Leasing vs Financing 2015 Mazda 3 S Grand Touring w/ tech

krazydawg825

I'm comparing options for leasing vs financing in the San Francisco Bay Area.

The out the door price for a Mazda3 S Grand Touring with the tech package is $30,008. The breakdown is $27,151 for sale price, $2451 for sales tax, and $406 for registration and fees.

Financing for 60 months at 0% with $2500 down payment is $458/mo.

Leasing for 36 months can range from $349/mo to $376/mo depending on the 10k, 12k, or 15k/yr mileage option. Residual value will vary from 51% to 54%. Drive-off is $762 to $789.

I'm looking to keep the monthly cost down but I drive a lot of miles. I'm averaging a minimum of 20k/yr and plan to keep the car which leads me to several questions.

1. Does it make sense to lease the car and purchase it at the end of the lease? I can finance used around 2.24% from my credit union for 48 or 60 month options.

2. Is the lease buyout option the residual value of the car regardless of whether you're over or under the mileage limit at the end of the lease?

3. Can the lease buyout option be lower for excess miles?

Michaell

krazydawg825 said:

I'm comparing options for leasing vs financing in the San Francisco Bay Area.

The out the door price for a Mazda3 S Grand Touring with the tech package is $30,008. The breakdown is $27,151 for sale price, $2451 for sales tax, and $406 for registration and fees.

Financing for 60 months at 0% with $2500 down payment is $458/mo.

Leasing for 36 months can range from $349/mo to $376/mo depending on the 10k, 12k, or 15k/yr mileage option. Residual value will vary from 51% to 54%. Drive-off is $762 to $789.

I'm looking to keep the monthly cost down but I drive a lot of miles. I'm averaging a minimum of 20k/yr and plan to keep the car which leads me to several questions.

1. Does it make sense to lease the car and purchase it at the end of the lease? I can finance used around 2.24% from my credit union for 48 or 60 month options.

2. Is the lease buyout option the residual value of the car regardless of whether you're over or under the mileage limit at the end of the lease?

3. Can the lease buyout option be lower for excess miles?

1. No
2. Yes
3. Yes, you can purchase additional miles up front, which will lower the residual value at the end of the lease, but your lease payment will be higher as a result

In short, if you drive a lot of miles and plan to keep the car for many years, buy it.

krazydawg825

From researching leasing vs buying, I've only come across one article where it mentioned the total amount spent in the end was relatively close but I'm not able to find it for reference.

Most people that are leasing typically don't purchase the cars at the end of the lease, so I haven't been able to find much information about it.

Running my own numbers this is what I've found assuming that the residual price is what the price will be at the end of the lease. The articles I came across with mentioned that the price is already negotiated in the lease paperwork for purchasing at the end of the lease.

Leasing
349 * 36 = 12,564
16,359 residual
16,359 * 1.10 = 17,994.9
17,994.90 @ 2.24% for 48 months = 392.27
17,994.90 @ 2.24% for 60 months = 317.29

392.27 * 48 = 18,828.96 + 12,564 = 31,392.96
317.29 * 60 = 19,037.4 + 12,564 = 31,601.4

2500 down
337.77 * 48 = 16,212.96 + 12,564 = 28,776.96
273.20 * 60 = 16,392 + 12,564 = 28,956

Finance
0% 60mo - 500.13 * 60 = 30,008
0% 60mo - 458.47 * 60 = 27,508.20 + 2,500 = 30,008.20

1.99% 60mo - 525.84 * 60 = 31,550.40
2.24% 72mo - 445.80 * 72 = 32,097.60

2500 down
1.99% 60mo - 482.03 * 60 = 28,921.80 + 2500 = 31,421.80
2.24% 72mo - 408.66 * 72 = 29,423.52 + 2500 = 31,923.52

Finance scenario
If I can obtain 0% I would finance for 5 years and it would be cheaper compared to leasing and purchasing at the residual price.

If I don't qualify for the 0% rate it would be slightly more to purchase compared to leasing and my monthly payment would be higher.

Leasing scenario
In the leasing process, I would be making payments over a total of 7-8 years but my monthly payments would be lower. Looking at the data for total payments it would be less than purchasing. If I make a 2500 downpayment on the residual value of the car at the end of the lease the savings are more.

Is there something that I'm missing? Leasing and purchasing the car at a low interest rate seems to be cheaper overall. I would be able to keep my payments at $350 or below.

carperso

krazydawg825 said:

From researching leasing vs buying, I've only come across one article where it mentioned the total amount spent in the end was relatively close but I'm not able to find it for reference.

