General Questions about Leasing Vehicles

Kirstie_H · August 2013

OK, so it sounds like you're looking for something in the mid-size SUV range. That will be helpful. I'm not an expert on leasing, but we'll see if others have ideas for you in that range. I will say the Buick Enclave is one NICE vehicle, so you might want to keep an eye on lease specials closer to the time you're ready to make the change (2014). You never know when a manufacturer will offer an irresistible lease special.

Excellent credit is just one more factor that makes you a great candidate for leasing. The worse your credit, the harder it is to get a vehicle lease. This is partially due to the fact that if you don't take care of your credit, you might not take great care of your "rented" vehicle, and who knows if you would be able to pay for damages or excess mileage at the end?

In today's world, not owning, but instead leasing, a vehicle can be a smarter financial move for those with good credit than owning, particularly if you are in the RIGHT situation wherein a lease fits your driving patterns and lifestyle. Seniors (and I hate to use that term, as you are around my incredibly NOT senior parents' age) with good credit, who drive few miles and may like to change vehicles every 3 years or so, and like to have a nice vehicle, are very good leasing candidates - it makes a lot of sense. No worries about out-of-warranty breakdowns or non-fixed depreciation.

Kirstie_H · August 2013

Also, in your "not interested" category - It seems that you aren't interested in very standard vehicles with no touch of luxury. Would you consider the "upgraded" brands of some of those manufacturers? Toyota & Honda specifically, who offer Lexus and Acura models, respectively. Not a push to get you to commit to anything, just trying to understand what you're ruling out and why.

Have you considered BMW at all? The X5, which is a small-ish to midsize SUV is showing a $489/month payment in my area. One advantage to BMW leases is that they tend to include all scheduled maintenance, like oil changes, at no extra cost.

kyfdx · August 2013

I'm going to take another side of this debate... If you are only driving 5K-7K miles per year, then you should really be buying rather than leasing... It's just not cost effective to give away all of those unused miles, when swapping out.

I might change my mind, if you thought you would drive at least 10K mi/yr, since you are switching to one vehicle.

If you like the Equinox, have you considered buying one of your vehicles, instead of turning it in? You'll be getting a very low mileage vehicle for the residual price of one with higher miles.

Assuming you stick with leasing a domestic make SUV, please note that the Enclave is a pretty big vehicle that seats 7-8 people. It might be overkill for your needs. In domestics, I'd suggest the Equinox, Escape or Edge. If imports are under consideration, then you can get a lot of bang for the buck with the Kia Sorento or Hyundai Santa Fe..

The Acura RDX is a really nice vehicle that is similar in size to your Equinox, but maybe a little more luxurious. Stick with the base model (which is still nicely outfitted), and you should be able to stay under $500/mo.

graphicguy · August 2013

I'm thinking the same way as kyfdx regarding purchase vs lease. Paying for miles you don't use on a lease seems to be a slight issue. That said, a lease payment is going to be less than a purchase payment, generally speaking (unless you have a chunk to put down to get your purchase payment in line).

However, I think Kirstie has a good point, you don't like base or stripper vehicles. If you're trending to more feature rich, luxury vehicles, the afore mentioned Acura RDX or MDX (which was totally redesigned for the 2014 model year) is a good choice, as is a BMW X3 or X5. Both should be available for the monthly payment you've stipulated.

Good luck and let us know how your shopping goes.

retired2pa1 · August 2013

Thanks for the feedback.

I'm not sure you and kyfdx read my posts but we are NOT interested in Honda's, which makes the Acura crossed off our list.

That being said, we've decided to take another lease because we don't drive that much any more and we can realistically keep the mileage down. Why not drive a luxury car for far less a month for 2- 3 1/2 years, depending on the lease, and get a new car again after the lease is up? Why spend $700/mo. for 5 years to buy a vehicle that we still don't put any miles on?

Next week we're going to test drive a Lincoln MKX and the Enclave. I'm most interested in the Residual for any car that we're interested in.

isellhondas · August 2013

I have to agree with the others who have suggested that you BUY rather than lease your next vehicle.

As you get older do you really want to be on the lease treadmill anymore?

Do you want to face these same decisions three years from now?

