Lease Questions - Ask Here

CarMan@Edmunds · August 2005

Hi guy999. 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 what I come up with with the payment that your dealer quoted you. However, in order for me to do so I need you to provide me with its full MSRP (with the destination charge added in).

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CarMan@Edmunds · August 2005

Hi carnaught. If you had agreed to your lease, but not physically taken delivery of your new car you would be able to get out of this deal. However, once you sign the lease papers and drive your car off of the lot it is yours. I highly doubt that you will be able to get out of your deal at this point. If you are persistent and firm, yet polite, you may be able to get the dealer that you are working with to work with you on the 6-changer CD player, perhaps splitting its cost with you.

Car_man
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CarMan@Edmunds · August 2005

Hi Mike. If you were to lease a 2005 Lexus IS 300 without navigation through Lexus Financial Services right now for 36 months with 12,000 miles per year, its buy rate lease money factor and residual value should be .00110 and 53%, respectively. LFS' base lease acquisition fee is currently $600 in most states. It looks to me as though the dealer that you are working with is marking up LFS' acquisition fee slightly and possibly your car's base money factor. Using the above numbers and the prices that you provided in your post, an MSRP of $33,750 and a selling price of $28,800, I come up with a zero down, pre-tax monthly payment of around $355.

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zoomee · August 2005

Dear Mr Carman,

I'm interested in a 2006 M35x. The MSRP is 48,500 and the expected cap cost price is 45,000. I will drive 18k miles/year.

What is the amount that I can expect to pay per month, the residual, and MF?

Also, what are your thoughts on a lease with this many miles?

Thank you sir.

rbevz67 · August 2005

Hi Carman and company,

Could you please let me know what the current residual and MF is on a 2005 Accord EX-L Sedan non-nav assuming 10k and 12k miles per year for 36 months... or whatever special honda has going on this model right now.

Also, does the dealer still get the $750 cash back on a lease?

Thanks so much,

Chris

zoomee · August 2005

Dear Mr CarMan

If I lease a 2005 G35x, cap cost is 36,000 and msrp is 39,230 what would the monthly cost be, MF, and residual? for 18k miles/yr and 39 months?

My goal is to minimize monthly cost with 0 down -- would it be better to get a 2006?

Thank you.

zoomee · August 2005

Who do you call to get the VPP pricing? Do you have to get prequalified ahead of time?

hunt4car · August 2005

Hi Car_Man,

I'm trying to decide between leasing and buying generally and the dealers seem to say that if you plan to keep the car for less than 5 years then it is better to lease than buy. Is this true? My own sense was that the tipping point is 3 years - what do you think?

Does it make sense to lease a used BMW (eg 2003 or 2004 model) as compared to leasing a newer BMW (2005 model). I'm looking mainly at 325xi.

Are lease programs significantly different between car manufacturers (Lexus vs. BMW as an example)?

Thanks and sorry for all the questions.

hunt4car

qbrozen · August 2005

Yes, you have to get the paperwork ahead of time ... I don't call anyone, I have access to a (mostly) secure website that provides me with the current deals, pricing, etc.

This is the general site: http://www.insidenissan.com/
but to get the paperwork, you will need a username and password that has been provided to your employer if they have been given that benefit by Nissan. Oh, and, of course, the dealership will verify via your paystub.

mikeko · August 2005

Hi Car Man,

I'm looking to lease a 2006 Mercedes E350 4Matic in Connecticut sometime between now and mid-September. The MSRP on the vehicle I'm interested in is $57,965 and the selling price will probably be around $55,500 (including destination charge). I'd like to go with a 39 month lease, no cap reduction payment, and 15K a year mileage allowance. What are the current base lease money factor and residual % for this car and what do you think would be a favorable pre-tax monthly lease payment? Also, I was told that I may fair better if I get a deal done before the end of August, as opposed to waiting until September due to current MB financing incentives. Your thoughts on this? Thanks for your assistance.

bosoxin04 · August 2005

Car Man:

I'm looking at a 42 month lease on an MDX Touring (msrp of $40,295) with $0 cap cost reduction and $15k miles per year. I have received an internet quote from an area dealer of $35,280 w/destination charge and $12k miles, and I've been able to validate the $430 monthly payment before tax (money factor of .0022, and .56 residual). This dealer is also quoting drive off costs of $1,391 that includes first month's payment. I have a couple of questions for you:

1) I've seen lower money factors of .0018 posted on this board -- do you have an updated best money factor from AHFC (and yes, I'm a preferred risk)?

