Add Yours: Subaru Solterra Owner's Registry

Subaru now offering a lease for the EV tax credit

4042 Views 30 Replies 13 Participants Last post by JayEM, 18 d ago

O. horridus

Discussion Starter · 3 mo ago

Other EV manufacturers have been using the commercial EV tax credit to get the $7500 credit and pass it on to customers. See Here’s Every EV that Gets A $7,500 Lease Credit (Updated February 2023) — LEASEHACKR for how this works.

My dealer said that just today they got an email saying Subaru was going to do this too.

It's on Subaru's web site: Special Offers | Subaru

Has anyone else seen this yet? The terms of the lease don't look that great to me, and it's unclear where the credit is being applied and whether the customer is actually getting a benefit from that.

If this does in fact help to lower the cost, that changes the equation dramatically for me. At $50k the Solterra seems quite expensive, but at $42,500, which is what I was expecting last year when I placed the order, it seems almost reasonable.

Save

Reactions: 1

21 - 31 of 31 Posts

O. horridus

Discussion Starter · #21 · 2 mo ago

robzrage said:
Subie dealer here. The $7500 comes off cap cost and is ONLY available on Leases. Finance and cash not available.

The whole "$7500 off" with a lease is a bit of a scam, because Subaru sets the lease terms to recover that $7500 AND MORE over the life of the lease.

The only reason I wanted to do a lease (or anything other than cash) was because Subaru said they could pass on the $7500 credit that way. I don't think the vehicle is worth $50,000 to me, but at $42,500 I would buy it. That was the equation before the new EV credit went into effect, and that's the amount I would have ended up paying if Subaru had delivered my vehicle last summer when promised.

Subaru, and almost every other manufacturer, promised a way to get around the new EV credit restrictions by offering a lease. With a lease, the lessor (Subaru) can take a business tax credit of $7500 because they are the owners of the vehicle. They promised to pass on that savings to the lessee (me). In theory then, I would be able to get the vehicle for $7500 off the MSRP, but I would have to pay some fees associated with the lease.

Specifically, for my Solterra, this is what the dealer tried to sell me:

MSRP $50,450
Down payment $2000
"Discount" of $7500
Various fees ~$1300
Net cap $44,143
Payments $996/mo for 36 months = $35,856
Residual $27,243

So if I lease a Solterra in order to get the $7500 discount, then immediately buy out the lease, I end up paying ~$65,000+ in order to acquire a ~$50,000 vehicle. That's not MY math, that's the written terms I got directly from the dealer. BTW, my credit score is well over 800, so these represent their best terms. I went back and forth with the dealer for more than a week over this - their numbers never added up completely and they didn't seem too interested in getting my business. I guess they would rather sell this vehicle at well over MSRP to someone walking in off the street than to me, so they weren't trying too hard.

The money factor I was quoted was .00414 which translates to an "interest rate" of 9.9%. (For comparison my credit union offered me 5.49% if I had wanted to finance the purchase.)

I canceled my order and got my deposit back, a year after I made the reservation. My daughter did the same after getting a similarly bad deal from her dealer. Maybe the second-generation Solterra will be a better value, but there's a lot of competition coming on the market so who knows what I will end up with. Fortunately, I don't need the vehicle immediately so I can take my time and buy for value rather than simply accept the bad terms offered by the dealer.

See less See more

Save

JayEM

· #22 · 2 mo ago

The current money factor is the real villain here. On our 2021 Outback, the MF was 0.001550 (3.72%) in February 2021. By the time we took delivery of our 2023 Solterra (February 2023) that had risen to 0.00310 (7.44%) - exactly double. OTOH, savings accounts (if you shop around) are paying a lot more now than they were 2 years ago, so even paying cash has a higher opportunity cost too.

I'm just glad I got in before the rate rose to 0.00414! That would be hard to swallow.

