Mazda3 Lease Questions

clippersfan5 · June 2007

Car_man,

Could you please give me the current money factor and residual for a 36-month 10K-mile lease on the Mazda 3 S Grand Touring (4-door) with the Navigation and Bose audio packages (MSRP $24,525)? Thank you.

violet37 · June 2007

hi everyone,

I have been dealing with some very nice people at a Mazda dealership in New York state. I have less-than-perfect credit that I have been slowly rebuilding over the last few years - my FICO scores are now in the low to mid 600s. The dealership has approved me to lease a 2007 4-door i Touring, the only extra option being the ABS brakes / side airbags add-on. I get the details of their offer this week.

The thing is, I've never leased a car before and I'm not sure what a good deal might be. I'm a little afraid to negotiate because my credit is not great and I sort of feel like I need to take what I can get.

The MSRP for this car (with destination and options) is $18,145. The TMV is $17155. I am looking for a 36 month lease with 15k/year. I can put up to $5K down on the lease. I know that putting a lot down may not be wise if the car gets stolen or totaled, but I do want to keep my payments low.

For those of you in the know with Mazda3 leasing: given the above stats, and my mediocre credit, what do you think I should be looking for in the way of a deal - what do you think would be reasonable for them to ask for down payment and payments? They said that sales tax is included in payments (6.25%). I don't know if gap insurance is included in that as well.

quick update: I just spoke to the dealer and he is saying I will have to put $5k down and my payments will be around $240. is that ridiculous or not so bad considering my situation?

Thanks in advance!

avljmax · June 2007

Hi Car_man,

I asked for some info in the Nissan Sentra forum and would also like some help here, if possible. Could you please give me the current money factor and residual for a 36-month 12K-mile lease on the Mazda 3 i Touring with ABS? Thank you again for all your help.

qbrozen · June 2007

more information is needed. What is the purchase price (cap cost) before your down payment? What is the money factor? What is the residual?

The numbers $5k down and $240 a month doesn't give you much to go on. For all you know, they could be charging you full MSRP plus a bunch of add-ons.

m6_2005 · June 2007

Hi -

I am trying to lease a demo vehicle--a 2007 model. The odometer reads 5008 miles.

My question is: How are the residual values for demo cars determined for various lease terms? How would I determine the depreciated portion of this vehicle?

How exactly is this applied to the lease calculation?

Also, in leasing, what are some important factors in leasing a demo car vs. a new car to keep in mind? Do the same new lease incentives apply to demo car leases?

THANK YOU in advance!!!

qbrozen · June 2007

well, i can answer some of your questions. A demo car has never been titled, so it is still sold as new. The warranty would start at the sale date and at the miles on the odometer (in other words, your 36k mile warranty now goes to 41k miles on a demo with 5k on the clock). And the new-car lease deals do still apply.

I have no idea how to figure residual on that.

m6_2005 · June 2007

I really, really appreciate your quick and great response.

Thanks for the tip on the warranty.

Also, in respect to the residual value for demos, dealers should not touch the residual value. However, in order to get credit for what the dealer has driven, they must make cap cost reduction adjustment for every mile driven.
In my case, the cost of each mile is $.15.

Once again, THANKS!

CarMan@Edmunds · June 2007

Hey wilkich84. Individual dealers cannot alter banks' published residual values, so you won't be able to change your car's resid to provide you with a lower monthly payment. Rather than using the money from your tax return as a down payment for your lease, just beep it in the bank earning interest and use it to supplement or make some of your Mazda3's lease payments.

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CarMan@Edmunds · June 2007

Hi sml6. The Mazda3 is not a very high margin vehicle. In fact, I suspect that the $1,400 discount that you were given on yours probably puts its selling price at right around dealer invoice, which is a very good deal. Since you are paying $1,477 at lease signing, I'm just trying to figure out what is included in the capitalized cost that raises your car's selling price by $850. Do you have a breakdown of these charges?

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CarMan@Edmunds · June 2007

Hello tucci314. Consumers can and should lease any vehicle that they are interested in without making any sort of capitalized cost reduction. All you have to pay at lease signing are your car's first month's payment, a security deposit equivalent to that payment rounded up to the nearest $25 or $50 increment, Mazda Credit's acquisition fee (I believe that it is $475), and any state taxes or fees. You would be better off having a slightly higher monthly payment than putting money down. Consumers who make down payments on leases risk losing all or part of them if their vehicle is totaled in an accident or stolen and never recovered.