2) What is the residual on the 42 month lease from AHFC?

3) The above quote seems to trade off a very attractive cap cost/lease payment for considerable additional dealer profit payable up-front. Do you agree, and what would you consider to be a reasonable drive-off? I live in Massachusetts with a 5% sales tax and a $95 title and registration fee, I believe.

Thanks in advance for your help.

timmboj · August 2005

Cool. Thanks. It is the 2006 Saturn Vue AWD V6 with most of the options. I think the MSRP is somewhere around $25K-$26K. I'd like either 24 months or 36 months and need 15K miles per year.

smd5 · August 2005

CarMan - Does Acura offer a 24 or 30 month term on the TL. If so, what are the money factors and residuals with 15k miles/year.

Thanks

sponge_worthy · August 2005

My impression and reason for leasing a BMW is that BMWs make particularly good lease vehicles, that is if you don't plan to buy at lease end, due to their high residuals 60-63% for 36 or 39 months 10-12K/year.
Also, the fact that all maintenance including wearable items (except tires) is included for 4y/50K. To my knowledge, no other brand has as comprehensive a maintenance program - even the ones that cover schedules maintenance don't cover wearables (I've heard of people having to replace brakes on Mercedes after 30-35K miles -even on leased cars).

I think I've seen a statistic that BMW leases 50-60% of the cars they sell each year.

I didn't know you could lease a used BMW, probably not as good of a value as leasing a new one, particularly if you get stuck paying for maintenance.

steveholly · August 2005

CarMan!
Great forum - VERY useful!
I've been given some "over the phone/back of the napkin" quotes on a lease that I'm hoping you can validate.

Car:
2006 VW Passat 2.0T w/ Auto and Package #2.
MSRP w/ destination: $28,415

I put quite a few miles on the car and I was quoted:
~$385/month for 18K (yes, 18k!) miles/year for 36 months + inception fees (which I'm pretty sure includes first month's payment, a $300 security deposit, $575 Acquisition fee, tags, title - so about $1300).
I don't know (nor have I asked yet) about residual costs and money factor.
This quote seems very low, but might be in line with the specials VW are running to introduce the '06 Passat.
Can you validate this?
Thank you!!

rbevz67 · August 2005

Hi Carman and company,

Could you please let me know what the current residual and MF is on a 2005 Accord EX-L Sedan non-nav assuming 10k and 12k miles per year for 36 months... or whatever special honda has going on this model right now.

Also, does the dealer still get the $750 cash back on a lease?

Thanks so much,

Chris

max19 · August 2005

:surprise: :sick:

I am starting to feel sick about this one. It might sound off but here I go again: Interest = 9.25%
MFact = .00395833 (using the 2400 conversion)
Residual value is 48% on a 48 month lease.
Negotiated Price = $31,700.00 (aprox)

I have negative equity (big time) of $8,681.00
$1,500.00 Down Payment

The numbers I came up with was $570.33 for a monthly payment including the 7% tax in my county. Is this right or am I completely off? I am using the leasing guide by edmunds on http://www.edmunds.com/advice/leasing/articles/48365/article.html

I will appreciate your help because the number the dealer is giving me is well into the $700 and that is a shocker. :surprise:

Help!!!! :confuse:

kyfdx · August 2005

Your numbers are way off... The negative equity alone, would be over $230/mo. over the 48 months...

In addition, you'll need the MSRP to figure a lease... You can't run the numbers without it..

What is the MSRP of the vehicle?

regards,
kyfdx

max19 · August 2005

The MSRP is $34185 and I was able to negotiate $2485 under MSRP ($31700)

dino001 · August 2005

Well, another "victim" of "zero down" loans. Sounded great a few years ago, didn't it? But now rolling it to the lease - wow. BTW, is the finance charge figured on MSRP+ residual only, or on MSRP+residual+negative equity? Just curious.

If former, it is like getting 0% APR loan on that equity, but if latter - wow again.

bdr127 · August 2005

With your negative equity factored in, I'm getting about $750/mo..... Like someone else said, the negative equity alone will raise your payment a couple hundred per month. Take out the trade-in, and.... voila.... you're at right around $570/mo.

