Leasing - A Terrible Idea?

"Snuze: Needs another Swede" (markg) 11/09/2020 at 09:15 • Filed to: None

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Good morning Oppo! It’s t ime for another entry in the ongoing saga of Snuze not knowing what car to buy to replace his Cruze. I went out camping with some good friends this weekend, and at some point talk naturally turned to cars . One friend daily drives a Mustang GT, so he fully supported my pony car choice , another is the guy who owns the rally cars (and dailies an old Volvo 940) , and he says get the Volvo, and the third friend just bought a new F-150 , and he’s team pickup.

As an aside, the guys with trucks (rally car guy also has a Raptor) were certainly set for camping , which was cool. I’m trying not to let that affect my decision too much, I only go camping maybe once or twice a year and have managed thus far for years without a truck. But it would be nice.

One thing I need to do, now that I have a working list of interesting cars, is go drive a few and see what I like and don’t like. That might help narrow down the choice for me. But I also like doing my research and being prepared with options.

Anyways, last night I was doing a little (semi)necessary car shopping, and ended up on some manufacturers websites to look up specs, and discovered there are some attractive lease deals out there, at least for a Volvo V60 and a Chevy Colorado. I’ve never leased a car before, never even really considered it, but given my indecisiveness I’m left wondering if I should at least entertain the idea .

My thought process is that with a lease I am only obligated to something for 3 years and if I end up really liking it, I buy it out at the end of the lease. I f I hate it I can turn it in and move on. Another thing that’s appealing is the upfront costs are lower (~ $4k+tax ) and monthly payments are reasonable (~ $400) . One potential pitfall is mileage - most lease deals are ba sed on 10k miles/yr and I drive right about 10k miles a year, so it wouldn’t be hard for me to go over that . The other issue, in my mind, is the lack of “equity” . As I understand it, during a lease you are essentially paying off the depreciating value of the car, so at the end of the lease cycle you either buy it out or turn it back in. If you go the turn in route you are left with nothing. That being said, the low upfront lease cost means I can keep a huge chunk of the down payment I’ve saved, and now that I’m more financially responsible I will continue saving money during the lease. But still, the lack of an asset at the end of the lease, and temptation to jump in and “try” (i.e. lease) something else worries me I’ll get sucked back into the lease cycle. Having a paid off car and saving money is really nice, which is what keeps me thinking of buying something used and paying it off in a year or two.

With all that said, w hat are O ppos thoughts?

( Also, I found this gorgeous V60CC in my favorite color (Pine Gray Metallic) at a local dealership. I’m trying really hard not to let this influence me, but the more I look at V60s the more I fall in love with the new body style. )

i86hotdogs > Snuze: Needs another Swede 11/09/2020 at 09:22

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The mileage for me is the benefactor. I leased my 200 simply because it was the least expensive option for a college kid. But I went about 25,000 miles over the allowance. So although I would have been ok parting ways with it, I didn’t want to shell out another $6k in mileage fees and no car. So I bought it.

The only alternative you can do is turn the lease in early if mileage is adding up quickly, some dealers offer deals where they’ll take your lease and cover the remaining lease payments and fees if you trade it in for another car. Not guaranteed, but worth shopping around

Nibby > Snuze: Needs another Swede 11/09/2020 at 09:27

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I LOVE NEW VOLVOS

uhh my parents have a ‘19 XC60 if you wanna know anything about it just ask

Neil drives a beetle and a fancy beetle > Snuze: Needs another Swede 11/09/2020 at 09:34

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I have not see other posts on your car buying thought but I think this is why buying an off lease car or CPO is so tempting. For a similar set of economics- $4000 down and $400 a month(for 48 months)  you get a car that’s paid off when your done, shouldn’t need much for maintenance, no mileage limit and the car itself will feel almost as new.

https://www.cargurus.com/Cars/inventorylisting/viewDetailsFilterViewInventoryListing.action?sourceContext=carGurusHomePage_false_0&entitySelectingHelper.selectedEntity=d2266&entitySelectingHelper.selectedEntity2=&zip=55412#listing=286171987

notsomethingstructural > Snuze: Needs another Swede 11/09/2020 at 09:37

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If you genuinely have no idea what you want, I’m not sure why you’re leasing OR buying new. Those are acquisition routes for people that know what they want. Try to find a lease buyout from someone else since that isn’t going to end up underwater and it’s easier to change your mind than either of the other two options. 

Sovande > Snuze: Needs another Swede 11/09/2020 at 09:42

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I just met a guy with a new one. It was fucking gorgeous in the birch color. Only thing I didn't like was the wheels. I have never leased but quickly decided it wasn't for me when I looked at the cost vs buying used.  But I'm on board. Get the Volvo!

Tripper > Snuze: Needs another Swede 11/09/2020 at 09:43

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I have no beef with leasing, but would not but a lot (or anything) down.

adamftw > Snuze: Needs another Swede 11/09/2020 at 09:53

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Leasing works if you understand it, and are OK with the trade offs. You’ll get boned for extra mileage and any damage/excessive wear.

