Lease Questions - Ask Here

CarMan@Edmunds · October 2004

Hello m3by2003. Unless you told the bank that you are leasing your truck through how many miles it has on it, it is highly unlikely that they know. It is usually in one's best interest to give the bank that they are leasing through the impression that they are right at their mileage limit if they want to purchase their leased vehicle. If one is way over their allotted mileage, their bank may want their excess mileage penalty. If they are way under their allowed mileage, the vehicle is more desirable for the bank.

It is very possible that the bank that you are leasing your car through would indeed rather have you purchase it, rather than getting it back, especially if they have ceased leasing automobiles. Whether or not that means they it will be willing to significantly lower your vehicle's selling price is difficult to say.

In order to find out approximately what your truck is worth on the open market right now, look up its Edmunds.com True Market Value in the Used Vehicle Pricing section of this site. You may also want to stop by the following discussion that appears right here in the Smart Shopper Forum: "Real-World Trade-In Values". One of our most knowledgeable community members, Terry, frequents that area. He is usually kind enough to give other community members his opinion of their vehicles' values if they provide him with a detailed description.

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CarMan@Edmunds · October 2004

You're very welcome, desgnconcpts. Let me know if you have any other questions.

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CarMan@Edmunds · October 2004

I have had an opportunity to take a look at the lease programs for the vehicles that you are interested in, mzinzi. According to the latest info that I have seen, if you were to lease a 2005 Subaru Legacy 2.5 GT Ltd. Sedan through its captive finance company right now for 36 months with 15,000 miles per year, its base lease money factor and residual value should be around .00080 and 51%, respectively. The numbers for otherwise identical 39 and 42 month leases of this model should be .00080 / 49% and .00100 / 47%. If you were to lease it with only 12,000 miles per year, its residual values would increase by 1% for 36 and 39 months and by 2% for 42 months. I believe that Subaru is providing $1,500 lease cash on this model that will help you to negotiate a lower capitalized cost.

If you were to lease a 2005 Audi A4 1.8T Quattro Sedan through Audi Financial Services right now for 36 months with 15,000 miles per year, its base lease money factor and residual value should be .00065 and 58%, respectively. The numbers for an otherwise identical 39 month lease of this car should be .00065 and 55%. If you were to lease it with only 12,000 miles per year, its residual values would be 2% higher.

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CarMan@Edmunds · October 2004

Unfortunately, I can not say that I am surprised njl. Honda dealers were getting tons of money for the previous generation Odyssey for years before it finally cooled off. I am sure that they are going to get all that they can for it now that the new version is out. It will eventually cool off, but not in the immediate future. If you feel as though the new Odyssey is too expensive, you may want to consider the Toyota Sienna. It was redesigned not that long ago and is a very nice van that can be had for a lot less than the '05 Odyssey.

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CarMan@Edmunds · October 2004

I have seen what this car's lease program is like and would be more than happy to help you out, a2j. Thanks for the reminder. If you were to lease a 2005 Acura TL without navigation through American Honda Finance Corp. right now for 36 months with 15,000 miles per year, its base lease money factor and residual value should be .00245 and 60%, respectively. The numbers for an otherwise identical 39 month lease should be .00245 and 57%.

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CarMan@Edmunds · October 2004

Greetings Tony. According to the latest information that I have seen, if you were to lease a 2004 BMW 545i though BMW Financial Services right now for 3 years with 12,000 miles per, its base lease money factor and residual value should be .00150 and 60%, respectively. If you were to enter into an otherwise identical lease of the 2005 version of this car, its numbers should be .00235 and 62%.