Another thing to ask the dealer is what % over MSRP they are able to advance for you..... I think GMAC only does 110%. You'll need about 125% in order to pull this off.

After that, you better make sure GAP insurance is included in your lease!!!

x021627 · August 2005

thanks car man. If the msrp is $35,909 and the selling price is $32508 with no money down using your information the lease payment is about $437.03. Is that correct?

hondamattnj · August 2005

MF is based on credit tier.

Super Preferred: .00112
Preferred: .00144
Standard: .00173
Select: .00203

Residual for 12k (Honda does not do 10K leases) 36 mo: 54%

No the dealer does not get cash back for a lease.

msdavis · August 2005

Dear car guy. I just want to thank you for all of the help. My father is itching for a new car and I am trying to convince him to lease a Vw Phaeton. My dealer that loves me 3 cars in our family in the last 60 days. Is offering a 2005 phaeton for 36 month lease 12,000 miles for 55% residual and .00011 money factor. I asked him what kind of a sales price and was told Msrp, but he wanted to earn my buisness, and urged me to make an offer. I was woundrering if Vw has any lease cash avaible on the phaeton that you can use in conjunction with the special lease. Also is a 48 month lease any better? Money factor and residual? And what is the residual reduction for a 15,000 mile lease??

Thanks

bhavinpa · August 2005

Dear Car Guy & Company,

I have gotten the following information on a 2006 Lexus GS 300 w/ ML & Nav package 48 month 18,000 mile/yr:
***************************************
MSRP = $50,659
Cap Cost = $47, 413
MF = 0.00175
Residual = 42% ($21,276)
Monthly Payment w/Tax= $624.11
Refundable Security Deposit = $5000
Drive off fees are negligible since it is only $1500 or so.
***************************************
Using the following leasing formulas for an approximate verification:
Depreciation Fee = (Net Cap Cost -Residual) / Term
Finance Fee = (Net Cap Cost + Residual) * Money Factor
Total Monthly Payment w/o tax = (Depreciation Fee + Finance Fee)
Total Monthly Payment w tax = (Monthly Payment * 0.0825) + Monthly Payment
****************************************
My calculations have the above costs equal to a monthly payment w/tax of $597.00
Even though the final outcome of the numbers are close, this is only 1 instance. I have ran the numbers against a few other offers, and delta's are sometimes greater than $100.

Any insight on this?

Thanks,
Bhavin

rroyce10 · August 2005

........ It's much easier to "sell" a lease then a purchase (less payment and less $$ money down) ... thats the reason why you heard "keep the car for less than 5 years then it is better to lease than buy" .....

Leasing is fine for the right people and the right circumstances ...

Keep in mind you don't own the vehicle, you're only renting it .. and if you get laid off or move to Spokane and pile up the miles and scrape up the trunk lid, you pay ..... if you get married, divorced, have a baby or become a Brain Surgeon and decide to trade it, then you owe the the remaining payments "plus" the residual, so you kinda lose control of your own destiny .. . and if you decide to purchase the vehicle at the end, your paying taxes on the vehicle again based on a fixed figure ....... leasing is not a bad thing, but it's usually done for all the wrong reasons (like cheaper payments) .... if you decide to lease, going new is the only way .....

Terry

steine13 · August 2005

In case anybody didn't get all of that; Terry is NOT a big fan of leases.
He's just being subtle about it.

The advantages of leasing:
- Sometimes, a great monthly payment. Only if the manufacturer has a special program, or if the residual is too high. It happens quite a bit.
Leasing payments are almost always lower than purchasing payments, but you don't own anything, you just rent... so that has to be figured into the "value" equation.
- You don't own the car. If you get in an accident and have the car repaired, diminished value is of no concern to you. This is a big deal on a $50k Lexus.
- You don't own the car, so you don't have to sell it at lease end. That's a neat feature. Of course, if you'd rather keep it another 3 months... too bad...
- In most states, you don't pay sales tax on the residual. This isn't all that big a deal, but it adds up for those of us who buy a lot of cars.

The disadvantages were summed up well by Terry... my take is that leasing is find unless you're poor... if you move and start mileing up the car, just buy an '02 Taurus with some miles to drive to work. If there's wear&tear or overmileage charges at the end, just write a check... you lose some control with leasing, but it's OK if and only if you're able to handle it financially.

If you just lease for the lower payments and couldn't afford the car otherwise, you can't afford to lease. And don't never ever ever lease a car out of manuf. warranty. Verboten.