Go on the lease hacker forums and read up so you can get yourself the best deal you can. You want to put down as little as possible to get the most out of it. When b uying out the end of the lease, most of the time you are buying the car based off the original sales price, not the current value. Check your paperwork and double check your math before signing. You can get a very good deals on leases if you are willing to shop around and haggle a bit.

nermal > Snuze: Needs another Swede 11/09/2020 at 09:56

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Don’t look at it as more complicated than it is, yet at the same time do the math. Look at leasing as a 3rd way of financing. Instead of paying cash, or doing a loan, a lease is a contract for the depreciation of a vehicle over a term.

On cash or financed purchases, you pay everything, and sell for market value whenever you want. On the lease you’d pay depreciation plus interest plus lease-related fees (acquisition fee, disposition fee.... leasing companies are still banks that will try to screw you with fees any time they can). The catch with the lease is that you have a set term, and at the end you either turn it back in or buy it out for the agreed price on the contract. You’ll get ding’d in more fees for mileage or any blemishes or maintenance items due, such as tires and Camry dents.

The major concern with leasing is being dumb and getting hosed on a bad one. Manufacturers and banks are shady bastards, just like dealerships. Look at the residual value, money factor (aka interest rate) and fees. To get interest rate, multiply money factor x 2400. Sometimes the banks will set the residual value very high but also the money factor. This may not be a bad thing if you plan to turn it in at the end, but it is if you end up buying it out. A pro tip that I found is to search the Edmunds forums, they have threads for popular models with all of the money factors and residuals posted so that you can see how bad the dealer is trying to hose you.

Don’t look at a lease turn in as “getting nothing” at the end. Cars depreciate and should be looked at as expenses first. A car that depreciates by $10k over the term you owned it.... ....still lost $10k in value, regardless of how you financed it. The only major difference between the 3 at that point is that on the lease you have a pre-set agreement to sell it back at the end.

Khalbali > Snuze: Needs another Swede 11/09/2020 at 10:08

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My advice is that leasing is ok, depending on the terms and your situation. I think tripper said not to put that much down, I definitely agree with that, if it gets totaled or something that money is just gone. The thing people don’t really understand is (with mazda at least, my only first hand experience) you can always trade it in or sell it privately. You don’t want to purposefully go for less miles than you know you’ll use, although usually you can choose 10, 12 or 15k/yr. At the end of the lease the residual is the payoff amount, but it’s possible you could get more for it than that trading it in or selling it yourself before the lease is up. I do remember VW/Audi at least used to tack on extra fees making it hard to trade those in at another dealership though. But if you’re a little over on mileage or wear and tear you might be a little better off trading it in than paying the fees, you might be able to break even on the payoff instead.

Future next gen S2000 owner > Snuze: Needs another Swede 11/09/2020 at 10:16

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Leasing isn’t a terrible idea. You basically never have maintenance concerns because the vehicle will be under warranty, so major repairs are covered. Oil changes are becoming free for the first 2/3 but you’d have to check with Volvo.

You might also be stuck with what is on the lot. Can you order a lease car? I have no idea.

As far as camping, don’t worry about size. The bigger the car the more you pack. I’ve gone on several camping trips with the missus and the dog cramming all our gear in our old Saab 9-3. It’s really all about managing your expectations .

Pros and cons to buying new, used, or leasing. You could try it once and see if you like it. I had an aunt that leased for years and years. She loved it.

Jb boin > Snuze: Needs another Swede 11/09/2020 at 10:22

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What the fuck w ere they thinking calling that color “pine”...

Just for that reason, FUCK THEM !

Sovande > Jb boin 11/09/2020 at 10:27

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It’s dark green like a pine tree with grey undertones . Hence “Pine Grey Metallic.”

Rusty Vandura - www.tinyurl.com/keepoppo > nermal 11/09/2020 at 10:29

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Rusty Vandura - www.tinyurl.com/keepoppo > Neil drives a beetle and a fancy beetle 11/09/2020 at 10:30

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Rusty Vandura - www.tinyurl.com/keepoppo > Khalbali 11/09/2020 at 10:30

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Rusty Vandura - www.tinyurl.com/keepoppo > notsomethingstructural 11/09/2020 at 10:30

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Rusty Vandura - www.tinyurl.com/keepoppo > adamftw 11/09/2020 at 10:31

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Rusty Vandura - www.tinyurl.com/keepoppo > Snuze: Needs another Swede 11/09/2020 at 10:33

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Tangentially related: this morning on NPR, there was a story about the currently-hot used car market and how people who signed car leases a year or two ago contracted to have the option to buy their off-lease car at a certain price and how that price is below current market price by a four-digit number in many cases.

JustAnotherG6 > Snuze: Needs another Swede 11/09/2020 at 10:40

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I look at it this way: Are you planning on having the car for X years? (where X is no less than the loan amount) If yes, buy it if you can afford it, or if you can’t, find something used you can afford.

If you are planning on having the car for less time than it would take to pay it off, seriously consider leasing or buy shitboxes you can enjoy and lose little if any value when re-selling or scrapping them.

Jb boin > Sovande 11/09/2020 at 10:43

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Maybe they have different varieties in Sweden but i would definitely not associate a pine with that very dark color.

