My Lease, My Numbers, and The Future Value of an FR-S

[Hardway]

I have seen many posts throughout various forums regarding the speculation of how well the FR-S will do on the used market. Seeing that the FR-S is going in to 2015 production we already know it’s going to be around for at least another year and with the convertible on the way, its market share should increase. What is still surprising is that virtually zero marketing has been done by either Scion/Toyota or Subaru for their respective cars. Even to this day everyone that sees my car asks me what it is. Oh well, I am a lucky owner for the next 3 years and will continue to be an ambassador for it.

In regards to value in the near term, it is really too early to tell since even the earliest cars are only about 1.5 years old. I think these are going to be very desirable on the used market since the as-new price is a bit steep for most. However, picking one up for $16K - $22K depending on mileage and options should be a good deal. Since I am leasing my car I know exactly how much Toyota Financial says the car will be worth on February 14th 2017 with 36,000 miles on it, $16,632.80 aka Residual Value. Based on my current driving habits I will not reach 36K miles and the car is garage kept, I have no kids, no one will ever eat in it, and our dogs will never see the interior. So it will not only be low mileage but will also be in exceptional condition. At the end of 3 years depending where my life is, my experience with the car, and what else maybe out there at the time will determine if I keep it.

So should you buy or lease and FR-S? It is a good question to ask since there are pros and cons to both. The advantages of buying a car are pretty straight forward, you are buying it to pay it off and truly own it. With this you are free to do just about whatever you want with the car as long as the bank gets a payment from you each month. If you are buying it outright, good for you! The con you are buying a depreciating asset which some people care about and others don’t. Also, if you like to get a different car every few years you usually have to deal with negative equity and other nuances of selling something you don’t truly own. Yes, you can always trade it in but that doesn’t always work out for the better. If you are financing then in order to get your monthly payment down to a reasonable amount like $300 - $400/mo means not only having good credit but also putting some good money down. When I was looking at cars I was already pre-approved for up to $30K at 1.65% for 5 years. My 2013 FR-S out the door was $27,554.25 which would have created a monthly payment of $478.76. If I put $1K down it would have come down to $461.38. Not horrible but definitely not awesome.

The lease works like this. I put $1K down and that created a monthly payment of $368.67. The big pro here is I have the opportunity to walk away free and clear after 3 years and I have owner the new part of the car. The con is if I choose to buy the car I am not getting back 100% what I put in to it. The math works like this.

My payments: 36mos X $368.67 = $13,272.12
Cost of car: $27,554.25
Residual value: $16,632.80
Difference of cost to residual (expected depreciation): $10,921.45
Difference between my payments in to the car and the difference in cost vs. residual: $2,350.67

The $2,350.67 is essentially the premium paid for the flexibility the lease offers. In the grand scheme things it’s a loss but that is the cost of a lease. Regarding the mileage, the cost is $0.15/mile. Now, if the car has less than 36K miles on it they will credit me back the mile cost but not increase the price of the car if I were to buy it. If I chose not to buy it, I would leave the dealership with a check.

Food for thought. I have already pondered the idea of buying the car after 3 years. Given the same financing as mentioned above my payment would be $288/mo. If I put $1K down it would be $271/mo. This is attractive to me since I would personally know the history of the car and more than likely it would be taken out of DD status as something else would fill that slot. Also, if for some reason they were stop production of the car and it became “rare & desirable” I would definitely buy it since I have a price in writing that they have to sell me the car for, regardless of what else is going on the market.

That’s it. If you have any questions post them up. I hope this helps to explain a lease from a high level and give future owners something to think about.

[ashtray]

So you want to finance the car for 8 years? At some point down the road the car will need maintenance too, out of warranty. That would suck to be making car payments and the cost of repairs.

If you buy the car, after 3 years you've paid more than the residual value of the car. You not only can walk away, but you can sell it and pocket the difference. With a low interest rate you're paying roughly $5k/yr in principle, so that's $12k due on your loan in Feb 2017, on a car worth $17k.

If you put enough down now, you'll never be upside down on the value. And if you keep the car for 8 years, the last 3 you can spend without any car payment.

