End of Lease: buy out, or turn it in?

[Liz Dawrs]

I'm coming up on the end of a lease on my 2000 Outback next month. I'm
trying to decide if it makes better financial sense to purchase the car at
that time, or to turn it in and start afresh with yet another lease. I
should say upfront that I'm not the pride-of-ownership type -- renter vs.
owner mentality -- but I don't want that to cloud sound fiscal choices.

Any suggestions on how to proceed to make this decision? There are quite a
few variables I can see coming into play here. Any way to simplify the
anaysis?

Perhaps it boils down to this: If I can get the same or better deal (i.e.,
monthly payment, based on mileage allowance, downpayment, etc.) that I have
on this lease, why not go for a new lease? It certainly eliminates the
unknowns of vehicle repair, etc., that go with ownership.

I can provide more specific details (payments/mileage/etc.) if that helps,
but for now I thought I'd lob the broader question out to you all first.

Thanks in advance for your suggestions,
Liz

 

[Brian]

I'm coming up on the end of a lease on my 2000 Outback next month. I'm
trying to decide if it makes better financial sense to purchase the car at
that time, or to turn it in and start afresh with yet another lease.

Dominic had some good points. Another thing to look at is the used car
market right now. Unless you really want to keep your car, see if you can
sell it privately for more than the residual value before you have to turn
it in. That will give you a nice deposit on your new car. Also, this is
unlikely, but if the residual is really low, you could even take it to a
different dealer and see what they will give you for it in trade.

Brian

 

[Tiburon27]

The only problem is that it is not her car to sell. The car belongs whoever
she leases from.

Even if she could sell it, it is rare that the residual value is less that
the actual car value.

 

[Brian]

The only problem is that it is not her car to sell. The car belongs whoever
she leases from.

The leasing company either wants the car back or the money. They don't care
about what you do with the car after they get their money. Its slightly more
complicated than selling a privately owned car, but its possible. There's
just an extra step while you wait for them to fax you a release note.

Even if she could sell it, it is rare that the residual value is less that
the actual car value.

True, the leasing companies are pretty good at predicting the residual value
in the market. However it couldn't hurt to try.

Brian

 

[PlaneGuy]

Actually it all depends on the contract between you and the lessor. If the
contract says you can sell it and pay out a given amount, you can, if it
explicitly excludes it, you obviously can't. Hence, always read the print.

 

[L. Kreh]

...Perhaps it boils down to this: If I can get the same or better deal (i.e.,
monthly payment, based on mileage allowance, downpayment, etc.) that I have
on this lease, why not go for a new lease? It certainly eliminates the
unknowns of vehicle repair, etc., that go with ownership.

Easiest answer is that if you buy a vehicle, at some point it is paid
for, hence no monthly payments. For people that buy a good quality
vehicle, this makes economic sense because repair bills will likely be
much lower than lease payments for a fairly long period of time.
Also, you can modify or buy accessories for an owned vehicle, like a
better stereo or something, but you wouldn't do that with a lease. As
far as a Subaru Outback, you are likely able to own and run one up to
100,000 miles relatively trouble free.

In my opinion, leasing is a waste of money.

 

[Liz Dawrs]

Good points in this, and the others' posts.

At this point, I'm leaning toward buying the car. Other than a few
scratches, it's in great shape, has been maintenance-free (except for an
annoying go-round with an ill-fitting inner door panel...grrr), and at 3
year old, has under 30K miles on it. Since I'd probably end up buying a
late-model used car anyway, why not go with a known quantity?

My one thought was that, living in Southern California, the AWD is a bit
over the top, and I'd probaby be content with a more economical Honda, but
I do appreciate the AWD on those snowy trips to Mammoth (and the occasional
rain-slicked day on the oily freeways).

Thanks again, everyone, for your suggestions. Much appreciated!