But it doesn’t look bad :

Snuze: Needs another Swede > Neil drives a beetle and a fancy beetle 11/09/2020 at 10:57

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Well, the gist is I want a new car. I’d love to get a new sports car, like a Mustang GT350 or Camaro SS, but most of the driving I do is commuting in traffic so it seems like kind of a waste to buy a car like that. The opposite end is get a truck, which would be very useful to me for many reasons, but I also don’t much care for driving trucks. The middle of the road would be something like that V60 CC. I own 2 Volvos currently, one of which I will be selling soon, and I think the V60 CC would be a good compromise between the utility of a truck, and the fun to drive factor. I’ve seen some ~2015-16 V60CCs that I like that are in the $20k neighborhood, so that is an option. However I’m smitten with the new one, I think it looks gorgeous, and I saw the lease deal and thought it might be worth at least exploring.

Snuze: Needs another Swede > notsomethingstructural 11/09/2020 at 11:03

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Well this is where I’m sitting the fence. I wasn’t considering buying anything new, but the lease deals are attractive, and I like the idea that I could get something new and only be on the hook for 3 years, and have a way out if I decide it’s not the right vehicle for me.

If it’s not apparent, I don’t know a ton about leasing, probably just enough to be dangerous. I know even less about a lease buyout, but it’s an interesting idea. I’ll have to look into it.

I also don’t need to buy anything right this second, so I’ve got time to explore my options, both in terms of cars I might want, and how I might acquire them.  

Snuze: Needs another Swede > JustAnotherG6 11/09/2020 at 11:09

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I’m fortunate that I’m at a point where I don’t need a car. And it’s not entirely about the money. I mean it always kind of is, I don’t want to take a bath, but I’m also not hard pressed and scraping under the couch for loose change to afford something. 

I also like some different cars (truck, sports car, wagon, etc.) but I’ve got some time to think about what I want and all that. Conversely, I feel like whatever I buy isn’t going to be right for me for one reason or the other, so I kind of like the idea of a lease where I only have to live with it for a set amount of time, and if I like it great, if not I can turn it in and move on to something else. 

JustAnotherG6 > Snuze: Needs another Swede 11/09/2020 at 11:16

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That is a good place to be.

Also, re:camping. If you can’t carry it in a backpack and hike it in you don’t need it. Unless you are car camping, then the value of bringing something is directly related to how much of a pain it is to setup and how long you plan on being there. Source: I’ve been camping nearly every month for the last 4 or 5 years with my boy’s scout troop.

Snuze: Needs another Swede > Sovande 11/09/2020 at 11:21

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I’m really on the fence about it. If I go the Volvo route, I like the P3 V60s, but I love the new ones.  With the used car market being the way it is, a used 2019-2020 V60 CC isn’t really much cheaper than a new one. But I’m still not entirely sure the V60CC is the car for me, and the lease offers seem good, so it just seemed like a reasonable way to get into one and see if I like it, without too much obligation.  Conversely, in the long run I’d probably wind up paying a bit more if I wanted to keep it.  And if I go with a used V60 I’d pay half of what a new one is.  Decisions, decisions...

fintail > Snuze: Needs another Swede 11/09/2020 at 11:39

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I’ve leased several times. It all depends on priorities, how you care for a car, and how long you want to keep it. Buying late model/lease return used is probably the best deal, leasing works to be always under warranty and in something “new”.

Also, lease offers are as negotiable as MSRP - I’ve never put down the money they claim to want at signing, usually a fraction of it - taxes and fees etc.

Snuze: Needs another Swede > JustAnotherG6 11/09/2020 at 11:40

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I was a Boy Scout (Eagle Scout, actually) so I’ve done hiking, car camping, etc. I used to use my folks old truck which was nice, but they sold it. I’ve managed okay since then with a car. My friends and I got to a camp that has lakes, a range, and all sorts of other neat things, so it’s nice to have room to bring stuff to shoot at the range, fishing tackle, etc . But I’ve done it in a car for years and it’s been fine. One of the guys even camped this weekend out of his Mustang GT, so it’s doable if you pack well.

That’s one of the reasons I’m not more gung-ho about a truck. It would be nice, and in some ways make my life a lot easier - good for camping but also nice to have around the house, and I could sell my folding utility trailer and free up space in my garage. But I’ve also lived this long without a truck, so it makes me question if I really need it.  

MUSASHI66 > Snuze: Needs another Swede 11/09/2020 at 11:47

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Leasing it not a bad option if you get a good deal on the car you want, but it is never (or very rarely) the best financial decision. Leasing and buying out at the end of the lease will pretty much never be cheaper than just buying the car in the first place - especially if you have to finance the buy-out at used car finance rates.

I would not even worry about lease vs. buy at this point, as you don’t even know if you’d like the car. I thought I’d love a FIAT 124 Abarth with a 6sp manual and hated every second of driving it.

My advice - go drive the cars you like, and see if you fall in love in any, or if they’ll just be “a car”. Once you decide on one or two, then look at buy new vs. lease vs. buy used.

