Question about my next move

Ask the Hackrs Buy/Finance
1

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. The buyout amount (in February) 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 particuar car anymore. I don’t need a crossover, and I don’t need this “level” of vehicle. A well-equipped Honda/Toyota/Hyundai/Kia midsize sedan 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 Hyundai Sonata/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.

Even if there isn’t a ton of equity, there will be SOME, and I could also easily add cash if I had to, but I’m trying to keep my payments below $500/month with no MSD’s if possible, so I thought maybe going cheaper would do the trick.

What say you?

2

I have some k5 and Camry if you go that route.

Jim
215-359-6836

3

Does the buyout amount include tax?

4

Do you live in a state where you’d pay tax on the buyout? Does Volvo allow 3rd party buyouts?

Trade the Volvo towards a new vehicle (let’s say you have $6-7k of equity in the Volvo) and finance the new vehicle. The lease terms are likely to be terrible. Just try hard not to pay above MSRP on the new vehicle. The market is softening but I believe some brands such as Toyota and Kia are still pretty inventory constrained.

The new lease will likely be at or near MSRP, with a normal residual and no incentives, so why bother with the lease

5

“The new lease will likely be at or near MSRP, with a normal residual and no incentives, so why bother with the lease”

As far as a new lease, you’re right, but even an MSRP lease on a $35k vehicle (before putting some money down), would be cheaper than financing a $35k (at this point, used) car, correct?

I’m looking at it strictly for budget reasons.

6

I would think through this carefully. At $500 a month, you’re close to be able to getting a 4XE depending on taxes and will be driving a fuel efficient $60k vehicle vs. a gas only $30k vehicle. Some of the brokers have a pipeline coming in, with prices posted etc.

Price out the leases on cars in the $30k range, but my guess is that unless you find something with a high residual (we aren’t going to see much rebates or discounts yet), they aren’t going to look attractive.

If you have the chance, it probably makes more sense to cash out the equity of the Volvo instead of putting it towards the new lease.

7

Please forgive my lack of knowledge, but:

  1. What is a 4XE?
  2. I understood when you said cash out the equity, but then what would I do with that equity?
8

  1. Jeep Wrangler 4XE SUV. The Rubicon is still sitting with a decent residual and if you take delivery before end of year, the $7500 EV rebate applies. So $600ish maybe for a $65-70k vehicle which isn’t bad and it’s a hybrid so great on gas. There’s a whole thread in the “Share a Deal Section”

  2. Typically at the end of the lease, you expect to walk away empty handed. If your car is worth $37k and the payout is $30k, you can pocket the money, invest it etc. Rolling into the new lease should be your last option since you’d lose it if the vehicle were totaled.

9

You can only trade a volvo lease in on a new volvo lease

10

Good advice, thank you!

11

I meant, buy out the lease, and THEN trade it in to a different mfg.

12

Just an FYI there is a 1-2 month lag in there due to processing.

13

  1. There’s no point discussing hypotheticals. What are the actual numbers?

  2. Is your budget going to change after 3 years? Otherwise jumping on the leasing hamster wheel is very short-sighted. Owning two Toyota Camrys over the next, say, 12 years is going to save you a ton of money over doing 4 consecutive 36m leases.

14

I have owned longterm, purchased vehicles for the better part of the last 30 years, I’m not interested in doing that anymore, and dealing with the maintenance.

Also, I leased my current vehicle almost 3 years ago, so, I’m not “jumping on the leasing hamster wheel”, I’m already on it.

Kind of odd advice, given this website is geared toward leasing vehicles, but thanks :slight_smile:

15

This is entirely dependent on the lease programs.

16

This website is really geared towards being an informed consumer to maximize leasing value. Part of that is recognizing that some vehicles have no business being leased.

17
18

Keep in mind if you take a quick look at the “Ask a Hackr” or “Shared deals” section their were decent deals to be had on eveything from trucks, sedans, suvs, and the occasional wagon deal would pop up three years ago. In the past 18 months collectively their have been about two vehicles talked about on here with a few more outlier deals. Most of us have leased b/c we received a new vehicle, under warranty, maint covered, etc…that was financially beneficial due to a combination of factors ( rv, mf, dealer discount, mfr incentives ). Now that those factors aren’t in favor of the consumer anymore it causes a lease to be far more expensive. If you value the new car, under warranty AND mostly value the fact the bank is on the hook for projected rv and should an accident occur they take the rv hit then go ahead. It more than likely isn’t going to be a good deal and you would paying a good bit of money for those factors vs getting a “good deal”.

If leasing made financial sense you would see people snapping up deals left and right. Leasehackr can make a crappy situation better, it can’t make a crappy deal automatically one that will make financial sense. It’s your money though.