For the record, I've never leased, though I've been tempted. I don't like to have to ask if I can pretty please sell a car... it's bad enough to have to square it with the missus...

-Mathias

djocks · August 2005

Could you find me the monthly payments of a honda accord 6mt/ nav/ dvd.....

I live in CT, I need 15K miles a year. I would want zero down.

MSRP $32,120
Selling Price - out the door $29,000
Super Prefered Credit

Thanks so much for the help
djocks

hunt4car · August 2005

Hi Terry & Mathias,

Thanks - that was very helpful. another question I had was what are "cap reduction" payments? Is the idea that you pay to drive more miles.

In my case for the next two years I doubt if I'll drive more than 12,000 miles a year (maybe not even 10,000) and I've thought about leasing a BMW to test it out to see if I want to buy one after two years or go for a Toyota Prius (a hybrid gas/electric that they claim gets 60 mpg). BMW has good residual values and great service for a new car lease (2006 325i) with the monthly payments around $420 with $3000 down (I'd be inclined to have a lower down payment and that increases costs a bit).

Reading your emails it seems that if you trade the car (I didn't know you could do that before lease end) then you have to make all payments and residual? That would be around $30,000 for the BMW? Is that right? Why would anyone trade cars if BMW covers all maintenance etc... ? Thanks.

hunt4car · August 2005

Is the shortest lease term 24 months? Do they go shorter too (12 months or 18 months)? Thanks.

benj100 · August 2005

I am considering leasing a 2005 Sienna XLE...anyone know what the money factors are and the residual values? I am thinking of a 36mo lease with 12K miles per year. Thanks!

smbnj · August 2005

Car Man & Company,

The dealer tells me that prices/rates will be going up Sept. 1. I want the car by then anyway, I just want to make sure this lease deal is fair:

MSRP: $39,430
Cap Cost: $31,789
Residual: 46% ($18,137)
Money Factor: .00240
Monthly payment: $499 / 36 months / 12,000 miles per year

Out the door cost is $2,000.

Is it a fair deal or should I try for < $2,000?

Thanks.

kyfdx · August 2005

If you just lease for the lower payments and couldn't afford the car otherwise, you can't afford to lease.

This is the most important thing anyone needs to know about leasing.

timmboj · August 2005

Hi Car_Man,

I was planning on heading to my dealership this weekend, and would like to have some figures in the back of my head before I do. Whatever you can provide would be appreciated.

Again its the 2006 Saturn Vue AWD V6 with Sun & Sound, Comfort, Head Curtain, and Chrome Packages. MSRP $26,180, Invoice $24,187.

I prefer 24 or 36 months and need 15K miles per year.

Thanks Car_Man!

kg6c · August 2005

When the car dealers are calculating your lease cost and tax, do they base it off the Invoice Price or MSRP.
My question is that if it is based on the MSRP (which is public) and the money factor (which is published and set in stone) with the Residual Value. Then why do lease prices fluctuate so much.
I was at a dealership yesterday and they were quoting everything of the MSRP for the lease. The same dealer said if I were to buy the FX 35 he would give me $500 over invoice. Does this make sense.
Thanks

smbnj · August 2005

I know the residual is based off the MSRP. It makes sense that the lower the negotiated price for the car, the lower your lease payment should be. I think dealers try to hide their real profit by quoting standard lease payments based on where they need to be profit wise.

t_o_n_y · August 2005

Thanks Car Man! I just got them to roll in the startup costs and still hold the $260 pretax payment. Looks like I am getting a reasonably good deal.

Your wisdom is appreciated - I'm sure I speak for all of us.

mojorator · August 2005

Thank you..thank you

delrick · August 2005

Ya gotta explain that one for me......

simbah · August 2005

Dear Car Guy & Company,

I have gotten the following on a 2006 LR Range Rover HSE Lease: 30 month 15,000 mile/yr:
----------------------------------------------------------------------
MSRP = $76,650
Cap/Negotiated Cost = $70,311 ($0 dollars down cap reduction)
MF = 0.0033
Residual = 63% ($48,289)
Monthly Payment w/NJ Tax (6%)= $1181.00
Drive off fees:Tax,title,security= $2110.00

My particular questions: Overall is it a good deal for this vehicle? and if I am tier 1 credit status (Fico 800+) is the MF too high..? looking to lease in the next few days...Thanks in advance for the advice.

