Edmunds dealer partner, Bayway Leasing, is now offering transparent lease deals via these forums. Click here to see the latest vehicles!

General Questions about Leasing Vehicles

1456810

Comments

  • zyaaaaazyaaaaa Member Posts: 36
    edited May 2011
    Is it currently easier to get approved for a lease or finance? Does this vary by score and auto loan history?
  • zyaaaaazyaaaaa Member Posts: 36
    edited May 2011
    Got another... what are the general rules for rolling negative equity into a lease and what effect does it have? Is the amount capped based on MSRP usually? Is the interest the same as the money factor for this amount?
  • delta737hdelta737h Member Posts: 626
    zyaaaaa,

    Negeative equity, like any other items that are capped in the lease, is added to the agreed upon value (i.e., sell price) to determine the gross cap cost. Cap reductions are deducted from the gross cap to determine the adjusted cap, upon which, the lease finance and depreciation charge is computed and, hence, the payment is determined.

    Generally, negative equity can be capitalized in the lease as long as the amount advanced, usually measured by the adjusted capitalized cost, does not exceed the fund provider's maximum funding level which varies depending upon the provider. Typically, the range is 90% - 130% of the MSRP.

    Another concern is that there are those states that tax negative equity and there are those that don't. You should check with your state's department of revenue to determine the tax treatment given negative equity.

    Hope I've answered your questions.

    John
    The AutoLeaseGeek
  • zyaaaaazyaaaaa Member Posts: 36
    Thanks for the reply. I did some checking and didn't see anything about FL taxing negative equity. I did see where they credit sales tax on trade-ins and am wondering how that works when going from traditional finance to lease and also when you are upside down.

    I'm still trying to run the numbers to see if rolling the negative equity makes sense. I hate to do it again but the new payment would be around $200 less and could be directed to other debts with higher interest. Plus this would assure that its gone in 3 years and wont happen again. So many numbers to consider!
  • delta737hdelta737h Member Posts: 626
    edited May 2011
    FL taxes the monthly payment streams. Also, negative equity is taxable in FL. However, positive equity reflecting a net trade credit is not subject to tax.

    John
  • zyaaaaazyaaaaa Member Posts: 36
    Got it - thanks for all of the help!
  • amoszamosz Member Posts: 38
    Hi

    I'm new to purchasing and leasing cars.

    I will be moving from NY to MD this summer. I am looking to possibly lease 2 cars in the month before I move to MD. I know I will have to register the car in MD to get Maryland license plates. But will I be responsible for paying NY taxes on the lease vehicle or maryland taxes (which taxes the final sale cost)?

    I can't find any information online so far.

    Would there be any gain from doing the lease in NY?
  • im_brentwoodim_brentwood Member Posts: 4,883
    NY Taxes are almost certainly higher than MD taxes.

    In order to register the car in MD you'll probably have to already have MD residency.
  • kyfdxkyfdx Moderator Posts: 235,200
    NY only taxes the total of payments, though.... and, MD taxes the full selling price..

    I would worry about moving within a month of leasing... NY collects their tax upfront, and if you roll it into the payment, you could end up paying tax twice. Hopefully, there would be some sort of offset, but why take a chance?

    I would wait to lease in Maryland, either way... If you absolutely knew you could pay the NY tax, and not be taxed again in MD, then that would be the best way to go.. but, I think the timing (moving shortly after signing) might be what trips you up..

    regards,
    kyfdx
    (serial lessee)

    Edmunds Price Checker
    Edmunds Lease Calculator
    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • amoszamosz Member Posts: 38
    Thanks.

    My initial thought was that it may end up being cheaper to lease the car here in NY if I were to pay a higher sales tax on a smaller amount of money.

    Because of my schedule, I really couldn't lease a car until memorial weekend at the earliest and hope to be in my new apartment by the 3rd week of June.

    I guess as a side note. If I leased the car within NY, do I have to register the car in MD? I'll be in MD for only 12 months on a short contract. Where I go from there its still to be determined. I still have a texas drivers license.

    Sorry, I'm new to a lot :|

    Thanks for the replies. Very helpful so far.
  • cloud51620cloud51620 Member Posts: 4
    Hi, I just have a quick question and to see if anyone has a good way to solve this legal issue.

