Any car finance guys? Extend lease or buy-out / flip to Ford as trade in?

[jaruss01]

For total transparency

I have a 2018 Outback Limited 2.5l w/ eyesight. Basically loaded. The lease is up on 2/28/21. Subaru is allowing me to extend for 6 months (month to month), but no later than that. My Bronco reservation was 11pm EST night of reveal, so really 50/50 that i get it by 8/28/21. We have a second sedan, and MAY make due. But if our family is stuck with 1 car for a month or so, its not the end of the world, but if its 5 months, I run the risk of the wife saying to stop messing around with Ford, and get a proper SUV given we are expecting kid #2 in early 2021 (this scenario is my biggest concern, as it dashes away all my hopes to get the Bronco if it gets delayed into year end 2021).

The car is under mileage - it has 17.7k miles (it should have around 24k at this time). Total lease mileage is 30k, figure I am am tracking to have 23k miles when the lease is up 2/28/21, or 27k miles by the time I get the Bronco in late summer / early fall.


Option A
Extend the lease, and take the chance of not fully bridging the gap?
$335/mo, for 6 months, with a $300 dispo, is $2,310



Option B
Buy-out the lease in February in cash. Buyout is $22,400. But i need to pay tax on that, which is another $1,500 (tax really is the biggest negative here) plus any fees (not sure what those end up being. Assuming that i am NOT spending $2,310 to extend the lease and pay a dispo charge, my B/E trade-in is $21,600 (buy out + tax, less $2,310, exc. whatever fees i paid to take ownership, title, etc). So B/E may be a few hundred less.

KBB is showing my car trade at $22.6k-$24.4k (if i put in my future miles say, 30k by August 2021 assuming that's when i trade it into Ford). However, the car will be a year older by then, so lets ding the value at 2k and call it $20.6k-22.4k. So around my B/E. Unfortunately, any value I picked up on having the car being under mileage is wiped out by having to pay tax in this scenario.

Some things to note -
1. I am not strapped for cash by any means, and would use the trade in as a down payment (i was initially thinking of a $20k down payment on the Bronco even if i gave the Subaru back, so the numbers actually work out well given the buy-out price).
2. I do NOT want to sell the car privately, and I am not considering that as an option.
3. Subaru has confirmed that they will not stroke me a check for any equity I have given I am under-mileage. They dont want the inventory.
4. My credit score is around a 835, but not sure if that comes into play here
5. The car is in excellent condition (assuming very good condition on KBB estimates)

What would you recommend? I dont see how my Ford dealer would give me a ballpark trade-in value now, 1 year early. So Option B comes at some risk, especially if I am handcuffed to that dealer. For what it's worth, i have in writing that there is no ADM on the Bronco, but still at their mercy of the trade in price. Is it possible to maybe have Ford buy out my lease in March when the lease is up, and then put me in like a MTM lease on say a Ford Edge, capped at 12 months? Perhaps I am overthinking all of this, and should just extend MTM. But again, if Ford is delayed thru year-end, and I have a 3 year old and a newborn with only a sedan (that has 2 years of lease left and isnt going anywhere), then i run the risk of wife squashing the Bronco.

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[PaBronco]

Best two options IMO , extend the lease six months, and then if needed buy it out, or just buy it out at the end of the current lease period. Your tax is in essence be a wash if you are eventually going to trade it when you get your Bronco.

 

[jaruss01]

Best two options IMO , extend the lease six months, and then if needed buy it out, or just buy it out at the end of the current lease period. Your tax is in essence be a wash if you are eventually going to trade it when you get your Bronco.

Thanks. So really, Option C - extend lease, and if 6 months isnt enough, buy it out after the 6 months, and flip to Ford when the Bronco is ready. This may make the most sense, since my buy-out will go down every month i extend. And for what it's worth, I will pay less tax given the buy out will be less at the end of the extension. Not sure how they calc the buy-out figures during the extension, but i would think it would work in my favor if it's pro-rata, given they are assuming a monthly depreciation during the first 36 months and applying it to month 36-42 (when the car is depreciating less). If i rolled the dice and extended the lease, my downside is still having to buy-out at the end of the extension. But even if I did have to buy out at the end of the extension, I dont see how I would be losing money in this scenario (based on above) compared to just buying out at the end of the lease....if I am thinking about this the right way?

