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2013 and earlier-Subaru Forester Lease Questions

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  • I can definitely see in this climate that leasing would far outweigh buying. The used car market is just as bad off as the new car market. Dealers are more and more frequently quoting people wholesale prices on their trade-ins. Even if you sell your car privatley after 2 years you are not guaranteed to get KBB value.

    Having said all that, you can't get a good deal leasing just any car. The numbers are the sole factor. You have to find a 24 month lease that has a high residual value (around 70% is good) and has at least a midrange money factor.

    Not sure on the Forester. The Legacy has numbers like this for 24 months. In fact the 24 and 36 month leases are about the same monthly payment. This is normally not the case. 24 month leases normally are $50-$100 more per month.
  • pano1pano1 Posts: 11
    Thanks for your input, but I'm still looking for a definitive answer that isn't mired in technogibberish. I don't know what a money factor is nor do I care about a residual.
    What I'm asking here is at the end of my 24 month lease, will the lease be more cost effective than me buying outright and then reselling at a value higher than what I think a residual value is?? Example: my local paper is advertising a 2009 Toyota Camry on a 24 month lease for $9995. The car stickers at $22395 and the residual is $13935. This is a one payment ($9995) with 15K miles per year. So I know that for $9995 I can have a Camry for 2 years and walk away. My out of pocket is $9995. Now, say I buy the same Camry for $19995 have it for two years with no mileage penalty and then sell it in two years for $13935. My out of pocket is $6000. So in my example here I saved $3000 by buying outright rather than leasing. So indianajohns, can you see where I'm coming from now?? Remember that I am a virgin and unlike you, I don't know the workings of lease like you aces here do, so I might be full of it and that's why I am seeking your counsel. Thanks for your time.

    Pete
  • ateixeiraateixeira Posts: 72,587
    It may be worth it to find out if the new tax deduction still applies if you don't pay all the tax in a given year, since they just passed that car-buying incentive.

    Maybe you deduct it little by little, as you pay the state sales tax.
  • kyfdxkyfdx Posts: 31,079
    My guess is: Leases won't qualify..

    MODERATOR
    Prices Paid, Lease Questions, SUVs

  • ateixeiraateixeira Posts: 72,587
    They should - why not? You're still paying state sales tax, and it still helps the auto industry and the economy.

    The deduction is proportional so that seems fair.
  • kyfdxkyfdx Posts: 31,079
    In most cases, the owner of the car (the bank) pays the tax... you are just reimbursing the bank for their expenditure, according to your lease contract.

    So... since you don't pay the tax, you don't get the deduction..

    As stated above, this is my (somewhat educated) guess...

    MODERATOR
    Prices Paid, Lease Questions, SUVs

  • Not an expert, but I will throw out some thoughts/questions for discussion:

    - you might get less than $13,935 in two years.

    - does your 19,995 include everything - tax etc if not need to factor that in

    - are you paying cash? lost return on your 10,000 (19,995 - 9,995)
  • Thanks for all the info here guys. I signed the following deal last week

    2009 forester 2.5x limited
    MSRP: 26,690
    negotiated price: 24,479 (~500 under invoice)
    acquisition fee: 595
    SVCS fee: 99
    Gross cap cost:25,173
    Residual (58%):15,480
    money factor 0.0016
    term: 36 months 15,000 miles/yr
    total due at signing: 445.48 (1st month plus title and registration fees)
    total monthly payment: 334.29 + 18.39(tax) = 352.68

    I feel I got a pretty good deal.

    We just had some freezing rain/snow and the forester handled it as well as the jeep commander we just turned in, but with better gas mileage :)

    Very fun to drive. My only gripe is the climate control takes a long time to switch from blowing hot to cold air, but no car is perfect....
  • ateixeiraateixeira Posts: 72,587
    Sounds good, prices are a lot lower than a year ago. Congrats.
  • pano1pano1 Posts: 11
    Still seeking an answer from the gurus here about the merits of buying or leasing. In my previous post (see above) I surmised that I would be further ahead by buying my Limited outright rather than leasing for 24 months. His residual was almost $16K after 3 years so a 24 month lease should yield a much higher residual. If I pay cash for the same vehicle gdtrfb bought at roughly $24K, certainly the residual would be much higher than the $16K he has after 36 months. As I read it, after two years the value of my Limited should be somewhere about $18k. Simple math tells me that I would have spent $6k for 24 months use versus the $13k that gdtrfb did on his 36 month lease. Am I missing something here?? Oh, I'm paying cash and could care less about money factors, SVCS, acquisition fees, etc. I just have to be overlooking something here because buying outright seems to just be a plain better deal.

