Lease Questions - Ask Here

earth777 · April 2004

Car_man,

I notice that I am paying taxes on the rent charge. IE. Payment for principal = 400, rent charge 50 ==> Tax = 8.25% * (400+50)

Is this right? I wonder why is it so since when you buy a car, you only pay taxes on the principal.

Also, wouldn't this make down payment an advantage on leases as you reduce your rent charhe (interest) and next sales taxes paid over the entire lease?

Thanks,
Earth

postnobills · April 2004

Hello again Car_man -
Seems like no-one wants to sell me an Audi A4 Cab, so can you please tell me the MF and residual on a BMW 330CiC in VA for 36 months and 12,000 miles? Also, are BMW dealers allowed to increase the "official" BMWFS rates - if so, do they just pocket the difference as additional dealer profit?
Thanks much.

pref · April 2004

Hello, Carman and everyone

I have an offer from the dealer, and I would really appreciate the feedback. It is $375/month for 36 months for EX-V6 Honda Accord Coupe, with $1187 up front (Bank fee of $595 and first month payment comprising majority of that). Negotiated price (with delivery charge) = 24600. The money factor I qualify for is 0.00204. They also agreed to cover the last payment ($300) on my current car. The monthly payment also includes tax (I live in NY). It seems like a good deal, as it comes out approximately to what I calculated myself from info here. Any feedback?

Thank you all

JoeSM · April 2004

Hey CarMan- You're the best! Can you help me out with mf/residual on a 48 month, 12k/yr lease on 6cyl Porsche Cayenne? Thanks for all your help.

kyfdx · April 2004

In most states, you are paying tax on the payment. Some leases break out how much is principal and how much is interest, but most don't state that anywhere on the actual contract you sign. The only amount that is available to the taxing authorities is the payment amount. That is the trade-off in not having to pay tax on the entire cost of the car.

Also, in most states, any downpayment on a lease is taxed upfront, so any tax savings by doing that would be minimal.

regards,
kyfdx

totcessp · April 2004

Hi Carman, I got an internet dealer quote for a Z4 3.0 Retail $45,245 for $43,745, Money Factor of .0012, residual 60%. 12k/36k. $494 (+tax) $2,500 down + inception fees). Is this good? Do the dealer still get the $1,500-2000 incentives? Thanks for your help, I hope to lease before April ends. Any feedback? Thanks again for your help. Thomas

figelwump · April 2004

Carman,

Could you also let me know the residual/money factor for leasing a 2004 acura TSX with navi (MSRP: 28,490, Expected neg. price: 27,500), with 15,000 miles and for both 3/4 year terms.

thanks

shane2 · April 2004

I'd like a sample monthly lease payment for a 2004 325i Sedan with Navigation in the Northern California area.
MSRP $34,070
Selling Price $31,500 (Euro Delivery).
30 month term
15K miles per year.
$0 down.

Thanks.

multiplechoice · April 2004

Is there a reason why you want a 30mo. lease? With european delivery, you will effectively "lose" two months of your lease period while your car is being shipped to the states. Also, with a 30 month lease you have already paid for the 3rd years tags. I would definitely go with a 36mo lease.

shane2 · April 2004

I plan to vacation in Europe in the summer but I want to return the car in winter when the following years models are out. A 30 month lease makes the lease return date fall where I want it. The other option is 42 months and I'm not sure I want the car that long.

seajester2 · April 2004

hi car man-
my lease is up on aug. 2004 and the car is in great condition and under the miles of the original lease -
the dealership (and others) are 'incentivising' to turn it in early towards another lease -I'm aware they have to guy it out - my question is...is there a benefit to turning in a lease early or should I just wait until Aug. and then turn it in - and then go negotiate a new lease??

fuzlbutt · April 2004

In Indiana, like many states, you pay tax on the monthly lease payment. Our tax rate is 6%.

307web · April 2004

2005 Chrylser 300C without navigation.
36 months, 12K miles per year and $0 cap reduction.

MSRP $36315
Selling Price $35000.

2004 Acura TL automatic with navigation.
MSRP $35195
Selling price $35000.

Same mileage and terms.

Also, what should total drive-off fees be for each?

Thanks.

infinitimn · April 2004

In NJ the sales tax is on the depreciation only not interest.

eagleeye3 · April 2004

Dear Car Man & Others

Attempted to lease a 325I today, but ended up waliking out because it was the 1st dealer I negotiated with and had a feeling in the back of my mind I could do better. Felt that way because of all the deals I've read about on the leasing forum over the last 60 days or so. I wanted to get opinions from Car Man and others re: the deal.