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CarMan@Edmunds · October 2004

Let's work up a sample lease payment on this car for you and see what we come up with, coolhandluke. According to my calculations, if you were to lease a 2004 Infiniti G35 Sedan 2WD with a full MSRP of $36,560 and a selling price of $33,500 through Infiniti Financial Services right now for 3 years with 12,000 miles per, its zero down, pre-tax monthly payment should be right around $421. Unless IFS was willing to negotiate this car's lease-end selling price, it would cost you 60% of its full MSRP, or $21,936 to purchase at the end of this lease. It is difficult to predict if this price is higher or lower than what this car's actual value will be 3 years from now. If I had to make an educated guess, I would say that its residual value is a little high, but this isn't a bad thing because it makes this car's lease payment lower than it would be if its residual value was lower.

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CarMan@Edmunds · October 2004

Hi jk1971. The vast majority of leases are what is known in the industry as closed-ended. This means that your payment is based upon an estimated future value for the vehicle that you are leasing and it will cost you exactly that much to purchase it at the end of your term. Open-ended leases do not have a predetermined lease-end purchase price. In fact, I can not even remember the last time that I heard about anyone entering into an open-ended lease.

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CarMan@Edmunds · October 2004

Hello Brian. I would be more than happy to give you my opinion on how much you should pay per month to lease this truck. However, in order for me to do so, I need you to provide me with its full MSRP. Once you do, I will let you know what I think. Talk to you soon.

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CarMan@Edmunds · October 2004

No problem, infinitimn. The money factor that you were quoted, .00075, is equivalent to an interest rate of around 2%. Since, Ford Motor Credit's base lease rate is 1.5% for this truck and term in most areas, there is a 0.5% difference there. It is difficult to say why this is the case, but your dealer may indeed be marking-up the lease rate slightly if they are allowed to do so.

As far as the Mercury Mariner goes, if you were to lease a 2005 Mariner Luxury 4WD through Ford Credit right now for 3 years with 10,500 miles per, its base lease rate should be 5.25%. When negotiating your lease on this model, keep in mind that there is $1,000 lease cash and the $500 loyalty cash on it that will help you to negotiate a more attractive capitalized cost.

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CarMan@Edmunds · October 2004

Thanks for the reminder, David. Here is the information that you are looking for. If your wife was to lease a 2004 BMW X3 2.5 through BMW Financial Services this month for 3 years with 15,000 miles per, its base lease money factor and residual value should be .00070 and 57%, respectively. The numbers for an otherwise identical lease of a 2004 BMW 325xi should be .00220 and 56% for the sedan and .00140 and 51% for the wagon. BMW is not currently providing any dealer cash on the '04 X3, but it does have $1,500 dealer cash on the '04 325xi wagon and $1,200 on the '04 325xi sedan that will help you to negotiate an attractive capitalized cost.

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CarMan@Edmunds · October 2004

You're welcome, jack15. At lease signing, most banks require lessees to pay their vehicle's first month's payment, their down payment (which in this case would be $0), a security deposit that is equivalent to the monthly payment rounded up to the nearest $25 or $50 increment, and a lease acquisition fee which in Lexus Financial Services' case is $600.

Many banks, LFS included, allow consumers top put additional security deposits down when leasing. Each additional deposit will lower the money factor that is used to calculate their vehicle's monthly payment by a certain amount. This is a much better alternative to making a down payment when leasing if one has the money and wants to lower their payment, because assuming that there are no lease-end penalties one gets all of their additional security deposits back at lease-end.

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eegs2k · October 2004

Here is a quick reminder on the Wrangler Unlimited Lease.
Thanks,
eegs2k

infinitimn · October 2004

Thanks, Car_man.

jack15 · October 2004

Thank you Car_man. Sounds like something we should look into. BTW, when is that additional money at risk ?

tdevane · October 2004

How much should a 36 month lease, 15k miles, on a limited V8 with selling price of $36288 run me a month?

slocko · October 2004

I just helped my sister negotiate a lease for 2004 Pilot EX-L 36 months/36k for $370 a month plus tax with no money down and no out of pocket.

And it included running boards and cargo mat.

To achieve this I had to get two dealers going against each other. It was an awesome experience.

What I had her do was negotiate with one dealer. When she had gone as far as she could, I had her stop by another dealer and present them with the numbers and tell them she was on the way to pick up her vehicle. And then from that dealer call the other dealer and a bidding frenzy broke out.