    Thanks for your patience,
    Pete
  • Hi Pete, there are a couple reasons that leasing appeals to me.

    1. The car is under warranty for the majority of the lease so I know I will not have to make any repair costs for the next 3 years or so.
    2. I like to have a new vehicle every couple years
    3. This is the first year of a redesign of the forester, while Subaru has a great reliability record I am leery about the first year of a new redesign as I got burned on purchasing a 2001 X5 that turned out to be a hunk of crap. So if it does turn out to be unreliable I can just turn it in after 3 years instead of trying to sell it.
    4. Sales tax is spread out monthly throughout the lease instead of lump sum when purchasing.

    As I understand it, you never want to put down any more than you have to on a lease. The reason is, if the car is totaled, or stolen and not recovered you get zero money back from the insurance company since you don’t actually own the vehicle. So for example if I had put down the total monthly costs for my lease ($12,696) and the car was totaled after the first month I am out the full $12,696. Since I put down only 1st month payment and registration fees, if the car is totaled next month I am only out 1st month payment and registration fees ($445).

    Second thing to remember is car companies do not know exactly how much a vehicle will be worth after the end of a lease (neither do we). The best they can do is guess; their guess is called the residual value. A good example of this is the Jeep commander I leased before the Subaru. When I signed the lease 27 months ago Chrysler financial guessed the jeep would be worth $17,600 in 27 months, but in the mean time the economy tanked and gas prices shot up so now the jeep is only worth $12,000. So if I had purchased it and wanted to try and sell it after 27 months, I would have to put it up for sale at $5600 lower than the $17,600. Because I leased the jeep I was just able to turn it in and not have to worry about the accelerated depreciation.

    So in the example above you might be able to sell the forester for 18,000 after 24 months, but what if it is worth 5600 less than 18k after 24 months like the jeep was. Then you could only sell it for 13000 and would end up spending 11,600 over 2 years. Also you would need to add the tax paid at time of purchase (~1300 depending on where you live) so you could end up spending 12,900 over 2 years which would be more than leasing for 3 years.

    If you do decide to lease, then the money factor (MF) will become important. MF is simply the interest rate on the lease. MF x 2400 = interest rate %. So on my lease the MF is 0.0016 so the interest rate is (0.0016 x 2400) = 3.84%.

    I hope this helps.
  • tomdctomdc Posts: 2
    Carman (or anyone who has this info): could you please provide the residual and money factor for a lease on a 2009 Subaru Forester 2.5 X with premium package (MSRP aprox $25,500).The lease would be for 10,000 mile/yr for 36 months. Also, I saw on the Subaru website there appears to be a lease special on the Forester thru 3/2/09. Does this impact the residual or money factor, or is there cash back to be used in the lease? Last, when negotiating with the dealer, should they be up front about the residual and money factor; it seems the salseman that I have spoken to either can not or will not discuss this with me.

    Thank you for your help.
  • jackson41

    Could you please explain how to calculate lease payments once we know residual and money factor?

    Thank you
  • kyfdxkyfdx Posts: 31,079

    MODERATOR
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  • pano1pano1 Posts: 11
    Thanks for your reply and information. I'm not doing a very good job of explaining what I'm getting at with forum members. I'll try to do a better job this time. I've always paid cash for my purchases because I've never had a trade-in. I was able to negotiate a good price because I bought at year's end and when incentives were at or near their highest levels. People would line up at my door to ask when I was selling my last vehicle because I only drove them for a year, maintained them scrupulously and was willing to sell below similarly priced cars at a dealer's lot. It was great for me and great for the purchaser. I buy a new car every year and tire of them in a year so I'm always looking for a new one that appeals to me. I'm single, retired, and owe nobody anything. I have no wife or kids and thus have the wherewithal to buy every year, which I do. I could care less about financing, money factors, or residuals. I'm interested in getting the best possible deal available and once I find that, I pay cash. Over the last 27 years, I have paid an average of $2187 to buy a new car every year. Sometimes I do better than that and at other times worse.

    I am constantly bombarded by my friends asking me why I just don't lease since I buy every year. My prejudice has always been that people who lease are people who don't have the good fortune of being in my financial situation or who are in business and can write off their leases. I may be wrong in my belief but no one as yet has been able to show me that I'm better off leasing than by purchasing outright. I have sought counsel here but obviously have not done a very good job at getting this point across. My contention is that I will do better purchasing a vehicle outright than by leasing, which has mileage limits, and many other negative factors for someone in my situation. You cited reasons why you like leasing and showing why you find it beneficial. I have no problem with any of the points and advantages that you cite, for you. But for me, those factors are irrelevant. I hope you see why in my rather long explanation of my situation. So what I need here from you or forum members is evidence that leasing is a better deal than buying outright.

