Lease Questions - Ask Here

kyfdx · June 2005

money factor X (cap cost + residual) = monthly finance charge

dino001 · June 2005

Does this mean if cap cost is 30K, residual is 15K, montly charge is MF *45K? Makes little sense to me... :confuse: Shouldn't it be minus?

zheka212 · June 2005

"Does this mean if cap cost is 30K, residual is 15K, monthly charge is MF *45K? Makes little sense to me... Shouldn't it be minus?"

A lease payment is made up of 3 parts : depreciation + finance charge + local tax.

Depreciation = (selling price - residual value) / lease term in months

Finance charge = MF (Selling Price + Residual)

Local tax varies, but should be something along the lines of
(Depreciation + Finance charge) * local tax rate

Finance charge is really a convoluted calculation of compound interest over the term of your lease, divided into even monthly payments. However, the formula that kyfdx provides is what it works out to be, and is used to calculate lease payments.

Keep in mind, the money factor is not the same thing as the interest rate -- it is a fraction equal to 1/2400 of the interest rate, so a 4% interest rate = .00167.
Using your example, (30000 + 15000) X .00167 = 75.15. The depreciation is then (for a 36 mo lease) (30000 - 15000 ) / 36 = 416.67.

Base payment is then 75.15 + 416.67 = 491.82.

Total payment in PA (9% tax) would be 491.82 * 1.09 = 536.08.

Hope this helps.

kyfdx · June 2005

It is added... the intent is to get an average of the cap cost and the residual.. Because this is the average of the outstanding balance over the life of the lease..

So.. (Cap cost + residual) / 2 = average amount financed...

Of course, if they did it this way, the money factors would be twice what they are now.. and to convert the money factor to an equivalent interest rate, you would multiply by 1200, instead of 2400...

By making the money factor number half as large, they can eliminate the step where they average the cap cost and residual.. They can just add them together..

Convoluted maybe, but it makes sense... Just trust me!!

amk · June 2005

Can you please tell me what the monthley payment for BASE MDX should be please. MSRP 37470, buy it for 500+ invoice at 34350 for 36 months for 12K/year in NJ. Can you tell me what the Residule % and MF should be please. Thank you.

rhawb · June 2005

Hey Car Man, I am a college student looking for a new car for myself and the $179 deal on the Mazda 3i grabbed my attention, since I would like a new car with a sub-$200 payment. I was wondering if you could give me their current leasing numbers (money factor, residual, etc.) for the 3i with AC and Power/16" wheel package. I would be an S-Plan buyer and I'd like to see if I could actually keep the payments under $200 per month even with those options. Thanks for your help!

-Rob

dino001 · June 2005

OK, it makes sense now. The conclusion is, when you enter the lease world forget everything you learned about loans...

CarMan@Edmunds · June 2005

Andre1, if I am not mistaken in order to qualify for the additional lease cash that I mentioned earlier, one does have to be a resident of the states that it is available in and not an out-of-area consumer who is just looking to take advantage of the additional incentive money. Your dealer may be able to double check this though.

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CarMan@Edmunds · June 2005

Hi conanc. $500 under invoice is an attractive selling price for a 2005 Honda Accord. I would be more than happy to work up a sample lease payment on this car for you using American Honda Finance Corp.'s actual lease program, however in order for me to do so I need you to tell me its exact full MSRP with the destination charge rolled in.

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CarMan@Edmunds · June 2005

Hello jake20. Since you are new to the world of leasing, you definitely should check out the following informative articles that are available here at Edmunds.com prior to visiting any dealers: 10 Steps to Leasing a New Car and Calculate Your Own Lease Payment.

I am sorry to say that it is usually fairly expensive to get out of leases well before their scheduled end dates. In order to do so, you need to purchase the vehicle that you are currently leasing from the bank that you are leasing it through. It often turns out that it costs more to do so than your vehicle is worth on the open market. Furthermore, many banks expect consumers who end their leases early to still make all, or at least the depreciation portion of their remaining lease payments. As you can see, this can get very expensive.

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". One of our most knowledgeable community members, Terry, frequents that discussion and he is often kind enough to give community members who give him an accurate description of their vehicles with his opinion on their value. 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.