Snuze: Needs another Swede > nermal 11/09/2020 at 11:59

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Don’t look at a lease turn in as “getting nothing” at the end.

This is true, and I should have expanded on my thoughts a bit more. You do get something, you get the use of a car for 3 years (or whatever the term is).

The major concern with leasing is being dumb and getting hosed on a bad one.

That’s kind of where I’m at, I’m not sure if I would get hosed or not, and I’m not sure I would know that until I know the full terms of the lease.

My issue is, I’m not pressed to buy a new car, which is a nice position to be in. I can also say money isn’t the main issue - it’s always an issue, I don’t want to get hosed, but I’m also not scrimping and checking under couch cushions for change to be able afford something.

In the past I bought cheap econoboxes because it was all I could afford, but they wer e also a fine fit for my lifestyle. Now things are different, on one hand I can afford something awesome, like a sports car, but I’m also a homeowner and could benefit from something like a truck. Then there’s the option of something that would split the difference like the Volvo. But whatever I get, I have to live with.

With that in mind, the idea of a lease, and having an out after 3 years, is appealing in some ways. Take the Volvo for example, I could afford to buy it, that’s not a problem. I could put down $15k and end up with about a $500/mo payment, which is within my realm of affordability. But what if I hate it after a while and decide it’s not meeting my needs and I really should have bought a truck? Or maybe it’s not very exciting and I don’t need a truck and really wish I’d bought a sports car. I’m going to take that big depreciation hit, and while I probably wouldn’t be upside down, I’d sell it and probably net a lot less than $15k for a down payment on a truck. But with the lease deal being $4k down and $400/mo, I’d be keeping almost 75% of my cash in the bank, and my monthly payment would be less. At the end of the lease if I love the car I buy it, an if not I move on and get something different, maybe that truck or sports car.

At least that’ s how I think it’s supposed to work, and I want to make sure I’m not missing something and that I’m going to screw myself over.

Or I should just be smart and buy something used - I can get a P3 V60CC (previous generation of the same car) for around $20k.  Put half down, pay the other half off in like 3 years.  But I’m kind of smitten with the new one, which is why I’m even considering this.  

Textured Soy Protein > Snuze: Needs another Swede 11/09/2020 at 12:00

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Leasing is good if you structure the lease properly. Also, just leasing a car without incentives may not work out all that favorably. The trick is leasing a car that has good lease programs on it.

You might see advertised payments based on a certain number of miles but most of the time you can take an advertised lease and restructure it within certain parameters where you’re still getting the advertised incentive. Certain companies (Honda being one) don’t do this and only give you the special lease on specific trim levels of specific models, but most other companies use these advertised lease deal as a starting point for a little tweaking based on options on the car, mileage etc.

The way a lease works, they take the sale price of the vehicle, and project the residual value at the end of the lease as a % of that. Subtract the residual from the sale price, multiply by a money factor (sorta kinda like interest), divide by the number of payments.

So if you had a car with a sale price of $40k with a projected residual of 53%, and let’s just say the money factor was equivalent to 3% interest (the actual way money factors are expressed is weird) for 36 months.

( ( $40,000 - ($40,ooo*0.53)) * 1.05) / 36 = $548.33

Just as an example.

As long as the payments are fine it doesn’t exactly matter how you arrive at them, except a few caveats related to the residual value.

Many luxury brands use artificially high projected resale values to make their lease payments lower. This sometimes happens with mainstream brands as well.

Where this comes into play is either A) you want to get rid of the car before the end of the lease or B) if you want to buy the car at the end of the lease.

For getting rid of the car, the payoff on the lease is the residual value at the end of the lease + any remaining payments. So if the residual value is projected as artificially higher than it will end up, your payoff amount is likely to always be higher than the car is worth as a trade. So if you want to get out of it early and the best trade offer you can get is below the payoff, you have a negative equity situation where you have to go out of pocket or roll over that negative equity into the next car’s loan/lease. Neither of which is desirable.

For buying the car at the end, same issue applies. The residual value is what you would have to pay to buy the car. So if the residual is projected too high, you’re effectively paying an above-market number for buying a used (by you) car.

I’ve gotten into leases a couple times now where the falsely high residual turned out to be annoying. First with my BMW 135is back several years ago where it wasn’t a huge deal but when I thought about getting out of it a few months early as I had no intention of keeping it, I was stuck waiting until the end because the payoff was a few grand above the best trade offers.

The more recent time is with my wife’s Mazda CX-5. Based on the 135is experience I knew exactly what the pitfalls of a too-high residual value on a lease were, but we figured my wife was going to be totally fine keeping the car to the end of the lease and we didn’t want to buy it at the end so whatever. Well, that was Aug 2018 and 2 things happened: at some point my wife decided the CX-5 was actually a bit too big for her taste, and covid.

We’ve talked about trying to trade in her CX-5 on the Kia Niro we’ve decided is the best move for her next car, but even with covid over-inflating used car values, that’s not super likely to be possible.

In the past, we did a couple leases for her on cheapish mainstream cars where the residuals weren’t over-inflated, and in both of those cases (a Honda Civic and Subaru Impreza) we were able to trade those cars in a little early and extract a small amount of positive equity because their trade values were higher than their payoffs.

