Actual Cost at Dealer for 2010 vs 2009

Sounds like a good deal to me. At the end of 3 year if gas is $5.00 a gallon you can buy the Prius for less than it's worth and if gas is by some miracle .50c a gallon the prius will be worth very little and you can hand it back. Interest is almost non-existent and I assume fixed, go for it I say.
Leasing a car here always costs the earth.

 

I respectfully disagree with you here. For all the reasons I stated in my post.
Do you seriously think you can buy a BRAND NEW 09 for 17k? I'd say the chances of that are slim to none.. and slim run away when he saw your post. Unless of course Toyota comes out with a $4,000 rebate. Which is about the same chance as GM bringing out the Volt this year and pricing it at 17k.

 

I think it's possible, yes, depending on how well the 2010s are selling vs. the 2009s, what gas prices are, etc. You *will* be able to get an '09 for under $22K, that much is sure, because people are now reporting deals of < $20K and the '10s are not out yet.

 

Lotta,

What I think that he is disagreeing with you about is not that $22k is not a good deal, but that he does not think that you will be able to get one for $17k, and you stated "Your chance of getting a new '09 for somewhere in the $17K price is pretty good as the '10s roll out en masse."

That is why he stated "Do you seriously think you can buy a BRAND NEW 09 for 17k? I'd say the chances of that are slim to none.."

I spoke with "Jabber" last night on the phone, and found him to be one of the more knowledgeable sales people that I have spoken with recently, and would have to agree with his assessment that, at least in the Chicago region, you will not find many new '09s at $17k.

 

Sarah,
Prior to the 2010 price release, I was shopping for a 2009 with OP#2 with leather seats and I was quoted $23,069.42. Granted, I live in Texas, and there are other transportation fees associated with this sales region. I'd say that your pricing is adequate, and I would suggest, if I may, for you to wait until 2010s hit the lots or at least until Toyota gives dealers more incentives. It WILL happen. I had a hard time convincing myself, but now, I'm happy as a clown just waiting for it to go down. You can save yourself another grand or two if you wait, in my opinion. Good luck shopping!!

Regards,

Chance

 

couple things to add here. the 2009's will sell cheap only if the 2010's dont sell. now, there was a post last week stating that Toyota already had 40,000 pre-orders for the 2010 which means they will not be selling for anything under MSRP at least for a while.

that means that some will get the 2009 because they do not want to wait and also means that the 2009's are not likely to be discounted much at least until the newness of the 2010's wear off (hopefully it wont take 2½ years like it did for the 2004 intro!!) and those cars start to pile up at the dealership and i dont expect that to happen until next year... possibly this fall if the economy continues to tank.

 

Thanks EGL, that is exactly what I meant. The cheapest Gen II Prius is the base model and has an invoice of $22,158 (of course, your region may differ). With the $1,000 rebate and taking out holdback, WFC, and other assorted fees, the cheapest you can get one WITHOUT the dealership actually losing money would be about 20,500. Give or take a hundred bucks. Like I said, unless Toyota comes out with a $4,000 rebate, you won't see one at 17k. And the vehicle mentioned was a 1224 with an HG package. That adds $1,000 to the invoice.

Again, I meant no disrespect, but if I have information that is true and accurate versus an opinion that will most likely never come true, I feel obligated to mention it so others don't take the opinion as fact. Kind of like when someone stops you at a gas station and starts spouting off about how the Hybrid batteries cost $10,000 to replace. We all politely correct them, right?

 

Ah but therein is one of the problems. The 'invoice' price shown on cars is not really the true price the dealer pays. That invoice already has profit built-in. I've had more than one car industry person tell me that. It's a marketing game being played by the industry on consumers. You're talking like that $22.1K number is real and solid. And it's not.

People on this board have already reported being quoted under $20K for a new '09 (I don't know what trim level). Now maybe $17K will never happen, maybe $19K will be the lowest it will ever go, but the O.P. is talking about leasing at $22K+. If leasing s/he will be paying upwards of $2K or more difference that we already KNOW about. People do pay more for the car when they are leasing it...that's a fact. Profits are built in even on the 'really good' deals.

I'm not saying that no one should ever lease, but they need to at least know the facts: overall they are (or will be) paying more $$ for the car, than purchasing outright.

 

When deciding to buy vs lease, can we not add up the total costs of each and determine which is cheapest on a case by case basis? Why assume one is always better than the other?

