Lease Questions - Ask Here

jratcliffe

So you just leased a car 7 months ago, and you rolled $5k in negative equity into the lease? Well, that $5k hasn't gone away, so if you trade the car in, you'll likely be even deeper in the hole. Keep the car, make the payments, and turn it in at the end of your lease - then, you'll be even, rather than thousands upside down.

audi_buyer

Hi, could you help me figure this out... The MSRP for an A4 1.8T Q 6-speed with premium, sport, lighting is 32,420... my selling price is 30,061 at a MF of 0.0002 and residual of $17506 (54%).. for 36month, 15K/yr..
Now the way I calculated the payment is (according to Edmunds ofcourse)...

Car, I'll be using.. 30061-17506= 12555..per month= 348.75
The interest with money factor of 0.0002= (30061+17506)*0.0002= 9.5

So, the pretax with no down payment/ month = 348.75+9.5=359(appox)

Now, what should I pay for the car/ month including taxes if I live in Texas??

The dealer says my monthly payment= 434(appox)... and he took into account the same selling price, MF, residuals while arriving at this price.. he says its the tax!!!

Since, this is the first time I'm leasing, I'm confused.. is he taking me for a ride??

Any help would be much appreciated!!!

adgridley

audi_buyer - tax is calculated either on the front end (based on your sale price and either rolled into the lease or paid up front) or in some states based on your monthly payment.

So assume your state/local sales tax % is 8%, take your payment (which appears to be correct based on your numbers) and multiply it times 1.08 to get your final payment (or multiply 8% times your payment to get the tax portion and then add it to your payment). Alternatively, if it is based on the sales price, you'll still add it into your payment, but I'll let car_man jump in to clarify.

Bottom line - something is fishy - doesn't matter how you calculate it, unless your tax rate is 20+%, their numbers are wrong/inflated. Your numbers/analysis is correct.

FYI - I just negotiated on a Volvo XC 70 and I got the run-around where they had their numbers and nothing matched up to my numbers, even with the same MF & residuals. I finally told them what I wanted to see, using the same calculation you did, and if they could match my numbers exactly, I'd sign for the car two hours later. Sure enough the numbers matched when I got there so they should be willing to walk through step by step the same process you did.

If they don't want to provide such details until you sign the papers, walk now or be prepared to walk when you get the final paperwork. Of course, as car_man has state, first negotiate the best sales price, and then the payment falls out of it. Good luck! Adam

CarMan@Edmunds

Now that you've told me what state you are in, postnobills, I can tell you exactly what the lease program should be like for this car in your area. If you were to lease a 2004 Audi Cabriolet 3.0 2WD through Audi Financial Services in Virginia this month for 3 years with 12,000 miles per, its base lease money factor and residual value should be .00170 and 52%, respectively. Audi's Premiere Purchase Plan usually uses different interest rates than its lease program does. The Premiere Purchase Plan is what is known as a balloon note program. Balloon notes are very similar to leases in that they offer consumers low monthly payments with the option to purchase at the end of their terms. The main difference between balloon notes and leases is that with balloon notes the driver's name is on the title while with leases the bank's name is on the title. This is why many automakers have started offering balloon notes instead of leases in states that have vicarious liability issues.

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CarMan@Edmunds

Ch7656, the most important things about your deal are this car's selling price and its lease money factor. These are the two main profit centers for your dealer. Individual dealerships do not have any authority to alter banks' published residual values. If the residual value that you were quoted is different than the one that I mentioned earlier there is probably some sort of misunderstanding. I just double checked and BMW Financial Services 48 month, 12,000 miles per year residual value for the 2004 525i is indeed 48%. I don't remember stating otherwise earlier, but if I did I apologize for the confusion.

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CarMan@Edmunds

You're welcome, bmw325. Make sure to let us know how everything turns out.

