2005 Subaru Legacy

[ChrisLee]

Hi guys. I am new here. I am pretty close to getting a Subaru Legacy 2.5 GT. I am not sure whether or not i should go with a finance or lease. Also what would be a good price on a lease?

[RallyKeith]

I was always told that if you want to own the car and keep it for a long time then loan is the way to go, and if you fully intend on replacing the car in a few years then lease is the way to go. Most people think that you can't lease if you put a lot of miles on a car. This isn't the case. You can specify yearly mileage and the "hit" you take for extra mileage is usually no different than would be reflected in a hit you'd take selling the car if you in turn had "bought" it and taken out a loan.

 

Keith

[ChrisLee]

I was always told that if you want to own the car and keep it for a long time then loan is the way to go, and if you fully intend on replacing the car in a few years then lease is the way to go. Most people think that you can't lease if you put a lot of miles on a car. This isn't the case. You can specify yearly mileage and the "hit" you take for extra mileage is usually no different than would be reflected in a hit you'd take selling the car if you in turn had "bought" it and taken out a loan.

 

Keith

 

3000 down 320 a month 36 months. Is that a good deal?

[bjwirth]

grr.. I hit reply instead of edit.

[bjwirth]

I need more info to determine what kind of deal that is:

-MSRP

-Selling price

-#miles

-if this includes tax

-is it $3000 down, or is it $3000 due at signing

-MF and residual if you have it

 

Normally leasing subarus is not that great of a deal because they don't tends to have great resale (Before I get flamed, I didn't say it had bad resale, just not GREAT resale)

[ChrisLee]

I need more info to determine what kind of deal that is:

-MSRP

-Selling price

-#miles

-if this includes tax

-is it $3000 down, or is it $3000 due at signing

-MF and residual if you have it

 

Normally leasing subarus is not that great of a deal because they don't tends to have great resale (Before I get flamed, I didn't say it had bad resale, just not GREAT resale)

$28364 msrp

sp -?

miles = under 40

3000 down on the lease

Dont have mf and residual

 

U said subarus dont tend to have great resale so why would i want to buy ? If i lease i dont have to worry about the resale

[Zephyr]

$28364 msrp

sp -?

miles = under 40

3000 down on the lease

Dont have mf and residual

 

U said subarus dont tend to have great resale so why would i want to buy ? If i lease i dont have to worry about the resale

 

So the dealer is going to make you spend more up front because they know they may not be able to make up the difference when they turn the car around for used.

 

I also believe a lease would be a good option for this car. In the next 5-10 years, fuel economy is going to be a big issue. With more and more hybrid cars hitting the road I believe the cost of gas will rise even more. You may have a very hard time either selling the car or paying the premium price for fuel in a number of years.

[bjwirth]

$28364 msrp

sp -?

miles = under 40

3000 down on the lease

Dont have mf and residual

 

U said subarus dont tend to have great resale so why would i want to buy ? If i lease i dont have to worry about the resale

 

when I said miles, I meant how many miles/yr

 

THe residual takes into account what the future resale will be and is more or less on target. The only reason I said poor resale cars are bad lease candidates is because you are essentially financing more of the car. so if you have a car that has a high residual, you have more money to invest or spend elsewhere. That's not to say you are at a disadvantage when you are leasing, youre just not in as good of an advantage if you lease a low residual car. A couple of months ago, the subaru lease had the legacy at a 41% residual for a 3 yr 15k mile lease and a whopping .00305 MF. This sounds like a lot considering you can lease a tribeca for $2k down and 319/month for a more expensive car.

 

Beleive it or not, I'm a big proponent of leasing. I actually like the advantages of leasing- but only if the deal is right. If you get some of those numbers, I can tell you exactly where the dealer is ripping you off.

[ChrisLee]

when I said miles, I meant how many miles/yr

 

THe residual takes into account what the future resale will be and is more or less on target. The only reason I said poor resale cars are bad lease candidates is because you are essentially financing more of the car. so if you have a car that has a high residual, you have more money to invest or spend elsewhere. That's not to say you are at a disadvantage when you are leasing, youre just not in as good of an advantage if you lease a low residual car. A couple of months ago, the subaru lease had the legacy at a 41% residual for a 3 yr 15k mile lease and a whopping .00305 MF. This sounds like a lot considering you can lease a tribeca for $2k down and 319/month for a more expensive car.