    I went into a dealership and leased a g37 coupe, the deal was for 12k, but the lease contract said it's for 10k only, but i didn't look at it ( i know, it's my fault) until i got the payment in mail and it stated that the lease was for 10k not 12k. So i called back and talked to the sale person and he was nice enough and said 12k was the deal in his notes and that the financial guy screwed up but unfortunately there is nothing he can do. He said he will put a note in the system stating that our car is actually 12k instead of 10k so when we return the car in 3 years, we won't have to pay for the extra 6k we drive. He couldn't give me that in paper though, and he said he couldn't redo the lease

    my question is, is there a way that i can get something like this in writing or have they re do the lease?

    i know it's my fault not reading it clearly when signing contract, but i thought the finance guy needs to go over everything on the lease when we sign it, and obviously we would catch this mistake if he actually go over one by one

    any suggestion?
    thank you
  • qbrozenqbrozen Member Posts: 32,891
    go up the chain of command. No way i'd settle for a note made in your file by the salesperson. He has no authority and most likely wouldn't even be working there by the end of your lease.

    '11 GMC Sierra 1500; '08 Charger R/T Daytona; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '08 Maser QP; '11 Mini Cooper S

  • fezofezo Member Posts: 10,384
    What q said. That gent is blowing smoke. If you can get something in writing you'll be OK. Could well be a classic case of buyer beware. One of many reasons I never lease but not leasing isn't for some people just as leasing is never even an option for me.
    2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
  • cessna10cessna10 Member Posts: 4
    lease agreement says "You are responsible for all damage to the vehicle and for its loss, seizure or theft. you must tell us immediately if any of these events hapen, and cooperate with your insurance company"

    accident has a total cost of $960.00, I am having it repaired at the dealer where I purchased the vehicle- same toyota dealer,

    Wise, unwise, or unnecessary to report it to the toyota leasing company?
  • sebring95sebring95 Member Posts: 3,241
    I would report anything that would not fall into the "typical wear and tear" bucket. $960 would be above that threshold.
  • moogmoomoogmoo Member Posts: 2
    Please advise on the best option to get out of a lease premature....I am only 4 months into a 36 months lease and have changed my mind. Is it better to:
    1. deal with my current financial institution to get out of the lease
    2. get new dealer to buy me out of the lease
    3. use one of the lease swap or carmax service
  • qbrozenqbrozen Member Posts: 32,891
    Absolutely swapping it if you are allowed would be the least painful option. And, really, the only even partly reasonable. The other 2 choices would cost you a small fortune.

    '11 GMC Sierra 1500; '08 Charger R/T Daytona; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '08 Maser QP; '11 Mini Cooper S

  • sebring95sebring95 Member Posts: 3,241
    Agree that finding someone to assume your lease will be the best on your pocket assuming the lease is economically reasonable. A lot will depend on what you have and the payment vs what someone could walk on the lot and get one. Most that look for lease assumptions (like myself) are looking for a bargain. There's really not many other reasons to do that type of deal.
  • ksrpksrp Member Posts: 11
    I am considering a lease and would like to know any tips and suggestions to lower the price before getting into the down payments and monthly payment negotiation. Should I start by saying that I want to purchase the vehicle and get a lower sale price first and then change to a lease after the sale price is agreed upon?
  • robr2robr2 Member Posts: 8,805
    Every part of a lease is negotiable.

    IMHO, go in trying to get a price you are comfortable with and then bring up the lease. Then negotiate the residual (can be difficult) and the rate.
  • sebring95sebring95 Member Posts: 3,241
    As robr2 mentioned, the purchased price (cap cost) is the most negotiable piece of any lease simply because that's the part the dealer fully controls. Residual and rates CAN be negotiated but it's usually more difficult and might require getting the leasing company involved. I lease heavy equipment all the time for my biz and I've changed almost every word in some of these contracts. But overall it's much easier to lease multi-million dollar equipment than a vehicle. The dealers/leasing companies go to great lengths to make it as difficult as possible to understand where all the money is landing. So if you really don't understand all these number and what's going on...be very careful.

    Now for my obligatory soapbox speech...don't take it personal:

    If the only reason you're leasing is for a low payment and you don't have the financial means to get out of the lease early, I advise people to stay away. My rule is...if you can't pay cash for the vehicle, you shouldn't be leasing it. That's a pretty broad rule but it gets the point across. If you have very little cash at your disposal and just trying to get a nicer car than you can afford, a lease will just decrease your overall financial position in the long run. Buy a car you can afford and drive it for a long time.
  • qbrozenqbrozen Member Posts: 32,891
    There is no need to play games. Know all of your numbers before going in and just state what you want. "I'd like to lease this vehicle and have a net cap cost of $xxxx. I know the XX Financial MF is .00xxx, and the residual is xx%. So my payments should be $xxx with $xx out of pocket."

