Tax Credit2 Swaps


My 2nd car lease is coming due - Volvo - and I have 4 kids with carseats or boosters in the car (1st car is a minivan!). I want to finance an XC90 Extended Range now. Accept the tax credit this coming year. And possibly exchange the car in 2023 or 2024 as my family carseat situation becomes more flexible. Assuming the car market normalizes to pre-COVID levels by 2024, and given the lease economics now, is financing for the tax credit now into a future lease a bad strategy?

Very crystal ball question. The short answers IMO:

  • I wouldn’t lease under the current terms and leave the $7500 Federal credit on the table. The residual and MF isn’t strong enough
  • If we return to pre-COVID levels, expect that RV to be correct: everyone presumably got the credit (assume a $7500 haircut) and most PHEVs were roughly/historically worth 45-50% at 36 months with 36k miles if the lease ended before March 2020

Now where will gas prices be? Will the used car market return to 2019 price levels? Are people permanently more interested in PHEVs? :crystal_ball::eyes::man_shrugging:t2:

My 2019 Volvo lease is up in August, this is one of the many vehicles I’m considering, I am NOT considering any Volvo leases given the current programs. Whether the next is a lease or purchase depends on those programs, then.

All extremely valid points - especially the RV historical perspective - I really appreciate your response.

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Also, let us know what you decide for your next car!

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I’m going to type some advice I need to take myself (a gallon jug worth):

The hard part about this shitty, upside-down market is trying to swallow what feels like a bad deal today, in hopes of timing a good deal in the future.

Make the best deal you can for what you want/need today, worry about what comes next when it comes. Nobody has a crystal ball.

As much as I am tracking XC60s and XC90s like it’s my job, 99% not going to have a Volvo in the garage in 60 days, but my situation is different. I have been 99% on a couple used cars that didn’t work out. I am 99% on another brand that the dealer keeps nudging me in ways I have twice told them to return my deposit. It’s anyone’s guess what will be in my garage next, but I’m sure I’ll vent about it here when it’s decided.

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Buy a Subaru :point_up:

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Buy a Subaru but not a SOLterra. They have issues …

In a normal market there is very little appetite for high-priced Volvos.

XC90 leases used to be heavily incentivized. You can look back at past deals and see for yourself. And that was when they were relatively new and hot, not aged and due for a replacement soon.

So in a normal market, you should assume there will be a new body XC90 and that Volvo will incentivize them because nobody will want them at sticker. So what does that do to the values of the old body?