, I have equity in my car, so if I just walk away, I'm leaving money on the table, that could really help on a new lease. All of the websites say, if you have equity in the car, DO NOT JUST GIVE IT BACK.
 
if you have equity then buy it and either drive it or sell it. i would not do another lease.

im dumb but i think leasing is always a terrible idea. its the most profitable method for the car companies and dealerships which is why they try to steer everyone to it. we have been convinced as a society that you will always have a car payment and i think that is just wrong and stupid. i am not rich by any means but we have 2 paid off cars that will last for quite a long time. i dont tie my self worth to what i drive. even vehicles that are 8-10 years old can be very reliable these days.
 
What is your true budget for a monthly payment, and for what term?
How many miles on the Volvo now, and how many miles would you continue to put on it, going forward, annually?
And if you bought it out, what exactly would the cost be, including the other things you mentioned, and would that ESP cover any expected repairs/maintenance for your predicted financing term?

I'd start with filling in those blanks.
 
if you have equity then buy it and either drive it or sell it. i would not do another lease.

im dumb but i think leasing is always a terrible idea. its the most profitable method for the car companies and dealerships which is why they try to steer everyone to it. we have been convinced as a society that you will always have a car payment and i think that is just wrong and stupid. i am not rich by any means but we have 2 paid off cars that will last for quite a long time. i dont tie my self worth to what i drive. even vehicles that are 8-10 years old can be very reliable these days.

Oh I hear you, very wise man. I didn't have a car payment for like 20 years, because I bought cheaper used cars, BUT, that was 20 years ago, and I don't have the kind of liquid cash to buy another car that I'd want to drive for 8-10 years now. Even before covid, used cars values went up, and you can't buy a solid Civic with 80k miles on it for $5k like you could decades ago. That kind of car will cost you $15k or more, and it will probably have 150k on the clock.

I guess I worry about the longterm maintenance costs on this Volvo, there is A LOT of tech in this car that could go wrong. The plan was to lease another car after this one, depending on discounts/loyalty programs and such, but covid changed ALL of that. No inventory, no discounts, prices went up sharply, etc.

I guess I'd like to knock my payment down or keep my monthly payment between the $400-$500 mark, and not drive a P.O.S. I know that will take me out of the luxury game, and like I said in my OP, I'm fine with that. I don't NEED a Volvo/Lexus/BMW, etc. Having said that, with me driving as much as I do, and at night, I do like all the safety features the newer cars have.

What is your true budget for a monthly payment, and for what term?
How many miles on the Volvo now, and how many miles would you continue to put on it, going forward, annually?
And if you bought it out, what exactly would the cost be, including the other things you mentioned, and would that ESP cover any expected repairs/maintenance for your predicted financing term?

I'd start with filling in those blanks.

1. I could stomach $500/month, but I'd like to make it lower
2. I have about 29k miles on it now, prolly put about 12k on it annually
3. My buyout is $30,250, but that does not include interest, (I think there is a $350.00 buyout fee), so I don't know exactly what it would be, but we could figure about 4% or 5% interest? That also does not include any kind of extended warranty

So yeah, I figure it would take a good $550+, over 72 months, ($600+ for 60 months), to drive this car, and I'm just not sure that is smart, longterm, when I could go back to the mainstream market level and lease something at $30-35k and pay less than $400/month, and not have to worry about maintenance.
 
1. I could stomach $500/month, but I'd like to make it lower
2. I have about 29k miles on it now, prolly put about 12k on it annually
3. My buyout is $30,250, but that does not include interest, (I think there is a $350.00 buyout fee), so I don't know exactly what it would be, but we could figure about 4% or 5% interest? That also does not include any kind of extended warranty

So yeah, I figure it would take a good $550+, over 72 months, ($600+ for 60 months), to drive this car, and I'm just not sure that is smart, longterm, when I could go back to the mainstream market level and lease something at $30-35k and pay less than $400/month, and not have to worry about maintenance.
Ok, that's helpful.

So in 5 years you'd only have 100K miles on a car that's 7 years old. And you'd now own it outright. That would be, imho, a much better place to be, than simply flipping cars every few years, while watching those payments continue to rise. And still not owning the car.

From what I remember going back a ways, before Ford bought them, was Volvo tended to be pretty damn reliable. But by my math, I'd say you're looking at $33-$34k to buy out that car, including an ESP that would cover you till 100K miles (I estimated between 1 & 2 thou)

If you could glean some more info about the long-term reliability of your car, and if that info makes you comfortable that you won't expect any serious repairs long-term (over $1,000, on up until you have 150,000 miles on it), I would most definitely keep the car, pay it off, then continue driving it for at least another 5 years. But still make that same payment into savings (or something at least close to it) for that time period, that you can then use toward your next purchase, the goal being to "buy" yourself a future period of time w/o a payment, or at least allow that money to be more useful to you, rather than paying the interest.
 
And if at all possible, I also agree with getting away from leases, and try to knock that finance term down to 60 months. Figure out what the difference would be between 72 and 60, and then look for ways in which you could find that money from other things you already spend it on. Most of us have something that seems like a small, innocuous purchase (starbucks anyone?), but added up over the course of a year, ends up being over a thousand dollars.
 
Ok, that's helpful.

So in 5 years you'd only have 100K miles on a car that's 7 years old. And you'd now own it outright. That would be, imho, a much better place to be, than simply flipping cars every few years, while watching those payments continue to rise. And still not owning the car.

From what I remember going back a ways, before Ford bought them, was Volvo tended to be pretty damn reliable. But by my math, I'd say you're looking at $33-$34k to buy out that car, including an ESP that would cover you till 100K miles (I estimated between 1 & 2 thou)

If you could glean some more info about the long-term reliability of your car, and if that info makes you comfortable that you won't expect any serious repairs long-term (over $1,000, on up until you have 150,000 miles on it), I would most definitely keep the car, pay it off, then continue driving it for at least another 5 years. But still make that same payment into savings (or something at least close to it) for that time period, that you can then use toward your next purchase, the goal being to "buy" yourself a future period of time w/o a payment, or at least allow that money to be more useful to you, rather than paying the interest.

That's a big help, thanks. I may have needed it to be broken down that way, to help with the decision.

And if at all possible, I also agree with getting away from leases, and try to knock that finance term down to 60 months. Figure out what the difference would be between 72 and 60, and then look for ways in which you could find that money from other things you already spend it on. Most of us have something that seems like a small, innocuous purchase (starbucks anyone?), but added up over the course of a year, ends up being over a thousand dollars.

Lol, yeah, like my s/o's drinking budget :LOL:
 
That's a big help, thanks. I may have needed it to be broken down that way, to help with the decision.
Well, tbh, I wouldn't have posted that without you pointing out that I wasn't helping by only talking about my own experiences. So glad I was able to contribute something to actually help!
Lol, yeah, like my s/o's drinking budget :LOL:
There ya go! haha
 
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