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CarMan@Edmunds · June 2007

Here you go, newcar3178. Mazda Credit's current buy rate lease money factor and residual value for a 36 month lease of a 2007 Mazda3 S Touring (4-Door) with 15,000 miles per year are .00213 and 57%, respectively. The numbers for an otherwise identical lease of a 2007 Nissan Altima 2.5S through Nissan Motor Acceptance Corp. are slightly better at .00199 and 58%.

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CarMan@Edmunds · June 2007

Hi clippersfan5. Mazda Credit's current buy rate lease money factor and residual value for a 36 month lease of a 2007 Mazda3 s (4-door) with 10,500 miles per year are .00213 and 60%, respectively.

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troysun · June 2007

Guys I need your help,

I am about to lease my first car and here is the offer: (NJ dealer)

Mazda 3- 5 door: 24 month lease, $2.150 down payment (includes first month payment); $230 monthly payment. (includes taxes and all fees/title..etc) 12.000 miles limit

Thanks

CarMan@Edmunds · June 2007

Welcome violet37. Since you have never leased before, you definitely should check out the following informative articles that are available here at Edmunds.com prior to visiting any dealers: 10 Steps to Leasing a New Car and Calculate Your Own Lease Payment.

Basically, what you need to do is negotiate the lowest possible selling price for the Mazda3 that you want. The selling prices of leased vehicles are negotiable, just as if you were paying cash for or financing them. The fact that your credit is not perfect should have no impact upon your car's selling price. It will only alter the money factor that is used to calculate your lease payment.

You really should keep that $5,000 in the bank rather than using it as a down payment for your lease. You can use it to supplement or make a number of your monthly payments if you want.

Car_man
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CarMan@Edmunds · June 2007

Here's the information that you're looking for, avljmax. Mazda Credit's buy rate lease money factor and residual value for a 36 month lease of a 2007 Mazda3 i Touring with 12,000 miles per year are .00213 and 60%, respectively. I'm headed in the direction of the Nissan discussions, so I'll see you over there soon.

Car_man
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CarMan@Edmunds · June 2007

Greetings troysun. Since you are new to the world of leasing, you definitely should check out the following informative articles that are available here at Edmunds.com prior to visiting any dealers: 10 Steps to Leasing a New Car and Calculate Your Own Lease Payment.

You never mentioned the selling price or MSRP of the car that you are interested in leasing. These are important numbers for you as a consumer to know for two reasons. First, the selling prices of leased vehicles can be negotiated, just as if you were paying cash for them. Without knowing this car's selling price in relation to its MSRP you don't know how much of a discount you are getting on it. The second reason is that one needs the selling price and MSRP, including the destination charge, of a vehicle to calculate its lease payment. I would be more than happy to give you my opinion of this deal if you let me know what these numbers are.

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troysun · June 2007

thanks car_man ; Mazda3 S sport 5 Door : 19.000 (includes destination charge but excludes tax, title, license fee)

nupeskee1 · June 2007

Carman I need the lease numbers for a Mazdaspeed 3 lease for 24 and 36 months at 12k and 15K per year. Please provide residual, money factor and any special credit terms if there are any. Thanks.

ufnavy06 · June 2007

My girlfriend leased a Mazda3s Touring on Saturday. She has an amazing credit score and her monthly payments are $367 and change. She put $2500 down off a trade, which was fully paid off. Her old car has now been sold and the dealer promised her a check for the difference in the remaining equity of her old car in excess of $10,000. We have been having issues with titling the car and because of this the dealer is saying they may have to raise her monthly payments another $50. According to Mazda American Credit, Mazda's leasing agency, and their website describing certain offers on leases, a comparibly equipped Mazda3s Touring is leasing for $229 a month with $2,239 due at signing. Is it me or does it sound like my girlfriend was taken advantage of, especially considering a Mazdaspeed6 can be leased with less money down and for a lower monthly payment. Furthering the problem is the titling issue and the fact we haven't received the check the dealer promised yet (they said they'd have it in 2 days). Is there anything we can do to get the lease payments closer to what we think she should be paying, or get out of the lease without doing further financial damage? We don't feel it's right if the dealer can already sell her old car when the contract hasn't been fulfilled completely on their part. Any help is appreciated.

qbrozen · June 2007

wow! yeah, that is a horrible deal. Something is terribly wrong there. Can you post all the numbers of the deal? (residual, money factor, fees, etc) It sounds like they must have added a bunch of stuff to the car (warranty? protection package? accessories? extra insurance?).

