[R P]

Will your purchase be cash, finance or leasing and do you have a trade in?

I get the impressions that most purchases are leases, followed by financing. But times have changed with the higher interest rates.

In my case, I have cash available, as I sold my Kona EV earlier this spring (got a great price) and parked the cash in a high dividend ETF. But I always prefer cash anyways for several reasons. Even when I had a trade-in I would sell it privately for more than the dealer offered, and gave me more bargaining leverage for discounts (which may not be the case these days). I also kept my cars for at least 5 years (except only 3 years for the Kona), some as long as 10. The only leases I ever had was for company cars (am retired now) and only had to pay income tax for the Taxable Benefit portion.

I intend to keep the Solterra for some time, as it meets my needs with the off-road capabilities, and have more faith in Toyota reliability. It will not be my primary trip car (slow charging), and looking to get an Ioniq 5 or 6 for that (fast charging). That may take a while with the continuing supply issues, but am OK with that, as am still quite happy with my Crosstrek.

I am not sure about Hyundai reliability, though. My Kona had issues (all under warranty). My battery got replaced (recall due to fire hazard) and also the motor and reduction gear box. Also had to get an alignment with my rear wheels way out. Never took it off road as it only had 6.2" clearance and only FWD. But I did take it into the mountains in the winter, where sometimes the road surface was rough when the snow plowing didn't completely clear down to pavement, making for uneven surfaces and small potholes. The dealer told me this was a common issue with all Hyundai's, not just the Kona, and during the winter they were doing 1 or 2 alignments almost every day.

So how are you people planning to do your purchase?

 

[Snow Drift]

Lease. BEV technology is constantly changing, and I like the idea of putting the car back and walking away. I don't keep cars long.

 

[md.]

I would be financing. I, too, typically keep cars for a long time. I'm in Wisconsin, U.S., so trading in a car at the dealer has an advantage that you only have to pay sales tax ~5% on the difference between your trade and the new car. On a $50k vehicle, that's around $2.5k, so that's a big deal if you can save the tax on the car you're trading in for, say $30k. Good in that you save that money, but bad in that the dealer knows you'll save money with them so they know they can offer less than a third party would offer.

That's particularly important for me now, as I recently bought a Chevy Bolt EUV, so I'd be trading that in for the Solterra. If things don't work out great with the deal, I'll stick with the Bolt (really loving it so far!) and see if Subaru fixes some of the most glaring shortcomings in the Solterra a couple years down the line.

 

[JIm_in_PA]

I have not leased vehicles in decades as I tend to keep them much longer. So I suspect that when I do move on a Solterra, it will be a buy with financing 'cause I don't keep big piles of cash around. But I'd have to carefully consider leasing because it's also very likely that EV tech will at some point start to move quicker than it is right now and there might be an advantage to moving "up" after three years.

 

[R P]

I considered leasing my Kona EV back in 2019 for some of the reasons mentioned above. I knew EV technology was evolving rapidly and also expected resale value to drop rapidly with high depreciation. That didn't make for a good cash buy decision either. However, the Kona was the next gen EV design for Hyundai/Kia and they seemed to have a good rep with their first gen BEVs. And there just weren't a lot of alternatives at that time, really only the Bolt or a Tesla M3 (which my son owned). I liked the Kona best, so chose it. But when I did the calcs for lease vs buy, the lease costs were high due to residual values used. So I bought, intending to keep it for a longer time.

In the end, my fears of lower future value were wrong, and ended up getting $5K more than I paid for the car after 3 years use. I sold it with pre-orders in hand for the Solterra and Ioniq 5. I wanted both, and hoping one of them would become available within a few months, and then I wouldn't mind waiting for the other. The best bet seemed to be the Solterra as I was #7 on my dealer pre-order list and they were the largest dealer in BC, so should get a decent allocation. But as we know, things didn't turn out as planned.

I do want to buy the Solterra vs lease, though. I have more faith in Toyota engineering and reliability, so expect to keep it for a long time. Yes, it has slow charging (similar to my old Kona), but can live with that, as long as I get another BEV that will be a better trip car. The big feature for me, is the high clearance so can take to our cabin which has a very rough FSR road. My Crosstrek handled it well, better than my previous 4WD truck, and hoping the Solterra will be the same as the Crosstrek. Our cabin is off grid with solar, so will even be able to charge it there.

If I can get the Solterra in Dec or Jan, I will be happy. What I really miss after selling the Kona, is the 1 pedal driving. Makes for a much more nimble car, esp in the city. You can scoot quickly in and out of roundabouts, lane changes, and merges with more confidence and control than any ICE car, just with 1 pedal. Almost never have to use the brake, usually just for the final stop to keep it from creeping forward. It is a new way of driving and way more fun. Now just driving the Crosstrek, really hate how it coasts and coasts and coasts when letting off the throttle, so constantly having to use the brake. Just can't get used to that anymore.