Remember that Honda wants to clear this vehicle and any dealer that has them on the lot will deal to get rid of them. In this case they ended up going $200-300 below invoice on the car.

The original dealer's first offer was $359 for 48 months with nothing throw in. So you see how much room they had to maneuver to come down.

bigbutr · October 2004

Good point, Mathias. I stand corrected. There is truly no way to get out of a deal, just make the painful experience less to deal with. I think if we can save one person from this traumatic experience, we've done a great service.

Steve

slocko · October 2004

Here are the numbers I have been quoted from Honda finance for Touring Nav:

.00275 money factor
.56 residual value

This is for 36 months/45k.

This is from a dealer with no vested interest in selling me the van. So I am sure this probably represents the bottom numbers.

With 1k off msrp the monthly payment comes out to $622 without anything rolled in.

This is one expensive mini-van. I think I'm about the cancel my order and go with another dealer that is willing to sell for 1k over invoice.

njl · October 2004

Thanks Slocko...

Expensive indeed. I'm sure there will be some initial demand for the latest thing in a minivan, but it surely will weaken.

I can't find a resource that has the Invoice price. Do you know what the invoice is for the Touring with NAV/DVD?

kyfdx · October 2004

slocko..

You did a great job for your sister... I hope she realizes what a good deal that is..

slocko · October 2004

Thanks. She does.

I put together a spreadsheet that looked at leasing as a finance deal, but without paying interest on the residual. The reasoning is that you shouldn't have to pay interest on the residual, only the depreciating portion.

Using the formula I arrived at $375 at 5 percent loan. So to me this was the best deal she could get. Since I know that leasing companies believe in adding the residual to the interest calculations and on top of that believe that the interest rate should be higher than a regular loan, I didn't think she would get close to that figure. I was surprised when they beat it by 5 bucks and threw in running boards and a cargo mat. The keys where that it's a model on the way out and that the dealer had many in stock.

slocko · October 2004

There is no such thing as a Touring Nav without DVD.

The invoice prices are out there. I can't post the link because of the policies of this board.

But the difference is 4k on the touring.

So figure about 34k for the invoice on the Touring.

I have just received news that my van is in. So now I have to decided if to say no and wait another month for the offer of $950 over invoice. I just calculated the difference over 36 months on the lease and it's $2500 bucks.

So do I give in to the devil on my shoulder that says go pick up my van today, or do I listen to the angel that says $2500 is worth waiting a month or so.

My van is a Touring Nav, Silver with black interior. I'm in love

kyfdx · October 2004

Well.. that is an interesting theory.. but, you are borrowing the whole truck, not just the part you are using... The bank gives the dealer the full selling price, so in effect you are borrowing that entire amount... and only paying back part of the principal.

But, supply and demand triumphs over all.. I'm glad you got a good deal. It is always nice to do better than you think you will.

regards,
kyfdx

njl · October 2004

I meant "with"... sorry.

I just received a Touring quote from a dealer in western NJ for $719/month (includes tax). Obviously, I laughed. I can buy it for that!

A decent price ought to be ~$550/month with the data I've received.

No dealer is ready to do that yet. Now...if oil goes to $60/barrel and the word recession starts to get thrown around...dealers may be a little more eager in December.

jessicao · October 2004

Hi, I currently own a 2003 Lexus RX300, but am looking to lease a 2004 RX330 to lower my monthly payments. I am not upside down, and owe about $4-5k LESS than what a dealer would realistically offer for a trade-in amount. My question is: Would I have an upper hand in negotiating if I owned the car & had title as opposed to still owing on it? Also, how would this work at the dealership? Would they cut me a check for the trade-in value or expect me to put the entire amount down on a new lease?
Thanks for any help!

njl · October 2004

Car_man do you have the MF and residual on this vehicle for 36 month 15K/year? I will probably price this minivan with the HE package. Also, I'm in northern NJ.

