Ot: A new way to lease a car?

[Tickdoc]

Volvo rolls out there new lease today.

Starts at $600/mo and includes service and insurance, with no down payment?

https://www.volvocars.com/us/cars/new-models/xc40/care-by-volvo

https://assets.volvocars.com/us/~/media/us/images/care-by-volvo/updated-page/xc40_1140x780_alt.jpg?w=800

[MattTuck]

I personally like to own (eventually) my car, and keep my monthly payments as small as possible. 600 is a bit rich for me. But if you're someone who wants to budget $600 per month for transportation, and call it a day, this seems pretty attractive.

I suspect that starting price is based on being a low insurance risk with fairly low liability coverages (but I bet full coverage on the car). I'd be interested to see what the final out the door monthly price would be once you get everything in order insurance wise.

15k miles per year seems decent.

Still, call it 7,200 per year. Less insurance and maintenance, maybe Volvo nets 6,000. What is their cost for the car? 25K? After the first 1 or 2 years, will they be able to move the cars coming off the rental program at a price that is still profitable for them.

[AngryScientist]

that is a bloody brilliant idea for the typical car leaser. i bet this will catch on like wildfire.

definitely not for me, i would personally never lease a car, but for the demographic of people who might lease a mid range volvo - this is a winning idea.

[Ralph]

A good deal....considering depreciation of that car plus insurance, and opportunity cost of money you didn't spend for down payment or paying cash up front. I mean it's a good deal if you want to always drive a fairly new car and don't want to spend money on service.

If you go buy a $40,000-50,000 car and drive it for 10 years.....and at the end you sell it for (say) $5000. Divide all that depreciation by 120 months.....and add back in maintenance costs, and insurance, you will spend almost that much....and not be driving a new car.

I'm beginning to think cars cost to much to buy these days. It's pretty easy for first year to cost you $10,000....especially for some of these hi end vehicles. For years I've always paid cash for my cars...been proud to be able to do so. But have recently decided....that is a poor use of my assets. Having $50,000 tied up in a car (cost plus sales tax, etc....not a real expensive car really) can cost me $5000/yr in opportunity costs, plus the depreciation, insurance, and maintenance. Always had 3 cars around, have cut that down to two. There is a car rental place up the street where I can get a very simple car for sometimes $25/day....if I need one occasionally, there is Uber and Lyft, public transportation, etc.

If I wanted that Volvo (I don't) ....I might would pay that.

[alancw3]

one deal breaker might be that some insurance companies (mine) require that you have a certain amount of auto insurance to buy an umbrella liability policy. don't know volvo coverage would qualify or if my insurance company requires their auto policy. just a thought as i recently bought a new van. i imagine this would be an interesting conspect for many people though.

[soulspinner]

Ive been at Volvo for going on 7 years. They are appealing to young urban buyers to make it convenient and short term. The insurance thing may disqualify lots of the population that has marks on license or in risk pools.

[summilux]

I love the idea of getting a vehicle without having to deal with a dealership.

[Ralph]

I'm sure that Volvo will have that vehicle fully insured. Plus GAAP. In addition to passing a credit check, imagine one would have to be insurable in order to lease.

[mktng]

could you not just goto your local rental place. rent a small SUV for around the same price?

probably end up costing less..

[trener1]

Cadillac was doing something similar, though it's much more expensive
http://money.cnn.com/2017/01/05/luxury/gm-book-cadillac/index.html
But a similar concept

[rwsaunders]

If you move the numbers around, leasing a Volvo now sounds leasing an iPhone. I sort of like the idea so we will see what happens when my soon to be 17 year old Audi wagon decides to give up the ghost.

[dbnm]

I'm looking to buy that XC40 in the spring when it comes out (R-Design package).

The new pricing option might be really good.

[likebikes]

and volvo is going all hybrid/electric by 2019

[batman1425]

I'd be leery of the insurance coverage. Volvo will want the value of their asset (the vehicle) back, but I'd find it unlikely that they would extend any significant coverage beyond that - personal property or injury coverage for you or anyone/anything that you may injure/damage.

[MattTuck]

and volvo is going all hybrid/electric by 2019

My understanding was that they'll simply have that as an option for each of their models. Not that they are doing away with the regular gas engines.