So, be very mindful of how much flexibility you think you need because once you put that structure in place you’re stuck with it. Focus on cars with incentives, and know exactly what you’re getting into with residuals. 

JustAnotherG6 > Snuze: Needs another Swede 11/09/2020 at 12:01

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The one thing I -really- don’t like about trucks is that it is such a pain to get things out of the bed.

Snuze: Needs another Swede > JustAnotherG6 11/09/2020 at 12:11

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Agreed, and that’s where the trailer shines. But it also takes some time to setup and breakdown, and I have to store it in my garage, so that’s kind of a downer.

Sovande > Snuze: Needs another Swede 11/09/2020 at 12:14

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I hear you. I am not willing to pay retail and when I went to talk about leasing a new one the residual was so low that I couldn’t pull the trigger. I kept thinking about how I could get a three year lease or I could buy a three year old car, finance it for four years and be at about half the lease payments and end up with a car at the end of it. So I bought used. Sounds like they have some better deals out there now though if you can get into one for $400. I was looking at $700 which made no sense.

The new wagon is better looking than the old. I haven’t driven one, but the guy I met said it wasn’t necessarily fun to drive but that it was perfectly capable and a very nice place to be. He was a young guy who’s previous car was a n Alfa sedan.

Snuze: Needs another Swede > Future next gen S2000 owner 11/09/2020 at 12:16

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Thanks for the input.

Regarding camping, I’ve done it for years out of cars, trucks, etc. I was in boy scouts and we used to hike and camp. You’re absolutely right, with more space I’d probably just pack more crap. Thats why I’m trying not to let that be a big factor in my decision.

I may try the lease, I don’t know yet. I’m in no hurry, which is bad because it gives me more time to think and analyze, which seems to decrease my certainty about what I want in a car , not increase it.

notsomethingstructural > Snuze: Needs another Swede 11/09/2020 at 12:17

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Yeah, I believe someone can assign their end of lease buyout option to you. I don’t know a ton about how it works, but people do it. Usually you slip them a few bills ($1k or less I think is the going rate) since you’re getting a car at trade- in price. Two different coworkers of mine  are actually doing this with two other coworkers right now (but I think they’re only doing a nice dinner or bottle of booze for the finders fee). Most leases are 3 years and most factory warranties are 4 these days it seems, so you got that going too. 

Snuze: Needs another Swede > Jb boin 11/09/2020 at 12:17

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Yeah, not exactly pine, but it’s still pretty!

Snuze: Needs another Swede > Textured Soy Protein 11/09/2020 at 12:29

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I remembered you had some leases and have talked about it in the past, I was hoping you’d chime in here. I really appreciate all the advice.

As I’ve told others, I’m still in my search phase, and still balancing the pros and cons of a few different, and different types, of cars. Still thinking about new vs. used. The lease deals on a couple things caught my eye and I’ve never thought about leasing before but figured it was at least worth considering.

I know people who have gotten hosed on leases, and others where that’ s the only way they will get a car. I don’t see myself as someone who wants to live in a lease cycle of getting a new car (and payments) every 3 years, but I also see the lease as an opportunity to essentially try out a car I might not otherwise get.

Thanks again. Hows the Achilles doing? Can you drive your SI yet?

Snuze: Needs another Swede > Sovande 11/09/2020 at 12:45

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I still need to get out there and actually drive some cars. My inclination towards the Volvos at this point is mainly based on the looks and my love of the brand, which in turn is mainly based on my affinity for my two old heaps. I’m not sure if that’s misplaced expectations or not. I was writing off the newer ones for a while, I’d heard bad things about the VEA engines, but you and others have said that they aren’t actually that bad, and I’ve read that Volvo has made some changes and ironed out kinks for 2020+.

The current lease deal is very attractive but I have no idea what the residual is on it yet. I’d need to go and sit in a dealer and talk with someone... which I don’t really want to do. For now I’m having fun dreaming and window shopping.

Snuze: Needs another Swede > notsomethingstructural 11/09/2020 at 12:50

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That’s really good to know. I did a little googling, and there are sites to setup lease takeovers. It’s pretty much exactly what you are talking about, but a bit more formal. I’ll do a bit more digging on that later. But thank you again for the idea. 

Snuze: Needs another Swede > Khalbali 11/09/2020 at 12:56

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Yeah, I would need to sit down and run hard numbers to inform my decision.  But I’ve gotten a lot of great advice about the process and potential pitfalls. I appreciate your input as someone who have first hand experience. 

Snuze: Needs another Swede > adamftw 11/09/2020 at 12:57

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I’ll check out lease hacker, thanks for the info!

Snuze: Needs another Swede > i86hotdogs 11/09/2020 at 12:57

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Thanks for sharing your experience, I appreciate the input.

