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2013 and earlier Lexus IS 250 / IS 350 Lease Questions
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Car_man
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Most consumers who lease vehicle just have them inspected and return them at lease-end. Some lessees purchase their vehicles at lease-end, but doing so only makes sense if their vehicle's purchase option price is less than they would have to pay for a similar car on the open market. Lessees can purchase their leased vehicles at the end of their deals and try to sell them on their own or trade them in, but more often than not this is not a good idea because leased vehicles are rarely worth more than their purchase option prices.
You're right, Lexus' lease program for this car is not that great right now. I do not anticipate it getting any better in the near future either (though it is difficult to predict exactly what manufacturers will do with their future lease programs). If you can get an attractive finance rate through an independent bank, there's nothing wrong with financing this car. I doubt that the money factors for the 2007 model will be any better, but the residual values should be. You may find that it is less expensive to lease a 2007 model than it is to lease a 2006 model right now. Whether this ends up being the case will depend upon how low a selling price you can negotiate on an '07.
Car_man
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Car_man
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Thanks for the response.
After I posted the question about gap insurance, I called my insurance broker to see what I could find out. I was told that I could have gotten gap insurance on my wife's leased '03 MB 230 Coupe from my insurance company, Safeco, for $16 a year. That's only $48 over a three year lease. I paid a one time fee of $125 for it from Bank of the West when I leased the car through a private leasing company 4 years ago. That's what they charged the leasing company, which passed the cost straight through without any markup. The MB dealer in San Jose where we bought the car wanted to mark it up to $525, which I found out later was the max BWE would allow. That's one reason we went with the private leasing company vs. doing it through MB, even though the MB dealer was also using BWE as the bank, had they done the lease.
Moral of the story......call your insurance person first!
By the way, it was at my local MB dealer, RAB Motors, where I heard about the "expanded" gap coverage program from a salesman. First I'd ever heard about it too. I won't be going back to discuss leases with them since my wife has since decided she wants a Lexus, so I won't be able to provide any additional intel about it. Perhaps another Marin County forum member knows something about this they could share?
Do a matrix of nine boxes, like an enclosed tic tac toe. Across the top write 24, 36, and 48, the most common lease terms in months. Down the side write the most common mileage allowances, 10,000, 12,000, and 15,000 per year. You now have nine boxes to fill in with percentages which represent the percentage of the MSRP which will be applied to a lease for that term and mileage allowance. These are either set by the manufacturer or come from the Automotive Lease Guide (ALG) which is the bible of future valuation used by 99% of the banks which do car leases. When Car Man tells you what the residual percentages are for a particular make and model, fill in the appropriate box. I found that was a good way to envision how much change there was between the various terms and mileages. You'll notice that the residuals usually drop quite a bit between 36 and 48 months. That's because the estimated future value of a four year old car is not nearly as good as a three year old car, so keep that in mind when determining how long you want to lease a car for.
The money factor is based on your credit, and is one of two numbers used to determine a lease payment which may be marked up by a dealer as a source of profit. (The other is the negotiated selling price of the vehicle.) If the manufacturer is providing the dealer with lease financing at a money factor of .00245, the dealer may mark that up to, say .00295, and quote you a payment of say, $400 a month, when the payment would have been say, $360 a month had the dealer used the .00245 money factor. The dealer can then pocket $40 a month and send the manufacturer $360. The dealer then makes an additional $1,440 profit on the deal that most buyers/lessees don't even realize he's making. ($40 x 36 payments = $1,440.)
The selling price at the end of the lease is the residual value, which is clearly spelled out in the contract, plus whatever "termination fee" the financing entity charges if you buy the car. Perhaps $250, to "cover the paperwork." If you turn the car back to them rather than buy it, then the termination fee will typically be higher because they have to do the paperwork plus clean the car up for disposition, so that costs more. The latter termination fee should be spelled out in the contract, as the contract assumes the car will be coming back.
Just check any contract VERY carefully. Go sit in a corner with your calculator for half an hour and figure out where every number on that contract is coming from before you go back to the F&I guy. Write down all your questions. Get solid answers you completely understand before you sign anything. Remember, he's a pro who runs these numbers all day every day for a living, so he can make them sing like a convict cutting a deal. You don't stand a chance unless you know exactly how the numbers should be crunched. They don't pay him to sit there and fill out contracts. They pay him to make money for the dealership from people who don't understand ALL the elements of the deal. He does that by playing with the numbers. The really good ones can pour you a cup of coffee with their right hand while running a 10-key under their desk with their left. "And your card was .....the 8 of spades!" "Good golly, Ethel!! How did that feller do that!?"
Hope all this helps! Get educated and go get 'em! Let us know how you did.