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CarMan@Edmunds · June 2005

Hi jpdesd. I am sorry to say that there is no three day period in which automobile purchases or leases can be reversed. Once your father signed the lease contract for his new car or truck and drove off in it, he can not get out of the deal. Of course, you or he or both can always go back to the dealership that he got the vehicle from and see if they will be willing to work with you, but more than likely they will not.

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CarMan@Edmunds · June 2005

Hello Jeff. It is not necessarily easier to qualify to lease than it is to qualify to finance a new vehicle. The exact credit score that is necessary to qualify for manufacturers' lease programs varies from bank to bank. I do not personally know the exact score that is necessary to qualify for the current special lease on the 2005 Honda S2000 though. If you feel as though the current dealer that you are working with is misleading you about whether you qualify for this program, you can always comparison shop with another Honda dealer in your area.

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CarMan@Edmunds · June 2005

You are very welcome Kywon. The $3,500 lease cash that is currently available on the 2005 Saab 9-3 is exactly that - lease cash. It is not composed of a combination of bonus cash and lease cash. It sounds as though you are being mislead. It is easy enough to figure out how much you should have to pay to lease this car through GM's employee purchase program right now. Look up the dealer invoice price for the exact model that you are interested in, including any options that you want on the following page: Edmunds.com New Vehicle Pricing Section. Then subtract dealer holdback, Edmunds.com Holdback Page and the $3,500 lease cash.

As far as this car's current lease program goes, if you were to lease a 2005 Saab Saab 9-3 Arc Sedan through Saab Financial Services Corp. right now for for a 2 years with 12,000 miles per, its base lease money factor and residual value should be .00173 and 59%, respectively. The numbers for an otherwise identical 3 year lease of this car should be .00157 and 49%.

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dwynne · June 2005

As car_man says, it is too bad but nothing you can do to un-wind the deal.

However, what part of it was bad? Just the lease terms and money factor? You may be able to get a 3rd party lease broker to re-lease the car to him at better terms. They just pay off the car and do a new lease deal with better terms.

Obviously he could also obtain financing and buy the car out of the lease and just finance it.

If he just paid too much, then that will not be an attractive option either.

While I sometimes think it would be nice to have a 3 day period to change your mind (like you do here on a home purchase) that would be a NIGHTMARE for car dealers. I am in the process of selling a car now and have sold many over the years just as a private party - and I can assure you I would not have done it if there was a 3 day right of recision on car sales.

Dennis

CarMan@Edmunds · June 2005

Here is the lease info that you are looking for, scott31. According to the latest information that I have seen, if you were to lease a 2005 Acura MDX Touring with Nav. through American Honda Finance Corp. for 3 years with 12,000 miles per, its base lease money factor and residual value should be .00178 and 60%, respectively. I do not believe that AHFC offers 10,000 miles per year leases. As far as the $1,500 cash incentive that you mentioned goes, I do not believe that there is any sort of dealer cash on the '05 MDX at this time. Where did you see this incentive mentioned?

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CarMan@Edmunds · June 2005

No problem 123appraiser. Interesting, I have not seen anything about $2,000 cash from Volvo on leases of the '05 XC90 this month. You are interested in the 2005 Volvo XC90 V8 right? Let's calculate a sample lease payment on it for you. According to my calculations, if you were to lease this vehicle with an MSRP of $50,985 and a selling price of dealer invoice, $47,609, through Volvo FInance right now for 48 months with 12,000 miles per year, your zero down, pre-tax monthly payment should be around $662.

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CarMan@Edmunds · June 2005

Hey bondguy1. I am not personally all that familiar with what the market is like for the 2005 Audi A6 in your area right now. It looks as though you were given a dealer discount of over $2,200 on this car. This sounds very reasonable to me. For more feedback on how much others have paid for similar vehicles lately, you may want to stop by the following discussion: "Audi A6: Prices Paid & Buying Experience".

Let's calculate a sample lease payment on the car that you leased using Audi's current base lease program and see what we come up with. According to my calculations, if you were to lease a 2005 Audi A6 3.2 with an MSRP of $51,770 and a capitalized cost of $48,001 through Audi Financial Services right now for 36 months with 15,000 miles per year, pre-tax monthly payment should be around $655 without any capitalized cost reduction other than the loyalty cash. As you can see, the payment that you were given looks pretty good.