    '11 GMC Sierra 1500; '08 Charger R/T Daytona; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '08 Maser QP; '11 Mini Cooper S

  • ksrpksrp Member Posts: 11
    > If the only reason you're leasing is for a low payment

    Not true

    > and you don't have the financial means to get out of the lease early

    Not true

    > Buy a car you can afford and drive it for a long time

    Good advice, provided I am looking for a long term solution, which I am not.

    I am considering a lease because I am looking to provide a vehicle to a family member for a 2-3 year duration only.

    In any case, thanks for the response sebring95
  • sebring95sebring95 Member Posts: 3,241
    No response necessary for the obligatory blather. Like I said, don't take it personal. Let us know how the negotiations go. Leases aren't nearly as attractive as they once were. Too many banks/captive fiance companies took a beating on leases when resale values fell through the floor so they don't take on as much risk these days with high residuals.
  • dhammerdhammer Member Posts: 13
    We leased a vehicle a week ago. Today we received a call from the dealership asking if we could come back in and sign a new lease, they made a mistake and had us sign the wrong lease. My question is...if we are not all that crazy about the vehicle, can we return the car in lieu of signing the new lease agreement?
  • sebring95sebring95 Member Posts: 3,241
    I guess I'd want to know exactly what is meant by "wrong lease" but you accepted the car so you're going to get stuck with something. "not all that crazy about the vehicle" doesn't give you a right to back out of the deal. You might be able to negotiate something different if you ask nicely.
  • dhammerdhammer Member Posts: 13
    Thanks for the quick response...my husband took the call and didn't ask any questions. I'm curious myself to find out what was meant by "wrong lease". I looked over the one we have and it looks okay. We're heading over soon, so we'll see.
  • kyfdxkyfdx Moderator Posts: 235,200
    Buyer's remorse? Why do you want to return the vehicle?

    Edmunds Price Checker
    Edmunds Lease Calculator
    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • mpl82mpl82 Member Posts: 9
    I know that most experts say not to negotiate montly lease price but why should I care what the other factors of the deal are if I'm planning to give the car back (and not purchase) at end of lease.
  • delta737hdelta737h Member Posts: 626
    Think of it this way...

    You would never buy a car based on payments only as that would be very foolish. The same holds true for a lease. Every leased car is a sold car. When you lease, you are actually buying that car on behalf of the fund provider or lessor. However, you're responsible for the payments and so it's in your best interest to negotiate selling price; not payment. The lease payment is dependent upon the selling price. The higher the sell price, the higher your lease payment. As such, you should know how to calculate the lease payment as welll as how to determine the gross cap, adjusted cap, and residual value. Remember the following...

    Gross Cap = Selling Price + Amounts Financed (capitalized) in the lease
    Adj. Cap = Gross Cap - Cap Reduction

    Payment = MF x (AC + RV) + (AC - RV)/N

    MF = Money Factor
    AC = Adjusted Cap
    RV = Residual Value = Residual Factor x MSRP
    N = Term

    As you can see, the sell price is a necessary ingredient in determining payment. When negotiating a lease, always ask for a quote. The best way to obtain a quote is to check the dealers inventory and select the vehicle you want (assuming it's in stock). Next, relay this information to the dealer and request a quote in the form of a Lease Worksheet which should include all of the following information...

    MSRP
    Selling Price (i.e., Agreed Upon Value)
    Acq Fee
    Documentation Fee
    All government fees including license/reg/title fees
    Sales Tax and Sales Tax ate
    Customer Rebates
    Money Factor (buy rate preferred)
    Residual Factor & Annual Mileage Allowance
    Residual Value
    Lease Term
    Payment

    Now you have all the necessary data to craft your own one-page lease proposal. If you think the seling price is too high, you can change it and re-compute the lease payment. Two of the most costly mistakes people make when negotiating a lease are...

    1. Negotiating payments instead of selling price
    2. Allowing the dealer to control the deal

    Hope this helps.

    John
    The AutoLeaeGeek
  • mpl82mpl82 Member Posts: 9
    thanks John - I appreciate your response but it didn't address the core of what I'm asking which is: if i'm giving the car back to the leasing company in a few years...why should I care about anything BUT monthly price...as long as i perceive it to be a low monthly payment...what else matters.