Thanks for the reply on the Mercedes mileage switch thing. I too had never heard of that until this sales guy at RAB Motors in San Rafael (just north of San Francisco) told me about it a week ago. I'm pretty sure that a mid-lease purchase such as the one you outlined is what's going on. Unfortunately, I won't be talking to them again as my wife has since decided she wants a Lexus. All I know is that he said at the 12 month mark you could call them up and "adjust the mileage allowance up" if you found that you were driving more than you were allowed.
Sorry I couldn't be of more help.
Bill
Yes, your math is correct. The selling price to you would be $26,700. You would also have to pay a (probably reduced) termination fee to the entity which financed the lease, plus sales/use tax on $26,700 to the state. I'm not sure what other fees you would have to pay, but that might vary depending on what state you live in.
If you negotiate say, $3,000 off MSRP, then the depreciation component of your payment would be the difference between $41,500 and $26,700, or $14,800. Divided by 48 payments that's $308.33 per month. If you just paid list, then you'd divide $17,800 by 48 and the depreciation component would increase to $370.83. So it pays to negotiate price even if you're leasing!
I'm not sure what the residuals are for the 2007 models, but here are some residuals and money factors I found somewhere which applied to 2006 models in August. I think for 2007 you could increase the residuals by 2%, but I don't think you should rely on the money factors being the same. They probably went up a little. I think they might be .00275 now instead of .00245. I'd confirm that with a couple of dealers. I think they usually change the first of the month, but that might not be the case now, because Lexus has had that Golden Opportunity Event going on for a while, and it runs through tomorrow, so they may still be what they were in August. Any help, anybody?
2006 Lexus IS350 4dr Sedan
24 mo/15k mi – Residual Value 62% of MSRP – .00245 Base Money Factor Rate
36 mo/15k mi – Residual Value 56% of MSRP – .00245 Base Money Factor Rate
48 mo/15k mi – Residual Value 46% of MSRP – .00245 Base Money Factor Rate
60 mo/15k mi – Residual Value 37% of MSRP – .00255 Base Money Factor Rate
36 mo/12k mi – Residual Value 58% of MSRP – .00245 Base Money Factor Rate
48 mo/12k mi – Residual Value 48% of MSRP – .00245 Base Money Factor Rate
60 mo/12k mi – Residual Value 39% of MSRP – .00255 Base Money Factor Rate
2006 Lexus IS350 4dr Sedan w/ Navigation
24 mo/15k mi – Residual Value 62% of MSRP – .00245 Base Money Factor Rate
36 mo/15k mi – Residual Value 56% of MSRP – .00245 Base Money Factor Rate
48 mo/15k mi – Residual Value 46% of MSRP – .00245 Base Money Factor Rate
60 mo/15k mi – Residual Value 37% of MSRP – .00255 Base Money Factor Rate
36 mo/12k mi – Residual Value 58% of MSRP – .00245 Base Money Factor Rate
48 mo/12k mi – Residual Value 48% of MSRP – .00245 Base Money Factor Rate
60 mo/12k mi – Residual Value 39% of MSRP – .00255 Base Money Factor Rate
The next day, we got a call offering us the same lease for 650. After some calling around, we found the same car at 2 other dealers (one is about 15 minutes away, the other is about an hour). Both offered the lease at 785 above invoice, which came to 580 per month, on a 2006 or a 2007. I was shocked that they would do it on a 2007. Just an FYI as to what some dealers will do, and what others won't.
I been offered so far over the internet for package A, $33,500 and $33,300. Also with above normal money factor.
I appreciate any input, such as dealers and sales staff in the Bay area. I'm willing to drive 50 miles to make the right deal for 36/10,000 miles on a automatic IS250 rwd with HID lights and leather.
Package A: 18" Alloy Wheels w/225/40R18 Fr + 255/40R18 R
Summer Tires, High Intensity Headlamps with Adpative Front Lighting System (AFS), Premium Package Includes: Heated and Ventilated Front Seats, Wood Interior Trim, and Perforated Leather Seat Upgrade, Preferred Accessory Package:
(MSRP: $35,097.00)
Package B: 18" Alloy Wheels w/225/40R18 Fr + 255/40R18 R
Summer Tires, High Intensity Headlamps with Adpative Front Lighting System (AFS), Navigation System Includes: Generation 5 Navigation System with Rear Camera, Bluetooth, and Voice-Activation with Destination Input, Premium Package Includes: Heated and Ventilated Front Seats, Wood Interior
Trim, and Perforated Leather Seat Upgrade, Preferred Accessory Package:(MSRP: $37,647.00)
I live in the Marina district and have sent out a quote request to Lexus of Marin but they have not responded.