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CarMan@Edmunds · June 2005

You're welcome nyatl. 700 miles on your new truck already, huh? It definitely sounds as though you are enjoying it. Congratulations.

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CarMan@Edmunds · June 2005

You're welcome hcl. Sorry that I didn't have better news for you. Enjoy your new ride

.

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CarMan@Edmunds · June 2005

Thanks for the additional info joker382. However, in order for me to give you my opinion on the lease payment that you were quoted, not only do I need to know its selling price, but I need its full MSRP as well.

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CarMan@Edmunds · June 2005

Thanks wongx2

. According to the latest information that I have seen, if you were to lease a 2005 Volvo S60 R through Volvo Finance right now for 36 months with 12,000 miles per year, its base lease money factor and residual value should be .00040 and 51%, respectively. The numbers for an otherwise identical 39 month lease should be .00075 and 48%.

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CarMan@Edmunds · June 2005

Hi cartalk1. Many banks, especially the captive finance companies of luxury brands like Lexus Financial Services and BMW Financial Services, allow consumers to make multiple security deposits on leases, with each additional deposit buying down the money factor that is used to calculate their vehicle's monthly payment by a certain amount. The $75 reduction in your leased vehicle's monthly payment for $6,000 in additional deposits sounds like a great investment, and it's a heck of a lot safer than anything else that has the potential to give you that sort of return on your money.

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CarMan@Edmunds · June 2005

Greetings jgbanker. I believe that Chrysler Financial's current lease acquisition fee is only $550. If your lease is being run through this bank, the dealer that you are working with may be trying to mark-up its base acquisition fee to add additional back-end profit to your deals. You never mentioned the selling price of the truck 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 Jeep 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 truck that you are interested in for you if you let me know what its selling price is.

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CarMan@Edmunds · June 2005

You are absolutely right kyfdx. Audi's current lease program on the 2006 A3 stinks. I personally am not a big fan of its looks. I suspect that Audi will have to introduce lease support on it in the next couple of months. Though its lease programs on the 2..5.5 A4 and the redesigned A6 really aren't where they need to be yet either. Right now is not the best time to lease an Audi.

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CarMan@Edmunds · June 2005

Hi gpearce. Two things bother me about the lease that you were quoted right off the bat. The first is it is a 60 month lease. It is usually fairly expensive to get out of leased vehicles early. A lot can happen during the course of five years to make you need to get a different vehicle. Your family situation should change, have children, etc..., your commute for work could change causing you to go way over your mileage allowance, you could just plain get sick of your vehicle, etc. Furthermore, this vehicle only comes with a 4 year / 50,000 miles warranty. This means that you will have to pay to fix any problems that you have with it during the final year of your lease out of your own pocket or possibly face a lease-end penalty for excess wear and tear.

Another thing that I don't like about this lease is the large down payment. I always advise consumers against making any sort of down payment when leasing. I do so for two main reasons. The first is if your vehicle is totaled in an accident or stolen during your lease, your insurance company pays off the bank that you were leasing it through and your down payment essentially disappears. The second main reason is that down payments on leased vehicles do nothing to reduce their lease-end purchase prices. So your lease-end purchase option price for this Volvo V70 would be exactly the same, regardless of whether you had put $3,500 down, or had made absolutely no down payment at all.

You already mentioned this vehicle's selling price, but you never mentioned its MSRP. If you let me know I can give you an idea of what sort of lease payment to expect if you were to lease it for a shorter term, like 39 or 48 months.

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CarMan@Edmunds · June 2005

Hey s60leaser. I don't believe that this forum works any differently on a Mac, but then I've never personally tried it on one. Thanks for the additional information, let's calculate a sample lease payment on this car for you and see what we come up with. According to my calculations, if you were to lease a 2005 Volvo S60 2.5T AWD with an MSRP $36,750 and a selling price of $34,600 through Volvo Finance right now for 36 months with 10,000 miles per year, your zero down, pre-tax monthly payment should be around $395. The money factor and residual value that you were quoted for this car are right on the money, but for some reason the monthly payment that you were told looks to be a little on the high side, even after taking tax into account.