So if its financially a wash, and logistically easier (if the Bronco is ready before end of August), Option C sounds like the best bet.

 

[Big Boss]

For total transparency

I have a 2018 Outback Limited 2.5l w/ eyesight. Basically loaded. The lease is up on 2/28/21. Subaru is allowing me to extend for 6 months (month to month), but no later than that. My Bronco reservation was 11pm EST night of reveal, so really 50/50 that i get it by 8/28/21. We have a second sedan, and MAY make due. But if our family is stuck with 1 car for a month or so, its not the end of the world, but if its 5 months, I run the risk of the wife saying to stop messing around with Ford, and get a proper SUV given we are expecting kid #2 in early 2021 (this scenario is my biggest concern, as it dashes away all my hopes to get the Bronco if it gets delayed into year end 2021).

The car is under mileage - it has 17.7k miles (it should have around 24k at this time). Total lease mileage is 30k, figure I am am tracking to have 23k miles when the lease is up 2/28/21, or 27k miles by the time I get the Bronco in late summer / early fall.


Option A
Extend the lease, and take the chance of not fully bridging the gap?
$335/mo, for 6 months, with a $300 dispo, is $2,310



Option B
Buy-out the lease in February in cash. Buyout is $22,400. But i need to pay tax on that, which is another $1,500 (tax really is the biggest negative here) plus any fees (not sure what those end up being. Assuming that i am NOT spending $2,310 to extend the lease and pay a dispo charge, my B/E trade-in is $21,600 (buy out + tax, less $2,310, exc. whatever fees i paid to take ownership, title, etc). So B/E may be a few hundred less.

KBB is showing my car trade at $22.6k-$24.4k (if i put in my future miles say, 30k by August 2021 assuming that's when i trade it into Ford). However, the car will be a year older by then, so lets ding the value at 2k and call it $20.6k-22.4k. So around my B/E. Unfortunately, any value I picked up on having the car being under mileage is wiped out by having to pay tax in this scenario.

Some things to note -
1. I am not strapped for cash by any means, and would use the trade in as a down payment (i was initially thinking of a $20k down payment on the Bronco even if i gave the Subaru back, so the numbers actually work out well given the buy-out price).
2. I do NOT want to sell the car privately, and I am not considering that as an option.
3. Subaru has confirmed that they will not stroke me a check for any equity I have given I am under-mileage. They dont want the inventory.
4. My credit score is around a 835, but not sure if that comes into play here
5. The car is in excellent condition (assuming very good condition on KBB estimates)

What would you recommend? I dont see how my Ford dealer would give me a ballpark trade-in value now, 1 year early. So Option B comes at some risk, especially if I am handcuffed to that dealer. For what it's worth, i have in writing that there is no ADM on the Bronco, but still at their mercy of the trade in price. Is it possible to maybe have Ford buy out my lease in March when the lease is up, and then put me in like a MTM lease on say a Ford Edge, capped at 12 months? Perhaps I am overthinking all of this, and should just extend MTM. But again, if Ford is delayed thru year-end, and I have a 3 year old and a newborn with only a sedan (that has 2 years of lease left and isnt going anywhere), then i run the risk of wife squashing the Bronco.

Wow I am literally in almost the exact same scenario as you. Kid #2 due in January of 21, lease on my Mazda is up in November of 21.

 

[Straight 6]

Buy the outback, don't extend lease

You want to solve problems not delay them and you could easily get screwed up if ford delays your bronco. With a brand new product and the whole pandemic thing it's really likely that ford is slow on deliveries


Outbacks are very desirable and will be easy to unload when the time comes, even if you have to sell it to CarMax or something because you don't want to sell privately

The added bonus too is you then aren't under pressure to do something fast if the bronco ends up being a bad vehicle at launch. Imagine if it comes out with Tesla grade assembly quality? Unlikely but not impossible.