 

[CTValleySubaruGuy]

I'm not a lease guy. I keep my cars 10 years and more, I drive them far more miles in a year than a lease typically allows, and I drive them in conditions that would make me cringe if it were a leased vehicle. As I've said, whilemI buy the best ai can afford when it's time to invest, I don't need to be constantly upgrading to get the greatest technologies.

Since I don't ever foresee me being in a situation where I can drop the full retail value of a vehicle in cash, financed it will be. Crossing my fingers for some reasonable interest rate deals.

 

[BigPeteTO]

Anyone in finance will tell you to never buy something that depreciates as much as an automobile.

For those that say that people who lease can't afford to buy, I call b.s. I am perfectly able to pay cash for a car, but why would I? Here in Canada, you pay 13% tax on the invoice purchase price which is thousands of dollars on the typical vehicle purchase. When you lease, you only pay tax on the monthly lease fee. I'm not one of those "drive it into the ground for 10 years" kind of people. I love having a new vehicle every three years. When you are driving an old 10-year clunker, it's not longer safe by today's standards, and you are probably shovelling in good money after bad for constant repairs.

I walk into my dealer, hand him the keys, and he hands me a new set of keys for the next three years, so I love leasing.

Other than changing the oil and other minor maintenance updates, that's all I pay for twice a year. And with a 3-year lease, I don't need new brakes, tires, shocks, muffler, etc., etc. I hate car maintenance, and leasing absolutely works for me.

Yes, I know, I don't own it, but I don't care. I get a new toy every 3 years with the latest technology.

And in the era of EV vehicles, with so many unknown issues, buying an EV is absolutely the wrong way to go. Lease it.

 

[442]

...I walk into my dealer, hand him the keys, and he hands me a new set of keys for the next three years, so I love leasing...

My dealer used to throw me keys as I walked in the door saying something like, "Hey, we got a new [insert model here], want to take it for a spin?"

Except for shady leases of years gone past, there's no reason to wait until the end of your lease to change cars. I ALWAYS get a 3 year lease with the lowest mileage allocation possible -- because it doesn't matter whether you go over that number if you trade the car in (even a day before your lease is up). Anytime during your lease you can get the fair market value for your car (which may be more than the lease buyout the dealer will perform) credited to your new car.

The only issue with some current leases, especially on EVs, can be the one's that won't let you purchase the vehicle if you like it.

 

[CTValleySubaruGuy]

Anyone in finance will tell you to never buy something that depreciates as much as an automobile.

For those that say that people who lease can't afford to buy, I call b.s. I am perfectly able to pay cash for a car, but why would I? Here in Canada, you pay 13% tax on the invoice purchase price which is thousands of dollars on the typical vehicle purchase. When you lease, you only pay tax on the monthly lease fee. I'm not one of those "drive it into the ground for 10 years" kind of people. I love having a new vehicle every three years. When you are driving an old 10-year clunker, it's not longer safe by today's standards, and you are probably shovelling in good money after bad for constant repairs.

I walk into my dealer, hand him the keys, and he hands me a new set of keys for the next three years, so I love leasing.

Other than changing the oil and other minor maintenance updates, that's all I pay for twice a year. And with a 3-year lease, I don't need new brakes, tires, shocks, muffler, etc., etc. I hate car maintenance, and leasing absolutely works for me.

Yes, I know, I don't own it, but I don't care. I get a new toy every 3 years with the latest technology.

And in the era of EV vehicles, with so many unknown issues, buying an EV is absolutely the wrong way to go. Lease it.

Some pretty amazing overgeneralizations there, starting with the fact that an old 10-year clunker isn't safe by today's standards. It certainly is, if you maintain it properly. And again, if you buy a good quality vehicle to begin with and maintain it properly. Granted, it may not be AS safe as something with a lot more technology, but that's not the same thing.

Since in the US, sales tax paid on a vehicle is directly deductible for both state (in most cases) and Federal income taxes, that's a wash.

And every time I have priced out a lease, the cost of the monthly financing payment, plus maintenance, plus an allowance for repairs, still comes up to less than the monthly cost of a lease. Routine maintenance is often included for the first 2-3 years of car ownership as well, and that includes all the minor stuff (oil changes, tire rotations, alignments, etc).

You have also completely overlooked the fees (often exorbitant ones) that you have to pay if you exceed your mileage allocation; which in my case would be on every time.

Fact of the matter is that there is no one right answer, only what is right for the individual.