Aren't you better off BUYING something and maybe pay it off in four or five years and at that point OWN it?

Just my thoughts...

driver100 · August 2013

If you like the Enclave but don't want to pay that much the Chev Traverse is a very similar model. Keep in mind these are huge vehicles and you may not want to navigate such a big beast especially in town.

Here is the Edmunds review about the Traverse;

http://www.edmunds.com/chevrolet/traverse/2013/

retired2pa1 · August 2013

Yes, we've decided to look at the Traverse and test drive one. We had a Nissan Pathfinder LE from 2006-2011 and it was similar in size to the Enclave and Traverse. Besides, we had a Dodge dually 1 ton for a few years when we hauled a fifth-wheel, so I'm use to bigger vehicles..haha. We have also had X-terra's and they are a little bigger also.

Actually, the Traverse's are very nice and can be upgraded a little and would be even more reasonably priced then the Enclave.

sebring95 · August 2013

Don't forget the other twin...Acadia. It's a nice mix of the Traverse/Enclave. like the GM twins although the FWD version didn't impress with traction on wet roads. I spent two weeks in a rental Traverse awhile back and with nearly new Goodyear Forteras it was tough to accelerate without spinning tires. I'm so used to RWD or AWD these days that was quite annoying!

retired2pa1 · August 2013

We test drove a 2014 Pathfinder SL with Tech Package yesterday and was so impressed with several features. It's going to be difficult to top it in it's class for the price. We owned a 2006 Pathfinder LE until we leased the 2 Equinox's in 2011. We loved the Pathfinder and really missed the luxury part of it.

We live where AWD or 4x4 is really a must for the winter's so anything else is non-negotiable.

We're going to take a look at the Traverse's but I'd be surprised if they will compare to the Pathfinder. The Acadia is a little more pricy than what we want as is the Enclave.

Surprisingly, the Residual on the Pathfinder is 56%. I don't think the Traverse, Enclave or Acadia is that high. We could have gotten a 2013 Pathfinder Platinum for .09% (.00038) for 36 months and the 2014 was 4.2% (.00175) for 36 months and $1500 down and also rebates.

sebring95 · August 2013

My normal daily driver is an '08 Pathfinder so I'm familiar. The new pathfinder is a totally different vehicle now that it's built on a car chassis...but that seems to be what most folks want these days. Those of us that need 4x4 and towing capacity are quickly running out of options that aren't full-size trucks! Sounds like a pretty good lease deal on the '13.

retired2pa1 · August 2013

Yes, it is a different Pathfinder from what our '06 was. The '14 had a much smoother ride. Not the stiffness of the older ones that were on a truck chassis (I think), but they also have 5,000 towability. Not sure what you need but that's sufficient for a small trailer.

The other thing we really liked was the ability of every day driving in 2WD, which helps gas mileage and then there's the 4x4 option to switch to and then you can lock the 4x4 in if needed.

I think if we didn't have 8 more months left on our current leases, we would have driven home a new one yesterday.

Don't go look at them because you'll love them!!

stickguy · August 2013

just curious, but if you are fine with a Nissan, why so adamant about no Honda? And other than being owned by Honda, the Acura SUVs are definitely not Hondas. The RDX (I have a 2013) is much different, and nicer, than a CRV (same size). And from what I have been reading about the new design MDX, it sounds very nice, and certainly competitive to a pathy (though I have no idea how leases will compare!)

beach15 · August 2013

The new 2014 MDX is in a whole new ballpark compared to any other midsize to large crossover out there, from fuel economy, to performance, to incredible fuel economy and luxury. We had a customer with an Infiniti FX last week looking at the Pathfinder next door, roamed over to us at Acura while still looking and went home in a new 2014 MDX.

These start at $45185 with AWD, are rated at 27mpg highway with AWD, and as an all new 2014 model, the residuals right now are still incredible in the 66%, etc range depending on how many miles per year you choose. Worth a look.

sebring95 · August 2013

Since you're low on miles, you can probably trade out just fine now. No need to wait until the end of the lease if the equity is there.