You do have one great thing going on ... the titling issue. Just what is the problem? If they can't sort it out, they will need your GF to sign new papers, THIS is where you fix the problems! Do NOT sign new papers unless you get the deal you expect (the advertised deal will be just fine). If they won't give you that deal, then they will have to take the car back and give you all of your money because you ARE NOT signing a new deal otherwise!

If they really sold her old car, then so be it. Take the money and go find something else or go to another mazda dealer.

Unfortunately, if they make the deal go through as it already stands, then there is nothing you can do about it. Learn from the lesson and move on.

ufnavy06 · June 2007

Taken directly from the lease agreement:
Monthly payments: 356.67
Total monthly payments are 8821.44 over 24 months
12000 miles a year
2500 down
Initial value of the vehicle of the car was 21063.00 and the gross capitalized cost is 21658.00
Capitalized cost reduction: 1493.94
Adjusted capitalized cost: 20164.06
Residual value: 13919.25
Depreciation and any amortized amounts: 6244.81
Rent charge: 2576.63
Total of base payments: 8821.44
Lease payments: 24
Base payment: 367.56

She has a 773 credit score so it doesn't make sense the payments would be $100 more than what Mazda credit advertises. The titling issue is complicated. She's from Ohio and recently moved to SC where I'm located after graduating college. She wants to remain with her parents insurance for lower monthly payments and in doing so wants to title the car in Ohio because of the hassle of getting new insurance, a new license, etc etc. The dealer wants her to title it in SC because they have a flat tax rate for vehicles capped at $300. Titling the car in Ohio means she pays Ohio taxes. Since that issue has yet to be resolved, it is my understanding the car has not yet been titled. Thanks for the insight.

kyfdx · June 2007

What is the MSRP?

Also, if you signed the lease agreement, and took the car, you likely can't get out of it, no matter where it will be titled.

Of course, that is a separate issue from where your $10K check is..

qbrozen · June 2007

Ok... well, at that price, I'm going to assume its a Touring S sedan automatic with moonroof/6cd and autodimming mirror. That brings me to $21,060, which is close.

1st problem is, your cap cost is above the sticker, meaning there are some extras on there. Let's say its a bank fee. That's fairly normal, BUT it also shows me you paid full sticker for the vehicle. That's a HUGE mistake right there. You guys should have bargained for invoice. That is the lack of research.

Mazda's advertised deal is based on a discount from sticker, first of all. But its open to dealer participation. They don't HAVE to give you the discount ... they obviously didn't.

2nd thing is, I don't see the lease special you are referring to. I see a Mazda3 SPORT 5-door automatic for $229 and $2229 down. But that's quite a different price than the car you got. Every option adds money to the payment.

3rd. we don't know your money factor. they COULD have bumped it up for additional profit.

ufnavy06 · June 2007

It's a Mazda3s Touring 5 spd with leather, moonroof-cd package, rear spoiler and I think that might be it. I don't have the sticker in front of me so I can't say for sure.

ufnavy06 · June 2007

Oh then you probably saw the Mazdaspeed6 lease offer too and how that's 339/month with 2339 down. It's all puzzling to me.

blitztwn36 · July 2007

Hey All-

I'm looking to lease my first car and needed some help.

I'm looking between the Mazda 3 and 6 (the lease prices I was quoted were within $30/month of each other for a Mazda 3 iTouring and a Mazda 6 iSportsValue)

Anyway - the Mazda 3 iTouring price I was quoted was 18.2k. For a 36 month 15000 miles/year lease with $500 down (includes first months payment) I was quoted at $290/month.

The Mazda 6 iSportsValue was quoted at 22.2k. And a 36 month lease, 15000 miles/year with $500 down (includes first months payment) would be around $310/month.

Do these deals sound good? Cars are pretty much standard except a moon roof has been added to both prices.

CarMan@Edmunds · July 2007

You're very welcome, troysun. OK, so this car's selling price is $19,000. What is its MSRP? Having both of these numbers will show me how much of a discount you are being given and will enable me to use Mazda's current lease program to estimate what your monthly payment should be.

