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C-Max purchase: lease or buy?


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17 replies to this topic

#1 OFFLINE   bridge97

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Posted 23 July 2016 - 03:47 PM

Hello, 

 

I visited a Ford dealership this afternoon to research hybrids, test drove a 2016 C-Max Energi SEL, and liked it a lot. The dealer offered me what seems like a great deal (about $12,000 off MSRP) if I lease. I have a 20 mile daily commute, but 3-4 times a month I drive long distances for work, and average 25,000 + miles/year. 

 

Please help me understand how a lease works, if and how I can buy it out, if it makes sense to put cash down, etc. New territory for me. What questions should I be asking the dealer? IS the deal as good as it looks? 

 

Thanks, 

 

Brian 


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#2 OFFLINE   ls973800

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Posted 23 July 2016 - 06:57 PM

Welcome to the forum  :noobie:

 

Leasing and driving 25000 miles a year WILL NOT be prudent, or even economical.  You can pay for extra miles up front and set up the lease that way, but it will be pretty expensive.  On a normal lease of 12000 miles if you didn't pay for extra miles up front, each extra mile at the end of the lease over the allotted miles usually costs you .20-.25 cents a mile!  There are also low mileage leases being written such as the one I have on my C-Max.  That only allows 10500 miles a year, but I will be returning it with only about 15000 miles of the allotted 21000 miles on the 24 month lease.

 

You also DONT want to put any money down on a lease other than the upfront costs of the lease.  In other words, you really don't want to make a cap reduction cost by putting more money down. 

 

I believe you would be better off buying with the number of miles you drive each year.  There are lease returns coming back to Ford which are selling for pretty decent prices.  You can also find great deals on new ones and hopefully can take advantage of any tax credits offered.


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#3 OFFLINE   bridge97

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Posted 24 July 2016 - 05:08 PM

Thanks for your reply. So -- in round numbers -- $33K MSRP; $21K three-year lease; no money down; buy lease out. What am I missing? They say the $12K of incentives are not available with a direct purchase, only by leasing, but I can buy out right away. 


Edited by bridge97, 24 July 2016 - 05:09 PM.


#4 OFFLINE   fotomoto

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Posted 24 July 2016 - 06:18 PM

Great lease rates typically only include 10k miles/yr allowance.  You'll need to know exactly what the lease buyout is and any and all penalties.  Others have reported the price MUCH higher than street value and (reluctantly) returned the car.  If you have 75k miles, you'll owe a crazy amount of money for the extra miles if you don't buy it out.  



#5 OFFLINE   ls973800

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Posted 25 July 2016 - 04:32 AM

Here is a link where real car sales people and finance people hang out and answer specific questions regarding car purchases, leases, what car is right for you, etc.  Some of the language over there is explicit (you know, four letter words and such) but some very good information.  You might consider signing up and posting your question over there.  At the top of the page on that link there is a selection of topics to choose from.  I always read the "NEW" topics and find some interesting questions and replies.

 

 

There are also other forums such as Edmund's which cover leases and purchases and is one of the industry's top resources for automotive related information.

 

https://www.reddit.c...skcarsales/new/

 

http://www.edmunds.c...e-a-new-car.htm


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#6 OFFLINE   cwstnsko

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Posted 25 July 2016 - 07:08 AM

Since a 20 mile round-trip commute is only about 5000 miles per year, that means 20,000+ per year on road trips for work?  You might be a good candidate to get an EV for your local commuting and rent a car for the road trips. I've known a number of people who drove a car into the ground every few years going to soccer and/or softball tournaments, and they tell me that they now always use rentals for road trips now, and save a bunch of money.  If your employer won't pay for the rental, and the trips are required for your work, you can probably write the rental costs off on your taxes.


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#7 OFFLINE   ShoulderThingThatGoesUP

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Posted 25 July 2016 - 11:06 AM

2013s can now be had pretty cheap, and there hasn't been any particularly important refresh since then (besides getting the recalls taken care of). Since I could buy my 2013 for half the price of a new one after tax credits, that's what I went with.