I go off-road on a regular basis for work and car based SUV's don't work out well. We used to run a lot of Explorers for our engineers and they held up quite well. We bought one of the new Explorers in '11 which is the new crossover style and it has not worked out well. It was demoted to courier duty after about six months.

jake26 · August 2013

We just received a letter from the dealership stating that we owe a balance of $733 on the down payment for the leased car... (45 days after we got the car) I remember the sales manager even told us not to bring our checkbook as it would be no need...

we never agreed to pay any down.. in fact we made sure we qualify for the zero drive off and zero down payment before we agreed with the monthly payment of $349. We drove off the lot without paying a dime.

It is stated though on the Lease Agreement "Amount to be paid in cash" $733

Weird thing Finance Manager never talked about how are we making this payment and never asked us for the money. isn't it supposed to be amount "due at lease signing" well it was 45 days ago

What should we say when I call the dealership?

Any advice would be great and appreciated.

sebring95 · August 2013

Sounds like you signed a contract stating you owe $733. Unless you have other documentation from the dealership showing this was paid somehow (on the deal write-up perhaps?) you owe the money.

jake26 · August 2013

If we are obligated to pay this balance then I really do feel that we were mis led and at the same time the dealership is committing fraud for not honoring their advetised deal. I am really considering hiring a small claims attny...

sebring95 · August 2013

Have you tried discussing it with them? Do you have anything proving the salesman/whomever promised zero out of pocket? Once you lawyer-up they will no longer discuss this at all so that should be your last resort.

But in the end, you signed the contract apparently without reading it. Not a good situation to defend really and "I didn't read the contract" doesn't go over well in court. Now if they changed the contract after you signed it....that's more in the realm of fraud.

retired2pa1 · August 2013

Sebring95 can you expand on this comment a little more: No need to wait until the end of the lease if the equity is there.

How is there "equity" in a lease vehicle?

We don't have any particular "dislike" about the Honda's, but they just do not appeal to us even though they have a high residual. Residual is important, but if you don't like the vehicle you're driving it's not worth anything.

sebring95 · August 2013

Sure. The car has a fair market value and the lease has a buyout amount. You can call the finance company and get that buy-out amount at any time. It's usually a combination of the stated residual/buy-out plus remaining payments, less some finance charges, plus a few fees. It varies greatly from company to company but regardless there is a "buy-out" amount. If the buyout is less than the fair market value...you have equity.

The easiest way to capitalize on the equity is to trade the vehicle in on something else. You could also take it to a dealer that will buy them without trading (Carmax for example). In either case, they will basically buy the vehicle from the leasing company for the stated buy-out amount. Equity can be applied to your trade or refunded to you.

Another option is to buy the vehicle out early yourself. This usually requires you to pay sales tax on it and by that point you may not be able to get enough on a private sale to make any money. But with enough equity it's certainly possible.

retired2pa1 · August 2013

Thanks for that explanation. I thought that's how "equity" was figured but I was sure.

I called Ally last week or so and got the buy-out because I didn't want to go to a dealer without having this figure. Unfortunately, we don't have any equity in our vehicles. We have 8 months left on the leases and with the buy-out plus the remainder of payments left ($2000 on each) dealers don't want them right now because they're not going to make any money on them.

We've pretty much realized that we need to fulfill our leases and then get something else.

sebring95 · August 2013

Some GM's are very tough to get out of early, even with low miles. They seem to set the residuals above reality in most cases. Makes for a cheap lease but more difficult to get out of. I thought you had an Acura but looked back at your posts and realized it was an Equinox. Very tough to keep a decent resale value on a vehicle that's so popular on the fleet side.

retired2pa1 · August 2013

Using your info to see if we have any equity, which we don't, I'm concerned about what happens in 8 months when the leases are up. Will we be in the hole on these???

Currently, the buyouts are approx. $20,000 each, which includes what we still owe. The current TMV is $18,400 each. In 8 months that TMV will be how much less?? Who knows? According to our lease the residual will be $13,241.80 and $13,377.20.

Now, I'm back to my original question....should we lease again???...or should we purchase a vehicle??

When we got the Equinox's they were selling like hotcakes and you couldn't find them any where. We were going to order one with the upgraded package (leather, etc.) but it would have been months before we got one so we took what he could get in. Anyway, they are all over the place now and I fear their value has gone down. Although the dealers around here are asking $21,000 for 2011's like ours.