As always, thanks.

slocko · October 2004

That is what I thought at first, but then I thought, if I finance the vehicle the bank is giving the dealer the full price too. The bank has no guarantee that I will stick with entire payment plan. I can prepay the entire thing at anytime and the bank will cease to get interest payments from me.

So why should a lease be any different? Why should I pay a higher interest and also pay for the portion I am not going to use? At least with a lease they are guaranteed interest for the life of the lease.

Anyway, I don't expect to be able to get them to see it my way, but it gives me a starting point to begin negotiations and negotiate bottom up instead of bottom down.

With my spreadsheet I can quickly see how much the lease is really costing me viewed through my logic

slocko · October 2004

I know a dealer 4 hours from Central Jersey in Ma who is willing to sell for $950 over invoice.

So if you interested, email me and I will give you his info.

They have a Touring Nav Slate/Olive with a production date of 10/23.

liannell · October 2004

Hi Carman, Can you provide October lease terms for the 2004 Infiniti G35 sedan (the leather automatic model)? I'm looking for 15k miles/yr, deciding between a 3 or 4 yr lease. Please provide money factor and residuals. And a question about leasing a 2005 model (which is not yet available, I know)...holding lease length and mileage equal, shouldn't the residuals be higher on a 2005 model year lease? Thanks for your help!

hipreck · October 2004

Carman - do you have numbers for the 2005 Jeep Grand Cherokee yet? 15K/3 YR? Thanks!

jessicao · October 2004

Hi, I currently own a 2003 Lexus RX300, but am looking to lease a 2004 RX330 to lower my monthly payments. I am not upside down, and owe about $4-5k LESS than what a dealer would realistically offer for a trade-in amount. My question is: Would I have an upper hand in negotiating if I owned the car & had title as opposed to still owing on it? Also, how would this work at the dealership? Would they cut me a check for the trade-in value or expect me to put the entire amount down on a new lease?
Thanks for any help!

chevyfan88 · October 2004

Thanks Car_man. I'm in Michigan so that would be the North Central region. Just to remind you I was looking for the residual and mf numbers for an LT AWD (36/15000) and was also hoping you would provide me with the same information on the LS FWD and AWD. Thanks again for your help.

slocko · October 2004

Generally they say you should not put money down on a lease. You could lower your payment by simply selling your trade-in at any dealer and then using that money to make future lease payments. In the end it works out to about the same thing.

It doesn't matter to the dealer if you owe money or not. They will simply call the bank to find out how much you owe, you then fill out a power of attorney form, and they pay off the balance. Anything left over they will use to work your lease deal.

Even though I am not 100 percent sure, I do think they would simply cut you a check if you don't want to use the trade-in for leasing or want a portion of it back.

My advice is take your car to the used car dealership and simply ask them how much it's worth. Compare it to the blue book value and Edmund's TMV. Then you will have an idea of how much it's worth without having to worry about leasing on the spot.

Whatever you do, do not tell the dealership you are looking to pay x amount a month on the lease without fully knowing how leasing works. If you do that, the finance guy will eat you alive. He will just manipulate the numbers to meet the payment figure you are looking for.

marshallcpa · October 2004

Car_Man:

In post #13774, you provide some information on this vehicle. I am looking at an Aero, and I have a few follow-up questions.

My local dealer is small, and they only have one Aero on the lot, in an Automatic (I want a manual), and they're trying to push it on me. They are telling me that the $1,000 "Aero Bonus" you refer to in #13774 only applies to cars that they take from the Port, to which my response is, well then get me one with a manual, and sell the Automatic to someone else. Can you confirm if there are any stipulations for this additional cash?

Also, my dealer says that the residual for the manual is higher (52% for 36/15k) but the money factor is .0022, resulting in a significantly higher payment per month. Can you provide any information on this? A manual isn't worth that much to me.

Finally, they say that Saab credit charges a $595 "assignment fee" in addition to the acquisition fee, which another dealer has already told me is bogus, but if you have the information, could you confirm this?

