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Mazda5 Lease Questions

CarMan@EdmundsCarMan@Edmunds Posts: 38,515
Hi everyone. Please use the following discussion to post any questions that you have about leasing a Mazda5. Thanks.

Car_man
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Comments

  • Just curious----do you negotiate the price first?
  • Hi ndigiorgio. You absolutely should negotiate the best possible price that you can before having the dealer that you are working with calculate your car's lease payment.

    Car_man
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  • bobw3bobw3 Posts: 2,997
    Why is that? What's the difference between negotiating the car price versus negotiating the lease payment?
  • Hi.

    If you tell them right away that you lease, they will give you final pricing, they are more reluctant to give you the detail as of amount given for the exchange, price paid for new car, ...

    The sales dept. will give you a nice (it's gonna be 450$/month, tax, exchange, Trans&Prep included).

    I prefer to know how much i got for the exchange,then the price paid.
    It's easier to negotiate with other dealers with those numbers.
    then again, some will give you the details even if you tell them you'going to lease the car.
  • Just my own two cents about the art of leasing. Unless they actually allow you to sit down and view the lease computer, chances are the price you spend time negotiating will be meaningless. Having worked in a dealership I know that the finance guys will routinely punch sticker price back in as the sale price, quote a payment, and see if you can swing it. Heck, same goes if you're a payment buyer on a loan too. If you push, they'll "change lenders" or try some other sales tactics to get you closer to where you want to be. Because leasing involves lease factors, residual values, mileage allowances, etc. it is less understood by the general public and can be manipulated to a greater degree for dealership profit. Not saying leasing is bad, but make sure you're dealing with somebody you trust and/or find an independent source for financing.
  • dglozmandglozman Posts: 177
    thats ok to negotiate the lease payments as long as you are sticking to the terms of the lease. (Let say your target price is 0 down, $250 a month for 36 month, 12k a year plus tax that you could pay upfront)
  • I had good luck with Leasguide.com for great info about leasing. I paid the ~$20 bucks US and found that information and tools have been invaluable in my research towards driving our M5 sometime next week!--can't wait :P

    After a bit of research and negotiating I settled on a deal with Leasecompare.com. They allow you to either locate the car you want and negotiate the purchase price or they'll find your car and purchase it, then lease it to you. They had trouble finding the one I wanted, so now that I have found it and got the price down a bit, they are working with the dealer on the purchase and with me on the lease deal. It turns out something like this...
    I talked to my local dealer (Stokes Mazda, Charleston, SC, USA) and found an M5 Touring Carbon Gray, the only acc. = floormats Manual trans. US$18,800 + Tax/Title/Lic. OTD $US19,438
    Now for the lease
    At Leasecompare.com I input all the parameters and it returned 5 or 6 offers, of which I chose the my best set of parameters (lease term, miles/year, 0 to ?$ downpayment, money factor, etc) and chose the lease option.

    I should be zooming next week :)
  • The difference is that it is easier to tell if you are getting a good deal when you look at the selling price of a leased vehicle than if you look at just the lease payment. The selling price shows you how much of a discount you are being given. You wouldn't finance a vehicle without knowing how much you were paying for it would you? this is sort of the same thing. Also, with the MSRP and selling price, I can use Mazda's actual lease program to estimate what your car's lease payment should be and see if the dealer that you are working with is trying to mark-up Mazda's buy rate lease money factor to add additional hidden back-end profit to your deal.

    Car_man
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  • I have never leased a car before, but my uncle has been leasing cars for many many years and I work in the finance field. So on theory, I think I know leasing.

    In my mind, the first and foremost is the price of the car. Everything else is derived from the price because the monthly lease payment and the future residual value are all a factor of future value of the current purchase price.

    Since I learnt finance, I am pretty familiar with a financial calculator. If you provide two out of the following three variables, the calculator can help you to find the last variable: Monthly Payment Amount, Future Residual Amount; &/or Interest(depreciation)%.

    I have bought 4 vehicles in the last 10 years or so. Each time the dealers brought up the leasing option and I started punching in numbers to the calculator. They never told how much they were making on the interest(Depreciation) on a lease, so I would use the monthly payment and residual value and back tracked the interest they were making off of me. Usually, it would be 8-10% from my experience with the promoted leasing program. However, if there was no promoted leasing program, just a lease alternative that a dealer brought up so you might afford a car that you wouldn't be able to afford with a loan, then the interest on the lease would be much higher.

    By the way, not only you need to negotiate on the purchase price of the car, you also should pay attention to the residual value of the car. If you want to get rid of the car at the end of the lease, you want the residual value to be high (so lower monthly payment). If you want to buy out the car at the end of the lease, you want to have a low residual value.