This was our first experience with a lease and it was an easy deal. Our friend has a dealership and I had used the lease formula before we went so I knew what we SHOULD pay. He came within a few cents of what I had figured and I hadn't even told him my "goal" payment. He was very fair with us. Maybe we'll have to go see him about a car again

sebring95 · August 2013

The vehicles value at the end of the lease makes no difference. You turn it in and walk away.

I'm not sure your numbers sound correct unless they have some sort of massive buy-out penalty (possible with Ally). The other possibility is that a dealer could have a different buy-out amount than you. I have seen that with GMAC (ally's predecessor) where a GM dealer would have much more preferential buy-out amount.

I say the numbers don't add up because if you take $20k less the residual of $13k and divide by 8 months....that would sound like your payments are somewhere around $800/month. Surely you're not paying anywhere near that for an Equinox. You may need to actually go to a dealer and have them check on a dealer buy-out.

retired2pa1 · August 2013

Holy Moly!!!...$800/month for an Equinox??? No way!! I could lease an Escalade for that..ha. We're paying $255 and $278.

I said $20,000 because when I called for the buyouts it was $17913 and $18013. One dealer told us they would have to buy them for $20,000 each. He said they would have to add the remainder of the lease payments ($2000 on each) to the buyout figures and that would be the $20,000.

Could Ally be tacking on a penalty for early buyout? Is that why it's so high?

sebring95 · August 2013

Perhaps the dealer was confused that the buy-out number you gave him was the lease-end number and not TODAY. If Ally gave you those numbers as today's buy-out....that should be it. It sounds like you're closer than you think...with only 8 months left you shouldn't be too far off even for something with mediocre resale value.

Also, with the lease payments you mentioned it sounds like you put money down. I would recommend to NEVER put anything down on a lease. They may tell you you can't do that, or it's not part of the "promotion" but this is just math and they can make it happen. Yes your payment will be incrementally higher but it's still a good practice.

retired2pa1 · August 2013

Actually, the dealer called Ally while we sat in front of him. I didn't give him any figures I already had. That was at a Ford dealer. Maybe they didn't want 2 Chevrolet's..ha.

Yes...we did put money down on both leases. I didn't know this tidbit before we went or I could have had $$$ in my pocket!

Well, we'll see what happens in a few more months. Maybe my son has the right idea. He never buys a new car and always pays cash.

Let's face it...buying or leasing is never a win-win situation for the buyer/lessee.

sebring95 · August 2013

Leasing is generally the most expensive option as well. It's a convenience (sometimes) and basically an easy way to lock in expenses over a period of time. Many folks use it because it's the cheapest payment...but that doesn't usually mean the cheapest.

I have done quite well over the years doing lease assumptions. Basically someone else puts down money and drives very few miles for a period of time and then for various reasons has to get out of the lease. There's very few good deals like that out there to find though...most people trying to get out of leases are in up to their eyeballs and are stuck because nobody wants to take over a crappy lease.

I would typically say cash is also the cheapest option, although given the super low interest rates I'm willing to risk 1% or so and invest the cash elsewhere.

ghstudio · August 2013

Leasing is not always the most expensive option. If you can find a 0% lease (and I've done that on an infinity), it's better than financing. If there is dealer cash available, sometimes a lease can be really inexpensive. I'm driving a 2011 MB E350 diesel, fully loaded...a $60K car and I put no money down (no trade in either)....my monthly bill is just over $500 a month for 12K a year. Why? It had a 77% residual.

You really have to look at all the options available. You have to understand leasing and things like multiple security deposits, residualizing maintenance and so on. I've lease my last 5 cars for 24 months each. I get a new car every two years with no trade in troubles. It's been a great way to own cars.

kyfdx · August 2013

I was so close to doing an E350 diesel lease in 2011.. Similar numbers..

sebring95 · August 2013

That's why I said generally. I've found some ok deals at times...usually models they're trying to ditch and/or something I don't want. Pretty rare to find an example that doesn't work without investing cash savings and be able to use the extra tax deduction on some luxury vehicles. Try it on a non-luxury vehicle and the probability is very close to zero.

retired2pa1 · August 2013

That's what my husband and I were just saying...just try to find those kind of deals with a non-luxury vehicle. Dealer don't want to give the buyer any more breaks than they have to.

tiguan516 · August 2013

Recently leased a 2013 Tiguan SE 4Motion w/ sunroof and navi. Original deal was $2500 out of pocket, and $325/month for 36 months. I wanted to pay more upfront, so final (actual) deal was $3000 out of pocket, and $315/month for 36 months. Basically, I paid $500 more today, and ended up losing approx. $140 NET/overall.