Save

Reactions: 1

voxel

· #23 · 2 mo ago (Edited)

O. horridus said:
The whole "$7500 off" with a lease is a bit of a scam, because Subaru sets the lease terms to recover that $7500 AND MORE over the life of the lease.

The only reason I wanted to do a lease (or anything other than cash) was because Subaru said they could pass on the $7500 credit that way. I don't think the vehicle is worth $50,000 to me, but at $42,500 I would buy it. That was the equation before the new EV credit went into effect, and that's the amount I would have ended up paying if Subaru had delivered my vehicle last summer when promised.

Subaru, and almost every other manufacturer, promised a way to get around the new EV credit restrictions by offering a lease. With a lease, the lessor (Subaru) can take a business tax credit of $7500 because they are the owners of the vehicle. They promised to pass on that savings to the lessee (me). In theory then, I would be able to get the vehicle for $7500 off the MSRP, but I would have to pay some fees associated with the lease.

Specifically, for my Solterra, this is what the dealer tried to sell me:

MSRP $50,450
Down payment $2000
"Discount" of $7500
Various fees ~$1300
Net cap $44,143
Payments $996/mo for 36 months = $35,856
Residual $27,243

So if I lease a Solterra in order to get the $7500 discount, then immediately buy out the lease, I end up paying ~$65,000+ in order to acquire a ~$50,000 vehicle. That's not MY math, that's the written terms I got directly from the dealer. BTW, my credit score is well over 800, so these represent their best terms. I went back and forth with the dealer for more than a week over this - their numbers never added up completely and they didn't seem too interested in getting my business. I guess they would rather sell this vehicle at well over MSRP to someone walking in off the street than to me, so they weren't trying too hard.

The money factor I was quoted was .00414 which translates to an "interest rate" of 9.9%. (For comparison my credit union offered me 5.49% if I had wanted to finance the purchase.)

I canceled my order and got my deposit back, a year after I made the reservation. My daughter did the same after getting a similarly bad deal from her dealer. Maybe the second-generation Solterra will be a better value, but there's a lot of competition coming on the market so who knows what I will end up with. Fortunately, I don't need the vehicle immediately so I can take my time and buy for value rather than simply accept the bad terms offered by the dealer.

Seriously stop listening to lying dealers. Read the contract. With Hyundais and Genesis leases the early buyout is based on the adjusted cap cost (has $7500 subtracted from MSRP) and nothing to do with residual. Dealers are often idiots or will lie.

There are multiple people who have bought out Hyundai EV leases and saved $6500. Almost no lease will force you to pay for unearned rent charges even if the dealer outright lies and tells you you will.

Save

Reactions: 1

FelineFreddie

· #24 · 2 mo ago

What??? A dealer salesperson/finance guy making untruthful statements?

Well, who could have possibly seen that coming???

What‘s the world coming to when you can’t even trust a car salesperson?

Save

Reactions: 1

O. horridus

Discussion Starter · #25 · 2 mo ago

Yup, I read all the fine print, which is how I know what it would actually cost me vs what they were saying it would cost me. I wanted to make it work, but not on those terms.

I got to test drive the car, and I do like it and would gladly buy it if I could get the $7500 off that I thought I was going to get when I made my reservation last year. It's not a matter of absolute cost for me, it's a matter of value. I already have an EV as my primary vehicle, and I can afford to wait for a better value to replace my remaining ICE vehicle. Maybe that will be a second-gen Solterra, maybe not. It just wasn't worth the trouble to me to continue to fight the issue with the dealer(s).

Save

Reactions: 3

davidsmartin

· #26 · 2 mo ago

voxel said:
There are multiple people who have bought out Hyundai EV leases and saved $6500. Almost no lease will force you to pay for unearned rent charges even if the dealer outright lies and tells you you will.

