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General Questions about Leasing Vehicles

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  • kyfdxkyfdx Posts: 27,687
    When you go from 12K to 15K, you don't pay per mile... Depending on the make, the residual reduces by either 1% or 2%... Either way, the extra miles are cheap..

    I'm pretty sure that Hyundai is like Kia, and the residual reduction is 2%... the numbers from my previous post would be doubled.. Still cheap. Under $0.07/mile...

    MODERATOR
    Prices Paid, Lease Questions, SUVs

  • I've found this webpage Fighting Change on leasing a car. Author claims that I should go with an authorized dealer (as I understand him) as opposed to a third party since the dealer will always get me a better deal since there is no middleman. I take it to understand that if I got to my local 'authorized' Honda dealer and the salesman will be able to meet and possibly give me a better deal?

    In my case it's civic lx 2013 199/month, 1500$ insurance from Honda, no disposition fee for 36/month. I would have to pay first month fee+bank fees+dmv fees. Basically 1100 down +200 each month. Do you think that's a good deal or can I do better?

    thanks
  • sebring95sebring95 Posts: 3,231
    What is $1500 insurance? Regardless, $200/month is in the ballpark for the numbers you've listed. Not sure how the $1,500 insurance plays into this because if that's extra $200/month doesn't make sense.
  • eclipse2eclipse2 Posts: 64
    edited September 2013
    a 2013 G37x MSRP $48,695
    for 24 months no money down
    got him down to $41,840
    MF 0033 res $33,599
    $474.85 a month NJ tax added
  • $1500 allowance for "wear and tear" at Lease-end
  • sebring95sebring95 Posts: 3,231
    edited September 2013
    OK gotcha. I recommend putting zero down on a lease whenever possible. Honda is advertising a zero down deal on an LX for $210. That actually seems a little better than the deal you're getting but if your credit is not top-notch you may not qualify for that payment. But if you can get zero down with a payment under $225 you're probably better off.
  • my credit is probably top notch so that won't be a problem. I'm wondering how is 210 deal better than 199/month? Is it because I need to do first month+bank+fee+dmv fee with the dealer?

    thank you for the help with this.
  • sebring95sebring95 Posts: 3,231
    Yes the advertised $210 with zero down has fewer up front fees. So $11/month more x 36 = $396 compared to $800-$900 you're likely paying in fees (deducting first payment and estimated DMV fees). The main problem with downpayments/fees is that if you wreck and total the vehicle, you're pretty much screwed out of that money.
  • Never put anything down other then first months payment and tags.
    Gap insurance only covers whats owed..Look at Porsche most of those deals want 10k down.If that car is stolen next day they are out 10k
  • Do yourself a HUGE Favor! Don't buy the Infiniti QX56. Google the steering, suspension, bump steer, and issues it has. Infiniti refuses to do anything about it and says its a 'normal characteristic' of the car. It's an unsafe driving experience and it all starts kicking in about 15k miles into ownership.

    STAY AWAY
  • I've never owned or leased a car before but need one now to move around my growing family. Looking at a 2013 Hyuandi Elantra GT, they are offering a lease of $179/month for 36 months. Offer shown based on $2,699 due at lease signing (includes $179 first payment and $2,520 capitalized cost reduction). No security deposit required. MSRP $20,340 (includes destination, excludes tax, license, title, registration, documentation fees, options, insurance and the like). Actual net capitalized cost $17,805.34. Net capitalized cost includes $595 acquisition fee. Dealer contribution may vary and could affect actual lease payment. Total monthly payments $6,444. Option to purchase at lease end $12,204. Lessee is responsible for third-party fees. Third-party fees vary by state or locality. Lessee is also responsible for insurance, maintenance, repairs, $.20 per mile over 12,000 miles/year, excess wear, and a $400 disposition fee

    Is this a good lease deal? What parts of this deal can I negotiate?
  • sebring95sebring95 Posts: 3,231
    Anything is negotiable. First thing is to scratch the down payment. It's a bad idea to put money down on a lease. This will raise your payment to somewhere north of $250 but is far better than up-front money.

    I've thought the lease deals on the Camry SE seem pretty good. They're advertising $0 down and $267 a month on a $25k MSRP car.

    You say this is the first time you need a car....does it make sense to lock yourself into a 3 year commitment on one? Is there a chance you won't need this car 12k miles a year? Leasing is generally the most expensive and least flexible option for buying a vehicle. Would a lightly used vehicle not work just as well for you? You should be able to buy something still under warranty for around the same payment.
  • thanks for the response sebring95. I am weary of putting a down payment on something that I technically will not end up owning and yes, since I use public transportation to get to work and my wife does not drive, this will be a weekend car only, and I cannot see us putting 12k miles on the car over the course of a year.

    The reason to lease is because I have never been a car owner before and am concerned over the upkeep over the long-haul. But a good warranty should take care of that, no?
  • sebring95sebring95 Posts: 3,231
    I don't think I would ever consider leasing in your situation. Weekend driving and not using what you're paying for (12k miles) just makes it a lousy decision.