#8 OFFLINE   stolenmoment

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Posted 25 July 2016 - 11:18 AM

Yep, I made much the same decision, no regrets.



#9 OFFLINE   cwstnsko

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Posted 25 July 2016 - 11:44 AM

If the plan is for lots of highway miles (which is what it sounds like)  the 2014 and newer don't seem to have as many transmission problems.



#10 OFFLINE   astrand1

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Posted 25 July 2016 - 12:03 PM

Got my 14 with the 302a (nav, Sony radio, power lift gate) as a lease return. It was in excellent condition. I saw it right as it came from the auction. No clean up. Told sales guy they didn't even need too other than maybe a wash. But anyway it had 13k miles on it and I paid 15k. Hard to pass that deal up! 👍

#11 OFFLINE   ls973800

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Posted 25 July 2016 - 01:26 PM

One important question about the lease you are considering.  Are you able to deduct mileage at the end of the year on your income tax return, or are you being reimbursed by your employee for any miles you put on the car?  If yes, then that may very well have a positive impact on leasing even with the high miles.



#12 OFFLINE   bridge97

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Posted 25 July 2016 - 06:03 PM

Here are answers to my questions from the dealer -- 

 

What is the lease buyout price? $12,724.80 (based on a 39 month lease at 10,500 miles/year) 

Could you tell me any and all penalties for buying the lease out? $500 buyback fee, already included in the lease buyout price What is the earliest the lease could be bought out? Tomorrow! (or after you have it registered) 

What are additional expenses? Sales tax and fees? What drive-off fees do I have to pay? There is a $398 admin fee + a $27 title fee (for NH) which comes out to $425. That is true on any car you purchase from us. No sales tax either since you live in NH. 

What is the car's residual value? All values based on MSRP given for 39 month lease: 10,500 miles = 37%, 12,000 miles = 36%, 15,000 miles = 34% 

What is my interest rate? 0.00135 money factor (the rate term used for leases which equates to about 3% interest) 

How many miles does the lease include? We can do whatever you want (10,500 miles, 12,000 miles, 13,500 miles, 15,000 miles or more), but we've based our numbers on 10,500 to get the lowest monthly payment. 

With the federal tax reduction and clean energy rebates, what would the sale price be (to buy directly as opposed to lease)? New Hampshire doesn't offer any additional rebates at this time for clean energy (at least to the best of the dealership's knowledge, and it would certainly be a great thing for us if they did), so you would be looking at a starting value of $31,319.70 ($300 below invoice), minus a $5,000 rebate if you finance through any company other than Ford (you only get $4,500 through Ford), so you would be looking at $26,319.70 + $425 admin/title fee, whereas if you lease initially and refinance right after, you would have a buyout of $22,513 + admin/title fee (applies again since a new title has to be issued). With the lease, if you did decide to choose a higher mileage (12,000 for instance rather than $10,500), you are looking at roughly a $10/month increase. A 30,000 mile lease would put you up at about $489/month. The 3 year/100,000 mile lease you were referring to only applies for Municipal Leases.



#13 OFFLINE   MaxLB

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Posted 03 August 2016 - 05:44 PM

If by saying "buying out the lease" you mean owning the car, you are wrong.  A lease is an agreement to drive someone else's vehicle (the leasing company owns it) for a certain time period and limited to a certain mileage.  For that you pay a lease fee.  Sure, you can pay the entire fee up front it you want (instead of monthly), but you still don't own the car.  All you've done it give the leasing company all your cash up front, including all the interest they are charging you.

 

In order for YOU to own the car, you also have to pay them the residual.  So if you are thinking of leasing and then paying all that stuff off at one time in order to own the car outright, you need to add those numbers together, plus any fees.

 

Since Ford is currently offering 0% financing and you've already stated that the leasing rate is 3.24%, it's probably better to purchase the car outright to begin with.  



#14 OFFLINE   stevedebi

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Posted 03 August 2016 - 05:49 PM

Not sure if this has been covered, but to claim the tax credit, you have to OWE the taxes. It isn't a deduction. So if you plan to use tax credits as part of a sale, you have to reduce your witholdings during the year to the point where you owe enough taxes to claim the credit.