 

[jaruss01]

Wow I am literally in almost the exact same scenario as you. Kid #2 due in January of 21, lease on my Mazda is up in November of 21.

Ha! Well you are probably in a easier spot than me, if you could extend MTM beyond November. My lease is up end of Feb.

FYI to save you some time, JPMorgan finances Subarus, and they are the decision makers on capping the lease at 6 months. Other car companies, like Audi, allow up to 12. You should look into what your options are on extending the Mazda, and most importantly, confirm that 1. it is MTM, 2. You have the same monthly mileage allowance, and 3. Your buy out goes down (but probably isnt a factor for you, as it is for me, since my lease extension period still may not be enough to bridge the gap)

 

[jaruss01]

Buy the outback, don't extend lease

You want to solve problems not delay them and you could easily get screwed up if ford delays your bronco. With a brand new product and the whole pandemic thing it's really likely that ford is slow on deliveries


Outbacks are very desirable and will be easy to unload when the time comes, even if you have to sell it to CarMax or something because you don't want to sell privately

The added bonus too is you then aren't under pressure to do something fast if the bronco ends up being a bad vehicle at launch. Imagine if it comes out with Tesla grade assembly quality? Unlikely but not impossible.

I hear you. See me second post above regarding Option C. If I buy-out AFTER the extension, it sounds like it would have no financial impact, per my post above. I think??

So if anything it gives me the opportunity of potentially not having to buy at all if the Bronco is ready by 8/28....and maybe i get some clarity around that time that my bronco is in transit, and will be ready for ownership in a couple weeks, and I could just hold out with 1 car.

 

[Straight 6]

I hear you. See me second post above regarding Option C. If I buy-out AFTER the extension, it sounds like it would have no financial impact, per my post above. I think??

So if anything it gives me the opportunity of potentially not having to buy at all if the Bronco is ready by 8/28....and maybe i get some clarity around that time that my bronco is in transit, and will be ready for ownership in a couple weeks, and I could just hold out with 1 car.

I'm all about trying to minimize automotive transactions, every time you do something it costs you money

I just don't want you to get messed up if ford delays, 1 car with a wife and kid sounds like a recipe for a lot of yelling

And in the unlikely possibility that the bronco sucks, you won't be under pressure to do something fast because of no car.

Best of luck!

 

[PaBronco]

Thanks. So really, Option C - extend lease, and if 6 months isnt enough, buy it out after the 6 months, and flip to Ford when the Bronco is ready. This may make the most sense, since my buy-out will go down every month i extend. And for what it's worth, I will pay less tax given the buy out will be less at the end of the extension. Not sure how they calc the buy-out figures during the extension, but i would think it would work in my favor if it's pro-rata, given they are assuming a monthly depreciation during the first 36 months and applying it to month 36-42 (when the car is depreciating less). If i rolled the dice and extended the lease, my downside is still having to buy-out at the end of the extension. But even if I did have to buy out at the end of the extension, I dont see how I would be losing money in this scenario (based on above) compared to just buying out at the end of the lease....if I am thinking about this the right way?

So if its financially a wash, and logistically easier (if the Bronco is ready before end of August), Option C sounds like the best bet.

That would be a good option.
You sound like a rational fellow. If you want to save even more $, buy out the lease and drive the Outback until the the waters calm and you can buy a Bronco well under MSRP.
I am not the type of person to stand in line to pay MSRP since I do not have the be the first to have a new model. Would probably make the boss happy too.

 

[Big Boss]

Ha! Well you are probably in a easier spot than me, if you could extend MTM beyond November. My lease is up end of Feb.

FYI to save you some time, JPMorgan finances Subarus, and they are the decision makers on capping the lease at 6 months. Other car companies, like Audi, allow up to 12. You should look into what your options are on extending the Mazda, and most importantly, confirm that 1. it is MTM, 2. You have the same monthly mileage allowance, and 3. Your buy out goes down (but probably isnt a factor for you, as it is for me, since my lease extension period still may not be enough to bridge the gap)

JP Morgan finances Mazda as well so looks like I would be capped at 6 month as well.

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