Snuze: Needs another Swede > MUSASHI66 11/09/2020 at 13:03

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You are absolutely right in that I definitely need to go drive some cars first. That being said, I like to do my homework, on the cars as well as the financial aspects. I might be willing to pay a bit more for the flexibility of a lease, but I don’t want to take a bath on it. And that seems like its going to be entirely up to the details of the lease deal (residual value, money factor, fees, etc.). If it’s slightly more expensive in the long term, but it gets me into something I want , and lets me save a bunch of cash up front, but costs a grand or two more in the long run it may be worth it, vs dumping a huge chunk of savings into a down payment up front.

And there’s still some used cars I like, which would financially work out well for me. At the end of the day I’m in a really good position now matter how I slice it , I’m just trying to feel  things out.

Neil drives a beetle and a fancy beetle > Snuze: Needs another Swede 11/09/2020 at 13:03

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Good luck! I think some test drives are the only option to get a feel for what falls where in priority. 

Snuze: Needs another Swede > fintail 11/09/2020 at 13:04

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Interesting, though as I understand it not putting money down can increase the monthly payment, right?  I have a good chunk of cash I was going to plop down on a new or lightly used car.  The idea of a lease appealed to me in that I can keep a large portion of that cash AND have a slightly lower monthly payment if I’m buying something nearer the top end of my budget.  

Khalbali > Snuze: Needs another Swede 11/09/2020 at 13:04

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Disclaimer, I sold new mazdas for a little over a year 2014-2015, so that’s when my knowledge ends. I did have customers try to trade in leased vw/audi products and I don’t remember the exact deal but basically the payoff was only valid at their dealers, it went up anywhere else because fuckery, I remember driving a customers s4 to the dealer to turn it in with her and then gave her a ride back in her new cx5, she was great, told me to beat the hell out of it since it wasn't her car anymore.  If you have more specific questions, I’m not the only oppo that ever sold/sells cars but I’d be happy to answer my best and I’m sure others would chime in as well.

Snuze: Needs another Swede > Nibby 11/09/2020 at 13:05

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I think they are gorgeous cars. How do your parents (and you) like the XC 60? Any issues with it so far ? 

Snuze: Needs another Swede > Khalbali 11/09/2020 at 13:06

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Thanks, I really appreciate it. Right now I’m just feeling things out and exploring my options, both in terms of cars and financials. I need to go drive some stuff before I do anything.

Snuze: Needs another Swede > Neil drives a beetle and a fancy beetle 11/09/2020 at 13:07

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Yeah, absolutely.  I’m still exploring what I want, and the financials of it.  Leasing just seems like one way to do it, and I’ve never leased anything before, so I’m just trying to learn more about it.  

Sovande > Snuze: Needs another Swede 11/09/2020 at 13:11

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I think the engine problems were limited to the early runs of the Drive-e, specifically 2015-2016. After 2016 they changed the ring design and oil designation and the problem was fixed.

This is not an old Volvo. They have probably lost a bit of the charm of the older models, but I like it better than any other Volvo I have had. In fact, yesterday I was going to look at a reasonably priced, seemingly good 1998 V70 T5 Manual (I had one a few years ago and which I always swore I would buy again if one came up for sale ) and I easily talked myself out of it. Too much trouble to end up with a car that does everything my current car does, but not as well.

I’m only every dis ap pointed with my V60 when I am in normal mode and I want to drive like a dickhead. It doesn’t like that and the transmission has no idea what to do. But all that is sorted in Sport mode so it’s fine. The R-Design (which is the model I would buy if I had my choice) is more fun with the addition of the supercharger. It feels properly quick when you floor it.

I bet I window shop for a new Volvo every week. I want a V90 which  might finally satisfy my wagon needs.

Snuze: Needs another Swede > Sovande 11/09/2020 at 13:33

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Ahh, the problem was solved earlier than I thought. That’s good to know.

The two main things I like about my old Volvos are their quirkiness (weird door handles and 5 cylinder engines are things that immediately spring to mind) and their ruggedness. Though the ruggedness is paradoxical - never have I had to fuck around so much with something that’s so dependable. As we’ve said, they will run like shit forever. Getting them to not run like shit is the challenge. And I’m keeping my 240 wagon, so I have my bases covered for that challenge.

What I am really after is a daily driver to replace my Cruze, which has been efficient and reasonably comfortable, if not always reliable. In that regard the Volvo really fits the bill - super comfy, good economy compared to other options, and much more useful. From there I could take a step in a particular direction, i.e. something more sporty, or something more utilitarian.

And what enabled this is I had some very lucrative work back in August thru October and was able to save quite a bit towards a down payment.  Now that money is burning a hole in my pocket, but I’m trying really hard to pace myself. But that doesn’t stop me from window shopping almost daily. I’ve looked at everything else under the sun, BMWs, Mercedes, Infinitis, Lexus, etc. just to see whats out there.  

fintail > Snuze: Needs another Swede 11/09/2020 at 13:39

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Yes, once you agree on a price (no different from negotiating a purchase, and the money factor is also often negotiable), a down payment (“capitalized cost reduction”) will reduce the monthly. But I’d rather have the money in my account than spent on a big down, and maybe the real issue - if the car is wrecked or otherwise lost, that big down payment is gone. There’s a risk of using significant money upfront.