My Subaru dealer told me that if I buy the car before the end of the lease, I will have to pay the total of all remaining lease payments, including any unearned rent charges. When I read the contract for the lease under purchase option it says that I will have to pay the adjusted lease balance, and that is defined as the adjusted capitalized cost minus accrued depreciation. I suspect that the finance manager at the dealer is misinformed rather than lying. But before I sign the lease I would like to be assured that I am interpreting it properly. I tried to call the Subaru leasing people, however when I finally got a real person she did not know the answer to the question and told me to ask my dealer. When I objected to that plan she said she would transfer me to someone who could answer the question, but then she disconnected me. Is there any way to get a real answer to the question?

See less See more

Save

JayEM

· #27 · 2 mo ago

I've been looking up my payoff amount on Chase.com after each month's payment. It's exactly what I would expect, the residual plus all the future depreciation, nothing more (except sales tax). So far I've paid about $1,175 in finance charges (rent), each month is about $285 going forward (dropping each month). I plan to pay it off after one more payment.

My payoff is exactly the adjusted capitalized cost minus the three depreciation payments I have made ($2,075) plus sales tax on the residual.

The adjusted capitalized cost already has the $7,500 deducted, when the lease payments were calculated.

If the dealership person implied there was any kind of pre-payment penalty, that is not correct.

Save

John Austin

· #28 · 2 mo ago

I clearly don't understand these lease terms (and I'm not sure I want to) but the finance manager (whom I liked and trusted) when I leased my Solterra was clear that an early payoff of the lease would incur unexpected charges and was not a good financial idea. Of course, he/Subaru could have their own incentives for discouraging this plan. I have not read my contract as I don't expect to really understand it. I was asking about early payoff as a way to take advantage of the $7500 tax credit somehow applied to the lease and the lower loan rates available from my credit union. I was convinced to let go of my plan but would love to hear how the plan works for those who do initiate an early payoff. Real world data is helpful!

Save

JayEM

· #29 · 2 mo ago

I'll let you know in about a month. 4th payment will happen on May 11, payoff the following week.

Save

Reactions: 2

davidsmartin

· #30 · 18 d ago

My payoff is underway in my first month of the lease.

The MSRP of my limited with accessories and delivery charge was $51,342.
The dealer agreed to discount of $1955.
To this figure they added sales tax ($880), title fees ($117), lease acquisition fee ($595) and a dealer documentation fee ($499). Except for the acquisition fee these added fees would be the same if I had paid cash.
The gross capitalization cost was thus $51,447.
From this figure they deducted my down payment of $3000 and the $7500 tax credit for an adjusted capital cost of $40,977.
When I got the car I also paid the first lease payment of $652.
It took two weeks for my lease to show up on the Chase Bank site because the dealer made a mistake on the original lease and I had to come in and sign a new one.
The next step was to call Chase and ask them to mail my the paperwork to pay it off. That took a week to arrive. It showed a payoff amount of $40,710 if I pay before the end of my first month. I sent them a bank check for that amount. If all goes well, doing the lease should save me $7500 less the acquisition fee of $595 less the apparent rent charge for one month of $385 for a net savings of just over $6500.

I will let you know if it all works.

It seems clear that the dealer finance manager was wither misinformed or lying when he said that I would have to pay all the unearned rent charges.

See less See more

Save

Reactions: 2

JayEM

· #31 · 18 d ago

JayEM said:
I'll let you know in about a month. 4th payment will happen on May 11, payoff the following week.

My lease was paid off a week ago, when Chase removed my lease from my Chase dashboard (but my check didn't clear until Friday 5/19). The payoff amount quoted over the phone (and in the buyout documents they posted to my lease account online) was about $236 less than the figure shown online (which was itself only $0.08 off from what I had projected). Now I'm just waiting for the title to arrive in the mail.

I paid $1,226 in rent charges but the money I was holding earned about $743 in interest (taxable) so I'm still ahead about $6,900 compared to paying cash upfront.

I suspect "misinformed" best describes your finance manager, @davidsmartin (giving the benefit of the doubt).

Save

Reactions: 2

21 - 31 of 31 Posts

Top Contributors this Month