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Does anyone know how often Volvo offer incentives? Is this a better incentive than most?
I don't want to miss any substantial discount I can approach the dealer with, yet I don't what to rush in purchasing it before 1/3.
Any help would be appreciated.
First of all, there is no free lunch. Whether buying or leasing, no one else is going to pay for the interest and depreciation associated with the car. YOU pay for it either way. So, how does lease make sense financially? Two things:
(1) Sales tax: Because you don't buy the whole car, you only pay sales tax on the rent. For a $40k car @8% tax rate, that is a saving of $3,200 up front, which translates into $89 monthly saving on a 36-month lease.
(2) Discount/incentives/rebates: In lease contract, the depreciation is defined as the difference between the capitalized cost (buying price) and the residual value, which is a percentage of MSRP. So, if you negotiate an effective price (net cost with all discount) that is substantially lower than MSRP, you can save on the depreciation cost because you receive a portion of the residual value which you never pay for. (But be careful to make sure the residual ratio is fair first.)
Therefore, in addition to Gardencar's criteria, lease would not make sense if your state make you pay sales tax on the full cost of car for leases; if you intend to buy the car at lease end; or if you drive more than 15k miles a year.
Another way you might do well when leasing is if you are able to sell the car at or near the end of the lease, for a price higher than the pay off amount. You then pocket the difference and hopefully save a couple of thousand.
Sell a used car for a price higher than pay-off?
I wish you the best luck, unless you buy a collectible item that appreciates over time.
The best way to save money is to buy a car and keep it till it starts falling apart. That is one of the reasons for us to stay with Volvo, which is so famous for its longevity.
I have tried it all - cash purchase, financing, lease. The only way to save is to pay cash and keep the car for a long time.
Neither financing nor leasing make any economical sense - you loose money either way. The difference is in the life style. You lease if you can afford driving a brand new car every 2-3 years. You finance if you can afford a new car every 4-5 years, otherwise - you save money (in essence - self-finance, accumulating an interest) for 5-7-10 years and then buy a new car for cash.
I wish I would learn such self-discipline earlier in my life, saving a bundle that I have paid as an interest in the past.
2005 XC90 2.5T AWD
Metallic Paint (Ruby Red)
Premium Package
Versatility Package
Climate Package
Park Assist
Bi-Xenon Headlamps
MSRP: $43,885
Selling Price: $38,756
I'm a recent college graduate. The information on Volvo's website says that there are some benefits for recent grads but no details. Can anyone provide some insight? Thanks!
An example.
If I borrow $40K @5.25% for 4 years - my monthly payment would be $925.70.
If, on other side, I invest this money @10% (my actual portfolio performance for last 5 years is 10.7% with rather conservative investments) for 4 years, I will end up with almost $55K.
I am sure, that additional $15K will be more than enough to maintain my car for 4-5 years. An extended warranty for additional 4 years/48K miles for my S80, that I have purchased @49,950 miles was just $2200.
And after 6 years of saving - the interest along will be enough to buy my next car, as the value of my investment will be more than $90K.
Make sense, dolphin?
If you can earn 10% on your money and you can borrow at 5.25%, run to the bank and borrow as much as you can.
Guy
And I am not sure, that I understand you. Of course, I do not have 40K at the beginning. You did not get 40K, you get a car that is worth of 40K initially.
In first case, I buy my car today, borrowing 40K, paying interest to the lender.
In second case, I first save for four years, investing $925 every month, and after 4 years buy the same car for cash, and have 15K to spare.
I will agree with you, if I will be in such position, when I can keep investing $925 per month and borrow the money and pay additional $925 back to the lender.
I think I've got a point of confusion.
I meant investing $925 per month from ground zero.
I've ran some calculations - It takes a return on investment of 10 % or more and difference between interest earned and interest paid of 4.5% to get into the situation when borrowing money to pay for a car is profitable, consider that you already have a full sum at ground zero.
So, in my previous example, if I would have 40K in my portfolio that makes 10%, then borrow money @ 5.25% and stop investing for 4 years I will be slightly ahead (about $1200) of other scenario, when I pay cash, but keep investing $925.70 for four years.
But if I borrow @ 7%, I am better off (about $2000) paying cash from my portfolio and keep investing $957.85 every month.
But in any case it is profitable to keep your car for extra 4 years, investing money toward the future cash purchase, and that what was my original point.
And my original example was that you have $0 today. In this case my point remains - hold on on old car, save for 4 years and buy the car you want for cash later.
I also ran a few calculations considering the trade-off value, but still remain the same conclusion.
I am afraid that your last 2 posting will confuse a lot of people. It is not that complicated. As far as Loan 101 is concern, one should not pay cash if the cost to borrowing (5.25% in you case) is lower than return of investment (10% in your case).
I agree with you 110% that the best way to save money is to BUY a car and drive it for as long as it will last. However, when it comes to decision of buy vs. lease, as you said, it is more of a question of life style. If you keep a car for more than 5 years, it is definitely better to purchase it (either pay cash or financing). If you like to change car every 2-3 years, for sure lease is the way to go. Between 3 and 5 years, it depends. Generally, purchase will be the safer bet unless you find special lease deals that can do better.