By the way, I am able to get GM supplier pricing through a family member, so I'm already able to get these cars cheap (at or below invoice before the incentives) and while the dealer may get some money through the GM program, they certainly are not making a killing on the car. I'm in a small town, and I might just have to take a trip to a city to set a straight up deal.

Thank you in advance for your assistance with these questions. This is a great service that you provide here, particularly when there are so many ways for dealers to make back-end profit in a lease transaction. I've got a 9-3 linear manual for the day, and I must say that for the price on the lease (after all of the incentives), they are nice cars.

Brian

CarMan@Edmunds · October 2004

Hey mia10. Capitalized cost reduction is basically another name for a down payment. As I have mentioned in earlier messages, I always advise consumers against putting money down when leasing. You should try to lease this car without making any sort of down payment.

When one backs out the down payment that the dealer wants you to make and the $3,000 dealer cash that BMW is currently providing on this car, you are really only receiving a discount of around $1,200 on this car. I don't know exactly what the market is like for this car in your area, but in places where there is a decent amount of competition for your business, I would think that one would be able to easily negotiate at least another $500 to $750 off of this vehicle's selling price.

I just calculated a sample lease payment on this car for you and using the prices that you were quoted, the payment that I came up with is right around the one that the dealer told you. So from that perspective this is a good deal, I just feel as though you may be able to negotiate a slightly lower price.

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CarMan@Edmunds · October 2004

Hello bkln. If you are looking for inexpensive, reliable transportation, the Honda Civic definitely fits the bill. The Civic and the Corolla are two of the best cars out there for the money, in terms of leasing.

You never mentioned the selling price of the car that you are interested in leasing. This is an important number for you as a consumer to know for two reasons. First, the selling prices of leased vehicles can be negotiated, just as if you were paying cash for them. Without knowing the price of the car that you want to lease you don't know how good a price you are getting it for. The second reason is that one needs the selling price of a vehicle that they want to lease is that it is necessary to calculate its lease payment. I would be more than happy to work up a sample lease payment on the car that you are interested in for you if you let me know what its selling price is.

Since you are new to the world of leasing, you may want to check out the following informative articles that are available here at Edmunds.com prior to doing any more negotiating: 10 Steps to Leasing a New Car and Calculate Your Own Lease Payment.

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CarMan@Edmunds · October 2004

Hi slotmaker. It is obviously too late to change anything about your lease now, so don't be too hard on yourself. If it turns out that you could have done better, just use the information that you gain from analyzing this deal to help you the next time around.

When negotiating a lease on a car or truck it is important to remember that the selling prices of leased vehicles can be negotiated, just as if you were paying cash for them. According to your post, the full MSRP of the IS 300 that you leased was $33,449 and its selling price was $29,700. If by selling price you meant the capitalized cost that was used to calculate your lease payment, then I personally feel as though you were not given a large enough discount. After backing out the down payment that you made, you essentially received $1,000 off of the price of a car that has a spread of over $3,500 between MSRP and invoice and that consumers are usually able to negotiate lower selling prices on.

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CarMan@Edmunds · October 2004

Hey Chris. Unfortunately for your friend's sake, Ford's lease program on the 2004 F-Series is not very attractive. If one has to use its standard lease program to ger this truck, the interest that Ford Credit is charging is high enough that your friend may be able to lease one for less by going through an independent banks. In fact, Ford has stopped leasing most of its 2004 models altogether. I have not seen any lease rates being offered on it on any F-Series trucks larger than the F-150.

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CarMan@Edmunds · October 2004

Hello jeans1. You are leasing your 4Runner through a bank, most likely Toyota Financial Services, not your local dealer. Your local dealer has absolutely nothing to do with your lease, other than the fact that it sold the truck that you are leasing to the bank that you are leasing it through. Individual dealers do not have any authority to get consumers out of leased vehicles. The salesperson who you spoke with actually did a very good job at explaining your situation to you. Consumers who want to get out of leased vehicles early, must purchase their vehicles from the bank that they are leasing through. In addition to paying their vehicle's quoted purchase price, their bank may also want them to make all of their remaining lease payments on it. As you can see, it will likely be very expensive for you to get out of your leased truck two years before the scheduled end of your deal.