Although, the interior room of the IS250 is smaller than the
325i, I really enjoy the leather, wood, and the layout of it much more than the 325i. It seems the base money factor of the IS is higher(.00265) vs. 325i(.00225), but I may just purchase the vehicle instead of leasing if the borrowing rate is favorable. I will be using MACRS depreciation and the residuals are close enough. I'm also looking at 06 Acura TL at cost to below dealer invoice. Any suggestions of other dealers that I should stop by?
Sounds like you need a CPA who can run the numbers both ways for you if you want to buy the car and use accelerated depreciation.
No help on Acura dealers, but the prices seem great if they're below invoice.
As far as Lexus dealers are concerned, I think some good ones are Concord and Serramonte from what I've seen on this forum. I'd try Marin again. Maybe your email went to someone who's off for a couple of days.
Yeah, the Lexus MF is higher. It all depends on the desire of the manufacturer to support the leasing program.
Good luck!
Acura TL sure does sound good about now. I just hope the G35 and the new C-class will bring these dealers back to earth.
There are basically four numbers that go into a lease calculation: The MSRP (including destination); the Residual Value at the end of the lease term you have chosen; the negotiated selling price of the car; and the money factor.
The dealer controls, and can make money on, two of these: the selling price and the money factor. He cannot control the MSRP or the residual, which is set by the manufacturer, and is based on lease term and miles driven.
If Lexus Financial is giving the dealer a .00265 money factor, then the dealer can use a higher rate when they quote you a payment, or they can make nothing on the financing component and pass that rate straight through to you without a markup. Obviously that's what you want.
There are two major components to a lease payment: depreciation and interest.
To calculate the depreciation, you multiply the MSRP by the residual value percentage, to get the RV in dollars. Then you subtract the RV dollar amount from the capitalized cost (negotiated selling price of the car + acquisition fee), and divide the result by the number of months in the lease.
To get the interest, you add the cap cost to the RV, and multiply the result by the money factor.
Add these two results together, multiply that result by the sales tax where you live, add the three together, and you have your lease payment. Depn + int + tax = payment.
Be aware that there is always an "acquisition fee" added to the negotiated selling price, and that results in the cap cost. Lexus' fee is $600, and cannot be altered by the dealer.
Many dealers will suggest you make a "cap cost reduction" (down payment) to bring down the monthly payment, but that's just moving money around and is not a good idea, since it could be lost if your car is totaled or stolen. Insurance may not cover this "gap." Call your insurance agent and get a quote on gap insurance. It will be MUCH cheaper than buying it from the dealer.
Hope this helps. Go through the calcs a couple of times and it will become very clear that negotiating a good price and insisting on using a money factor that has not been marked up becomes crucial to getting a good deal on a lease.
Good luck!
Thanks
regards,
kyfdx
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Will this be an invoice? $44500-$4285=$40215
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I just pick up a IS 250 AWD with NAV/WOOD/HID, and this is what I'm paying for, 32 months Lease @ $450/mth and $2600 Upfront.
I live in Miami and I'm looking to get an IS 250 RWD / Automatic/ Premium Plus Package w/ 18" Wheels. The MSRP for the vehicle is $36,355 and Invoice is $31,740. With December to Remember coming up, I'm hoping to get the price down to $32,500 or at invoice. Do you think there's a chance?
I'd like to lease the car for either 24 or 36 months with $1500 Out the Door. What do you think the payment will be if I can get it down to about $32,500 or at invoice?
Thanks for the help Car_Man!
I really need some help with a 2007 IS 250 lease. I was offered a deal in the DFW area for a 15000 miles/year 36 month lease at $590 a month. This is on a IS 250 with Premium package including the nav and hands free package. The MSRP was 37772 and the dealer gave me $2600 off the MSRP. What concerns me is the money factor. They offered .0035 This seems extremely high. Is this the normal money factor or are they trying to screw with me. I have seen in the forum people talking about .00265 money factor for this car. Is this what i should demand for?
I can't tell you what sort of lease payment to expect through the "December to Remember" event until Lexus officially provides its dealers with its details. Please feel free to check back with me after the program starts, probably around November 22nd or so, and I will be happy to tell you exactly what the new program is like.
Car_man
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It appears that the "December to Remember" event has started. Any information about the new money factors?
Thanks!
I got a price for an IS250 AWD for the Decemeber to Remember sale of $483. My lease for the car I have now isn't up until March. So I would get the IS in the end of January (still with the december to remember deal) & I would have to give back my current car early (paying for 2 months even though I'm giving it back early).
Do you guys think I should get the lexus & give my car back early or just wait until March to get the lexus?
I'm a little worried that I'm not going to get the same money factor in March and I'm going to wind up paying more money.
Thanks!
36 month lease, 12k miles per year
Money Factor: .00265
Residual: 60%
Is this a good deal for the "December to Remember" event? I've read elsewhere that people were getting the .00265 money factor before "december to remember".