    Assuming you and other forum members are correct in leading me to leasing, I find that no one in the entire auto universe offers a one year lease. The best I can do is a 24 month lease. The purchase year for me is unlike any year in my buying history. First, since the economy sucks so badly, no one had knocked at my door so I decided to keep my car last year and actually held this vehicle for almost 2 years now and I am really bored with it. I just love the Forester and am planning to buy it when I get around to selling my vehicle. I can purchase a Premium for around $22.4K outright. ALG leasing, the "bible" or residual values says that the Forester has a 69% value retention after 3 years. I believe that I should buy the Forester outright, do the unthinkable and keep it for two years, then sell it after 2 years. My point here is that after two years, I should be able to recapture more than 75% of my initial investment (~$16.5K) and be further ahead than by leasing for 24 months at the best leasing rate I can find. If my assumption is correct, I would have spent ~$6000 over 2 years for the use of the Forester. That would be $3K per year.

    Based on your recent leasing experience can you refute my example and logic so that you can convince me that your deal is better than my hypothetical?? I apologize for the length of this post, but if you can provide me with an opinion or better yet, facts, I would be deeply appreciative. Allow me to throw one more scenario that I just thought of. What if nobody knocks at my door or I am unable to sell my vehicle at the price I want.....would trading in and leasing be a good option?
    What should I do at the dealership to ensure a good deal?

    Thanks for your patience,
    Pete
  • I can purchase a Premium for around $22.4K outright. ALG leasing, the "bible" or residual values says that the Forester has a 69% value retention after 3 years. I believe that I should buy the Forester outright, do the unthinkable and keep it for two years, then sell it after 2 years. My point here is that after two years, I should be able to recapture more than 75% of my initial investment (~$16.5K) and be further ahead than by leasing for 24 months at the best leasing rate I can find. If my assumption is correct, I would have spent ~$6000 over 2 years for the use of the Forester. That would be $3K per year.

    If you are comparing a zero down lease you have to compare a zero down bank loan also. A $22,400 sale price including sales tax of 8% would make the financed amount $24,192. That was based on a 5 year loan at 6% with a monthly payment of $467.70. Your total of the 24 payments should be $11224.80. Now here is where it gets fun. You should easily be able to lease a Forester Premium for $345 including 8% tax with zero down. $345 times 24 payments is $8280. The bank loan costs you $2944.80 more than leasing.

    According to my amoritization calculator you would still owe $14982.92 after 24 months. If the car is worth $16,500 (as you predict), you are only netting $1517.08 but since your out of pocket was $2944.80 more than leasing you actually LOST $1427.72. In this example leasing wins.
  • stoopystoopy Posts: 105
    If you can lease a car for $350 vs buying it for $470 you are saving $120 a month because of the lower payments. Even putting that money in a regular savings account will yeild over $2,900 after 2 years.

    If you negotiated a good lease and the numbers are good you will do better than purchasing. Even 7% Sales Tax on $22,500 is $1,575. So you are automatically in the hole $1,575 plus $2,880 in payment difference. That's $4,455. I don't see how you could make up that big of a difference when your loan payoff is $15,000. That would mean you'd have to sell the car for $19,456 to make a single dollar. I highly doubt a 2 year old Subaru with 24,000 miles would be worth that.

    The point of leasing is to lower your monthly payment by at least $100 a month and to lessen your sales tax burden. In most states the leasee pays sales tax only on the monthly payment instead of the actual sale price of the car. So on a 24 month lease at $320 you are only paying $537.60 total at 7%. Leasing makes sense under ideal conditions. But you do have to have a great money factor and residual AND a great negotiated sale price. You can't expect to lease any car for cheaper than buying it. Some cars have horrible lease numbers.
  • pano1pano1 Posts: 11
    @indianajohns and stoopy

    Thank you so very much for taking the time to try to enlighten this leasing? virgin. As I read your responses, both of you keep talking about getting a loan and the associated costs that go with it. Maybe I'm misreading you. I am paying cash for the car. I will pay the taxes and other fees. I know that indianajohns says that I must compare with taking a loan and stoopy talks about lowering the cost of my loan. My point is that I am paying cash not taking a loan. So I fail to see why I must compare taking a loan in order to get a straight forward answer, so I must assume that there are complex accounting mechanisms that I am overlooking.