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CarMan@Edmunds

Hi David. Assuming that there is no cut off on how many months a manufacturers' special lease money factors can be used for, generally speaking the longer one leases a vehicle for the lower its payments will be. This is because new vehicles experience their highest rate of depreciation during the first 12 months of ownership. The more payments one spreads out this initial depreciation hit over, the lower their payments will be. Of course, there are exceptions to every rule and from time to time manufacturers run specials for certain length leases that make them extra attractive. Thirty-six to thirty-nine month leases usually are a "sweet spot" in that they are not too long, but provide lower payments than two year leases would. All of the manufacturers that you mentioned in your post, Audi, BMW, Volvo, Saab, & Honda, have decent lease programs. However, since we are talking about convertibles, I can tell you right now that Honda has never provided any sort of lease support on the S2000. Its standard lease program is not bad because it usually has reasonable standard money factors and high residual values, but Audi's lease program on Cabriolets and BMW's lease program on Z4s and 3-Series Convertibles are usually a little better. Volvo usually does not provide any sort of lease support on the C70 either, but it does have dealer cash on it that one can use to lower the price and lease through an independent bank.

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CarMan@Edmunds

Hello l58472h. Generally speaking, it is a bad idea to roll negative equity into leases. It would most likely be very expensive for you to get out of your Mazda 6 lease at this point under normal circumstances, but since you have negative equity added to this deal it will probably be REALLY REALLY expensive for you to get out of your lease and into a different car or truck right now.

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CarMan@Edmunds

Hi nimajava. I would be more than happy to calculate a couple of sample lease payments on these cars for you. However, in order for me to do so, I need a little additional information from you first. How long do you plan on leasing for, how many miles per year do you need to be able to drive them, what are the full MSRPs of the exact models that you are considering, and what are their selling prices. You can find out the last two pieces of info by looking these cars up in the New Vehicle Pricing section of this site. Their MSRPs and Edmunds.com True Market Values are available there. Once you get me these details we can see what sort of lease payments you should expect. Talk to you soon.

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kyfdx

I think that in Texas you have to pay sales tax on the whole car, not just on the lease payments. That is a pretty good lease deal, but the state is killing you on tax. I believe Illinois has the same tax situation.

That is my recollection... as always, I may be wrong.

regards,
kyfdx

Sylvia

From time to time Edmunds.com execs are asked to speak at industry conferences to present the consumers’ point-of-view to industry experts, including an upcoming conference with leasing finance executives.

The executive who is speaking at an upcoming conference has been reading this discussion and learned quite a bit about what YOUR concerns are.

If you would like to further getting your voice heard, please take our short Edmunds.com Leasing Survey

Thanks!

CarMan@Edmunds

You're welcome, audi_buyer. The methods for calculating taxes on leased vehicles varies from state to state. I know that the state of Texas charges a sales tax equal to 6.25% of the vehicle's selling price, minus any trade-in allowance, but I am not exactly sure how it charges taxes on leased vehicles. You may be able to find out more information on the subject by visiting the following sites: Texas Department of Transportation or Texas Comptroller's Site.

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CarMan@Edmunds

Welcome back, jsevenseven. How do you like your allroad? Here is the information that you are interested in. If you were to lease a 2004 Volkswagen Passat GLS 1.8T Sedan through VW Credit this month for 3 years with 10,000 miles per, its base lease money factor and residual value should be .00050 and 49%, respectively. In addition to this low lease money factor, Volkswagen is providing $1,000 dealer lease cash on this model that you should take into account when negotiating its capitalized cost.

If you were to lease a 2004 Volkswagen Jetta GLS 1.8T Sedan through VW Credit this month for 3 years with 10,000 miles per, its base lease money factor and residual value should be .00115 and 53%, respectively. Like the 2004 Passat, VW is providing $1,000 dealer lease cash on '04 Jetta models as well.

Last but not least we have the fun 2004 VW Golf R32. As one might expect, VW is not providing any sort of lease support on this car right now. So, if you were to lease one through VW Credit at this time, you would have to use its 3 year base standard lease money factor of .00185. Its corresponding 10,000 miles per year residual value is currently 53%. The dealer cash that is available on '04 Golf leases is not available on R32 models either.

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CarMan@Edmunds

No problem, buster6. I would be more than happy to help your friend out. I believe that they are interested in the same length lease and mileage allowance that you were. It so, the base money factor and residual value would be exactly the same as the numbers that I provided you with earlier. The only difference is that the residual value is 2% higher on ES 330 models that are not equipped with navigation.