No, it won't. But you may be out of a lot of money. First, you call Nissan Motor Acceptance Corp to find out your pay off amount. Then you can either sell the car on your own or trade in your Maxima. You will lose out on the difference between you cap cost and the used car trade in value. It can be a few thousand dollars.
Car_man
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You can determine approximately how much it will cost you to get out of your current lease by comparing its purchase price to its value on the open market at this time. You should place a call to the bank that you are leasing your vehicle through to find out its exact price. Once you know exactly how much money it is going to cost you to buy your leased vehicle you need to compare it to its current value on the open market. You can find out approximately what your vehicle is worth by looking up its Edmunds.com True Market Value in the Used Vehicle Pricing section of this site. You also may want to stop by the following discussion: "Real-World Trade-In Values". Don't forget to check to see if you are still on the hook for your remaining lease payments. The difference between your leased vehicle's current value and how much it will cost you to buy it plus any remaining lease payments that you are obligated to pay will equal the cost of getting out of your lease right now. You may find that you are better off waiting until you are closer to the scheduled end of your lease to get another new vehicle.
Car_man
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I have a few questions, please excuse, just trying to increase my knowledge....
I assume you can haggle on the price of the car first, right?
Once you establish a price, then you go into all of the details of the lease correct?
This is where I get lost.....I have excellent credit, score is around 800.....what type of deal should I be looking for during this sales event? How many years is an average lease?
What kind of money is needed to put down on this purchase?
How many miles a year is average on a lease? Can you ask for more without paying more? What is a residual payment?
Last question, what advantage if any is there to leasing?
Thanks for all input, it is much appreciated!
It is not a wise move.
I live in the Las Vegas area where there is only one Lexus dealership. I have reasonable access to Southern CA and Utah so going to either place for a vehicle is not an issue. I currently drive a 2004 Infiniti G35 Coupe (Premium Package) with an expiring lease. I was considering a G35 Sedan although I have heard great things about Lexus so I test drove the IS 250/IS 350 models. I like the IS 350 more and would like to start negotiating. I do not believe that I want the nav and want upgraded seats with either the luxury or sport packages.
My questions are as follows:
1. Is the IS 350 superior to the IS 350?
2. What features are must-haves with the car?
3. With what dealers should I start negotiating for my lease and what should I be offering?
I realize that some of these are broader questions and hopefully as I learn more, I will get more direct with the questions. Any help you can provide would be most beneficial as I move forward with this process.
Thank you,
Eric
First quoted me MF of .00315(I have excellent credit) then lowered to .00250 saying the dealer buys the rate (probably not true) A few questions:
1. What is the MF being offered now through Lexus Fin. Service?
2. In Maryland, are sales tax added on the full sales price of the car.
3. I was quoted:
IS250 AWD w/ HID package
36,000
Residual value of 18,400
36 month lease with MF .00250
$563.00/month
No out of pocket except obviusly first payment.
Not sure if this included $600.00 acq. fee.
Is this a good deal. Some I spoke to said they thought this was the best I could get.
Also looking at BMW 328XI, I have a 330XI now and the IS250 seems a lot slower on pick up. I know the engine is smaller on the IS250 but are the cars comparable?
Thanks. I've learned so much from this forum.....
Forever grateful
I thought all along that I was gonna get a 335 until I used their Nav, and compared to the Lexus Nav, its like DOS to Window. But looking at some of thepost, either Lexus has horrible MF or BMW has super MF
In answer to your specific questions, yes the selling prices of leased vehicles are absolutely negotiable. Make sure to negotiate as low a selling price as you can on the new IS that you are considering leasing then have the dealer that you are working with calculate its lease payment using Lexus Financial Services' buy rate lease money factor.
Most leases are 24 to 48 months long. Generally speaking, the shorter your lease is, the higher your monthly payment will be. I usually prefer to lease for 36 to 39 months. This is a nice length because it is long enough that your monthly payment will be reasonable, but too long so you won't get sick of your vehicle.
Consumers can and should lease any vehicle that they are interested in without making any sort down payment. Consumers who make large down payments on vehicles actually risk losing them if their vehicle is totaled in an accident or stolen and never recovered. At lease signing, you will have to pay your car's first month's payment, Lexus Financial Services' $600 acquisition fee, and any required state taxes or fees. I believe that Lexus Financial Services will waive its security deposit requirement for consumers who qualify for its top credit tier, as you should judging by your credit score.
Leases usually allow 10,000 to 15,000 miles per year. Most consumers go with 12,000 or 15,000 miles per. Which option you choose will depend upon how many miles you typically put on vehicles. The higher your vehicle's mileage allowance is, the higher its lease payment will be.
Your vehicle's residual value is used to calculate the depreciation portion of your monthly payment. It is also used to calculate your vehicle's lease-end purchase option price.
Car_man
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