 

Whatever else is happening, the dealer is most certainly not taking a loss on this car. No dealer I've ever heard of would sell a new or nearly new car for less than s/he paid for it.

BTW, a good article on leasing vs. buying (at least it seems like a decent article based on my cursory glance):

http://www.leaseguide.com/lease03.htm

 

Actually, I never said 22.1 is the bottom line. If you read it again, I said 22.1 MINUS holdback, WFC, and other fees. That brings the bottom line down to 21.5 or so. 20,500 with the rebate.

That is exactly what you should do. Generally, with a slower moving product, the manufacturer will raise the residual and lower the rate. Often times, this means that they will guarantee a vlue at lease end that anyone in their right mind knows is too high. That is when you lease it.

1) Yes, I have taken a loss on a vehicle. Example: You had something that you purchased for $1,000 and held on to it. Later that year, that same thing (only it is now the newer, better version) came out. You know the new one will cost you $1,000 and you can sell it right away for $1,500. But you don't have the money to buy the new one. Doesn't it make sense to sell your old one for $900, and lose $100, so you can buy the new one and sell it for $1,500? By taking a small loss, you eventually earned $400. Dealers do that all the time with used cars, and some of the time with new ones.

2) GREAT article on leasing. As I mentioned, leasing is not for everyone. However, in certain instances, leasing can be a great deal.

 

OP: you appear to be in the position of considering a lease in order to afford the monthly payment. From the get go, that is a vulnerable state of affairs, and one that will unlikely be the smart money choice -- that is, the choice that costs you the least over time.

Every lease vs buy analysis I have ever seen *assumes* that the 'bought' car will be sold at the time the lease is up. Otherwise, how to compare ? Fair enough -- except that it is financially stupid to dump a car after 5 years. All that insures is that you will eat the high depreciation of the first couple of years of a new car -- every 5 years. Now occasionally, a car dealer will set an artificially high residual value (that is, above anticipated market value) in order to entice buyers. Is that happening here ? Well,  hard to figure out, since the quoted $2000 upfront costs that include $600 fee, sales tax, first payment, and TTL doesn't quite make sense. Sales tax will be 23,000*.06 = $1380; plus the 'Acq fee' brings us to $1980 ...  I think if you push them you will find the upfront costs is closer to $2500, or about $1000 over sales tax.

The point of the paragraph above is to show you that they are charging you ~ msrp for a car we all know is heavily discounted in general. Next, what is the built-in finance rate ? A google link tells me that apr = money_factor * 2400. I'll guess that your money factor is .004 (and not .4), or 9.6% !

OK, we are 2/3 done. To recap so far,
Interest is 9.6% on the lease,
Car price is ~ msrp.

Last, or back to earlier, how good is the depreciation schedule. If you are going to be prudent and keep the car for it's useful life, then this a mute point. The best I can say for five year depreciation is that 50% sounds about what the fair market would value the car at.

SO ... the lease is giving you a fair deal on depreciation, and screwing you on car cost and interest.

----
I'll not tell you what to do, but do consider a couple of other points:
1. A new leased car will have higher insurance costs, because the lender will demand full comp and collision. This will be true for any financing. I mention it for you to include in new car vs keeping the old paid off car comparisons.
2. Market rates for people with good credit is much lower than 9.6%. I bank at Penfed.org (nominally for the military, but open to anyone if you spend $15 to join a club they promote) and they are currently advertising 3.99% 5 year car loans. This difference is finance charges (9.6 vs 4) saves you a lot of money. I cannot give you a number because I don't know how the principal is calculated in a lease.
3. Not only will the G2 Prius be under price pressure when G3 comes out, you might be able to pick up a used G2 from a person trading for the newest and greatest.

Time is on your side. Dealers should be take with a grain of salt, and lease offers require a spoonful.

Addendum: Penfed has an amortization calculator on it's website. A $19,000 loan (my guess at what the cheapest G2 Prius buy will be offered at) at 3.99% for 60 months is $350 a month. If you keep $1800 of lease upfront costs in your pocket and spread it out over the five years of payments, you pay $320 a month of additional money, and in five years you own a car outright. Think about that: Pay $100 a month more for the next five years, and you are free for the rest of your life from high interest rates, having to eat high depreciation every five years, having to insure to your lender's satisfaction, and worrying about end-lease unexpected costs due to dings, mileage etc. AND you have a car you own, that will give a five or 10 year breather from car payments to save money before you have to get another one.