-simbah

someguy1 · August 2005

Car_Man,

I read a lot of the post but never felt the need to make an input. You have your hands full and you do an awesome job with all the posts.

Based on the numbers I have seen this seems like a great deal. I want to know what you think.... I gave a deposit over the phone to reserve the car but I did not see the paper work. I know you hate cap cost reductions, but I wanted to keep my payments under a threshhold...

2005 Acura RL
36 Months
15000 miles a year
$5000 total out of pocket, includes first month payment
$500 a month...., taxes and everything included... no hidden charges........

The dealer wanted to make a last deal before the end of the month and made this proposal.

Every other RL inquiry made with 5K down came out to more than $550 a month and many of them over $600

ajamo · August 2005

I've been quoted a .00209 MF on an Infiniti M45 Sport, which I'm told is based on a credit score of 700.

Is their a better tier without having to shell out multiple security deposits?

I've also been quoted a $550 dealer fee (one dealer called it a "bank fee") which I saw someone else mention; what in the hay is a dealer fee?

Thanks in advance!

topgun7 · August 2005

I think the different may be account for by the acquisition fee (or some time call disposal fee, the last Lexus I leased it ran about $550) and document fee (and this can range from 50 to 450 depending of the dealer). I think you need to look at your money factory more. I assumed the large security deposite is to reduce the money factor. When I lease my last Lexus (02 LS430), I paid 9 deposits to reduced the money factor by 0.0009. In your case, the deposit is large enough to look like 9 deposit. If it is true, your dealer is charging you 0.00265 for your money factor before the reduction. It is equivalent to 6.36% That sound a little bit high. May be Car_man can give you the actual money factor from LFS.

topgun7 · August 2005

Ajamo, are you sure that Infinite offer multiple deposit to reduce money factor? Do you know how it work for Infinite? I am only aware of 3 manufacturer that do it: Lexus, Volve and BMW.. The bank fee is the charged by the bank to acquire you car (your car is sold to the bank and then leased it to you) and then later they have to sell the car after the lease terminate and you returned the car to them. Every bank charge it but they can charge different amount.

rroyce10 · August 2005

.......... $5,000 down .........?

How do I say this in a nice way .... aaah .. are you nuts ...?

The whole point of leasing is going in with little or no money down ..... if the car gets wrecked or stolen that money is gone, if you decide to trade it in 20/30 months those greenbacks are "Hiss-store-ree" .....

Big money down accomplishes one thing and one thing only: - it lowers the payment - .. it doesn't lower the pay-off, it doesn't change the residual and you don't get any free tickets to Disney World, but you're certainly out of pocket for some serious Cashola ....

You're always better off taking the higher payment, which in your case would be "around" $30 per thousand and only dropping the first and security and maybe some tag and fee money, so maybe "around" $1,500ish ........... the other $3,500 ..? maybe the kids college fund, perhaps a set of new Callaways and a trip through some of the Trent Jones golf courses (all 27) or maybe that Omega watch that's always caught your eye .. or just maybe save it for the future ...........

Terry

rbevz67 · August 2005

No the dealer does not get cash back for a lease.

I would think they do. They're moving a car none the less

rbevz67 · August 2005

Hi Carman,

Could you please fill in the spaces below. I am trying to find out what special programs are being offered through AHFC on new 2005 Accord Sedan, EX-L 4cyl.

What is the lowest finance rate offered, assuming best credit? How long is the rate good for? 36mo? 60mo?

What are the MFs offered on 15k lease for 36-60mo? Residuals? All assuming pristine credit please.

Hope you get this in time Carman, you're the best!!

Thanks!

bdr127 · August 2005

I'm not familiar with that particular Accord program, but it is pretty standard for most manufacturers to have totally separate programs and incentives for lease/retail.

kyfdx · August 2005

Agreed... If the lease program has it's own incentives, then many times the dealer cash does not apply...

But, if the lease is the standard program (market rates and residuals), then sometimes incentives are still paid.

It varies with every program or incentive..

dhamilton · August 2005

Car-Man
I 'm doing some research for a friend. Do you know if GMAC will do a 20,000 mile a year lease? I know that there are a lot of drawbacks to such high miles. If yes, could you please give money factor, and residual for 36monthes, 18-20k a year. on a 05 suburban LT 1/2 ton, leather, capitains chairs.Thanks......D

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