The deal was for $1,785 under MSRP (Premium, Sport, Xeon, Leather, Auto), but the MF was .0016 instead of .0014 (Sec Dep. waived). Dealer admitted MF higher to make profit (785 credit score). Translated into an extra $14/mo (x 36 mos) incl. tax - based on my calculations.

MSRP = 37,195
Cap Cost = 35,935 (35,410 + 525 Acq fee)
MF = .0016
Res = 63% (3 YR/12K)

Asked for them to meet me at .0015 - but dealer would not move, "we need to make some money on the deal" response. Just seemed like I could do better since $1,500 off MSRP appears to be the "worst" someone should accept and NOBODY was on the lot looking at cars (on a Sat. afternoon no less). I should note that the car was not on the lot (would trade another dealer or order), but was perfectly equipped (incl. color). What do you think?? Plan to visit other dealer tomorrow (Sunday). Did I blow it?

multiplechoice · April 2004

From seeing others post, the dealers in San Diego seem to consistently deal less on price than dealers in the Los Angeles area. If you are willing to drive a bit, then look to the LA area. They might even have the exact vehicle you are looking for. Try shooting an email offer to several dealers.

CarMan@Edmunds · April 2004

You're welcome, pref. AHFC's 39 month base lease money factor should be exactly the same as the factor that I provided you with earlier. This car's 39 month residual values surprisingly are 4% lower than its 36 month residuals.

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CarMan@Edmunds · April 2004

Greetings indecisive4mos. When one leases a new vehicle, they need to pay close attention to the two numbers that dealers have the ability to make money on. These numbers are the selling price of the vehicle and its lease money factor. The selling prices of leased vehicles can be negotiated, just as if you were paying cash for them. When one has decided what model they want to lease, they should do some research here on Edmunds.com to find out how much money they should pay for it. Look up the Edmunds.com True Market Value for the exact Volvo S60 that you want in the New Vehicle Pricing section of this site. This number represents a fair selling price for this car.

Now that you know about how much you should pay for this car, selling price-wise, you need to find out what sort of lease money factors Volvo is providing on it right now. The lease money factor essentially represents the interest rate that you are paying to lease the model that you want. Dealers are allowed to mark-up banks' base lease money factors to add back-end profit to deals without consumers knowing that they are doing so. I am usually able to give consumers a good idea of their car or truck's current money factors if they tell me the exact model that they want, how long they plan on leasing it for, and how many miles per year that they need to be able to drive. In fact, if you tell me this car's full MSRP and selling price I can also work up a sample lease payment for you that you can use to shop around.

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beenhad55 · April 2004

I was an idiot and they saw me coming. I signed a lease because the monthly amount for purchase was over $500.00, more than I wanted. Of course the lease amount was just over half that. Now when I check the car companys site and put the amount in the monthly purchase price is over $150.00 less than they quoted me. So needless to say I am not happy. NOW I find out that the car does not have a major option that I was told was in the car and was one of the reasons I was paying more that I wanted to! They did not give me the window sticker and when I went back the gave me a print out with the options but no prices. That is when I discovered this option is not in the car. The dealer says he will work with me to figure this out. Does the fact that I did not get the car I was told I would null and void the lease?

CarMan@Edmunds · April 2004

Hello figelwump. Let's take a look at the lease programs for the cars that you are interested in. If you were to lease a 2004 Honda Accord EX-L V6 with navigation through American Honda Finance Corp. this month for 3 years with 15,000 miles per, its base lease money factor and residual value should be .00146 and 54%, respectively in all states except for New York. Honda's special lease money factor is not available for 4 year leases, so if you were to lease this car for 4 years with 15,000 miles per, its base money factor would increase to .00190 and its residual value should be 45%.

If you were to lease a 2004 Acura TL with navigation through AHFC this month for 3 years with 15,000 miles per, its base lease money factor and residual value should be .00210 and 54% in every state except for New York. The numbers for an otherwise identical 48 month lease of this car should be .00190 and 48%.

Last but not least, if you were to lease a 2004 BMW 325i through BMW Financial Services this month for 3 years with 15,000 miles per, its base lease money factor and residual value should be .00125 and 61%, respectively. the numbers for an otherwise identical 4 year lease should be .00255 and 47%. The 4 year lease money factor is so much higher because BMW's special lease money factors for this car are only available for leases of up to 42 months in length.

