Calculators vs Negotiating lease price

Alvin512

I'm looking at leasing a new car. From what I can tell, the residual value and money factor will be set by the lender, with the RV based upon the MSRP. I would expect, then, that there's room to negotiate with the sales team on the sale price of the car. Yet the lease calculators that I found assume that there's no negotiation -- that there's just one "sales value" that forms both the amount of the loan and the residual value; that maybe there's some reduction from a trade-in or downpayment, maybe some incentives, but as a buyer you just show up and tell them what viscosity lube to use.

My chosen vehicle has an MSRP of $39,300. With a $2k downpayment and a $2k trade-in, some sites give me a monthly payment of $600-700. Yet if I take the 58% RV (from the forums here) and assume I can negotiate a sales price of $35-36k, even assuming $1.5k in TTL, acquisition fees, and the like, I come up with numbers around $400. Do only like 5% of the population negotiate lease prices? Is there any reason why a dealership would refuse -- aren't they getting their sale credit anyway? If they'd sell the car for 36k, wouldn't they lease it at that price?

And, if so, why the hell do some calculators show a monthly payment of $700?! I don't want to call them out, but ****.com has calculators that make me think that it's a blatant, over-the-top shill for dealerships.

Michaell

Alvin512 said:

I'm looking at leasing a new car. From what I can tell, the residual value and money factor will be set by the lender, with the RV based upon the MSRP. I would expect, then, that there's room to negotiate with the sales team on the sale price of the car. Yet the lease calculators that I found assume that there's no negotiation -- that there's just one "sales value" that forms both the amount of the loan and the residual value; that maybe there's some reduction from a trade-in or downpayment, maybe some incentives, but as a buyer you just show up and tell them what viscosity lube to use.

My chosen vehicle has an MSRP of $39,300. With a $2k downpayment and a $2k trade-in, some sites give me a monthly payment of $600-700. Yet if I take the 58% RV (from the forums here) and assume I can negotiate a sales price of $35-36k, even assuming $1.5k in TTL, acquisition fees, and the like, I come up with numbers around $400. Do only like 5% of the population negotiate lease prices? Is there any reason why a dealership would refuse -- aren't they getting their sale credit anyway? If they'd sell the car for 36k, wouldn't they lease it at that price?

And, if so, why the hell do some calculators show a monthly payment of $700?! I don't want to call them out, but ****.com has calculators that make me think that it's a blatant, over-the-top shill for dealerships.

While the base money factor can be set by the bank, the dealer is free to mark up that value for extra profit.

There are often different incentives for lease versus purchase, so you cannot assume that a price negotiated for finance or purchase with cash will be the same price the dealer agrees to if you decide to lease.

I can't help you with online calculators; I use an old fashion the spreadsheet to do the math myself.

Alvin512

I went in and, although it wasn't exactly like negotiating a purchase, there were similarities. Mostly: yes, the normal sale-price negotiation is still there.

Yes, they marked up the Money Factor. I had to walk out of the dealership to get them to call me back and offer me the MF posted here in the forums.

Second, I wasn't sure what options would be available after purchase, vs manufacturer-installed. Getting straight answers on that was difficult, and as a result I spent too much time talking about it and not enough negotiating prices. The dealer's finance manager stated that dealer-installed accessories would not be rolled into the RV, which I'm willing to accept as a legitimate condition from the bank, so that meant that I would either have to pay cash (up-front) for those accessories or roll that into the capitalized amount.

As for calculators: the Edmunds.com calculator doesn't show RV (as a dollar value) and pulls MSRP based upon a standard car of a trim level with certain packages -- but no options. I wound up using the *******ckr.com calculator, as it provided the extra entry-fields I needed.

Michaell

Alvin512 said:

I went in and, although it wasn't exactly like negotiating a purchase, there were similarities. Mostly: yes, the normal sale-price negotiation is still there.

Yes, they marked up the Money Factor. I had to walk out of the dealership to get them to call me back and offer me the MF posted here in the forums.

Second, I wasn't sure what options would be available after purchase, vs manufacturer-installed. Getting straight answers on that was difficult, and as a result I spent too much time talking about it and not enough negotiating prices. The dealer's finance manager stated that dealer-installed accessories would not be rolled into the RV, which I'm willing to accept as a legitimate condition from the bank, so that meant that I would either have to pay cash (up-front) for those accessories or roll that into the capitalized amount.

As for calculators: the Edmunds.com calculator doesn't show RV (as a dollar value) and pulls MSRP based upon a standard car of a trim level with certain packages -- but no options. I wound up using the *******ckr.com calculator, as it provided the extra entry-fields I needed.

Thanks for the observations.

Yes, dealer installed accessories are not residualized; you are responsible for 100% of the cost.

We are hoping to roll out a new and improved calculator at Edmunds sometime soon; we mods just use old fashioned math (with a spreadsheet) instead of an on-line calculator - many of them make assumptions about the deal that are opaque to the user.

ninja83

Michaell said:

Thanks for the observations.

Yes, dealer installed accessories are not residualized; you are responsible for 100% of the cost.

We are hoping to roll out a new and improved calculator at Edmunds sometime soon; we mods just use old fashioned math (with a spreadsheet) instead of an on-line calculator - many of them make assumptions about the deal that are opaque to the user.

Hi @Michaell ,
I realize this is an old post, but figured I'd ask...
you mentioned you do the math in old fashion way in the spreadsheet and I wanted to ask:

Is there any example here in the forum for the old school spreadsheet way, where someone shows an example with step-by-step how it works? I've been navigating the site here but haven't find one with step-by-step example. Like with simple numbers...

"Cars costs 50.000 with residual of 53% and M.F. of 0.00025 (this are just examples, of course). if you did right you monthly payment should be something similar to this"


Is there anything like this in here, showing step by step, or if not, would you be able to show us an example with and without trade in, for example?

of course, there are things to consider, such as local tax and possible other things, but the idea still remains.

thank you so much for your help here!!

kyfdx

ninja83 said:

Michaell said:

Thanks for the observations.

Yes, dealer installed accessories are not residualized; you are responsible for 100% of the cost.

We are hoping to roll out a new and improved calculator at Edmunds sometime soon; we mods just use old fashioned math (with a spreadsheet) instead of an on-line calculator - many of them make assumptions about the deal that are opaque to the user.

Hi @Michaell ,
I realize this is an old post, but figured I'd ask...
you mentioned you do the math in old fashion way in the spreadsheet and I wanted to ask:

Is there any example here in the forum for the old school spreadsheet way, where someone shows an example with step-by-step how it works? I've been navigating the site here but haven't find one with step-by-step example. Like with simple numbers...

"Cars costs 50.000 with residual of 53% and M.F. of 0.00025 (this are just examples, of course). if you did right you monthly payment should be something similar to this"


Is there anything like this in here, showing step by step, or if not, would you be able to show us an example with and without trade in, for example?

of course, there are things to consider, such as local tax and possible other things, but the idea still remains.

thank you so much for your help here!!

https://forums.edmunds.com/discussion/12602/general/x/how-to-calculate-monthly-lease-payments/p1

ninja83

https://forums.edmunds.com/discussion/12602/general/x/how-to-calculate-monthly-lease-payments/p1



That's what I was looking for.
thank you.