    What am I missing here? I'm paying, say $25K cash for this car, selling it at what ALG says is over 75% of MSRP in 24 months. That's $18750. Net difference is $6250 or $3125 per year. Are you fellas telling me that I can lease for 24 months for less than $6250 total cost??? If you can find me this kind of lease, I would do cartwheels and would agree that leasing is cheaper than buying outright. I don't think that any human on this planet could lease for 24 months at the cost that I cited.

    Fellas, I am not the brightest bulb in the pack, but I fail to see the argument that you are making. I am showing you what I believe is very simple math. You guys are saying that it is much more complex than I am showing. I am deeply appreciative of the time that you are spending trying to help me see your point of view. I apologize for being so dense, so could you please make one last effort, showing me the folly of my math and logic??

    Thanks again,
    Pete
  • ursusursus Posts: 48
    OK, based on your earlier post:

    I can purchase a Premium for around $22.4K outright. ALG leasing, the "bible" or residual values says that the Forester has a 69% value retention after 3 years. I believe that I should buy the Forester outright, do the unthinkable and keep it for two years, then sell it after 2 years. My point here is that after two years, I should be able to recapture more than 75% of my initial investment (~$16.5K) and be further ahead than by leasing for 24 months at the best leasing rate I can find. If my assumption is correct, I would have spent ~$6000 over 2 years for the use of the Forester. That would be $3K per year

    If we go by your ridiculous 75% residual, we get the following 24 month lease:
    MSRP on your Premium w/All Weather: ~$24.7K
    Cap cost (selling price): $22.4K with 0 reduction (down)
    Money factor: .0016 (current best, but not the best in general)
    Tax: 8%
    Monthly payment: $170.45/month ($4,080 over 24 month) if your $22.4K includes acquisition fee and $198.26 ($4,758 over 24 month) if it does not (then you need to add it to the selling price).
  • pano1pano1 Posts: 11
    Thanks for your input ursus. I don't think you probably read my last post, #231, when you responded to an earlier post. I know that I didn't do a very good job of explaining my premise of the outright buy. I hope that post #231 does a better job of explaining my logic. If my assumption of you not reading post #231 is valid, could you respond to that one as well??

    I don't know for sure what all your math means. I also have no knowledge of some of the terms that you are using since I am so ignorant of the leasing process and certainly make to pretense that I do. But, I do have some knowledge about resale values of vehicles. Why is it ridiculous to expect that I should be able to sell a vehicle with a $25K MSRP for ~$18+K after 24 months? IF ALG numbers can be believed, they say that after 36 months that same $25K car should be worth ~70% or $17.5K after 36 months??? So why is it ridiculous to believe that I couldn't get a thousand dollars more than that after only two years??

    As mentioned above I have no clue about the numbers and logic you are using but am I correct in assuming that you are saying that IF my assumptions about ALG numbers are correct that the lease for 24 months would cost less than $5K for 24 months?? Please understand that what is easy for you leasing experts is a complete mystery to me and that I just don't get the logic of leasing. That's why I came here for help in getting me to see the logic of leasing. Problem is that the more you good folks try to help me, the dumber I get.

    What really confuses me is all the jargon that you folks use. I just can't see why talking about money factors, cap costs, residuals, etc has any bearing on this discussion. I have cited at length that I can buy, then sell a new Forester for ~$6K at the end of two years. What I am asking is what would a 2 year lease cost me under the most common lease arrangement that you have heard of ?? I am betting that whatever that lease arrangement is would cost me much more than my $6K estimate.

    Thanks for your patience,
    Pete
  • kyfdxkyfdx Posts: 31,079
    I wouldn't rely on ALG numbers for projected resale of a new car.

    For most cars, a private party re-sale of anything above 50% of MSRP is a real bonus, after three years... The Forester might do better than that, but the chances of it being above 70% after 24 months is about nil, IMO..

    That stated, I don't think the current Forester lease program is all that great... It's a fair deal, but not spectacular.

    The one thing that you do get with a lease, is guaranteed resale.. You know you can walk away from the car at the end of the lease, even if it's worth less than the residual..

    regards,
    kyfdx

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  • ursusursus Posts: 48
    Yes, your assumption that lease would be under $5K is correct in this particular case: only if you get 75% residual on your lease (which will never happen), money factor is below or equal .0016 and lease based on your numbers.
    I did read your posts, but you keep changing numbers and the trim you want. That's why I gave you an example on the numbers you had before.
    kyfdx explained why 75% residual is a ridiculous number.