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CarMan@Edmunds · July 2007

Hi nupeskee1. I do not believe that Mazda is currently providing any lease support on the MazdaSpeed3, just the regular Mazda3. As a result, if you were to lease one through its captive finance company right now, you would have to use its standard lease program...which is not very good. Chances are that it would be less expensive to lease a MazdaSpeed3 through an independent bank than it would be through Mazda Credit right now. I do not personally keep tabs on the independent banks' lease programs though.

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CarMan@Edmunds · July 2007

Greetings blitztwn36. Since this will be your first lease, you definitely should check out the following informative articles that are available here at Edmunds.com prior to visiting any dealers: 10 Steps to Leasing a New Car and Calculate Your Own Lease Payment.

You were smart to get the selling prices of the cars that you are considering leasing. The selling prices of leased vehicles are negotiable, just as if you were paying cash for or financing them. It is difficult for me to give you my opinion of the selling prices that you mentioned without knowing what these cars' full MSRPs are though. I would be happy to tell you what I think if you let me know what these numbers are.

For now I can give you an idea of what these cars' money factors should be like so that you can make sure that the dealer that you are working with is not trying to mark them up to add additional hidden back-end profit to your deal. Mazda's current buy rate lease money factor for a 36 month lease of a 2007 Mazda3 i is .00178 for consumers who qualify for its top credit tier. The number for an otherwise identical lease of a 2007 Mazda6 i Sedan is .00142. Make sure that these are the factors that the dealer you are working with is using to calculate your lease payments.

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merrydinnc · July 2007

I am looking into leasing a new 2007 Mazda vehicle. I am looking at the Mazda3 and the CX-7 (I am still trying to decide between the sport and touring models on both vehicles). I have seen advertised lease rates for 24 months on both of these vehicles but I am always skeptical of those advertisements. Can you tell me what I absolutely need to find out to get the best deal? Also, Is it better to lease a honda because of the residual values?

Thanks!!

gf2020 · July 2007

Can I get the money factor and residuals for a 2007 Mazda3 s Touring 5-Door, manual transmision, for 24 & 36 months, 12,000 & 15,000 mile leases?

Thanks!

phx08 · July 2007

Hi, i want to know what kind of Residual and Money factor i'm looking at for the 2007 Mazda 3 GT (Grand Touring). The TMV on here is around $20,900 for that car. 36 month lease with 12,000 miles per year.

Thanks

shirls · July 2007

Hi-- I would really appreciate your help, I am a first time leaser. I was offered a deal of $247.87/month for 2 years or 260.27 for 3 years. This is at a cap cost of 19,200 (msrp 20,100), with 790.00 in taxes/fees for a total of 19,990, with $3000 down. i don't know what money factor they are using or the residuals for the car. Is this a good deal or should I look for better? On first glance it seems pretty good to me, but it is also from the first place I went to. Thanks very much!
PS-- the car is a gray s-touring sedan with leather seats and moonroof package. I also want to add on remote starter and door guards.

proe · July 2007

Hi, Guys,
I will be leasing my first car to fill the gap until 2010. John Hine at San Diego has Mazda 3 s Grand Touring wagon AT with MCR compass and autodimming mirror and JCP pearl paint in their inventory. The MSRP is $21,840 form Edmunds, and I think that is close to the MSRP form the John Hine (I cannot get to the web page somehow, it must be my 1997 pc is too old for it :-) ).

If I can get the selling price down to $20,911 or around that figure (since that is what people at my zip code paid per Edmunds) and I am looking for 3 year lease with 15,000 mile/per year on mileage with excellent credit score (I am debt free), what kind of lease plan would you recommend?

By the way, is there a better Mazda 3 wagon to lease besides the one that I am looking for? Since the car is only to fill the gap until 2010, I may need to check my ego to get the payment down as much as possible

Also, what are other things about lease that I need to know before I start to negotiate with dealership besides those mentioned in the Edmunds?

Thank you so very much,

proe · July 2007

blitztwn36,
Can you tell me where you live, so I can compare the lease deal that you got?