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CarMan@Edmunds · April 2004

Figelwump, you should be able to lease any of these cars without putting any money down. In fact, it is in your best interest as a consumer to put as little money down as possible when leasing. All you will be required to pay at lease signing are your car's first month's payment, a lease security deposit of that payment rounded up to the nearest $25 or $50 increment, a lease acquisition fee, and any sort of taxes and registration fees that are not added into your car's capitalized cost.

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CarMan@Edmunds · April 2004

Hi freddo. Vehicles' residual values gradually decline as the model year progresses. In some instances, leftover vehicles' residual values do experience a slightly steeper drop when a the next year's model is introduced. There is a decent chance that BMW's residual value for the X3 will drop a few points in May. This may or may not have a negative impact upon its lease payments. Normally a drop in residuals makes vehicles more expensive to lease, however when vehicles' residual values go down automakers often drop their money factors enough to keep their payments at the same level. It is difficult to say for certain whether BMW will lower its money factors for the '04 X3 next month, but there certainly is a chance that it will.

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CarMan@Edmunds · April 2004

Wow, you have two leases that are about to expire, bmwpair. You get to experience the joy of getting a new vehicle twice in the same month

. I would be more than happy to work up a couple of sample lease payments for you on the vehicles that you are interested in. According to my calculations, if you were to lease a 2004 BMW X5 4.4 with an MSRP of $59,700 and a selling price of $58,700 through BMW Financial Services this month for 3 years with 12,000 miles per, your zero down, pre-tax monthly lease payment should be right around $870 or so. If you were to lease a 2004 BMW 745i with an MSRP $79,600 and a selling price of $76,765 through BMW FS this month for 3 years with 15,000 miles per, its zero down, pre-tax monthly payment should be right around $1,063.

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CarMan@Edmunds · April 2004

Hey Chris. I am sorry to say that I have no idea how the lease payments that are available here on Edmunds.com are calculated. I am only involved with the Town Hall. In the past, I have found that the sample lease payments that are calculated on this site are not very accurate. They often do not seem to be based upon manufacturers' actual lease programs, but instead seem to be calculated based upon some average residual value like the ones that ALG provides and an average interest rate. If you let me know what this car's full MSRP and selling price are, I would be more than happy to calculate a sample lease payment on it for you using Honda's actual lease program. Unfortunately, there is no way to tell exactly how long a vehicle has been sitting on a dealer's lot. You should be able to find out when the car that you are interested in was produced though. Many cars have this information in their door jam. The longer a go it was built, most likely the longer your dealer has had it.

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CarMan@Edmunds · April 2004

I'm not surprised that you are having trouble finding a dealer that will provide you with a significant discount on an Audi Cabriolet at this time, postnobills. Dealers want to get every penny they can for convertibles as people begin to get spring fever. In fact, BMW recently reduced its lease support on its 3-Series convertibles in anticipation of increased convertible demand. Here is the latest info that you're looking for. If you were to lease a 2004 BMW 330Ci Convertible through BMW Financial Services this month for 3 years with 12,000 miles per, its base lease money factor and residual value should be .00190 and 60%, respectively. BMW dealers are indeed allowed to mark up BMW FS' base lease money factor. Doing so enables them to add additional back-end profit to deals, usually without consumers knowing that they have done so.

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CarMan@Edmunds · April 2004

Hey pref. I would be more than happy to calculate a sample lease payment on the car that you are interested in for you, so that you can compare it to the quote that you have already received. However, in order for me to do so, I need to know this car's full MSRP first. I can tell you that your dealer is using American Honda Finance Corp.'s base lease money factor to calculate this car's lease payment and that it is charging you AHFC's base lease acquisition fee. These are good things because they mean that your dealer is not trying to add any additional hidden profit to your deal. As long as you are happy with the selling price that you have been quoted and the payments work out, I don't see any reason not to go for it.

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CarMan@Edmunds · April 2004

Thanks JoeSM. According to the latest info that I have seen, if you were to lease a 2004 Porsche Cayenne V6 through Porsche Credit this month for 4 years with 12,000 miles per, its base lease money factor and residual value should be .00230 and 49%, respectively.