Most people that are leasing typically don't purchase the cars at the end of the lease, so I haven't been able to find much information about it.

Running my own numbers this is what I've found assuming that the residual price is what the price will be at the end of the lease. The articles I came across with mentioned that the price is already negotiated in the lease paperwork for purchasing at the end of the lease.

Leasing
349 * 36 = 12,564
16,359 residual
16,359 * 1.10 = 17,994.9
17,994.90 @ 2.24% for 48 months = 392.27
17,994.90 @ 2.24% for 60 months = 317.29

392.27 * 48 = 18,828.96 + 12,564 = 31,392.96
317.29 * 60 = 19,037.4 + 12,564 = 31,601.4

2500 down
337.77 * 48 = 16,212.96 + 12,564 = 28,776.96
273.20 * 60 = 16,392 + 12,564 = 28,956

Finance
0% 60mo - 500.13 * 60 = 30,008
0% 60mo - 458.47 * 60 = 27,508.20 + 2,500 = 30,008.20

1.99% 60mo - 525.84 * 60 = 31,550.40
2.24% 72mo - 445.80 * 72 = 32,097.60

2500 down
1.99% 60mo - 482.03 * 60 = 28,921.80 + 2500 = 31,421.80
2.24% 72mo - 408.66 * 72 = 29,423.52 + 2500 = 31,923.52

Finance scenario
If I can obtain 0% I would finance for 5 years and it would be cheaper compared to leasing and purchasing at the residual price.

If I don't qualify for the 0% rate it would be slightly more to purchase compared to leasing and my monthly payment would be higher.

Leasing scenario
In the leasing process, I would be making payments over a total of 7-8 years but my monthly payments would be lower. Looking at the data for total payments it would be less than purchasing. If I make a 2500 downpayment on the residual value of the car at the end of the lease the savings are more.

Is there something that I'm missing? Leasing and purchasing the car at a low interest rate seems to be cheaper overall. I would be able to keep my payments at $350 or below.

In the cost breakdown, the third line is (16,359 * 1.10 = 17,994.9). Why was the residual multipled by 1.10?

Michaell

carperso said:

krazydawg825 said:

From researching leasing vs buying, I've only come across one article where it mentioned the total amount spent in the end was relatively close but I'm not able to find it for reference.

Most people that are leasing typically don't purchase the cars at the end of the lease, so I haven't been able to find much information about it.

Running my own numbers this is what I've found assuming that the residual price is what the price will be at the end of the lease. The articles I came across with mentioned that the price is already negotiated in the lease paperwork for purchasing at the end of the lease.

Leasing
349 * 36 = 12,564
16,359 residual
16,359 * 1.10 = 17,994.9
17,994.90 @ 2.24% for 48 months = 392.27
17,994.90 @ 2.24% for 60 months = 317.29

392.27 * 48 = 18,828.96 + 12,564 = 31,392.96
317.29 * 60 = 19,037.4 + 12,564 = 31,601.4

2500 down
337.77 * 48 = 16,212.96 + 12,564 = 28,776.96
273.20 * 60 = 16,392 + 12,564 = 28,956

Finance
0% 60mo - 500.13 * 60 = 30,008
0% 60mo - 458.47 * 60 = 27,508.20 + 2,500 = 30,008.20

1.99% 60mo - 525.84 * 60 = 31,550.40
2.24% 72mo - 445.80 * 72 = 32,097.60

2500 down
1.99% 60mo - 482.03 * 60 = 28,921.80 + 2500 = 31,421.80
2.24% 72mo - 408.66 * 72 = 29,423.52 + 2500 = 31,923.52

Finance scenario
If I can obtain 0% I would finance for 5 years and it would be cheaper compared to leasing and purchasing at the residual price.

If I don't qualify for the 0% rate it would be slightly more to purchase compared to leasing and my monthly payment would be higher.

Leasing scenario
In the leasing process, I would be making payments over a total of 7-8 years but my monthly payments would be lower. Looking at the data for total payments it would be less than purchasing. If I make a 2500 downpayment on the residual value of the car at the end of the lease the savings are more.

Is there something that I'm missing? Leasing and purchasing the car at a low interest rate seems to be cheaper overall. I would be able to keep my payments at $350 or below.

In the cost breakdown, the third line is (16,359 * 1.10 = 17,994.9). Why was the residual multipled by 1.10?

Probably to account for sales tax of the purchase at the end of the lease.

krazydawg825

Sales tax is around 9% and varies by city and county in CA. I added the extra 1% to estimate the registration fee.