Leasing works for some people - it’s not always stupid as some claim, not always a great deal as some claim either. Some makers, German premium brand in particular, are known to subsidize these leases, and there can be deals especially late in a model year or on outgoing models.

A general rule of thumb I use is “1%” - that is, with minimal up front, if the montly is 1% or less than the price of the car, it’s fair.

Snuze: Needs another Swede > fintail 11/09/2020 at 13:47

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Interesting. That’s definitely something to consider. I’ve seen this mentioned a few times, now, that putting too big of a down payment is bad because if the car is lost, the money is gone. I think that brings up a question, then... how does insurance work on a lease? Is it different than on a regular car? Or are you alluding to the fact that, since a lease is essentially paying the depreciation on the car, the insurance payout is likely to be equal to the lease balance, meaning net 0 return after everything is said and done?

And the particular Volvo that caught my eye is a 2020 which is why I think the lease deal may be good, to help move it along.

fintail > Snuze: Needs another Swede 11/09/2020 at 14:02

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Insurance may vary by state. Where I am, leases include gap insurance (I am pretty sure), and you are required to have full coverage, which is a no-brainer on an expensive modern car anyway. If something happens to the car, I think you effectively walk away - but no equity either, of course.

For the cars I’ve leased, the residual is inflated - that’s how the highline brands can make low payments work. My prior car has a residual of ~40K, at lease end, they offered it to me for something like 35K, and that was still top dollar for a perfect car. The profit margins on these cars are so large, they can make this a business m odel.

This is likely a great time to shop a 2020 Volvo, I think they have plenty of leftovers, and are probably anxious to move some metal. I’d play hardball, and maybe search online forums like Volvo groups and Leasehackr for tips and comparable deals.

Textured Soy Protein > Snuze: Needs another Swede 11/09/2020 at 15:47

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Healing is coming along but not quite driving yet. In another week or so I’m going to try taking my wife’s CX-5 for a spin around the neighborhood. Starting with the auto as it’s less foot movement than stick. I’ll start driving the Si if that goes well but heel-toe downshifts may have to wait. We shall see.

Snuze: Needs another Swede > fintail 11/09/2020 at 15:54

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It sounds like I really need to A) drive the car, and B) sit down and get some hard numbers. It seems like there are a lot of ways to move money around, no different than playing the monthly payment game on a regular auto purchase.

But I do agree that this is probably a good time to get a 2020, which is what caught my eye. It doesn’t help that there are 2 in that Pine Gray Metallic (my favorite color on this car) nearby, and one is already pretty aggressively marked down.

Snuze: Needs another Swede > Textured Soy Protein 11/09/2020 at 15:55

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I’m glad it’s coming along well, and I think you’re smart to drive the CX-5 first.  I hope it goes well and you can start enjoying your Si soon.  

fintail > Snuze: Needs another Swede 11/09/2020 at 16:20

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Yes, if you haven’t driven it yet, do that before making plans. Although I am sure it drives nice. Welcome to the wagon club :)

If they are putting aggressive numbers out right now, they’ll do more if you work at it, especially heading towards the end of the month or end of year.   And yeah, really no different than a normal purchase, same negotiation and numbers game.  Something else to think about is how long you like to keep a car.  If you get bored in 3 years or less, leasing can work, as because you know, depreciation on such cars is immense for the first 5-7 years.

Snuze: Needs another Swede > fintail 11/09/2020 at 16:32

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Thanks, although no welcome necessary, I already have a 1987 Volvo 240 DL wagon as a project car. That and my 850 have affirmed my love for Volvos, and are the main reason I’m considering a V60. Well that and I think the V60 is gorgeous.

I used to get bored and trade out cars fairly often, every 2-3 years. But everything I bought was a compromise. I’d get bored, sell a car, but not be able to afford what I really wanted, so I’d get bored again and sell that car for something different. Then I had a Cobalt in the late 2000s that I had for 3 years; would have been longer but it got totaled, so I got the Cruze, which I’ve now had for 8 years. One of the appeals of the lease is the potential out after 3 years, so I’m not forced to keep something I don’t like, but the option to buy if I do. T hat circles back around to the money aspect, being able to get into one where if I want to buy it I’m not taking a bath.

That being said, the previous gen V60 is also a nice car, and I can get a low miles used one for half the money.  It’s probably the smarter play, but the new one, especially in that Pine Gray, looks soo good!

Cash Rewards > Snuze: Needs another Swede 11/09/2020 at 21:25

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We spent last night in Prince William Forest down by Quantico, the weather has been great for it. We’d love Shenandoah but its been booked solid. Where' d you go?

Nibby > Snuze: Needs another Swede 11/09/2020 at 21:27

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we all like it a lot... no issues, almost 20k miles. just wish it had a bit more storage compartments but that’s a minor issue all new volvos have... otherwise it rides well and is comfortable

fintail > Snuze: Needs another Swede 11/09/2020 at 23:06

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Ha, for some reason I thought Cruze and forgot about others.

Leasing is great for people who get bored - you’ll get hosed if you buy new and change up at 3 or even 5 years, especially with the depreciation curve of a premium brand car. Depreciation is suddenly not a worry, many leases appear to be less than real world depreciation.