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CarMan@Edmunds · June 2005

I can give you an idea of what this vehicle's lease program is currently like, zheka212. If you were to lease a 2005 Pontiac Vibe through GMAC right now for 36 months with 12,000 miles per year, your base lease rate and residual value should be 5.75% and 54%, respectively. As you can see, GMAC publishes lease rates for vehicles instead of money factors. You can convert its published lease rates into approximate money factor equivalents by dividing them by 2400. I do not believe that GM is offering a 39 month lease of this car at this time.

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conanc · June 2005

Hi Car_man,

The full MSRP on the Accord LX is $21,090. Thank you!

cark · June 2005

Hi Cartalk1,

Can you tell me what is your lease payment on the GS300 (before MSD). Is the GS300 a AWD or Rwd. What was the MSRP, capital cost, money factor, residaul, term of the lease & mileage per year.
Thanks.

s60leaser · June 2005

ALL HAIL CARMAN!!!
Car_Man
You are the BEST!!!!! I was really eager to get the number under $400 and I had that uncomfortable feeling that something was not right. Now comes the hard part.

What do I do next?

How do I tell the dealer that the # should be $395,not $450?
Similar(=/-) $300 MSRP and CAP cost Quote for same car at different dealer is $443.I swear there is collusion among dealers....
1) does your $395 include CT Tax?
2)should I call a new dealer,or call back one of the(7-8) dealers I've spoken with by phone
3) How do I get the dealer to calculate the pymt the way you did?

THIS IS GREAT.Thank you for your help. I hope you have time to answer soon,. I decided to give all the dealers(and me) a day off from negotiating,so I'd Like to get back on this tomorrow.
Thanks

jgbanker · June 2005

I don't know how they can put $700 on the lease and call it the bank fee. Thats fraudulent or at least deceptive if the actual bank fee is only $550. I was told that the selling price for the Jeep was $500 under invoice. That would be a selling price of $31279 (based on an invoice price of $31779) The MSRP is $34670. Thanks for your help!

jtoss15 · June 2005

I decided on a 2 year 12k lease today on a black/black 2005 Altima 3.5 SL w/ Traction Control and side air bag package. With an MSRP of 28,770, a cap cost of 26,105, a residual of 68%, a down payment of 1,745 and a money factor of .00127, my monthly payments are 290. How did I do?

cadub49er · June 2005

Hi Car_Man - appreciate the work you do on this site...based on this post -- but adding the Navi, going to 15K miles per year and using a selling price of $37,895 (what csmonaghan bought for incl. destination in Santa Monica) what would you estimate the pre-tax payment to be? We're using the same money factors / residual (.00178 + 63%), right? I am coming up with a pre-tax payment of $529.75

Thanks for your help!
CADub49er

cartalk1 · June 2005

The MSRP was $47,419 for AWD without ML(Cap Cost. was MSRP minus $1,800). The lease quoted was $699 for 36mos./12K. That seemed "high" to me and that's why the sales person started pushing the MSD's. At that point I decided to leave and get more info. on MSD's. So we never discussed any of the other lease details.

jgbanker · June 2005

One more thing... I just spoke to Chrysler Financial and they said that they have no bank fee. It is entirely up to the dealer. I guess thats just another place to increase the price. I have always seen a bank fee on every lease that I have signed. $380 seems like a decent payment, but the up front money was my concern. Thanks again for your help.

cartalk1 · June 2005

I signed what I'll call a "yellow sheet"(because my copy was yellow) yesterday for a lease that I now have second thoughts on because I think I didn't negotiate well enough. The "yellow sheet" has just the bear minimum information on it - MSRP, Inception Fees and Monthly Payment. The dealer is looking for the car so there's no VIN number on the sheet. He claims he should be able to get the car in two or three days. I gave them a five hundred dollar deposit. What are the chances I can "renegotiate" the deal (assuming the dealer finds the car) before actually signing the lease or get my $500 back if the dealer doesn't budge? The stupid thing is that I did my homework, but didn't use all the skills and information I had gained when I was sitting at the sales person's desk. Shame on me !

scott31 · June 2005

The $1500 was mentioned on the MDX purchase discussion board, but I didn't find it here or KBB.

dwynne · June 2005

Tell them ASAP that you changed your mind - if they are having to locate a car for you and paying to have it shipped or driven in then the dealer will be out that money - and have a car on the lot that you no longer want. If you can stop them before they have any expenses then I don't see why they would not let you out of the deal. I have not heard of a non-refundable deposit on a car in YEARS.