I'd be leery of the insurance coverage. Volvo will want the value of their asset (the vehicle) back, but I'd find it unlikely that they would extend any significant coverage beyond that - personal property or injury coverage for you or anyone/anything that you may injure/damage.

Liberty Mutual (from my reading) is doing the insurance. I suspect you're right that the base price is a pretty spartan plan. I'm sure you'll have the option to increase coverages, at an added cost of course :)

[batman1425]

Liberty Mutual (from my reading) is doing the insurance. I suspect you're right that the base price is a pretty spartan plan. I'm sure you'll have the option to increase coverages, at an added cost of course :)

I'm sure that's the case and I'm betting an expensive add on. Particularly instates where there are high numbers of under or uninsured drivers. Loosing the multi-line discount with our current provider would be reason enough for me to avoid this mechanism. I do like the idea of a one-and-done pricing scheme but you'll pay for that convenience.

[AngryScientist]

maybe they have some agreement with Liberty Mutual, but i wonder how they are able to advertise this nationally.

i know insurance rates can vary widely even within a state, based on where the car is "garaged". i also remember my auto insurance rates dropping significantly when i got married as i was a better "risk" with a family, etc etc.

then the whole topic of state requirements, which can be significantly different from state to state.

i mean, if:

1) joe blow, age 17.6, lives in the bronx and has totalled a few cars already

and

2) john doe, age 58, lives in rural montana and has a clean driving record

both pay $600/month for the same volvo, that's pretty crazy!

[batman1425]

maybe they have some agreement with Liberty Mutual, but i wonder how they are able to advertise this nationally.

i know insurance rates can vary widely even within a state, based on where the car is "garaged". i also remember my auto insurance rates dropping significantly when i got married as i was a better "risk" with a family, etc etc.

then the whole topic of state requirements, which can be significantly different from state to state.

i mean, if:

1) joe blow, age 17.6, lives in the bronx and has totalled a few cars already

and

2) john doe, age 58, lives in rural montana and has a clean driving record

both pay $600/month for the same volvo, that's pretty crazy!

Probably get around it with minimum qualifying criteria. Like they say with leases - minimum qualifying criteria apply. In this case, driving record and risk category probably factor in to your ability to get the lowest possible monthly.

Liberty Mutual could also have a base policy for each state that satisfies the state requirements and the structure of what Volvo wants, which I'm sure is not much beyond just total vehicle replacement coverage, and the $600 assumes some aggregate average of what that will cost nation wide, adjusted for # expected sales/state.

[jlwdm]

My understanding was that they'll simply have that as an option for each of their models. Not that they are doing away with the regular gas engines.



...

Incorrect. All electric or hybrid in 2019.

Jeff

[buddybikes]

We go the other way - buying coming off lease after depreciated and generally cars have good warranty package.

[MattTuck]

Incorrect. All electric or hybrid in 2019.

Jeff

Source?

I thought the commitment only applied to new models announced after 2019.

From this story (https://www.fool.com/investing/2017/07/11/volvo-cars-electric-promise-is-less-than-you-think.aspx), I took the announcement to not apply to all their current models, but that they were offering hybrid as an option on all models of existing cars.


What Volvo Cars said
Volvo's press release didn't make any effort to tamp down the hype. On the contrary:

Volvo Cars, the premium car maker, has announced that every Volvo it launches from 2019 will have an electric motor, marking the historic end of cars that only have an internal combustion engine (ICE) and placing electrification at the core of its future business.

The announcement represents one of the most significant moves by any car maker to embrace electrification and highlights how over a century after the invention of the internal combustion engine electrification is paving the way for a new chapter in automotive history.

Sounds huge, doesn't it? But if you read a little further, you find what Volvo actually committed to do: Starting in 2019, every all-new model that Volvo introduces will be either a fully electric vehicle or a hybrid, including so-called "mild hybrids." (More on those in a bit.)


Fortune Article (http://fortune.com/2017/07/05/volvo-electric-cars-hybrid-2019/) on the 2019 commitment.

Volvo will continue to produce pure combustion-engine cars from models launched before that date, but its move signals the eventual end of nearly a century of Volvos powered solely that way.

I'm guessing you'll still be able to buy a gas powered XC90 in 2022. But, I guess we'll see.