    Upkeep is pretty minimal on cars these days. Picking up a Hyundai or Kia certainly covers you for quite awhile. 5 years on everything and 10 years on powertrain would be a good thing for someone that doesn't drive many miles. Assuming you would be satisfied with one of those vehicles it probably wouldn't be a bad thing. You pretty much have to buy new though because the powertrain warranty doesn't transfer to a 2nd owner. I'm sure they sell them with extended warranties though but just to go on the record I don't recommend extended warranties either. But if you do buy an ext warranty, only go with one backed by the car manufacturer.

    Personally if I was in your shoes...I would pick up an Accord. No the warranty isn't as glorious as the Hyundia/Kia but the odds are very good you'll never need it. The real upside though is resale value. If in a few years you decide you don't need a car or maybe need something bigger....low mileage Accords bring stupid money. Even in ten years it will still be worth considerably more than the Hyundai/Kia. I just feel that's a better investment and where I'd spend my coin. Good luck either way.
  • kmurkmur Posts: 36
    I have seen it often said "never put money down on a lease, you'll lose it if you wreck the car!"

    What is this statement based on? I know firsthand of two different people who wrecked leased cars, and the insurance wrote a payoff check to the leasing company, and another check to the lessee, for the difference between the payoff amount and current replacement value (which I believe would be equivalent to Edmund's estimate to buy the same used vehicle at a car dealership).

    In both cases, the people were pretty far into their leases. The further away you are from the payoff amount, the less likely you will see anything. But that is no different from financing a car, yet I don't see people saying "NEVER PUT MONEY DOWN WHEN YOU FINANCE A CAR!"
  • stickguystickguy Posts: 14,172
    you are talking about Gap insurance.

    the logic is that insurance makes the leasing co. whole. If there is any equity left, that could go to the owner.

    but, usually on a ST lease, the depreciation is such that there won't be any equity, so the buyer gets no $ (they just walk away). And that is true if you put 0 down, or 1k, or even 2K. So, the money you put down effectively instantly vaporizes as depreciation, and in a total situation, it is the first thing to go.

    2013 Acura RDX (wife's), 2007 Volvo S40 (when daughter lets me see it), 2000 Acura TL (formerly son's, now mine again), and new Jetta SE (son's first new car on his own dime!)

  • kmurkmur Posts: 36
    The reason there would be equity is that a realistic residual is basically wholesale, while the insurance payoff will go up to retail replacement value. If your lease has an artificially inflated residual (such as with BMW or Lexus), you probably won't see a dime. So it depends, I guess.
  • sebring95sebring95 Posts: 3,231
    The loss of the down payment is a short-term problem for the most part. Of course that all depends on the buy-out, terms, market, etc. It could be a long term problem if you buy something that depreciates heavily. Most leases require gap coverage to make up the difference but that doesn't help you with what you put down which vaporizes when you drive it off the lot.

    What's the difference between this and buying a car with a downpayment? Maybe nothing...but generally speaking the buy-out or payoff on a loan won't be as expensive as a lease $ for $. So this is just one part of why most (myself included) don't recommend putting money on a lease.

    One of the other reasons I don't recommend it is because the entire purpose of a lease is to minimize cash costs. By throwing down a big chunk of cash up front, you've just basically eliminated one of the main advantages to leasing. Yes your payment will increase if you put nothing down but it's cheap money assuming you're getting a favorable rate (less than 1% is common lately on subsidized deals).
  • kmurkmur Posts: 36
    Fair enough, and your rationale makes sense.

    I guess from my perspective, I see leasing more as an easy way of getting a car for several years on a trial basis - if I like it a lot, I will buy it out. If not, I just hand the keys back to the dealer without having to hassle with the trade in. Moreover, in my past experience of leasing many cars, I have usually had enough equity built in the car (according to appraisals provided by CarMax, among others) where I would be able to trade it in at no loss with about 1 year left on the contract.

    With my most recent lease, I crunched the numbers many times, considering an all cash purchase vs a lease. What I found is that for the first 3 years, leasing would cost virtually the same as cash purchase (assuming that the lease's depreciation curve is accurate). The reason is my state collects sales tax only on the payments, whereas the entire amount would be due on a cash purchase.

    So if I discover I really like the car and buy it out at the end of the lease, that's when I'd be kicking myself for not having paid cash in the first place.
  • sebring95sebring95 Posts: 3,231
    At the point you buy it out, wouldn't the sales tax only be on the buyout amount? If that's the case, the only additional part you would be paying tax on would be the interest/expenses rolled into the payment.

    There are probably deals out there that get the lease vs buy very close, particularly with some of these subsidized deals with inflated residuals and super low money factors. But for me if it's that close I'd still rather own it so I'm not locked into that mileage allowance, potential damage expense, or the tail-end fees that are quickly becoming the norm. You want to buy it out? Fee. You want to turn it in? Fee.

    What I've found is a nice way to "try out" a vehicle is to assume someone's lease. I've done this a few times and made out very well because someone put money down on a lease, drove it very few miles, and then had to get out for some reason. I took over the lease in the 14-18 month range with super low miles and in all cases bought out the lease at the end or traded/sold with positive equity. Those three trucks were among the cheapest vehicles I've ever owned. Most of the lease assumptions you see on the lease swap sites are horrible deals....but occasionally a killer deal will show up and you can pounce.
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