Haven't purchased new cars for 10 years. I am not familiar with the current market and want to get some suggestions. Here is my interested model: 2015 V60 2015.5 T5 AWD. bare model.
I got a quota from the nearest dealer. For purchase,$35215. For lease,$339 mo. 39 mos. $3299 due. Compared with some prices shared by others in autopriceshare, my price seems a little high. However, I am not good at bargaining and think this price is acceptable for me. The only question is: which one is better, Purchase or lease? Hope some friends here could give me some advices. Thanks

 

There really isn't a "right" answer. Part of it depends on pure economics and the rest is how often you typically trade cars. In those 39 months, you will have paid out $16,520 plus any charges for extra miles driven. Obviously, Volvo thinks that your payments will exceed the predicted decline in the value of the car over that time in order for them to make money but they could be wrong either way. You'd make out if they underestimated the depreciation and lose out if they overestimate the depreciation.

 

As mentioned so much of this decision has to do with your personal choices, so ask yourself this one question. If I bought the car how long would I most likely drive it? If the answer is at least several years or longer past the pay off point then buy it. The lease exists for the highest depreciation point that will ever exist for the car and slows down exponentially after year 3, so your per year cost to drive drops drastically after year 3.

Here though is one tip if you do lease. NEVER put money down on a lease. Especially right now. Money is cheap to borrow and you can easily make more on that money even invested in a simple mutual fund. Also, when you lease it is the lease company that holds title to the car. Why is this important? Because should you be in a total loss accident a month into the lease or anytime during the first 24 months what do you think happens to that $3299 you put down? It's gone. The lease gets paid off, even if the balance is greater than the market value because the lease includes gap insurance, so the lease company as the owner of the car gets made whole, but you are screwed. No car and no $3299. Yes, the monthly will be higher, but set the $3299 aside and use it to supplement your monthly if you have a target payment you want to hit.

 

A few other considerations: How long do you expect to keep this car? If you expect to own the car for 5 years+ you are better off with an outright purchase or a loan. How many miles do you expect to drive? Most leases have a 10K / year mileage cap, which for many people is easy to exceed and if you expect to trade in the car after the term is up, you have to factor that cost into the deal. Note that the trend in auto loans is towards longer term loans. This can lower your monthly payment but over the full term of the loan will increase the total paid in interest. There's plenty of tips on the internet - you may want to subscribe to Consumer Reports or similar to find out information like the dealer's invoice for a model (ie what the dealer paid the factory) and some services will show the typical dealer mark up/margin. So say you have a list price of 31,000 - CR will show you the factory invoice is 29,000 and the typical selling price is 30,000. So when you walk into the dealer you can show them your price is say 29500 and wait for a counter. The thing about negotiating is you need to accept the fact that your leverage is to say no and go over to the next dealer or shop for a remote dealer via Autotrader.com etc. Where you buy has nothing to do with where you service your car or how the warranty is honored...