One important thing that you need to keep straight is whether you're talking about pre-tax or post-tax dollars. You PAY interest on car loans in POST-tax dollars (i.e., what's left after Uncle Sam, etc. takes a bite out of your paycheck). You RECEIVE investment returns in PRE-tax dollars (i.e., it's what Uncle Sam, etc. takes a bit out of.)
It's usually easiest to deal with everything in POST-tax dollars. For instance, the 5.25% car loan listed above really "costs" 5.25% on an POST-tax basis. But the 10% investment return. Well, in POST-tax dollars, it ranges anywhere from 5% (if you are in the highest possible federal and state tax brackets) to about 8% (if you are in a relatively low federal bracket (or the return is capital gains/qualifying dividends) and you are in a no-income-tax state.)
You should also consider that that while the rate you PAY is likely to be fixed (or to vary in a narrow band), the income you RECEIVE will generally vary in a wide band (e.g., the stock market can return 30% in a year, or it can return MINUS 20%).
Hope that clears things up. ;-)
The Edmunds Volvo options MSRP's are all incorrect - too high. Use the pricing tool on Volvo's website to get correct pricing.
2005 XC90 2.5T AWD ($34,840 + $1,775)
Metallic Paint (Ruby Red) ($450)
Premium Package ($2,995)
Versatility Package ($2,100)
Climate Package ($625)
Park Assist ($400)
Bi-Xenon Headlamps ($700)
MSRP: $43,885
Hope this helps.
I also have one dealer who has already offered me $500 below sticker on the V8 (an "internet special") - to quote Frank Slade "I am just getting warrrmed up!"...
Does anyone know if the $1500 cash to dealer quoted in the incentives section here is correct?
I was looking for any good deals around here and mostly they got around $5,000 down from MRSP...
Here is a quote from local dealer...
XC90 2.5T FWD
base MRSP $35,290
MT paint $475
Premium $2,995
Versatility $2,100
DVD $1,995
18" Wheel $750
Wood steering $325
Park assist $400
Destination $695
Total MRSP $45,025
which is exactly same as volvo web site...
He can make $3,000 down from this price...
I ask about the rebate on Versatility, he said it's already inside $3,000...
Please advice me how I should get a good deal/incentives...
I request two other dealers on other town, but never heard yet...
1. Bargain really hard, but do it with the manager, ask the sales person politely to step out, and make manager believe that you WILL walk away to the Acura dealership.
2. Much more easy - fill-up one page Overseas delivery order. Your OSD price will be 41,075. $45 short of $4000 in savings.
-Climate
-Versatility
-Touring
-Park Assist
-Metallic Paint
The price is 43060 in Houston through a leasing company. The monthly payment is $664 and this is 0 down, no security deposit, 12k mi, 48 months and sales tax.
Question(s):
1) Is this a good price? Anyone have any experience with Prolease in Houston?
2) I'm being told that even though I'm leasing the car for 48 months I have to pay the sales tax on the entire cost of the car and not for the 4 year depreciation. Is this true?
3) Is leasing from a dealer a better option?
Thanks.
Regards
Darrell
Thanks,
Chris
Most inportant thing is my family enjoy this car so far...
Good luck for those who are seeking this car...
thanks,
Configuration is very much the same: 2.5T AWD, premium, climate versatality, 17" wheels, destination fees, black (no metallic) all for $38900 from the northwest. Great vehicle, nice ride, higher gas prices (but no surprises here). This is exactly what we were looking for. We have seen other people get metallic and premium sound for the same price but I guess it depends on the place where you are looking. We live in the NorthWest and last week saw an ad that had $2600 off MSRP. If you work that out on your quote, you should be seeing a good bargain there.
Edmunds shows manufacturer's rebate of $1250 for lease or return customers. Delaer incentives of a $1000 on top of that with a little bargaining should help you. Go around with the interet managers and get a feel of what they have to offer if you are not seeing good pricing.
I hate to ask, since you said not to, but why are you doing this?!! Problems with the T6?
brentwoodvolvo, "Real-World Trade-In Values" #1, 9 Jul 2000 1:00 am
Just wondering what you actually bought in the end. I too live in Mpls and see that there are only a few dealerships. It looks like I will have to go even more prepared to bargin with a monopoly. Did you end up leasing or buying?
Thanks,
Ryan
Premium, versatility, climate, metallic paint, rear parking assist, navigation, AWD
That's not bad according to Edmunds/KBB, so I go okay, get me that car. Well now they tell me they found a car with all those features, but it also has wood steering wheel and Xenon headlights, which are options I could care less about. They tell me they'll sell me that car for $42,890, which is nearly $1000 for options I don't want. Maybe it's a good deal, maybe it's not, but I wonder if I'm being the victim of the old bait-and-switch. They're giving me the choice of that car, refunding my $1000 deposit, or waiting to see what's coming with the 2006 models.
Any advice or pointers? Thanks in advance for your help.
And overall, we are talking about 2% increase ($890 over $42,000). Just get it and enjoy.
I have opted for wood, and I have passed on Xenon, and now regret it, after driving my friend's BMW with them at night.
Thanks so much for your advice. I may just take the plunge.