    The reason I never be able to lease is because I found the interest on the lease is almost always higher than a loan (which is natural), but more importantly, I can't drive less than 1000 miles a month, which is the usual 12K miles a year maximum requirement (10.5K miles per year on the current Mazda5 lease program). Remember, in most cases, each extra mile over the maximum mileage requirement costs $0.15 when you return your car. So let say you need to drive 20K miles a year, at the end of the 3 yr lease, you will owe 60K-36K=24K @ $0.15/mile, that equals to owing $3,600 when you need to return the car. Let say you don't have $3,600.00 cash to pay just to return the car, that means you HAVE to buy the lease off. Imagine if you have a high residual value compared to the used car market at that point, you basically are forced to buy an expensive used car.

    Personal experience, my co-worker leased 97 a civic LX and went over mileage. She doesn't have cash to pay the over mileage in order to return the car, so she got a 12% loan to finance her $15K residual value on a civic LX with a lot of mileage on it (more than used car market). She was totally screwed.

    So basically, if you want to lease a car that is your second car, so you can keep the mileage low; and a car that have good resale value, which translate to higher residual value; and you are pretty certain that you will return the car at the end of the lease, then lease is for you.

    If your car is your primary car, then you need to worry about the mileage. And if the car does not have a good residual value, you payment won't be too much lower than a loan payment. And if you want to keep the car at the end of the lease, you should just get a loan to finance car because the loan usually have lower interest rate even if it is a 60 month loan.
  • kev604kev604 Posts: 30
    Leasing only makes sense if you can write off some or all of your lease payments as a business expense.

    The reality is most people lease because the bottom line payments are usually less then financing. Short term benefit but long term bad idea. After your lease ends what do you have to show for it? For example if you bought a house and made payments towards it, your building equity towards your property. Whereas if you rent (and basically thats what leasing is a fancy word for renting) your monthly rent payments go towards the landlord who you are helping in building equity on his property. Or in this case the person leasing is helping the dealership build equity on their vehicle. Not a bad deal for the landlord or the dealership. That's why dealerships recommend and in alot of cases push leasing. Not because it's a good deal for you as they would like you to think.

    A friend of mine leased a Jeep and another friend leased a Lexus IS300. Both say they would never lease again.

    The dealership that I bought my Mazda 5 from told me alot of people go into the dealership saying here's what I can afford what can you get me into. Not here is what I want how much is it.
  • appcomappcom Posts: 3
    "After your lease ends what do you have to show for it? For example if you bought a house and made payments towards it, your building equity towards your property."

    That's the dumbest argument I have ever heard when it comes to lease vs own. The important difference you missed is that real estate appreciates in the long term whereas new cars depreciate. Within the first few years, most people are upside down on their new car loans. If you think a car is a good investment, I sure hope you own some limited edition 1970s muscle car! I do agree with you that leasing should not be used by people to get nice cars they would not ordinarily be able to afford.

    The bottom line is that leasing in good for some people, not good for others; good with some manufacturers, not good with others. It is important to do your homework before you settle on buying or leasing. Mazda does NOT have good lease deals right now. I looked at a 5 this week and negotiated a ~$360/mo lease with no CCR for a $26k MSRP vehicle. That's lousy. Instead, I picked up a Nissan Murano for $340/mo with no CCR for a $31k msrp vehicle. That, IMO, is a good deal. If you're looking to lease, find a Nissan, Honda or Toyota- all of which have some great programs on selected vehicles. If you have your heart set on a Mazda, buy it!
  • I agree with kev604. We cannot think of leasing a car the same way as leasing a house. Car naturally depreciates, unlike real property which in most cases appreciates.

    Below, I'm going to use a quote from www.comparelease.com (recommanded by a member from previous posts) to compare with a traditional loan. Hopefully the comparison can tell us (or me) which program is economically better. The purchase price on this example is before tax/title/license. A touring Mazda5 purchase price is $19,007. I assume $0 down payment and residual value is quoted at $9,365 and monthly lease payment is $370. A quick calculation with the financial caluclator shows that the lessor (bank) is making 8.66% annually off of this lease program. Clearly, 8.66% is higher than normal car loan rate with any decent credit. So Car Loan wins so far.

    Let say your intention is to keep the car at the end of 36 months, it is hard to come up with $9,365 cash at the end of the program to buy out the lease. So most likely you need to borrow from a credit union and get a 24 month loan to finance the $9,365. Eloan.com shows a lease buy out finance program for 24-36month at 7.05%. The monthly payment for this buy out loan is $419.50 until the balance is paid off.

    Let's compare, for a same purchase price, if you want a same $370 monthly loan payment, the finance interest rate with a long 60 month loan must be lower than 6.3% (which is obtainable as it is close to what I got on my fiance's car 6 months ago.)

    What do all these mean? If the car buyer is looking to keep the vehicle for a long term. A lease and the subsequent buy-out finance cost $370x36 + $419.5x24 = a total cash out of $23,388; vs. a loan $370x60 = $22,200. Clearly, Car Loan wins here as well.