 

If you lease, the leasing company gets the credits, and reduces the cap cost accordingly. That was the main reason I leased my car in 2014. We always attempt to owe no taxes during the year, and so would not have been able to claim them on our taxes.

 

It will generally cost more to buy out the lease at the end than it would have to simply buy the car. The advantage is that you don't have as large a monthly payment, and you get to "try out" the car to ensure it is a good one. I always prefer to buy, but not in the case of the Energi.



#15 OFFLINE   Tom_NC_1

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Posted 03 August 2016 - 06:28 PM

Not sure if this has been covered, but to claim the tax credit, you have to OWE the taxes. It isn't a deduction. So if you plan to use tax credits as part of a sale, you have to reduce your witholdings during the year to the point where you owe enough taxes to claim the credit.
 
If you lease, the leasing company gets the credits, and reduces the cap cost accordingly. That was the main reason I leased my car in 2014. We always attempt to owe no taxes during the year, and so would not have been able to claim them on our taxes.
 
It will generally cost more to buy out the lease at the end than it would have to simply buy the car. The advantage is that you don't have as large a monthly payment, and you get to "try out" the car to ensure it is a good one. I always prefer to buy, but not in the case of the Energi.


Actually owing enough taxes to take advantage of the credit is related to earning enough income to have sufficient tax liability. Reducing your withholding allows access to your income sooner rather than wait for a big tax refund after filing the taxes.

Tom

#16 OFFLINE   cwstnsko

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Posted 04 August 2016 - 02:09 AM

As Tom said, you don't need to mess with withholdings at all, as long as you make enough money that the total amount of taxes you owed (and likely paid) during the year is more than the credit.

normally when somebody talks about getting a lease and then buying it out, including residual, it is to get the much larger incentive that is associated with the lease (because Ford takes tha tax credit and gives most of it to you as a capitalized cost reduction), but in this case you are not entitled to the tax credit, because you are buying the car from Ford Credit as a used car.

#17 OFFLINE   Jonathan Ezor

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Posted 04 August 2016 - 07:51 AM

Hello, 

 

I visited a Ford dealership this afternoon to research hybrids, test drove a 2016 C-Max Energi SEL, and liked it a lot. The dealer offered me what seems like a great deal (about $12,000 off MSRP) if I lease. I have a 20 mile daily commute, but 3-4 times a month I drive long distances for work, and average 25,000 + miles/year. 

 

Please help me understand how a lease works, if and how I can buy it out, if it makes sense to put cash down, etc. New territory for me. What questions should I be asking the dealer? IS the deal as good as it looks? 

 

Thanks, 

 

Brian 

 

I'm somewhat in the same situation, as I got a new Energi last year and do about 25,000 miles/year. In the end, I decided that I would be able to find the cash at the end of the lease period to actually purchase the car, so I went with a lease knowing that, if I don't purchase the car, I'll be paying serious penalties to turn it back. It comes down to numbers, and how long a warranty on the battery you'll get from the dealer. The reason, of course, that the dealer is able to make such a deal on the lease is that the dealer, rather than you, gets the tax incentives for the Energi. If you purchase, you get whatever financing you can, and then get the tax credit yourself when you file next year. {Jonathan}



#18 OFFLINE   Teeker1

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Posted 21 April 2017 - 06:28 AM

New lease on last years (2016) Energi- first post. I have always paid cash for cars, but is was going to cost $1500 more than the lease. Also, with the lease, I can get rid of it if it turns out to have too many problems.  Here are my crazy numbers on a 33k MSRP.  Dealer took $13007 right off the price between Federal and manufacturer rebates. 12k miles per year 36 mo = 282 per month, it gets wayyy better. I have 450 coming back to me because the rebates exceeded max ford will let you do. I also have 3500 coming back from the state of CA, essentially reducing my payment to 169 per mo, zero out of pocket. If I buy out at the end of the lease, my "all in" price after rebates and including tax is 17k. It would have cost me a net of 18500 net  if I paid cash. 










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