Thank you very much,

proe · July 2007

John Hine at San Diego has Mazda 3 s Grand Touring wagon AT with MCR compass and autodimming mirror and JCP pearl paint in their inventory. The MSRP is $21,840 form Edmunds,

The is what I got back from the dealer.
36 month lease with 15,000 miles per year
Selling Price: $20,911
Cash Down: $3,000
Monthly Payment (including tax): $356.45
Money Factor: 0.00293

I found the money factor to be high.

Any comment?

Thank you very much,
Charles

proe · July 2007

What determines the money factor?

Thank you very much,

qbrozen · July 2007

manufacturer subsidizing and your credit score.

Your deal seems REALLY high, unless the manufacturer support went away recently.

maximafan · July 2007

That sounds too high! Plus, you're putting
3,000 down. $356.45 a month lease for 36 months? On a $17,000 car? I remember back in 1995 when I bought a used 1995 Nissan Altima GLE, loaded to the gills. The total selling price was under $17,000 and after financing it for 60 months, and that was to purchase, not to lease, my monthly payment was only $339.00 a month. And even after my purchase, I still didn't think I got such a great deal back then. I would keep looking if I was you. I would think you should be betting under $300 a
month payments based on this price.

qbrozen · July 2007

its a $21k car, not $17k. But, yeah, like i said, too high.

j1mbo01 · July 2007

Just got home from the dealer:

2008 mazda 3 5 door, no options, manual transmission, 3yr. lease, 12000 miles per year.

msrp= 18520
cap cost= 17500
residual= 56%
money factor, unsure but around = to 6% interest rate
was quoted 311 per month, 670 down (1st month, doc fee, registration)
311 includes 5 % massachusetts sales tax, and excise taxes for 3 years, gap insurance.

Still seems a little high, what do you think?

CarMan@Edmunds · August 2007

Greetings merrydinnc. The best way to get a good deal on a lease is to negotiate the lowest possible selling price and then have the dealer that gives you that price calculate your lease payment using its buy rate lease money factor. Shop around and negotiate a selling price that is as close to dealer invoice as possible on the Mazda3 that you want. You should be able to get an idea of how much you will have to pay for this car by visiting the following discussion: "Mazda3: Prices Paid & Buying Experience".

Once you have a selling price that you are comfortable with, have the dealer calculate your lease payment using its buy rate lease money factor. Vehicles' money factors vary by trim level and term. If you tell me exactly which Mazda3 you are interested in and how long you want to lease it for, I can tell you what its current money factor should be.

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CarMan@Edmunds · August 2007

Here you go, gf2020. Mazda Credit's current buy rate lease money factor and residual value for a 24 month lease of a 2007 Mazda3 Touring 5-Door with 15,000 miles per year are .00154 and 64%, respectively. The numbers for an otherwise identical 36 month lease are .00186 and 53%, respectively. This car's 12,000 mile per year residual values are 2% higher.

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CarMan@Edmunds · August 2007

Here's the information that you're interested in, phx08. Mazda Credit's current buy rate lease money factor and residual value for a 36 month lease of a 2007 Mazda3s GT with 12,000 miles per year are .00178 and 57%, respectively.

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blitztwn36 · August 2007

I'm completely new to leasing and trying to figure out if this is a good deal to go with.

Mazda 3 5 door Grand Touring
w/Moonroof + Bose package and other additions

MSRP: $23,300
Selling Price: $21,600

36 month lease, 15,000 miles a year
No money down

Monthly lease payments of $362 ($392 total with local usage tax).
Not sure of the residual value/money factor but input would be appreciated.

tracermag · August 2007

I am trying to decide between leasing a 2007 s sport or touring, and identical 2008 s sport or touring. The only options on the cars would be moonroof 6cd pkg, and side curtain airbags on the 2007 s sport. I believe the only difference for 2008 is on the s sport, the side curtain airbags are now standard. The prices on these models for 2007 vs. 2008 are the same, and I have the benefit of S Plan pricing.

I need to know what are the residuals and money factors for the 2008 s sport or touring models for 12k and 15k miles. I have, from Carman's post on Aug 1st, the numbers for the 2007 models. I am thinking that the residuals for the 2008 should be higher, but will that make for a better lease deal than on a 2007 with a lower selling price / cap cost?