    If the intention is to get rid of the car at the end of the lease, then your lease payments at the end of 36 months total $370x36 = $13,320. The benefit is that you don't need to deal with selling your car. All you need to do is to return it to the dealer; On the other hand, the loan payments at 36th month is the same $370x36 = $13,320, but there is a loan balance of about $8,330. If the lease residual value is a right indication of what your car is going to be worth, you can sell your car at $9,365 and pay off the $8,330 loan balance. $9,365-$8330 loan balance = cash back to your pocket $1,035. In this case, Car Loan still wins.

    I don't know how much tax write off can benefit the prospect, but a traditional car consumer should not look into a lease to save money. A car loan is more beneficial in any aspect that I looked into.

    If the above comparison is confusing to you, please ignore it. I just like to do analysis like this as a way to tell myself what's right for me and what's not. I don't mean to write a lecture for anyone. Writing the above is like I was thinking out-loud to myself.
  • wreineckewreinecke Posts: 13
    As far as a tax write off goes, you are probably better off to buy and take the IRS standard mileage rate than to lease. The 5 is an economical car and the payments are so low that you can likely do better buying than leasing.
  • kev604kev604 Posts: 30
    I never said a car is a good investment. in fact it's probably one of the worst investments you can make because you know your going to lose money.

    What I'm saying is if your paying $500 a month for a car or a house atleast down the road you've got something to show for it.
    Whereas if your leasing a vehicle or renting a house (depreciation/appreciation aside) what do you have to show for it?
  • appcomappcom Posts: 3
    "What I'm saying is if your paying $500 a month for a car or a house atleast down the road you've got something to show for it."

    I understand your rationale, but unfortunately, its incorrect. In a flat or depreciating real estate market, believe it or not in some cases it is actually more cost effective to rent than to buy! Like I said earlier- you have to take each choice on a case by case basis. Blanket statements like "buying is always more economical than leasing" is completely and utterly false. Whether you decide buy or lease a new car, its a losing proposition. The question is, which way do you lose the least? If you pay $25k for a car and after 3 years you have $15k in equity "to show" for it, you claim that is better than shelling out $275/mo over 3 years for the same car and having nothing to show at the end. Simple math tells us that we are in the exact same boat- $10k in the red.

    Which brings us to the specifics at hand. Mr. Spyder has proven (with numbers!) that buying a 5 right now is more cost effective than leasing. Like I said in my previous post, I think anyone looking at a 5 right now should consider buying over leasing. There are some excellent lease deals out there right now, just not with Mazda.
  • pisulinopisulino Posts: 78
    Very good post appcom.

    I would like to ad my 2 cents.

    I currently lease a vehicle that Im planning to return in 8 months from now.
    I have leased the car for three years, and I have been trouble free for all this time.........and that for me is very important.
    "having nothing to show for" is an old tradition and not completely true.

    Lease could be good for everyone, for example I don't have a businees to write off any of the interest or cost.
    However, this is what I see as the benefits:

    * Want to keep the car for a long time, but don't know how good the car is going to be. If car = good keep, if not good = return.

    * I pay for what I use. My payments are based on the portion that I use and that is true for the taxes as well.

    Finally, when leasing you MUST know the final price of the car, otherwise the payments can be based on WHATEVER THEY WANT TO.

    Also, do not let them change the amount that you decide and can afford to pay per month. People don't realize but an increase of $30-$50 dollars extra p/month is a big difference at the end. Try doing $50 x 36 or 48 and that's how much more profit they can make from someone that doesn't deal based on the final car price.

    The dealer will always try to talk to you in monthly payments. Monthly payments that are affordable and people lose perception of the actual total cost. You will say "I can pay that".
  • bob118bob118 Posts: 3
    I just lease a Mazda5 touring. Got the sales price to $19,600--and with $4k down payment, 39 mo term I'm paying about $275/mo + tax. I know it's not best to put money down, but I like seeing lower lease payments. And I looked at buying through my bank vs leasing and the numbers were comparable in terms of interest rate/ money factor. I also like the idea of paying on the vehicle for three years and then seeing if it's proven itself in the US market as a solid car. Just too new of a vehicle and concept for me to buy in completely. It's a fun car though. Did anyone get a better deal on a Mazda 5? Thx
  • pisulinopisulino Posts: 78
    Just a few questions since it looks to me like a lot of money.

    you put 4,000 down and will pay about 290 per month for 36 months. That is = to $14,500. What is the buy back amount at the end? is it only $ 5 or $6K?
    Im just thinking that you are paying a lot for the lease payments considering you put $4k down.

    But my calculations are only based on what you have provided.
  • bob118bob118 Posts: 3
    The buyback is actually around 9K. You're correct that my payment w/ tax is about $290. What do you think the payment should have been?
  • pisulinopisulino Posts: 78
    bob118,

    If you pay 290 x 36 = $14,500 + 9 = $23,500.
    Is that the car's price today? - 23,500 or less?...then you will know if you are paying too much.

    good luck
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