    Adjusted cap cost = cap cost (or selling price) + added costs (ex: acquisition fee) - down payment
    Money factor = corresponding interest you pay on your lease (0.0016 x 2400=3.84%).

    There are on-line lease calculators where you can just input you numbers to see the cost of your lease.
  • pano1pano1 Posts: 11
    Thanks for your patience, input and kindness stoop.

    Pete
  • ldl20ldl20 Posts: 10
    Car Man / Kyfdx:

    I went to test-drive a Forester and I was really impressed. I liked it a lot more than I thought I would. Anyway, I'm new to leasing, and thought I'd give it a try since I don't keep my cars too long, and I salivate over new cars all the time anyway.

    Told the salesguy I wanted to lease for 36 mo., 10K a year, little as possible down.

    He came back with $370 a month (tax included, I hope!), with $1,160 out of pocket (1st month + Acquisition + a dealer fee--not sure on the last figure), with a 15,500 buyout, and $25,600 selling price, which sounds good. When I asked for the money factor, he said it was "about 2.9."

    This is on a 2.5X Limited, with subwoofer (and mudguards and cargo floor cover, which he said they all come with). I'm in northern NJ and this was the first go-around, but doesn't it seem too high? What should the money factor and residual be on this model? I am ready to buy this month, BTW.
    Thanks for your help,
    lou
  • In Philly suburbs, I leased a 2009 Forester 2.5x Premium with Cold Weather a couple weeks ago.

    MSRP: $25,880
    negotiated price: $23,545 (~355 under invoice)
    acquisition fee: $595
    Gross cap cost: $24,140
    Residual (60%):15,528
    money factor 0.0016
    term: 36 months 15,000 miles/yr
    total due at signing: $550 (1st month plus title, registration fees and bullsh*t doc fee)
    total monthly payment: $303 + $27(tax) = $330

    Easiest experience I ever had leasing a vehicle. I called 5 dealers with nearly the same Forester in stock. All gave me their "best" quote right over the phone. The lowest dealer happened to be the closet. Lucky me. I hope the info above helps you guys in your lease.
  • lasher30lasher30 Posts: 18
    Car_Man,

    The Forester XT Limited is the other car I am considering.

    MSRP = $29,742
    Purchase Price = $27,650 (lease includes all the fees $28415)
    Money Factor = .0012
    Term = 36
    Residual =58%
    Monthly lease payment = $386.83 (what's due at signing)

    Thanks for your help.
  • lasher30lasher30 Posts: 18
    Car_Man,

    Forgot to add the miles. The Forester XT Limited is the other car I am considering.

    MSRP = $29,742
    Purchase Price = $27,650 (lease includes all the fees $28415)
    Money Factor = .0012
    Term = 36
    Miles = 10,000
    Residual =58%
    Monthly lease payment = $386.83 (what's due at signing)

    Thanks for your help.
  • CarMan@EdmundsCarMan@Edmunds Posts: 38,515
    Hey Pete. Unfortunately, Subaru is no longer providing support on two year leases. If you really want to lease a Forester, you would be much better off going with a treee year lease.

    Given the option of a three year lease versus financing or paying cash for a Forester, I probably would go with the lease. Subaru's lease program on it is pretty good right now.

    Given the choice between a two year lease on one and paying cash or financing, I definitely would choose the latter.

    Car_man
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  • CarMan@EdmundsCarMan@Edmunds Posts: 38,515
    Hi tomdc. Here's the information that you're looking for. Through March 31st, Subaru's buy rate lease money factor and residual value for a 36 month lease of a 2009 Forester 2.5 X with 10,000 miles per year are .00120 and 58%, respectively. Subaru is not currently providing any cash incentives on the 2009 Forester.

    Car_man
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  • CarMan@EdmundsCarMan@Edmunds Posts: 38,515
    Hi Lou. Subaru's current buy rate lease money factor and residual value for a 36 month lease of a 2009 Forester 2.5X Limited with 10,000 miles per year are .00120 and 55%, respectively. A money factor of .00120 is indeed equivalent to an interest rate of around 2.9% (2.88%).

    It is difficult for me to tell how good the selling price that you were quoted for this is without knowing what either its MSRP or dealer invoice price are. You can look those numbers up over in the New Vehicle Pricing section of this site. Let me know what one, or better yet both of them are and I will gladly give you my opinion on the price that you were quoted.

    Car_man
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