    Purchasing a car I can see as being different because the total financing has to be in my favor...but, again with leasing, I'm having trouble seeing beyond mohthly payments.
  • delta737hdelta737h Member Posts: 626
    edited October 2012
    How do you know if you're getting the lowest monthly payment possible? How do you know if the payment reflects a fabulous deal or just a very mediocre deal? Calling five different dealers and selecting the dealer with the lowest payment and, then, hammering that dealer until they drop the payment by $5 or so does not, in any way, guarantee that you've gotten a good deal let alone an outstanding deal. I've seen cases where people thought they got a great lease deal only to discover that the sell price was very closed to MSRP when it could have been gotten for many thousands of dollars less. Those that are payment buyers are at risk for getting very bad deals. Dealers LOVE payment shoppers. It's like bringing a canary to the cat. The only way to guage whether or not you're getting a good deal is to look at the selling price which, in turn, drives the lease payment. It is the metric by which deals are judged.

    The point is that what you perceive to be a low monthly payment may not even remotely mirror a good deal. Perceptions can be very misleading. Consequently, a lot of money is left on the dealer's table.

    John
  • sebring95sebring95 Member Posts: 3,241
    Couple other points...even if you're happy with the payment. An inflated residual could haunt you if for some unknown reason you need to exit the lease early (or total the vehicle without GAP). Also, early payoff fees, end-of-lease fees, termination fees, mileage fees, options to trade/sell/return at the taie...all things that should still be considered even if the payment is right where you want it.
  • delta737hdelta737h Member Posts: 626
    Absolutely agree! Higher residuals trigger higher lease balances which, in turn, inflate early termination charges IF one must terminate early.

    There are several factors that must be considered in addition to those described not the least of which is the money factor. Inflated money factors mean higher payments. Those with excellent credit should always insist on the buy rate when negotiating a lease.
  • mpl82mpl82 Member Posts: 9
    Hi John - appreciate the feedback. I do think that's the strongest argument in favor of looking at all of the numbers when leasing - it's the only way to truly KNOW if you're getting a good monthly payment.
  • mpl82mpl82 Member Posts: 9
    edited November 2012
    Are taxes, tags and title included in the monthly cost calculation?

    What fees can I expect to pay upon purchasing a new lease and what are ballpark estimates?
  • delta737hdelta737h Member Posts: 626
    edited November 2012
    You asked...

    Are taxes, tags and title included in the monthly cost calculation?

    They can be but don't have to be... it's up to you. All or some of these costs can be capitalized or paid up front at lease inception.

    What fees can I expect to pay upon purchasing a new lease and what are ballpark estimates?

    Can't provide ball park estimates. Taxes vary widely from state to state and bank acquisition fees and dealer doc fees vary as well. For instance, Honda charges a $595 acquistion fee whereas Mercedes-Benz charges $795. Texas and Illinois levy sales tax on the purchase price (i.e., Agreed Upon Value) while several states like Florida, Indiana, and Arizona levy sales tax on the monthly payment... a huge difference. The maximum dealer doc fee that dealers can charge in Ohio is $250 while in NY it's $75 unless, of course, these state mandated maxims have changed.

    Hope this helps.

    John
    TheAutoLeaseGeek
  • mpl82mpl82 Member Posts: 9
    Thanks John - which way do you recommend: paying up front or adding to the cap cost? Why?

    Thanks
  • delta737hdelta737h Member Posts: 626
    edited November 2012
    Depends upon the cost of money (i.e., interest rate % = money factor x 2400... this is a very good approximation which will serve as a basis for comparison). If money is relatively cheap, then I suggest you capitalize everything and pay as little up front as possible. You can even capitalize the first month's payment. One thing you don't want to do is put money down (i.e., cap cost reduction) because a car is a depreciating asset. Furthermore, if you total the vehicle, you may lose part or all of your cap reduction.

    John
  • steverstever Guest Posts: 52,454
    If you are in the process of car shopping, using online forums and tools and plan to visit a dealer soon, a reporter would like to hear from you. Please email PR@edmunds.com by Tuesday, November 13, 2012 and provide a few lines about your experience so far.
  • romil01romil01 Member Posts: 75
    I know everyone says not to do cap cost reduction on a lease if you can help it due to the risk of losing your down payment if you total the car. But what about a single payment lease? Is there any risk associated with that for the same reasons?
  • kyfdxkyfdx Moderator Posts: 235,200
    Single-payment leases work differently..