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CarMan@Edmunds

Hey siteexpert. I hate to say this, but the person who told you that the aforementioned lease money factor is only for returning Infiniti customers was either mistaken or lying to you, most likely the latter. They are probably trying to make some back-end profit on your deal since you are getting this car for such a low price.

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doug_t

Car_Man -

Just wanted to say thanks for your help a couple of weeks back, and to pass on a lesson in the value of arming oneself with knowledge. Based on the #s you provided, I was able to go in to the dealership with very clear expectations. After we talked price (which was very easy thanks to VPP pricing), they came back with a monthly payment that was within $6 of what I had anticipated - close enough not to stress about hashing it out penny for penny.

Sounds perfect, but then I noticed that the residual was $1300 higher than I had expected, translating into 57% rather than 53%. When I asked if this was through Nissan, they said no, and that the manufacturer does not always offer the best program. This meant (1) they were gouging me on the interest by going through a third party (surely making more profit), and (2) they were screwing me on the buyout (which I may very well do). When I questioned the #s, to their credit they readily offered to run the Nissan #s. This, of course gave me the expected residual, and kept the payment the same (I was willing to let the $6 or so discrepancy stand, as they agreed to make the final lease payment for my current car, and didn't feel it was worth the grief).

I am now the proud and excited owner of a brand new gold Murano.

So, thanks again, Car_man. And keep up the great work!

- Doug

jsevenseven

Thanks for the info CarMan, I am really happy with the Allroad. As someone who lives in Illinois, I can tell you that the state does charge tax based on the net cap cost of the car. Also depending where you live, there may be a local tax on your lease payment as well. In order for the lease to pay off the money factor has to be heavily subsidised.

mabubba

Carman (& joe1),

Thanks for the VFNA lease numbers. I am still interested in the S60R, but I am having trouble getting any decent quotes for one. I have just been informed that VFNA will only lease OSD vehicles at their standard rate, do you know what that might be? The April numbers you have for the S60R(36 month,15K miles/year) were 0.00013 and 52%, making payments for a roughly 40K selling price $490/month before taxes. I am getting numbers using the standard money factor/residual in the $650-$700 range. So VFNAs standard numbers must be much higher. Can you verify this? Thanks,

John

Kirstie_H

Don't forget tonight's member-to-member chat - it's open mic night, so come and discuss whatever's on your mind.



http://www.edmunds.com/townhall/chat/townhallchat.html

6-7pm PT/9-10pm ET. Drop by for live chat with other members. Hope you can join us!

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kjdaif

I'd like to lease a Toyota RAV4 from someone other than Toyota - their lowest money factor rate is .000220 and with excellent credit, I believe I could do better. But I can't find a bank or other entity whose name I recognize to get a lease from. Any suggestions? Am I correct that I should be able to get a better money factor rate?

rich2121

I appreciate your quick response. I have to admit I let myself be talked into a lease by an experienced sales manager with no bargaining on the lease price of the car and taking a 5 year lease on it. Realizing the bad deal I made the next day and very much embarrassed to say anything to family or friends. There was no trade-in involved and would have been a simple transaction, like walking out when it started to smell bad. I hope others think it through before getting tempted by an expensive car and how easy they make it to get the car with a lease! This was 4 years ago and I still kick myself!!!
thanks
rich

multiplechoice

Here in southern california, a local dealer is advertising 0% financing on the RAV 4 for up to 36 months. Would it be better for you to buy the car?

jratcliffe

Do you mean 0.00220? If you're being offered 0.000220, that's about equal to 0.5% APR, so you're not going to do much better. Looking at leasecompare.com, for a 4WD RAV 4 with the automatic and nothing else, using CarsDirect's price ($19817), it offers 0.00216 as the best rate. That's a difference of about $1.50 a month.