Lastly, the current dealer i am talking with has said there is a 500 rebate on the 2007 Mazda3, but I can't seem to find or confirm that anywhere on the net. I suspect they are just knocking 500 of my s plan price, which may not even be that great of a deal at this point in August. The MSRP on the 2007 s sport with delivery is 19870, and the s plan price with delivery is 18,550...so with the 500 "rebate" its 18,050. I can do the lease payment calculations and find any hidden profit, but I first need to pin them down on the selling price for this 2007 model, otherwise I think leasing the 2008 becomes more attractive.

Any info would be greatly appreciated, thanks.

delta737h · August 2007

tracermag,

The $500 sounds like a dealer discount. Anyway, here's a little math that can help you...

P = F (A + R) + (A - R)/T

This is the money factor formula that solves for the payment (P). Simply plug in the known values for Money Factor (F), Adj. Cap (A), Residual Value (R), and Term (T) in months.

You can use the following identity...

(V + C) - D = A

to obtain...

V = A - C + D

where...

V = Agreed Upon Value (Sell Price)

A = Adj. Cap.

C = Amount(s) Capitalized (i.e., financed) which may include taxes

D = Cap Reduction(s)

Now you have found "V", the Agreed Upon Value or sell price, which is what you want.

The BEST way to proceed is for YOU to determine the sell price and NOT THE DEALER... BAD IDEA! Check edmunds or kbb for MSRP/Invoice pricing. Examine my posts in the Infiniti forums to get an idea of how to construct a one page lease proposal that you can FAX/email to the dealer. It's designed to save time, money, and aggravation.

I suggest that you DO NOT put cash down as a car is a depreciating asset and, if you have a total loss, it's not likely you'll recover your down payment (cap reduction).

Hope this helps.

John

tracermag · August 2007

John, i appreciate your input and for taking the time to draw attention to the formulas. As i said in my post, i understand how to calculate the lease payment, and in fact have done so successfully for the last 9 years on my last 3 ford explorer leases, to within 1 dollar of the dealer's final number after knocking out the hidden profit - of course the dealers presume most customers can't or won't do this - and as you already know, they don't like it too much when the customer does do this.

Since I would be a ford A plan customer, and hence a Mazda S plan customer, i already know the discounted selling price / cap cost of the vehicle, except for any undisclosed dealer incentives or other discount for end of model year, which is really what I would like to find out.

The dealer is "saying" the price is S plan, which is invoice price, and then less another 500 "rebate." So, my question is, would 500 below invoice be a good price on this 2007 model at this point in August, or should one expect a larger discount?

I have no intention of paying doc fees, wear care, ad fees, etc., or any other hidden profit - i give them 100 to add to the selling price to get adjusted cap cost for title and registration fees and that's it - that covers the 60 dollars or so in true costs from the state and gives the dealer more than fair amount to have a runner get the papers filed, and more dealers are doing it electronically now in Ohio anyway. And tax is added to the monthly payment. I think you and I are saying the same thing, i just want to pin down the best selling price BEFORE i show them why their math is bad.

Here is a tip which is a variation of your one page lease proposal: I put the formulas into an Excel spreadsheet on my laptop. On buying day, the laptop comes to the dealer with me, but stays in the car until i know what the proper selling price of the car is. Then after i get the dealer's payment, which never seems to add up based on the agreed selling price, then the lappy comes in and i let them try to explain why their math skills are so bad. :surprise:

Thanks again for taking the time to respond.

delta737h · August 2007

tracermag,

A cursory look suggests to me that $500 below invoice falls within the domain of reasonableness. However, I would need to do some research that captures supply/demand considerations, incentives, etc. Having done that, I arrive at a sell price or agreed upon value. The sell price is reasonable and so I don't even consider all the other crap like doc fees, advertising, etc. And so "hidden profit" isn't even a consideration because there is none. Afterall, I'm the one that determines the selling price and, everything after that, just falls right into place. I'm always in control of the deal and that is the key. Another key to negotiating is DON'T.

I have programmed my TI 84 calculator to do fairly sophisticated lease calculations and have created an excel spreadsheet that does it all including lease amortization schedules. I'm convinced my programs are superior to most, if not all, lease programs used by dealerships only because so many of them contain mathematical flaws.