    For purposes of calculating the lease balance, a single-payment lease is considered to be a payment in escrow, from which the monthly payments are then taken, each month..

    In event of an involuntary termination, then you'd receive the balance of the payments in return.

    Edmunds Price Checker
    Edmunds Lease Calculator
    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • romil01romil01 Member Posts: 75
    Thanks for the answer.
  • hamm3rhamm3r Member Posts: 55
    I am looking at leasing my first car & want to make as little a down payment as I am allowed. I have a car to trade in that I will probably get around $9,000 for, but I'd like to pocket the cash instead of putting it toward the lease. Having never leased before I do not know if this is common, rare, or unheard of. My best guess is that it is rare but that it depends on the dealer, but I'm hoping that those of you with more experience will tell me that it happens all the time & I should go for it. Thanks for any advice.
  • qbrozenqbrozen Member Posts: 32,891
    edited December 2012
    perfectly normal. they will just cut you a check.

    '11 GMC Sierra 1500; '08 Charger R/T Daytona; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '08 Maser QP; '11 Mini Cooper S

  • steverstever Guest Posts: 52,454
    A reporter would like to speak to someone who is going to be in the market for a new car in the next few months because their lease is expiring. If you fit this description, please email your daytime contact info to pr@edmunds.com by Friday, January 25, 2013 at noon PT/3 p.m. ET.
  • steverstever Guest Posts: 52,454
    A reporter is looking for new car lessees. If you leased a new car in the past few months, and would like to share your story, please email your daytime contact information to pr@edmunds.com.
  • retired2pa1retired2pa1 Member Posts: 17
    My husband and I are senior's (72/66). We leased our (2) Chevy Equinox's in 2011 through Ally and they will be turned in in May/June (respectively) 2014. We have very low mileage on them (14000 and 10000) and they are in perfect condition so extra fees are not a concern.

    We have been looking at other vehicles that we think we might be interested in when we surrender our current vehicles. We are going to have just (1) vehicle next time as we don't drive them enough to justify the cost of insurance, gas, and lease payment.

    Since we are retired, would it be cost effective for us to lease another vehicle since we put on so few miles or should we buy a vehicle? We do not want a payment (leased or bought) over $550/mo. How can we get the most bang for our buck? Thanks
  • Kirstie_HKirstie_H Administrator Posts: 11,146
    What other vehicles are you interested in?

    You sound like perfect candidates for leasing again, since you drive so few miles, and your driving circumstances aren't likely to change (e.g., you aren't going to get transferred to a new job). That's the downside for some younger lessees - they lease a vehicle, and then they move house or job, or have a baby, and the vehicle or the lease mileage limit is a problem.

    If by "get the most bang for our buck" you mean you want the nicest vehicle you can get that fits in your budget, then again, my opinion is that you're a great candidate for leasing. Leasing generally allows you to have a lower payment on a nicer vehicle, since you are only paying for part of the vehicle's depreciation.

    Let us know what vehicles interest you, and members can offer more advice.

    MODERATOR /ADMINISTRATOR
    Need help navigating? kirstie_h@edmunds.com - or send a private message by clicking on my name.
    Share your vehicle reviews

  • retired2pa1retired2pa1 Member Posts: 17
    Thanks for your reply so quickly :)

    We have been thinking about "upgrading" to a Buick Enclave or Nissan Pathfinder or something in that range. We want another SUV because we need the extra space. When we looked at the Enclave my husband had sticker shock..haha

    We had a 2006 Pathfinder LE (loaded!) that we traded for one of the Equinox's and although the Equinox is a nice car...it certainly isn't the Pathfinder :)

    We've looked at the Ford Escape and taken it for a spin. It's in the same size and price range as our Equinox and has a couple more bells and whistles but we weren't overly thrilled with it. I think we're leaning more to a more nicer vehicle. I was tempted to look at the Edge while we there but they haven't had much of a rating.

    We have always owned our own vehicles and we have excellent credit (we've worked all our lives for it!).

    I'm trying to do research on vehicles that we might be interested in before we turn ours in next year. What I'm most concerned with is what the Residual will be.

    We're NOT interested in Honda, Toyota, Mitsubishi, Kia or the like.

    Any advice would be helpful. Thanks
Sign In or Register to comment.