Car_man can probably tell you if Toyota is offering discounted lease rates on this car. If not, it doesn't look like you'll go much lower by going to a 3rd party leasing company.

kjdaif

If I look at the main factors that one would lease - low mileage, ability to have new car again in 3 years, better car for less money - these all work better for me. But, I'm open to buying if it really works out better - so far, it doesn't seem to - I get a much lower monthly payment for leasing - and this will be a city car - so only use it on weekends.

kjdaif

Yes, I meant .00220. Various sources indicate that excellent credit should get me a money factor rate of .00180 - which is a much bigger difference than $1.50 per month.

mabubba

Anyone,

Any Indiana Leasses out there. Do you know how leases are taxed in the Hoosier state? Thanks,

mabubba

kyfdx

The difference between .0018 and .0022 is about $16/mo. You may be able to get that money factor somewhere else, but the residuals are likely to not be as good with an independent bank. Your dealer has a computer that can check dozens of different banks around the country to get you the best deal on the lease. Even after they make their commission on the lease, it is still likely to be a better deal than you can get on your own.

Manufacturer lease programs vary greatly depending on whether they are subsidizing the deal to move cars. It is very unlikely you will find a better lease deal on your own, but the place to start would be leasecompare.com

regards,
kyfdx

ponytrekker

Leasing does not make sense for 2 reasons: (1) if he's just commuting to and from work, might not qualify (ask a tax pro) and (2) if he can get a write off the mileage .36 cents x 43000 would work out to $15k a year

CarMan@Edmunds

You're very welcome, Doug. Thank you for taking the time to come back and let us all know how everything turned out. Enjoy your new ride!

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CarMan@Edmunds

No problem, jsevenseven. I'm glad to hear that you like your Audi. I know several people who have owned allroads and they all loved them.

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CarMan@Edmunds

You're welcome, John. I am surprised that Volvo will only lease European Delivery vehicles through its standard lease program. Did someone at Volvo or a dealership tell you this? This may indeed be the case, but it doesn't really make much sense to me. I believe that Volvo Finance's standard lease money factor varies depending upon what part of the country one is in. It should be right around .00320 for any length lease in most areas right now.

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paulc6661

Hi Carman,

I finally picked up my van from ACH Academy Honda in Old Bridge, NJ last night. The delivery was pretty smooth. The saleman was nice and professional. I'll definitely recommend them to anyone!

Here is the lease deal I got:

2004 Honda Odyssey EX-L RES
MSRP - $30,480
Cap Cost - $26,570 (including destination $490 and doc fee $99.70)- ~$1,000 under invoice!
Bank Fee - $595
DMV - $104
Terms - 36 months 15K/year 0 down payment
Money factor - 0.00106 ($0 security deposit)
Residual - 59%
Monthly lease payment - $329 including tax
Total payments - 35
Acutual monthly lease payment - $319.87

Since I decided to include $595 bank fee and 1st month payment $329 into the CC, I only paid $104 for DMV fee at the signing.

Mr. Carman, I really appreciate your help! Armed with the information and knowledge offered by you, I feel much stronger in negotiating this deal. I learned so much from this forum. Without you guys, I couldn't get this great deal done! Indeed, you made my car buying process a very pleasent one while saving lots of money. Please keep it up!

Best regards,
Paul

martini4me

Hello Car Man: A friend of mine has gotten a lease quote for a 2004 Range Rover and I wanted to see if you think this info is in line w/other current Range Rover offers. MSRP=$77k. Money Factor=0.00420 15K mile Residuals: (44%=42months=$34248) (41%=48months=$31959)

They are a returning Range Rover customer. That money factor seems extremely high to me. What do you think? Thanks for your help!

kjdaif

Carman - do you agree with what kyfdx says? I'd like to hear your thoughts. If this is a leisure vehicle (weekends only pretty much) with probably less than 10,000 miles per year, leasing is definitely a better option, isn't it? Please let me know if my logic is off.

pref

Greetings,

   Thank you for the information on the Honda CR-V, Carman. I think I am getting the nag of this stuff. Before, when I would go into a dealership, I had no idea what I was doing, and I felt that I really was in the dark about what the car salesmen were doing, except a distinct feeling of being screwed . I am still weighing my options in terms of the car, so I wanted to ask for the numbers on the V6 Honda accord coupes, EX and LX, 36 and 42 months. I live in NY. Thanks a bunch

PS: Would you happen to know what the Lease Tax policy is in NY? should I calculate the tax on each payment, or must I calculate the tax against the cost of the ENTIRE car and divide that by the number of months of the lease to find out the monthly tax?

CarMan@Edmunds

I am glad that I was able to help you out, Paul. Thanks for taking the time to come back and let everyone know how your deal turned out. Enjoy your new Odyssey.