 

[442]

Some pretty amazing overgeneralizations there...

I would say you brought just as many to the table

 

[JayEM]

Since in the US, sales tax paid on a vehicle is directly deductible for both state (in most cases) and Federal income taxes, that's a wash.

Um, source please?

Pretty sure this isn't true. Especially in the 9 states that have no income tax, and probably most of the other 41, but federal too.

 

[442]

Since in the US, sales tax paid on a vehicle is directly deductible for both state (in most cases) and Federal income taxes, that's a wash.

Getting a deduction is not even remotely the same as not paying tax in the first place.

 

[Snow Drift]

Leasing is usually $100+ less per month than buying a car. You are only paying for the depreciation, and in many states the sales tax is also only based on depreciation. In NY we pay the sales tax (depreciation) up front, it is not rolled into your payments.

Maintenance plans are certainly not the norm, especially at Subaru. Then again, the Solterra will have just about zero maintenance, so don't get conned into paying for a plan.

Interest rates are always more on a lease. However, it is nice to know you can return the car and don't have to worry about resale value. It does also, as you stated, allow for more car for the money.

 

[Snow Drift]

Um, source please?

Pretty sure this isn't true. Especially in the 9 states that have no income tax, and probably most of the other 41, but federal too.

He is correct, but not everyone would do it...

"You can elect to deduct state and local general sales taxes instead of state and local income taxes, but you can't deduct both. If you elect to deduct state and local general sales taxes, you can use either your actual expenses or the optional sales tax tables... As an individual, your deduction of state and local income, sales, and property taxes is limited to a combined total deduction of $10,000 ($5,000 if married filing separately)" (IRS).

So, if you live in a high tax state, own a house and or have a job, you probably pay more than $10k in SALT taxes anyway.

 

[FelineFreddie]

I think the main take-a-way is that leasing can be financially advantageous in some situations for some folks, and purchasing can make more sense in others. As is often the case, one size doesn’t fit all circumstances.

 

[CTValleySubaruGuy]

Um, source please?

Pretty sure this isn't true. Especially in the 9 states that have no income tax, and probably most of the other 41, but federal too.

How about my last 20 years of tax returns. Of course, if you take the standard deduction on your federal taxes, you can't claim it, but itemizing always works out in my favor, so I do it.

State taxes are a mixed bag, depending on where you live. I have always filed state taxes in a New England state, where you use your adjusted Federal income as your taxable income for state purposes.

 

[CTValleySubaruGuy]

Getting a deduction is not even remotely the same as not paying tax in the first place.

No it's not, and that's not what I meant. But the savings on your income taxes from taking the deduction for the amount that you pay, especially in higher tax brackets (because deductions always come out of the highest tax bracket) will substantially offset the differential savings at purchase. I expect to pay $3300-ish in taxes on my vehicle. Since I'm in the 32% Federal tax bracket and 14% for CT, I see roughly half that come back in the form of reduced tax liability. Compare that to what he saves by leasing, and the difference isn't worth bothering about. If tax credits were still in play (and while on life support, they're not dead yet), that would tilt the balance massively in favor of the purchase.

 

[Ducatista]

Anyone in finance will tell you to never buy something that depreciates as much as an automobile.

For those that say that people who lease can't afford to buy, I call b.s. I am perfectly able to pay cash for a car, but why would I? Here in Canada, you pay 13% tax on the invoice purchase price which is thousands of dollars on the typical vehicle purchase. When you lease, you only pay tax on the monthly lease fee. I'm not one of those "drive it into the ground for 10 years" kind of people. I love having a new vehicle every three years. When you are driving an old 10-year clunker, it's not longer safe by today's standards, and you are probably shovelling in good money after bad for constant repairs.

I walk into my dealer, hand him the keys, and he hands me a new set of keys for the next three years, so I love leasing.

Other than changing the oil and other minor maintenance updates, that's all I pay for twice a year. And with a 3-year lease, I don't need new brakes, tires, shocks, muffler, etc., etc. I hate car maintenance, and leasing absolutely works for me.

Yes, I know, I don't own it, but I don't care. I get a new toy every 3 years with the latest technology.

And in the era of EV vehicles, with so many unknown issues, buying an EV is absolutely the wrong way to go. Lease it.

100% agree with this. Exactly my reasons for leasing. I usually take a 4 year lease, but I’m out by 3 years. Dealer always wants to buy the car around that time and it usually results in positive equity. And just as you mentioned, for my driving amount, I am never paying for bigger ticket items like tires or brake parts. Just basic service.
Also, I agree with leasing current generation of EVs. So many changes, so many unknowns for the next 5-10 years. Lease it and give it back!