Buying a Subaru Outback

I recently wrote about how we decided which model to buy. This post talks about trim level and options for that model, as well as the actual buying process.

We started by using the car configurator on Subaru’s website.

Engine size

After driving weak cars for 20 years I was hoping to get something more powerful. I thought the four cylinder 2.5i would be underpowered when hauling a lot of weight (four people and luggage) up hills. I was drawn to the six cylinder 3.6R, but the gas mileage isn’t great. I estimated that we would spend between $5k and $8k more on gas over a 10 year period when compared to the 2.5i. And dealerships around here had fewer in stock, which meant the selection wasn’t great. And hauling a lot of weight up hills isn’t something we do very often (kids are light). We test drove the 2.5i with three adults and acceleration felt fine to me. Speculation: While the engine is listed as only having 175hp, maybe this is more adequate than you might think because CVTs allow for quicker acceleration than a traditional transmission by allowing constant high RPMs. So we went with the 2.5i—the rational choice, really.


To pick the color, both of us rated the options on a scale of 1 to 10. Our top three were the same and we decided on Dark Blue Pearl as our favorite.

Trim level

We knew we wanted the Limited trim level, which includes push button start, PIN code vehicle access, power adjustable front passenger seat, and HomeLink rear view mirror. Subaru’s adaptive cruise control/automatic emergency braking comes from a system called EyeSight. We didn’t feel strongly about it, but most Limited Outbacks in stock around here have EyeSight and it seemed like it could potentially prevent or reduce the severity of an accident, so we got it.


Most Limited Outbacks around here also had “Popular Package 2.” It includes a few things we cared about: rear bumper cover, new all weather floor liners, rear seat back protector. And some things we didn’t care about: exterior auto dimming mirror with approach lighting. To find a car in local inventory without the package would have meant limiting our options and possibly making it harder to bargain while not actually reducing the cost much, so we got it.

Getting price quotes

I looked up dealer invoice price for the base car and each add-on (possibly from NADA Guides). Cars 101 is also a great Subaru-specific resource (though they don’t list dealer invoice prices). I also looked at the price estimate on TrueCar. I was very familiar with the options at this point so I started calling dealerships. I asked what their best price was for the options we wanted.

Three dealerships gave me similar prices that were below dealer cost and on the lower end of the TrueCar range. The price was lower than I was expecting. We bought at the end of December, so maybe there were manufacturer incentives at play?

The dealership I found easiest to work with was also the closest, and they price-matched the lowest price, so we took their offer.

I thought having dealerships bid against each other was a great strategy. I also liked having an agreed-upon price before going to the dealership.

Considerations when negotiating a price:

  • Dealers like add-ons because they’re cheap for them but they have a high MSRP, so it sounds like you’re getting a lot. For example, LED map and dome lights have an MSRP of $99 but LEDs are like a penny each. I don’t know why this is even an option except to give dealerships an opportunity to charge more. Remember to negotiate these prices, too.
  • Some options are installed by the manufacturer, some are installed by the dealership, and some seem to be “port-installed,” meaning they’re installed at the port after arriving in the US. Manufacturer options make sense—it’s hard for a dealership to swap out a 2.5 liter engine for a 3.6 liter engine. And dealership options make sense—not everybody wants a trailer hitch so it’s easiest to just have the dealership install it on demand. I don’t know why port-installed options are a thing.

Lease, finance, or pay in full?

After looking at lease prices it seemed likely that a lease would have been the most expensive option for us over the long term. It was less clear whether it was better to finance or pay in full. Auto loan rates are very low, so it’s conceivable that you would earn more from stock market index funds than you would lose in interest payments. It’s impossible to know, of course, since stock market performance isn’t predictable. And should inflation be factored in? I don’t know. There are a few inconveniences associated with a loan: hassle of making payments, setting up autopay on the lender’s inevitably-crappy website, making sure you keep a high enough balance in your bank account, notifying the lender if you move, dealing with tax implications if you move to another state. There’s also a risk that the lender will neglect to remove their lien from your title once the loan is paid off. I assume this is very rare, but it did happen my brother (I’d love to see stats on this). So we chose to pay in full.

Dealership experience

We bought from Putnam Subaru in Burlingame. It went smoothly. We had an appointment first thing on a Saturday morning. We did one last test drive then filled out forms, read and signed documents, wrote a check, etc. All told it took between one and two hours.

I checked with our insurance company beforehand (Allied Insurance, a subsidiary of Nationwide) and they do not require that the car be added before purchasing. There’s a grace period.

It was helpful to know typical California new car fees ahead of time. For us, use/sales tax was $2,700ish, registration and related fees were around $350, and the dealership charged an $80 documentation fee, which is the max allowed in California for dealerships that partner with the state to provide on-site registration (it’s capped at $65 for dealerships that don’t provide on-site registration). The California DMV has a calculator that you can use to get an estimate.

We declined the extended warranty because it’s basically additional insurance. I use the same rationale for all extended warranties: Presumably the vendor makes money from the extended warranty. If they’re making money then, on average, the consumer is losing money. I’m ok with weathering the financial risk of my specific car (or whatever) having problems. So if I decline all extended warranties then I’m likely to come out ahead.

We declined the extended service agreement. Mostly because it wasn’t clear whether it would save us money. Speculation on the economics and psychology of car maintenance: In my experience dealerships tend to charge more for service than comparable non-dealership auto shops. Dealerships make money from extended service agreements by locking people in. If we planned to have all maintenance done at the dealership then perhaps the extended service agreement would save us money. But if we think we can find a cheaper or better mechanic elsewhere, even for a few of the scheduled services, then the extended service agreement is a bad deal for us. You would hope dealerships do better quality work since the mechanics can specialize and be intimately familiar with the dealership’s lineup. But it’s not fair to assume independent mechanics will be worse. There might be more variance among independent mechanics, but the best independent mechanics will be just as capable and might take more pride in their work. Or might work harder if they’re invested in the success of their shop. And of course some independent mechanics also specialize in specific brands.

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