Yannis,

Oh boy, I'm sorry to get under your skin there, I didn't mean to get a flame war started. I humbly apologize. But you did say in your post that the buyer would have a 'car with little warranty left' if he'd bought the leased car, so to me you were insinuating that a Volvo without a warranty is a 'bad' thing. (I was being sarcastic about the need for $25k of repair bills once the car was out of warranty. Sorry that it was misinterpreted. I gotta watch that.)

Now, I do agree with you that buying the leased car doesn't make sense after the lease is up, unless the buyer keeps it for another 7 years, then he'd make up their monetary losses.

As far as the leases are concerned, I'm confused. The Volvo website http://new.volvocars.com/models/S80/# lists an S80 T6 lease for $499 a month, "capitalized Cost Reduction" of $4000, "Acquisition Fee" of $500, total lease payments of $19461 (I'm assuming they get the $500 deposit back), PLUS taxes, registration & license. That makes the total 39 month payments equal roughly $24,000. If you put a tax of 8% on the depreciated value of $21,306 during the course of the lease, that would add another $1704 to the cost, or approximately $25,700. This is the total paid over the first 39 month term (not including registration fees which may or may not be significant depending on the state the car is bought)

Now, correct me if I'm wrong, but when one leased car is traded in for another, doesn't the "Capitalized Cost Reduction", "Acquisition Fee" AND tax on the depreciated value need to be added to the next lease? That's what I assumed in my calculations because the returned lease vehicle has NO value to the customer whatsoever. So the lessor pays another $25,700 for the second 39 month lease, and yet another $25,700 for the third 39 months. The lessor would pay a sum total of $77,100 over the course of 10 years.

The car buyer, on the other hand, will have (granted) a miniscule $7k equity left in the car after 10 years, but $7k goes to help defray the 50% down payment for the next car (That's the way I do it, at least. You're right, I'm NOT the standard buyer and car companies HATE me because of that. If my '91 T-bird I bought new hadn't been totaled I'd still be driving it.) But even if the cost were $60k, there's still the equity left to roll over into the next car. (Actually, the $60k is too high, at least the way I buy the car with the 50% down. At 5% interest on the 50% balance, the total price of the car comes out to about $51.2k including 8% sales tax, leaving $9k for repairs, tires, and whatnot after the warranty expires. I think even $9k is too high.)

I think we're saying the same thing: It's WAY cheaper to buy the car and keep it for 10 years. Where the buyer pulls ahead financially in this scenario is after Year #6.

What's crucial in this is that the buyer must choose a car that 1) they would want to keep for 10 years and 2) will reliably last over the 10 years with just normal maintenance and the odd repair here and there.

I would think Volvo should meet that criteria. Don't you?