How old is the used one, same style, same features, warranty ? You have to weigh that in, too.  When it comes down to it, go with your instinct.

Snuze: Needs another Swede > fintail 11/10/2020 at 10:22

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The previous gen went from 2011 to 2018 . There’s no 2019, and 2020+ is the new, completely different generation. In 2015-16 Volvo started to introduce their new VEA 4 cylinder engines. The early ones had some mechanical issues, so if I go for an earlier V60 I’ll probably pick one up with the older 5 cylinder. Its basically the same engine as in my 850 so I’m familiar with it , it makes the same power as the VEA, but is slightly less fuel efficient. B ut on the upshot it makes cool noises and doesn’t sound like a tractor (the major complaint I hear about the VEAs). From 2017 on Volvo only offers VEA based engines.

I’ve found a few CPO 2015-16 V60s with the 5 cylinder, with anywhere from 30 to 60k miles, in the $18-24k range, which seems quite reasonable. That’s right around half of what a new 2020 V60 costs. It’s still a great car, and probably makes more financial sense, but I am also quite enamored with the new ones. 

Snuze: Needs another Swede > Cash Rewards 11/10/2020 at 10:24

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Awesome! W e were at The Cove out in Gore, VA, which is out past Winchester on Rt 50, right on the VA/WV border.

nermal > Snuze: Needs another Swede 11/10/2020 at 12:14

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There’s no point in putting $15k down on a purchase or more than the bare minimum down on a lease. Same goes to paying cash when there is cheap financing available. Y ou’re better off putting the least amount down to get the best interest rate, then stuffing that cash somewhere else where it will earn you interest greater than what you’re paying. The money you make on keeping your money invested lowers your overall costs at the end.

I just checked Volvo’s site and they’re offering 0% for 60 months on the V60. Either do that with zero down or the lease with the minimum down. 

Snuze: Needs another Swede > nermal 11/10/2020 at 12:57

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Thank you for the advice, I appreciate it.  

Cash Rewards > Snuze: Needs another Swede 11/10/2020 at 13:05

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That place looks awesome! Problem is it’s 30 minutes from my mother-in-law, who lives in a lake community. We’d catch hell driving out there to camp by a lake and go canoeing instead of going to her place.

We’ll see though. Our youngest just turned five, and we’ve car camped with them 3 times this year. They love it.

fintail > Snuze: Needs another Swede 11/10/2020 at 14:04

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Do you think you’d get bored in 3 years? The continued depreciation of a 15+ model would be something to think about too, just in case you were itching to get out of it in 30 months.

It’ll sound lame, but the in-car electronics were a big selling point for me on the E wagon, too. The prior model was launched in 2009, and the electronics seemed modern - for that time. The 213 is a quantum leap, and still feels new inside. Not sure if that’d be an issue for you. MB also upgraded the V6 starting the year of my car, which I won’t complain about.

For my tastes, I’d be going even rarer (and larger, pricier) and looking at a V90, don’t see many non-XCs on the road.

Snuze: Needs another Swede > fintail 11/10/2020 at 14:47

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As long as it continues to meet my needs and doesn’t give me a lot of maintenance headaches, probably not. The Cruze was only supposed to be a 3-5 year car, just to get me through college and into my first job. Then I decided I’ d rather get married and buy a house , which is why I still have the Cruze 8 years later. In other words, I’m flexible.

And the tech isn’t lame at all. One of the realizations I’ve had is that a huge portion of my car usage is boring commuting. As much as I want a hardcore sports car, it would mostly be wasted on me. So, why not get something nice and comfy that I can “relax” and enjoy spending time in? And in that regard, you’re right. The prev. gen V60 interior looked dated when it came out in 2011, what with it’s big phone dialing buttons on the center stack and such. The V60 interior looks really clean , though I have some reservations about everything being on one touch screen.

As an aside, I’m planning to fix up the 240 wagon and V8 swap it, which I think will cover the fun car aspect. 

I love the V90s, they are really nice. I sat in one at a local dealership a couple months back and it was awesome. Sadly they are a bit out of my budget. I think the V60CC would be perfect for my needs. Now the debate I’m having in my head is colors - my first choice is pine gray, second is denim blue. There are 2 pine gray cars near me, one with amber interior, one with black. There’s also a denim blue car with the “City Weave” textile upholstery. I like leather, but there’s something really fun and funky about the City Weave that I find myself attracted to. Decisions, decisions...

fintail > Snuze: Needs another Swede 11/10/2020 at 21:13

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Got it. Yeah, I am not a fan of touchscreens - fingerprints, and non-redundant controls scare me a little. Fortunately, MB has kept away from that pretty well. Having the “latest thing” is also a pro of leasing, if it isn’t something you care about, that might help the “buy” side.

I like blue, but that grey is also nice, very unusual tint, so you probably can’t go wrong.

I bet the V90s are glued to the lots - few probably want a non-butch wagon (which is why the non-cladded E-wagon is gone for MY 2021). Might find a sweetheart lease deal on one somewhere, and I bet depreciation will be catastrophic, so maybe a future used buy, too.