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CarMan@Edmunds

Hi martini4me. I probably have said this before, but I love your user id. I'll take mine shaken, not stirred. You are right the lease money factor that your friend was quoted on a 2004 Land Rover Range Rover definitely sounds high to me. Even if Land Rover is not providing any sort of lease support on it, which I believe is the case, its standard lease money factor for consumers who qualify for its top credit tier should still be around .00300 to .00350. It certainly appears to me as though this dealership is marking-up this truck's money factor, adding additional back-end profit to the deal for itself. The residual values that they were quoted are terrible as well, but they do not surprise me. Range Rovers have had residual values in the 40's for longer terms lately. Your friend should definitely insist upon a lower money factor. The factor that they were quoted is equivalent to an interest rate of around 10%!!!! Nobody pays rates that high today unless their credit is really messed up.

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CarMan@Edmunds

Hi kjdaif. Ahhh the age old debate on whether it is better to lease or to buy. I am actually a big fan of leasing. I always purchase one of my vehicles and lease the other. I don't see anything wrong with entering into a low mileage lease on a leisure vehicle if there is a decent lease program available on it. Vehicles that have low lease money factors, high residual vales, or both actually can often cost consumers less to lease than to purchase and resell at some point down the road. However, if the model that you are considering getting does not have an attractive lease program on it at this time, you may want to consider taking advantage of any other incentives that are available on it like special financing rates or customer / dealer cash. Even if it does not have either of these programs on it right now, you can finance it at the reasonably low interest rates that are available out there today and avoid paying a lease acquisition fee of several hundred dollars. The bottom line is that I lease vehicles that have good programs on them and buy the ones that don't.

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CarMan@Edmunds

I'm glad to hear that you have a much better understanding of leasing now that you have visited this discussion, pref. That's what we're here for. Here is the information on the Honda Accord that you are interested in. If you were to lease a 2004 Honda Accord EX V6 Coupe without navigation through American Honda Finance Corp. in New York this month for 36 months with 15,000 miles per year, its base lease money factor and residual value should be .00194 and 57%, respectively. The money factor for an otherwise identical lease of a 2004 Accord LX V6 Coupe without navigation should be the same, but its residual value would be 56% for this term and mileage allowance.

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stacey_burke

I am being pushed by a sales person to lease an Accord before May 5th - the time new rates come out. She says that the rate will raise and the residual will drop (from honda lease program). I plan to get an Accord V6 with Nav and Auto. What is your thinking, should the rate and residual change in May.

The reason I do not want to lease yet is that my other accord lease has 3 months left on it. The dealer wants to "pay it off" which I'm sure means to roll it over. My Car is now a 2001 Accord V6 with leather and I still have 3 lease payments of 339.

kjdaif

Thanks - can you tell me whether you think a money factor rate of .00220 is part of a "good lease program." Should I have to put money down under a "good lease program?" I would think not - unless it's important for me to lower monthly payments. I've got a good price on the RAV4 - just not sure if I'm being taken on lease terms - I don't know if fully understand the rest of the fees beyond sticker price - should it only be taxes and DMV charges - what about these bank fees, etc. - is that just money for the dealer in the end? Should I be able to negotiate those out of the deal?

CarMan@Edmunds

Hi Stacey. According to the latest informaiton that I have seen, American Honda Finance Corp.'s special lease program on the 2004 Accord runs through May 3rd. AHFC is scheduled to publish new residual values in May as well. There definitely is a good chance that this model's residual values will drop next month. However, that does not necessarily mean that it will be more expensive to lease in May. Honda may increase its lease money factor support or introduce new dealer cash on the '04 Accord to help offset this expected drop in its residuals. A lot of what Honda does with this car's program will depend upon what its April sales results are like. So far I have heard that Honda is having a decent month so it may not increase its support on this car. Only manufacturers themselves know what they do with their future incentives programs. The bottom line is if you like the car and are in the market, there's no reason not to lease it now, but if you need to wait for some reason like you are already in a lease that hasn't expired yet you should not let your salesperson harass you into leasing before you are ready.