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CarMan@Edmunds · April 2004

Hi totcessp. BMW's current base lease money factor for '04 Z4 leases of up to 42 months is currently .00100. You were quoted a factor of .00120. This means that either you are having your vehicle's lease security deposit or acquisition fee waived in exchange for a slight increase in BMW's base factor or your dealer is marking up the base rate in an effort to add additional back-end profit to your deal. Make sure that the latter is not happening.

Another thing that I noticed about your deal is that you are putting $2,500 down. Even though BMW's current advertised lease payments on most of its cars are based upon the assumption that consumers put $2,500 down, you should be able to lease any car that you want without any money down and it is in your best interest to do so. I say this for two main reasons. The first is if your car is totaled in an accident or stolen during your lease, your insurance company pays off the bank that you are leasing it through and your down payment essentially disappears. The other main reason is that down payments on leased vehicles do nothing to reduce their lease-end purchase prices. This means that your Z4's lease-end purchase price will be exactly the same, regardless of weather you put $2,500 down or absolutely nothing at all down.

When negotiating this car's capitalized cost, make sure to keep in mind that the dealer cash that BMW is providing on it may be used in conjunction with its special lease program. Negotiate as low a selling price as possible and then make sure to have the dealer subtract the cash.

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CarMan@Edmunds · April 2004

Hello figelwump. If you were to lease a 2004 Acura TSX with navigation through American Honda Finance Corp. this month for 3 years with 15,000 miles per year, its base lease money factor and residual value should be .00210 and 57%, respectively in all states but New York. The numbers for an otherwise identical 4 year lease should be .00190 and 49%.

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CarMan@Edmunds · April 2004

I would be more than happy to calculate a sample lease payment for you, shane2. According to my calculations, if you were to lease a 2004 325i Sedan with navigation with an MSRP of $34,070 and a selling price of $31,500 through BMW Financial Services this month for 30 months with 15,000 miles per, your zero down, pre-tax monthly lease payment should be right around $368.

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CarMan@Edmunds · April 2004

Hi seajester2. Unless your vehicle's manufacturer is running a special early lease termination program it usually is not in your best interest to get out of your lease prior to its scheduled end date. This is because if you owe more money on your leased vehicle than it is worth, your dealership is going to have to pay money out of its own pocket to get you out of your deal. This cuts into their profit, and ultimately into your ability to get a good deal. If your vehicle's manufacturer is running an early termination program, then you might as well get out of your deal now provided that you are interested in getting another one of its products.

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CarMan@Edmunds · April 2004

Hi 307web. Interestingly enough, given the fact that this is such a new model, DaimlerChrysler is actually providing some relatlively attractive lease money factors on the 2005 Chrysler 300 right now. It just enhanced its lease program on this car a few days ago. According to my calculations, if you were to lease a 2005 Chrysler 300C with an MSRP of $36,315 and a selling price of $35,000 through Chrysler Financial this month for 3 years with 12,000 miles per, your zero down, pre-tax monthly payment should be right around $541.

If you were to lease a 2004 Acura TL with navigation with an MSRP of $35,195 and a selling price of $35,000 through American Honda Finance Corp. this month for 3 years with 12,000 miles per, your zero down, pre-tax monthly payment should be right around $513 in all states except for New York.

At lease signing, you would owe each car's first month's payment, their security deposits of that payment rounded up to the nearest $25 increment, and an acquisition fee of $500 for the 300C and $595 for the TL.

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CarMan@Edmunds · April 2004

Hi eagleeye3. I personally would never lease a vehicle from a dealer if I knew that they were marking-up its base money factor. There are tons of dealers out there, especially in California. I am sure that you will be able to find one that will lease you this car without marking-up its factor is you shop around a little bit.

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CarMan@Edmunds · April 2004

I am sorry to hear about your unpleasant experience, beenhad55. Regardless of what your dealer told you the options were on your vehicle, if your lease contract is for the exact model that you drove off in your lease is valid. I suggest that you go back to your dealer ASAP and try to work something out with the sales manager, general manager, or owner. The longer you wait, the harder it will be for you to get out of this deal. There is a good chance that they will be willing to work with you if they misrepresented the options that your car came with. I hate to say this, but it is extremely important to closely inspect any vehicle that you purchase or lease prior to signing any finance agreements. Doing so prevents any confusion about the options that your car or truck has and prevents consumers from getting damaged vehicles.