The numbers in my lease proposal are ALWAYS spot on. All the dealer needs to do is say YES or NO. If NO, I simply FAX/email to another dealer. If YES, they can trasfer the numbers in my proposal directly onto the lease agreement. I tell them to draw up the papers and have the keys ready because I don't want to spend any more than one-half hour at the dealership. Every number appearing in the lease contract must exactly match (to the penny) those in my proposal. I insist that the contract be completed correctly and I make that very clear to them beforehand. If their calculations don't match mine, then they made a mistake somewhere and I'm not about to argue with them or try to find their errors. They're in this business and they ought to know how the calcs are done. If not, I walk. End of discussion. Pretty simple, huh?

I'm not going to get into a classroom discussion with any dealership about how they do their math. And, I'm not about to educate them either unless, of course, they are willing to compensate me. These people are not the brightest bulbs on the chandelier and academics just isn't a priority item. Most of them can't do math anyway and frequently argue that the "computer does it" with very little understanding. I am a mathematician and so leasing mathematics is a breeze for me. I can do this stuff in my sleep and they should be able to do so as well. But, that's life in America the Great.

In Ohio, you have to be very careful particularly if you're considering a sign and drive lease. Dealers frequently miscalculate the payment and, hence, taxes are miscalculated as well. In Ohio, taxes are computed on the total payment. This payment is an intermediate payment, if you will, and is used only for the purpose of determining tax liability. Accordingly, it captures all taxable items capitalized in the lease. Non-taxable items (e.g., security deposit) must be kept seperate and out of this calulation. Therefore, it's important to seperate taxable items from non-taxable items. I have yet to find an Ohio dealer that can correctly compute a sign and drive lease. However, I did manage to find one dealer that agreed with my calculations after they input my numbers into their computer. However, they couldn't arrive at my numbers independently. Below is an example of what I'm talking about...

_____________________________________________

2007 Acura TSX
Retail Pricing Information

Base MSRP 2007Acura TSX 5 Speed Automatic (CL9687JW)... 28,090.00
Premium Pearl White.. 0.00
Destination Charge.. 670.00
MSRP...... 28,760.00

Agreed Upon Value. 26,700.00

Amounts Financed

1st Months Payment 361.71
Security Deposit.. 375.00
Acquisition Fee 595.00
Sales Tax @6.00% x 35 x 329.77. 692.52

Capitalized Costs

Gross Capitalized Cost. 28,724.23
Capitalized Cost Reduction.. 0.00
Adjusted Capitalized Cost 28,724.23

Residual Data

Residual Factor.... 0.62
Residual Value (Residual Factor × MSRP)... 17,831.20

Cost of Money/Term

Money Factor... 0.00127
Term (months). 36

Lease Payment Itemization

Monthly Lease Payment including Sales Tax..... 361.71
Monthly Lease Payment excluding Sales Tax.... 340.99
Taxable Monthly Lease Payment 329.77
________________________________________________________________________________- - - - - - - ______

Charges Payable at Lease Origination

License, Title, Registration Fees (estimated)..... 120.00
Amount Due at Lease Signing......... 120.00

Miscellaneous

GAP Coverage Included
Annual Mileage Allowance: 10,000
Disposition Fee: None
Excess Mileage @ $0.15 per mile
Reg. M Disclosure: NA

____________________________________________

John
Medina, Ohio

PS: If you're near Medina (near Cleveland), maybe we can have a cup of coffee. Good luck my friend.

delta737h · August 2007

tracermag,

One other area that I forgot to mention and that is the reserve level associated with the cost of money (i.e., money factor, interest rate). When I'm in the data collection mode, I always ask the dealer for the rate with 0% reserves. That rate is called the base rate or buy rate. Reserves work in much the same way that points do on mortgage loans. It is a form of dealer participation ( hidden profit) where the fund provider compensates the dealer for writing the lease at a higher money factor or interest rate. And so, reserves is another potential profit center for the dealer. For example, a fund provider's tiered rate structure might look something like this...

0.00130 + 0% reserves

0.00150 + 1% reserves

0.00170 + 2% reserves

A 2% reserve level means that the dealer receives 2% of the adjusted capitalized cost (excluding any acquisition/bank fee). The customer never sees the 2% because it's embedded in the money factor or interest rate. So, I suppose that would be classified as financing hidden profit.

Aware of this "hidden profit", I always ask for the buy rate. If the dealer insists on 1% or 2% reserves, I simply deduct the dollar equivalent from the agreed upon value. Sort of like the Rob Peter to Pay Paul Principle. They can jack up the rate as much as they like and I just deduct it from the sell price and use the result as my new sell price.

John

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