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CarMan@Edmunds · October 2004

Greetings tjm8. In order for you to trade in a leased vehicle to a dealer, the dealer that you are getting your new vehicle from must purchase it from the bank that you are leasing it through. How much this costs you will depend upon the difference between your leased vehicle's purchase price plus the sum of your remaining payments minus the amount of money that your dealer is willing to give you for your trade. Most likely, the total cost of getting out of your lease will exceed the money that this dealer is willing to give you for your truck. You will need to either pay this difference out of your own pocket, or roll it into your next loan or lease.

I would be more than happy to give you my opinion on the lease that you were quoted on this Expedition, but in order for me to do so, I need you to provide me with its full MSRP and selling prices. The selling price is an important number for you as a consumer to know anyhow. The selling prices of leased vehicles can be negotiated, just as if you were paying cash for them. Without knowing these numbers, it is difficult to determine what sort of a discount you are being given.

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CarMan@Edmunds · October 2004

Thanks for the reminder, eegs2k. Here is the information that you are looking for. If you were to lease a 2004 Jeep Wrangler Unlimited through Chrysler Financial this month for 4 years with 12,000 miles per, its base lease money factor and residual value should be .00248 and 52%, respectively. When negotiating your lease on this deal, keep in mind that DaimlerChrysler is providing $1,000 lease cash and an additional $500 bonus for deals through Chrysler Financial ($1,500 total) that will help you to negotiate a more attractive selling price.

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CarMan@Edmunds · October 2004

You're welcome, infinitimn.

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CarMan@Edmunds · October 2004

No problem, jack15. The only way that you would not get back all of the additional security deposits that you make is if you had a lot of excess wear and tear on your leased vehicle or if you exceeded your allowed mileage. If either of these things happened, Lexus Financial Services would deduct any penalty that you had to pay from your security deposits and refund you the remainder.

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CarMan@Edmunds · October 2004

No problem, jack15. The only way that you would not get back all of the additional security deposits that you make is if you had a lot of excess wear and tear on your leased vehicle or if you exceeded your allowed mileage. If either of these things happened, Lexus Financial Services would deduct any penalty that you had to pay from your security deposits and refund you the remainder.

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CarMan@Edmunds · October 2004

Hi there tdevane. I would be more than happy to work up a sample lease payment on this truck for you to give you an idea of how much it will cost to lease. However, in order for me to do so, I need some additional informaiton from you first. This information includes this truck's full MSRP and the state that you are in. Let me know and I will let you know

.

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tjm8 · October 2004

Thanks Car Man, the payoff on the dealer quoted me is equal to my payoff that Honda Finance quoted me. It equals the purchase price plus the sum of my remaining payments. The MSRP on the Expedition is $40,040. The selling price is $36,400. Thanks

tdevane · October 2004

Thanks. Im in Maryland. The MSRP is 41k. The agreed upon sellng price is $35k.

thanks
Tracie

alb · October 2004

If I chose to buy my vehicle at the end of a lease do I still have to pay for any wear and tear or for going over the mileage?

Just curious how this process works at the end..

CarMan@Edmunds · October 2004

No problem, Tracie. I do not believe that Toyota is currently providing any sort of lease money factor support on the 2004 Toyota 4Runner in your area, its Central Atlantic region. If this is indeed the case, and you were to lease one through Toyota Financial Services, you would have to use its standard lease money factor. Using TFS' standard lease program, I estimate that if you were to lease a 2004 Toyota 4Runner SR5 4WD with a full MSRP of $41,000 and a selling price of $35,000 for 3 years with 15,000 miles per, your zero down, pre-tax monthly lease payment should be right around $434.

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