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ponytrekker · April 2004

Your instincts are right, you can do better.

bmwpair · April 2004

Car_Man,

Thanks for your help. Please tell me the money factors (through BMW Financial Services) and residual car values you used to calculate the lease payments on the X5 4.4 and 745i. I will use this information for ammunition on signing day! Also, where can I get accurate money factors in the future? Will BMW FS give me this information over the phone?

figelwump · April 2004

thanks carman, you are a real resource for anyone thinking of leasing! just a thought, it may help (others and yourself) to centralize your knowledge on leasing and current leasing rates on a website... could help reduce your load in responding to everyone's queries (many of which i'm sure are repetitive).

pref · April 2004

Greetings, Carman.

The MSRP on the car is 26,500. The dealer said that the $440 Destination charge should also be included in the MSRP, so, it is $26,990. I am also under the impression that he is not trying to pull anything extra, and am inclined to accept. Just would be more comfortable with a nod of approval from someone knowledgable

rroyce10 · April 2004

....... While you wait for Carman to kick-up some figures on your next lease, you need to be doing a little negotiating on the "cost" of that new "7" ..

Dealers have them in great abundance (or, they have been waiting for their inventory to dwindle), folks aren't breaking down any doors to purchase and/or lease them, so you should be able to get one for "in and around around" $1,500ish over invoice, that should save you a few bucks ..

Terry.

CarMan@Edmunds · April 2004

You're welcome, bmwpair. For the 2004 BMW X5 4.4, I used a lease money factor and residual value of .00215 and a residual value of 58%. For the 2004 BMW 745i I used a money factor of .00190 and a residual value of 59%. BMW Financial Services does not provide consumers with information on its current lease program. If you call them, they will tell you to contact your local BMW dealer. In fact, I am not aware of any source that provides this sort of information to the general public. If you have any questions about current lease programs, your best bet is to ask me and I will try to help you out.

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CarMan@Edmunds · April 2004

You're welcome, figelwump.

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CarMan@Edmunds · April 2004

Good advice, Terry. Thanks for the input.

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CarMan@Edmunds · April 2004

Hey pref. Yes, vehicles' destination charges are included in their MSRP for the purpose of calculating lease payments. OK, according to my calculations, if you were to lease a 2004 Honda Accord EX-V6 with an MSRP of $26,990 and a selling price of $24,600 through American Honda Finance Corp. in New York this month for 3 years with 15,000 miles per, your zero down, pre-tax monthly payment should be right around $338 with a security deposit waiver.

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pref · April 2004

Greetings Carman,

$338 plus NY tax comes around $365-370, so 375 is fair enough, considering they are also paying off a month on the previous car. Last question (hopefully

) - this doesn't include the $595 fee required upfront, does it? I am going to try to incorporate it into the monthly payments, but right now, it is part of the $1200 I am expected to pay upfront.

mbarros · April 2004

Hi Carman,

I am looking to lease an Infiniti FX35 and would like to find out the residual and money factor on the following scenario:

3 years, 15,000 miles
In NY

FX35 w/Touring package - MSRP=39,340, agreed price 36,100

FX35 w/touring and Technology - MSRP=43,640, agreed Price=39,900

Thanks

john888 · April 2004

Hey Carman, pls advise lease money factors and residual values for an '04 X5 for 36 month lease?
Tks.

CarMan@Edmunds · April 2004

Yep, pref, the lease payment that you were quoted looks about right to me. Since you are having your lease security deposit waived, at lease signing you will only be required to pay this car's first month's payment and AHFC's lease acquisition fee of $595. Individual dealers do not have any authority to waive banks acquisition fees. You can get them to add this fee to your vehicle's capitalized cost, but doing so will either increase your lease payment or further eat into the dealer's profit.

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CarMan@Edmunds · April 2004

Hi mbarros. Let's take a look at the current lease program for the vehicle that you are interested in. If you were to lease a 2004 Infiniti FX35 AWD through Infiniti Financial Services this month for 3 years with 15,000 miles per, its base lease money factor and residual value should be .00174 and 52%, respectively.

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CarMan@Edmunds · April 2004

Hey john888. According to the latest info that I have seen, if you were to lease a 2004 BMW X5 3.0 through BMW Financial Services this month for 3 years with 15,000 miles per, its base lease money factor and residual value should be .00215 and 56%, respectively.

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john888 · April 2004

Thanks Carman! What would the #'s be for 10k/yr and 12k/yr 36 month leases? Thanks again!

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