If you can't catch them before they have moved the car, then if your deal is really bad offer to compensate them for their trouble if they can't negotiate a better deal. They will be out the money, but if they use low-wage "runners" to go get the car then not that much - but you should offer to pay for this.

I figure you pretty much messed up any chances of dealing with them now if you back out - so once you get this fixed you will need to find another dealer.

Dennis

qbrozen · June 2005

call them ASAP. Ask if they found the car yet. If they didn't, then start negotiating. With no car in inventory and no car on the way, they have no real reason to hold your deposit and you should have no problem getting it back. If they found it and its on its way already... its going to be tougher to get that deposit back since they will be commited to receiving that car and have made the trade.

edit: d'oh! dwynne was quicker on the trigger.

hartt · June 2005

Hi car_man.

You have been a tremendous help to me in the past so I thought I would call on you again.
I am currently considering leasing one of the following vehicles. Can you please provide me with the residuals and MF's on the following models for 3/45K ?
05 Toyota Avalon Touring (I'm in Kentucky)
05 Nissan Maxima SE (39 months if it's better)
06 Honda Ridgeline RTS
Thanks for the information.

gpearce · June 2005

CAR MAN:

Regarding the 60 month lease - that was in response to a request from me to see how I could lower the payment. The original lease terms were as follows:

MSRP: $33,000
Price: $30,940
Term: 39 months
Mileage: 13,846
Drive Off: $544.33
Payment: $535.58 (including tax)

On the above deal, I was told the money factor is 0.00256 and residual value is 51%.

Because the lease terms seem unfavorable, I am considering purchasing the car instead.

Any additional advice is appreciated. Thanks again!

Greg

dscars · June 2005

CAR MAN, What is your estimate for a lease payment regarding the following lease details for a 2005 Lexus LS430
MSRP 63284
48 Mos
no money down(except tax, title, etc)
12,000 miles a year
Dallas/Fort worth Metro area

safire574 · June 2005

Carman, I am considering leasing a Yukon XL and this seems to be the best deal I have come out with in my discussion with about 6 different dealerships..so far:

48,800 on MSRP with the GMS pricing including GMAC lease rebate of 2500 - so I pay 39,000 for this vehicle. 53% residual value after 3 years 15000 miles and money factor of 7. I also have 2500 GM dollars to cash in so would use as money down (we will lose them if we don't use them). He says my payment will be around $560 a month but the lease calculator I am using states $488. Can you help me please?? What should my payment be??

Thanks in advance Carman!!

olysan · June 2005

The lease calculator does not account for sales tax and/or license fees. Probably around $80-$90 on that vehicle.

sportycar1 · June 2005

I'm upside down on my lease $6000,wondering if it is a good idea to lease a Saab 93 Arc @ this time.
They are quoting me $1700 total out of pockett,$625 mo with tax,36 mo lease.
Car MSRP $34000.
Seems high.
Please advise

toyotaken · June 2005

Keep in mind that with $6000 rolling over into the new lease, divide that amount by 36 and without finance charges, $167 of the $625 pmt is just the negative equity. That may very well be why it "seems high".

Ken

zamajtuk · June 2005

I was offered tonight $325 a month for 36 months on a 2005 Maxima SE automatic with sky roof and spoiler. It is a standard model, black with frost interior. I was told I would be getting the car at dealer invoice. My total out of pocket expenses would be 2,000 dollars (which would cover tax tags reg etc). It seemed like a good deal, but I don't know that much about car buy or leasing so I told them I wanted to go home and think it over.

Is this a good deal? should I try to work something better? what should I look into changing?

Thanks

Jay

safire574 · June 2005

The lease calculator I am using calculates sales tax. License fees? Don't I pay these at the BMV?

rblnr · June 2005

Best numbers I'm getting on a Tribeca 7 Pass. LTD w/DVD, NAV and a few options putting 2K down is $489 w/12K miles/yr. for 36 mo., 469 w/o NAV. Anyone getting better terms? thanks

olysan · June 2005

Using your numbers the GM website lease calculator comes up with $507.88. This does not include sales tax.

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