What you're effectively doing if you lease then purchase the car to keep the payments lower is saying "I can't afford this car, so let me pay more for it, spread over a longer time."

You see how the "can't afford" doesn't match well with "paying more". Also, used car interest rates are typically higher than new car rates.

[Burrcold]

No guarantee a convertible is on it's way.

[Quentin]

I'm planning to lease my FR-S. It is an employee lease, so not really the same as what most would get. It does have some strings. No mods. No track/timed events. I really should have leased the Rav4 and bought the frs.

[BlaineWasHere]

Leasing works well for people who don't care about cars. People who just see it as how they get to work. Always keep a new car under warranty for fixed cost transportation. I recommend this to all my friends who don't care about cars and have quality, steady income.

For me, I put a shit load down and I've almost paid my FR-S off already. That way soon I can get a comfortable and fast car to go along with my uncomfortable and slow car.

[BlaineWasHere]

Leasing works well for people who don't care about cars. People who just see it as how they get to work. Always keep a new car under warranty for fixed cost transportation. I recommend this to all my friends who don't care about cars and have quality, steady income.

For me, I put a shit load down and I've almost paid my FR-S off already. That way soon I can get a comfortable and fast car to go along with my uncomfortable and slow car.

[OICU812]

Originally Posted by BlaineWasHere

Leasing works well for people who don't care about cars. People who just see it as how they get to work. Always keep a new car under warranty for fixed cost transportation. I recommend this to all my friends who don't care about cars and have quality, steady income.

For me, I put a shit load down and I've almost paid my FR-S off already. That way soon I can get a comfortable and fast car to go along with my uncomfortable and slow car.

Agree leading is for commuters, or like you say those that don't care and just always want something new and plain IMO. It works for some reasons, people's needs are different.

[ZionsWrath]

Can afford payments VS. can afford car

not the same...

Just buy a preowned/certified 2013... It's the same car...

[suaveflooder]

Originally Posted by ashtray

So you want to finance the car for 8 years? At some point down the road the car will need maintenance too, out of warranty. That would suck to be making car payments and the cost of repairs.

If you buy the car, after 3 years you've paid more than the residual value of the car. You not only can walk away, but you can sell it and pocket the difference. With a low interest rate you're paying roughly $5k/yr in principle, so that's $12k due on your loan in Feb 2017, on a car worth $17k.

If you put enough down now, you'll never be upside down on the value. And if you keep the car for 8 years, the last 3 you can spend without any car payment.

What you're effectively doing if you lease then purchase the car to keep the payments lower is saying "I can't afford this car, so let me pay more for it, spread over a longer time."

You see how the "can't afford" doesn't match well with "paying more". Also, used car interest rates are typically higher than new car rates.

Originally Posted by ZionsWrath

Can afford payments VS. can afford car

not the same...

Just buy a preowned/certified 2013... It's the same car...

This!

[whoster]

I definitely care about cars (obviously, I'm on a forum).

I leased my FR-S.

I don't plan on buying it out at the end.

[ZionsWrath]

Originally Posted by whoster

I definitely care about cars (obviously, I'm on a forum).

I leased my FR-S.

I don't plan on buying it out at the end.

leasing with the intent of buying is not the same as leasing with the intent of having the hot new toy...

. . .

[tennisfreak]

Sorry but I have never found a scenario where leasing comes out better than buying even if you dont plan on keeping the car.

I've bought more than a few cars kept them 2 years and still sold them for more than my payoff.

Leasing = cant drive it much + cant mod it + loose money.

[TrackRider54]

I've bought and leased my fair share of cars. I've been burned a LOT more on a buy than a lease because I tend to unload a car after two to three years. I've never kept a car long enough to pay it off or build any equity in it. Leasing for two or three years then dropping off the keys and picking out your next car works best for me. I don't mod cars, I don't race them, and I typically don't pile on a bunch of miles. My wife typically has the "family hauler" and we buy that car and drive it until it starts to require lots of maintenance. May cars are my commuter, but also my toy.

[subiestyle]

The biggest advantage that I've observed from lease owners that know they will swap cars at the end of the lease is that they (not that I condone this or would do this myself) don't properly care for the car.

No break-in, very minimum maintenance, regular hooning while engine is cold, etc.