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CarMan@Edmunds

You're welcome, kjdaif. A lease money factor of .00220 definitely is not that great. It's not horrific either, but it is equivalent to an interest rate of just under 5.3% which is nothing special. Toyota is offering customer cash and special financing rates on this truck in several of its regions. If I was in the market for a RAV4 and was in an area that did have one of these special programs I would probably take advantage of them rather than lease. Entering into an unsupported lease on a vehicle that has special financing rates or cash incentives on it is like throwing away money.

Most banks that lease vehicles to consumers charge what is known as a lease acquisition fee, or a bank fee. This fee is assessed by the bank that you are leasing your car or truck through and has nothing to do with individual dealerships, unless they try to pad a bank's base fee in an effort to add additional back-end profit to your deal. I believe that Toyota Financial Services has a base lease acquisition fee of $400 in most states right now. This fee is non-negotiable, but may usually be rolled into your vehicle's capitalized cost if you do not want to pay it all at one time at lease signing.

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pref

Thank you, Carman. Could you tell me the numbers for the same cars for 39 and 42 month programs?

indecisive4mos

Hello Everyone & Car Man,
I have been reading the posts for about a week and car shopping for much longer. I need help!
I ran across this lease and wanted to know what you think. I am new to this so please excuse me if I omit pertinent info.
04 S60 Lease-10,000 miles/48 mos/pymt of $329/mo.
Premium package.
I have never leased before, but with a commute of <10 miles a day to work, and my husband and I buying another car, I can't seem to find the negative. Other than being scared! I would like to negotiate to 15k a year but keep the payment in this same ballpark. Do you see this as feasible? I would also rather have the S60 2.5 at this price!
Help please!!! The S60 2.5 monthly is advertised at $369/mo. In your opinion what is the best I can expect? My credit is very good and I live in NC.
Thanks in advance to anyone who can help.

figelwump

Hey carman, I am considering leasing several cars, was wondering if you could help out on what the residuals/money factors are for each of these cars? I'm interested in 15,000 miles, and I wanted to compare 3 and 4 year lease terms.

Honda accord ex-l v6 with navi
-- MSRP: 28,400
-- Expected negotiated price: $26,000

Acura TL w/navi:
-- MSRP: 34,650
-- Expected neg. price: 34,000

325i (w/premium package + navi + auto tranny + leather)
-- MSRP: 36,200
-- Expected neg. price: 35,500

thanks!

figelwump

... and also what down payments I can expect to pay for each lease.

freddo

Do residual values drop on 2004 models as we are getting closer to the introduction of 2005 models? I am interested in a 2004 X3 2.5 and the salesman said that the RV will probably drop next month as we get closer to the 2005 model year. Is this true or is he just trying to get the sale?I need a car in early June but will I get a better deal at the end of this month (April) than in May? (I already have the MF and RV for April) Thanks in advance.

bmwpair

My two current car leases are coming due, and I am the market to lease a BMW X5 4.4 and BMW 745i.

On the X5, I need 12,000 miles/yr for 3 years. As per Edmunds, MSRP with options $59,700/TMV $58,700.

On the 745i, 15,000 miles/yr for 3 years. MSRP $79,600/TMV $76,765.

Assuming no cap reduction, what sort of lease payments should I be looking for?

Thanks

chris23

Hey Car_Man,

I need help one more time. I don't understand how Edmunds calculated their 36 mo lease for the '04 Accord EX-L (4-dr, auto, no nav system). The following link has estimated lease payment at $271 (http://www.edmunds.com/new/2004/honda/accord/100336784/estimated- payments.html) I see one assumption is no sales tax, so I can get to $291 based on TMV, but my calculations show that to be below invoice. What am I doing wrong, or is their MF different?

What are the variables that I'll have to negotiate (besides cap cost)? Aren't the MF and Residual known factors? You said the MF was .00146 for a 3 yr, 12k lease and the residual was 59%.

If I use the TMV of $22875, zero down, 3.5% MF for a 36 mo, 12k lease, I get a depreciation of $8538 and a rent charge of $1955, which gives me $10493 base. Sales tax is 5%, and I come up with $306 per month. I was shooting for about $300 payments, but if I can get lower then I would like to know how to approach it.

Is there any way to find out how long a car has been on the lot? That would be very helpful to know when deciding what a fair price is.

THANKS!

Chris