My little brother just started his first adult job after graduating college. I’m helping him look for a car lease as he needs a vehicle to get to work three days a week. He’ll be living/working in Phoenix, AZ, with a pretty short commute. He’s not the best when it comes to maintaining things, so we originally looked for a new car to lease as it should require less maintenance and is smaller opportunity cost in the short run compared to financing a used vehicle. We checked out dealerships for Kia, Mazda, and Subaru - and we had the best experience with a local Subaru dealer. The Crosstrek seems like a reasonable first out-of-college car for him.
I searched Costco for the dealership offer, which was a 100% discount on market adjustment (assuming this means no dealer markups), 0% discount on VTR (I have no idea what this means), and a 15% discount on the protection package.
Unfortunately, I’m too new of a user to upload the two lease estimates (one for the 2024 Crosstrek and one for the 2024 Imprezza) that we’ve received. The residual for the base 2024 Crosstrek is 73%. I attempted to use the LH calculator, and came up with the following.
A few questions:
Do you know what the items, VTR and DOC Fee, are in a lease estimate?
The monthly payment via the LH calculator is $409, compared to the leasing offer (via Subaru’s website) of $299/month. How does this compare once we’re taking into account taxes/fees/etc.?
The 24 CT is going to be much harder to find a deal on than a 23
Except for whatever brand has a Costco Auto special incentive (eg Volvo now, previously Audi/GM) they are iust lead generation for dealers, not necessarily a good deal like they proported to be pre-pandemic.
Have your brother read through
TL;DR most Subarus make more sense to finance than lease, and the advertised lease special is never worth the paper it’s printed on since the small print says it excludes taxes and fees and blessings.
You can look in SIGNED! For other AZ deals to better understand the fees if you buy/lease there.
Genuine question: On what basis did you conclude these are cars that lease better than they finance?
Also, you said you’re trying to help your little brother become an adult. If the subtext behind leasing is that “he won’t maintain it so he can just the throw the keys back and rinse/repeat every 3 years” then you are completely torpedoing your broader mission.
The dealer informed us that they had no 23’s in stock and were receiving ongoing allocations for the 24. By deals, do you mean specific for financing a used older model or am I misunderstanding here?
Appreciate the info re Costco and the tip on VIP pricing. We’re getting $500 off for the recent graduate credit, but I’ll reach out to see if the VIP pricing will apply to a leased vehicle.
Why lease and not finance? Have you compared 36 month leasing number vs. 60 month loan numbers? The payments should be similar and Subaru’s are more reliable so maintenance should not be a big issue. Leasing usually makes sense for higher MSRP/Luxury cars with higher maintenance costs.
It’s not that leasing a car is a better deal than financing a car - I agree that financing a car is going to win out financially. However, given the likelihood he moves on from Phoenix in 2-3 years and returns to a city where he does not need a car, I valued the convenience of leasing a car more. I attempted to update the original LH calculation with information for a comparable financing deal, here. Taking a 60 month deal at 5.9% APR (which from my understanding is pretty phenom rate right now), the monthly comparisons between leasing and financing are similar - effective monthly costs of $495 vs. $527. However, the monthly payments as they occur are $409 vs. $554 (in favor of leasing). This is largely due to selling the car after three years of ownership. I used a residual rate of 59% (i.e., the car would sale for $16K which seems reasonable for a base Crosstrek in 3 years).
Regarding your second point, I agree . However, there is high likelihood that he moves out of a car-centric environment and back into a city where he won’t need a permanent vehicle.
The 24 is a redesign. Subarus in general don’t lease well, new model introductions or recent redesigns don’t generally lease well, but in this case dealers are not likely to discount, except possibly for VIP on an order.
The residuals are generally lower than the actual value at disposition, MF is usually higher than financing. They aren’t ever atrocious, but SMF rarely subvents either side. And it’s usually BYO incentives.
Congrats on your brother! It’s really nice of you to help him out, and you should definitely be proud of him for wanting to be independent right after graduation. You would not believe how many kids in our neighborhood that come back to live at home after graduating from college. I’m trying to ingrain that into my kids now - 12 & 14 - that they will not be moving back in with us, and that they are expected to find a job and roommate(s) once they graduate from college.
But back on topic, the Crosstrek is nice, but it doesn’t lease well. I nice alternative that does lease well is the Kona AWD. I have the Kona EV, but they don’t make the EV in AWD. Test drive a Kona AWD with your little bro, and then reach out to a broker.
Conceptually this makes a lot of sense. However life happens while you’re making plans. Maybe the dream job in a bigger city materializes just 2 years into a 3yr lease. Or maybe it still hasn’t materialized at the end of the lease. Do you sign a new 3yr lease knowing you’d move ASAP if you could?
In reality the convenience to choose exactly when and where to exit your car comes from ownership. Subarus are so easy to sell; the demand for them never really ebbs and flows like some other types.
When you own the car, you do have alot more flexibility to sell to any dealer anytime. You dont have to wait for the entire 3 years lease term. I dont know if the Subaru’s leases do have any 3rd party restriction, if that is the case, then you are likely to get the less trade-in value if you decide to exit from the lease earlier than 3 years term. Leases only make sense if there are extra leasing incentives, sales tax benefit, etc.
. However, there is high likelihood that he moves out of a car-centric environment and back into a city where he won’t need a permanent vehicle.