 

Well then how are dealers offering new '09 prii for under $20K AND making profit? I never said $22.1K was your bottom line either...I said you were suggesting it's a 'real' price (perhaps because it's printed on the invoice). It isn't a real price of anything. I believe the dealer cost of an '09 Prii is lower (yes, even lower than your $20K price suggests). I don't believe the invoice price at all. I just don't. Why? Because I've had 2 different auto industry experts (who don't know each other) tell me that the invoice is a marketing gimmick.

a brand new vehicle? Your example indicates what would be considered a used vehicle.

 

Here is another way to compare lease vs buy options:

Lease costs:
$239 * 60 = $14340
Upfront costs $2000 -- $2500 (as I explained above, I am skeptical that the fees are really only $2000) -- not included in price, but deducted from 'buy' price.

Purchase costs:
Car price = $19000
Sales tax = 19000 * .06 = $1140
Less lease upfront costs of $2000 - $2500 that can be applied to principal up front.
Amortization table of $17640- $18,140 for five years at 4%: Total costs over five years is $19,487 - $20,136

There you are: By purchasing, you have bought this G2 five year old Prius for under $6000, and maybe actually closer to $5000. Compare that to the dealer's residual price they will sell the car to you at end of lease. Or maybe for a better deal, compare $5000 to the real market value of a five year old Prius you can buy a retail. The difference is the lease penalty (or if a negative number, the lease advantage.) Edmunds thinks a base 2004 Prius retail is about $15,000. This time, the dealer is offering the better used car buy of your end-of-lease option to buy compared to Edmunds TMV, but it is still **$7000 - $8000** more than going the purchase route !

Ouch.

Addendum: You might have noticed that I have not included title and licensing fees in the 'buy' option. This is because buyers typically have enough leverage with the dealership to decline their service, and just head down to the DMV and do it themselves. I don't know how much that would be in VT, but in my state it is about $50.

 

I agree that invoice is more of a marketing thing. But the real numbers don't lie. Because every region is different, the bottom line is different. In the chicago region, 21,400(ish) is the real bottom line. If I sell it for 21,399, I lose a dollar (give or take). The cheapest Prius out there, a 1220 model, comes in at 20,130 after rebate and all additional profit is removed. So if the rebate is bigger, yes, it is possible to get one for under 20k without the dealer losing money. But not in the chicago region.

New or used, it still is the same effect. Because of how all toyota dealers earn cars (allocation, turn and earn, etc), it still makes some sense for me to take a small loss on 09's to be able to earn extra 2010 models.

 

Nowhere is it written that the dealer cannot wind up taking a loss when the bottom falls out of the market for new cars. Some GM cars now have really huge rebates, that GM grants to accommodate the dealers. I predict that there will be rebates of three or four thousand dollars on the G2 fairly soon, because there is such a bloated stock of `09 G2s to find homes for, They may still let it ride for a few weeks, to get a few sales to people who do not do their homework. But when G3s begin to come in, something will have to give. Just wait!:flypig:

 

Sage, there are a couple of things wrong with your calculations, but that is exactly how you make the determination.

Lease:

239*36=8,604
2000 upfront.
13,168 residual.
Total out of pocket if you purchase the vehicle: $23,772 (there may be taxes on purchasing the vehicle at the end. Ask your dealer for details.)

Purchase:

$22,448. (You used 19,000 for the purchase, but 22,448 for the lease. You have to keep them the same. If I used 19k for the lease, the lease payment would drop by about 100 per month)
$2,000 down
Total of payments (at 4%): 24,060

Lease is better in this case. Especially since the total of payments doesn't include the original $2,000 down (as you also did in your comparison).

 

Oops, my mistake. It is indeed a 3 year lease.
I stand by my guess that the car purchase price can be negotiated down to about $19,000. This is one of the benefits of buying the car, compared to accepting a package price of a lease where the dealer plays with the car price, interest rate, and depreciation schedule to their heart's content until they arrive at the total cost number they want to charge you.

Revised numbers---


Lease costs:

Code:

$239 * 36 = 	$8604
Residual = 	$13,168
----------------------------
		$21,772

Buy costs:
Car cap cost: $19,000
Sales tax:	$   1,140
Less Lease fees:	$2000
Interest at 4% on $18,140 paid-down over FIVE years: $1900
----------------------------
		$20,040

So the buy option is still cheaper than leasing, but not by a lot. Note that I have set the calcs to reflect five years of interest payments on the buy option which inflates the apples to apples comparison of costs vs leasing, but probably reflects OP's monthly payments limits a bit better.