Really desperate for some insight here, as I have folks I know coming at me from every angle telling me completely different things.
I've been looking into replacing my car, which is terrible in snow, high mileage, and old. In looking around and chatting with people it seems like my best bet would be a Subaru, probably either an Impreza hatchback or a Crosstrek. The AWD is a big factor. It seems like these vehicles really, really hold their value and it hardly seems worth it to look at used models (although I could be wrong here).
One friend is telling me that leasing, then buying out at the end of the lease, is the way to go and will get me the best deal. His logic is that when you lease you are only paying the depreciation of the vehicle. Then when you buy it out at the end, you pay taxes and fees only on the DEPRECIATED value rather than the full value of the car, and you get a nice car that you personally know the history of rather than a used car with a less known history.
Other friends are telling me leasing is bad, although most of them have not gone into any deep detail as to why leasing is bad other than the usual, I will have to watch my mileage and have to be careful with it (although it seems like that won't matter as much if I buy it out anyway).
I crunched some numbers and based on what I am getting, it does seem like leasing to buy is the best deal… but I wonder what hidden fees I am forgetting.
So for leasing to buy, here is what I got, using numbers for the Impreza hatchback from a local dealer. Here is a link so you can double check the numbers and fine print ( https://www.vanbortelsubaru.net/global-incentives-search/2019-Subaru-Impreza-5-door-Offers-US2019SUB67ebe16cd3e2fd3c520ed09.htm ). The company I am looking at lists the base price of the Impreza at $20,980. The lease down payment is $2000. I then pay $205 a month for 36 months, so $7,380 for the length of the lease. The website says the buy out residual is then $11,749. My bank offers a rate of 4.64% on 3 year old vehicles if you have good credit (I do). Sales tax is 8%. An online loan calculator ( https://www.cars.com/car-loan-calculator/ ) said that given those numbers and no additional down payment I would be paying $239 a month for a 60 month loan, totaling $14,340 by the end of the loan. That would bring the total cost of the lease and then loan to $23,720.
So, comparing that to buying outright. Using the same numbers, so a $2000 down payment and a 60 month loan with my banks APR for a new car of 4.44% and 8% tax, the calculator says I would have a monthly payment of $386, coming to $23,160 by the end of the loan. Combined with the down payment that is a total cost of $25,160, or $1,440 over the cost of the lease-to-buy.
Even with a $7,000 down payment I am getting $293 a month for a final cost of $24,580.
I can see where buying used wouldn't make much sense, because the used Subaru Impreza hatchbacks I see around here looking on Car Guru, at 3 years old and around 36,000 miles, are selling for $15,000+. If they will sell me a "used" car that only I have used for $11,749, that just seems to make sense as the best option.
So, what am I missing here? I have never leased before so I am super suspicious that I am missing some hidden fees or anything that would stop this from working the way it seems to on paper at the moment. I really like the idea of those lower monthly fees but I don't want to screw myself over somehow and while I am careful with money, I know I am not the best with numbers or anything deeper than financial basics.
I am fine with buying used, or new, or leasing. I'm not one of those people who needs a fancy new car or the best and brightest, I just want something reliable, good in snow, that will last me a long, long time, and I want to take the best financial route to get it.
EDIT – I am not looking for advice on what car to buy. I am looking for advice on leasing vs buying that goes a bit beyond just saying "leasing/buying is bad", or fees and numbers I may not have taken into account when doing the above calculations on the overall cost of owning the vehicle. I may or may not stick with them but for now, Imprezas or Crosstreks are what I am looking at and doing calculations with.