XC90 2020 CPO former rental purchase vs leasing

Hi all

The forum has been a great resource for me as I got smart around leasing. We have settled in on the XC90 and I was planning to lease, ran some numbers with brokers. I’m realistic on getting the “best” deal as the wife has color preferences and we’d really like the advanced packages and a broker seemed worth it for me as a newbie.

However I recently got my head turned by a 2020 CPO with 7k miles on it - former rental car Covid blowout. Can get it for $45k / 27% under MRSP, in the color and package that we want and because it’s CPO there’s 4.5 yrs warranty.

I’m not precious about it being a fart car - obviously can’t control how it was driven but on the margin I’d guess it’s more likely rented by families than not but I’m realistic that’s a factor in the discount I’m getting. Also gives me more flex to sell quicker (eg small chance we may relocate internationally and no longer need) / own longer as suits. I’m also not a daily driver so it’s luxury - nice car to have for weekend trips, vacations etc so not the end of the world if it has to have things fixed so long warranty covers…

I’m flexible on purchase vs lease financially and much more focused on cost of ownership vs monthly payments and this feels like someone else has taken the first 2ish years of depreciation. So I feel have a good chance of coming out ahead of leasing which when you boil it down is really just financing depreciation down to ~61% (for this car at 10k miles/yr) residual which isn’t too far off the 73% paid for a 0.5 yr old car… However, I obviously own the risk of it being driven harder in rental etc etc and don’t know how good the original + CPO Volvo warranty is to cover such risks, so welcome thoughts!

Knowing this is a lease focused forum…how do people feel about this as a trade-off!

If it is a CPO, then leasing it does not make sense. The loaners that you see are untitled or have some exception in which the dealer uses them through a 3rd party company.

That being said, if you are planning on putting a lot of miles on the car, purchasing makes more sense because you have that great unlimited mileage warranty.

Sorry if I wasn’t clear. Trade off I’m looking at is purchase this one CPO vs lease a different one (either new or loaner).

Well it is a $62K car. Even a loaner with all of the incentives (Volvo Allowance and Lease bonus, dependent by region) and rebates (Costco, etc.) you are not going to get anywhere close to 27% discount. Take a look at the past LH deals (there have been a lot recently for XC90s) and see if that would work out better.

I went through this thought a bit too with an s60.
First place I’d start is 3-4 year old xc90’s and how much they are realistically going for. That way, you can get a decent depreciation forecast. Problem you might have now is that used cars values could be a bit out of whack with everything going on, so factor that in as well.

Also keep in mind how taxes are handled in your state lease vs buy.

Yep that’s why I’m leaning towards the purchase but making sure I’m not missing something!

Yeah they seem to put me well within the money vs leasing…if the world is the same but of course which is my risk when buying but seems more than enough padding in there. One thing that I haven’t been able to cross check is how much of a discount on second sale I should take for 2 owners and former rental

As a tangential data point, my s90 that I returned a few months back was worth about $15000 less than the residual value. Volvos depreciate like a rock. I’d much rather Volvo be on the hook for that than me.

I’d rather lease at 5% less discount than eat 20% in depreciation on the back end.

Absolutely for the sedans (especially the S90). The SUVs tend to hold their value better due to their popularity.

They do better, yes, but still not particularly well

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Wow, that’s crazy. Moral of the story, best value is to buy a CPO S90…!? (JK)

CPO S90s are great value. However, a 2-3 year old one still has a ton of depreciation.

I wouldn’t buy a former rental even in pre-Covid times.


Also running the math using that benchmark …let’s say I get the same hit.

3yr residual per leasing is supposed to be 61% ($37k) but let’s say it’s actual $15k less than that = $22k -> seems a huge discount on a 3 yr old $61k new car? Surely Volvo couldn’t afford to eat that across the board and stay afloat financially?

Quick research suggests the 3 year old XC90s are going for close to current residual % of new ones (and they were a bit cheaper when new given inflation).

“I drove it like a rental.”

Mine was a 2 year lease. MSRP was about $62k, rv was about $42k. Buy out offers I was getting at trade in was $27-28k. Not only did Volvo get killed on the rv, but my cap cost when I got it was in the mid to high 40s

This is what I was hoping to get people’s perspectives on. I had this view initially but the numbers are making me think twice. Shouldn’t the short tenure as a rental + 4.5 year (initial + 1 yr CPO) warranty give me comfort?

I absolutely would! - if it was something like a Camry or hell even a Sonata. Especially here in CA. They’re usually just driven by business folk coming in an out, occasional roadtrip and serviced well and come with some sort of warranty. I would have zero concerns

But a modern Volvo with their current reputation around reliability? Naaaah. Lease it.

Accounting at work… I’m no corporate accountant, but those types of write-offs can be offset in many ways (e.g. loss provisioning, deferrals, etc). There are usually reserves set aside for situations like these.

It’s all about the payment, what’s the payment difference on the lease vs buy? That’s what it would come down to for me