I don't know why I didn't run the math in my head before signing, but does this even make sense??? I feel like a dum-dum, and cheated. I spoke with a manager at the dealership, and he said that the math was right. And that nothing could be done.

What should I do???

sebring95 · August 2013

Nope. Your payment should have decreased by MORE than $500. How much would depend on the interest rate. For future reference, putting money down (any money) is a bad idea on a lease and should be avoided at all cost.

Now...here's the problem: How far along was this "original deal"? Do you have paperwork to backup this offer of was it just a number circled on a piece of paper? I say that because without some sort of proof to compare the two deals....it sounds like you've been bamboozled and don't have a leg to stand on to get out of the deal. Ultimately you signed the deal you have.

laurienj · September 2013

Did my first lease yesterday. 12k per year for 3 years. At the dealership I thought it was a good fit for me because on my other car I did a little over that BUT drove from NJ to FL twice which I do not plan on doing again.
I was up all night thinking about it and I think I made a mistake. I think 15k would fit me better.
I just signed YESTERDAY, today is Sunday so I can't call till tomorrow. Can I change my terms? I realize I will probably have to pay more monthly but I think it might be worth it not to go over the mileage AND or be stressed about driving far for 3 years!!

My husband bought a truck a few months back (no lease) and he had 3 days to change his mind. I'm hoping it's the same way with a lease.
Any input?? THANKS!
Its a 2013 Sonata

kyfdx · September 2013

Have you taken delivery? If not, then it's very easy to have them change the terms, as the deal isn't done until you do..

But, even if you have taken delivery, I'd just show up at opening time on Monday, ask for the finance person or sales manager, and just tell them that you really need 12K/yr, rather than 10K.. It's doubtful that there is anything keeping them from making that change (other than just not wanting to do the work)..

A change from 10K/yr to 12K/yr decreases the residual by 1%, in almost all cases. If your Sonata has an MSRP of $30K, that will add $300 to your depreciation (but, decrease your finance charge, slightly).. At most, that should add $8.34/mo. + tax to your lease payment. It should actually be slightly less than that.. Also, a corresponding amount added to your due at signing (for the higher 1st month payment).

If they say okay, but it's a lot higher than that, then they are trying to take advantage of your situation...

regards,
kyfdx

laurienj · September 2013

Thank you for your reply. I'm actually wanting to change from 12k to 15k.
I will go first thing tomorrow.

stickguy · September 2013

do the math first. Not sure what your over miles charge is per mile, but if the charge for 9k (3k/year) is roughly what you will lock in, I would not do it.

While yes, you are locking in the extra miles, you are also committing to them. And unlike going over, if you are under, they don't give the $ back!

let's see, at $.15/mile, 9K = $1,350. divide by 36, and you get $37.50/month. So if your new payment is close to or more than that, it does not make sense.

stickguy · September 2013

If you signed the contract and took the car, nothing you can do. And yes, sometimes the terms don't make sense, especially on subsidized programs.

I always look at the ads when they list options (payments based on various 4/down), and sometimes it really does end up that you pay more in total putting $ down. it is simple to divide the DP/term and see if it makes more sense to put the money in the bank (though IMO when leasing, you should always do that anyway and put nothing down)

kyfdx · September 2013

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...

pgb205 · September 2013

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

sebring95 · September 2013

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.

eclipse2 · 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

pgb205 · September 2013

$1500 allowance for "wear and tear" at Lease-end

sebring95 · 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.

pgb205 · September 2013

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.

sebring95 · September 2013

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.

tonka858 · September 2013

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

ajs1234 · September 2013

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

General Questions about Leasing Vehicles

Comments

Helpful Tools

Most popular vehicles