 

Beleive it or not, I'm a big proponent of leasing. I actually like the advantages of leasing- but only if the deal is right. If you get some of those numbers, I can tell you exactly where the dealer is ripping you off.

 

What is MF

[bjwirth]

What is MF

MF is the money factor, other wise known as the finance rate for leases. it roughly correlates to APR interest if you multiply the MF by 2400. a MF of 0.00305 is like a 7.3% finance rate.

 

3 things determine your lease payment, the cap cost (final negotiated price less down payment), the residual (aka buyout) and the MF. The residual is set by the leasing company and is based on the number of miles driven for that particular model. The MF is also set by the leasing company, but dealers have been known to pad this number and take the profit.

 

BTW, I just ran the numbers using the data from a couple of months ago, and my number came up MUCH higher. what this tells me is that subaru is probably doing it's employee pricing thing (aka summer clearance) and offering better rates and incentives.

[dpoppeli]

What is MF

 

Was curious myself... so Googled it:

 

Money Factor:A term commonly used in auto leasing industry. Under typical auto leasing terms, the interest rate can be approximated by the money factor multiplied by 24. When a dealer quotes a money factor k, the customer should have the confidence of knowing that he/she is getting an interest rate slightly better (lower) than 2400 k %.

 

 

and...

 

 

Important:When a car dealer quotes you a Money Factor, you can always multiply that by 2400 to get a very good feeling about the actual interest rate %. Also, the monthly payment calculated by the Money Factor is always slightly lower than that calculated by the 'real' formula. For example, if a dealer tells you his lease Money Factor is .0025, then you simply multiply that by 2400 to get 6. Now you know that the actual interest rate behind this Money Factor is slightly below 6%. Sometimes a dealer will give you a Money Factor like 3.1 so it sounds like a low interest rate. In this case you just multiply that number by 2.4 and immediately know that the interest rate is about 7.44%.

[ChrisLee]

MF is the money factor, other wise known as the finance rate for leases. it roughly correlates to APR interest if you multiply the MF by 2400. a MF of 0.00305 is like a 7.3% finance rate.

 

3 things determine your lease payment, the cap cost (final negotiated price less down payment), the residual (aka buyout) and the MF. The residual is set by the leasing company and is based on the number of miles driven for that particular model. The MF is also set by the leasing company, but dealers have been known to pad this number and take the profit.

 

BTW, I just ran the numbers using the data from a couple of months ago, and my number came up MUCH higher. what this tells me is that subaru is probably doing it's employee pricing thing (aka summer clearance) and offering better rates and incentives.

 

The the residual will correspond to what it will cost me to choose the buy option at the end of my lease?

[bjwirth]

The the residual will correspond to what it will cost me to choose the buy option at the end of my lease?

yes....err no. I'm not sure what you're asking. The residual is what it will cost you to buy the car at the end of your lease. The buy option is essentially $0. Some leases have a disposition fee (the fee if you want to walk away) but is usually waivable. The residual is also used in the calculation.

 

No offense, but the car dealer must have been drooling when he saw you coming. This is the problem with leasing... most people don't understand it and dealers can take advantage of that fact. But don't worry, like anything else, knowledge is key.

 

Here's a quick and dirty formula for calculating lease payments:

 

(CapCost - Resid)/36 + (CapCost + Resid)*MF = PMT

 

CapCost is the negotiated selling price of the car - down pmt

Resid = MSRP * (%) [the percentage used is typically (but not always) based on ALG data. some companies like BMW use inflated residuals to lower payments]

 

Like I said before, the deal you got doesn't seem bad at all considering what the lease payments were a couple of months ago. I'm just wondering what Subaru is doing (lower MF, inflated residuals, $$ in the trunk) to get the payment as low as what you got. If I didn't see the tribeca deal, I would have said you got a good deal.