Lease Questions - Ask Here

metmdx · October 2003

Hi Car Man:

Back again! Can you tell me how the financing works in states where companies don't lease anymore? I vaguely understand it that there is an option with a large payment at the end or walk away where you essentially are leasing but with your name on the title. Does the money factor/monthly payment get computed same way as a lease or purchase or other method? I need to compare the "known" methods to this new one to understand what kind of deal I'm getting.
thanks,
metmdx

dardson1 · October 2003

My first lease is on an '01 Lexus ES300 and it ends in January. I assume leases and the resulting sales tax is treated differently state to state, but in Texas the sales tax (all $1950 on my $30k '01) was rolled into the the 36mo. least payments. I have lately discovered if I choose to keep the car by paying off the residual, I get to give the governor another $1300, when I change ownership from Lexus Financial to me.
This may be an odd quirk in Texas, but it's something to consider for the folks on this board who worry about the bottom line. I've heard sales tax on leases in many states is paid on a monthly basis which means you only pay tax on the part of the car you use; but for those who lease in Texas, be aware of the nice deal our state comptroller gets collecting sales tax twice from the same driver for the same car. For me it will amount to $3250 on a $30k vehicle. Sours my feeling about leases.

rowemowe · October 2003

Hello, Car_man,

How do I figure out the equivalent APR from the money factor? I think I multiply by 60, but it's been some time since I researched this.

Your answers on this forum are extremely helpful, thank you for the help.

kyfdx · October 2003

multiply the money factor by 2400, to get the equivalent APR.

rowemowe · October 2003

Thanks, kyfdx...

rowemowe · October 2003

One more question. How much of a difference in residual is there for an '04 RX330 AWD w/o nav or entertainment, when the lease is 15K mi/yr vs 18K mi/yr over 3 years?

Also, on our '01 RX300 the salesman tried to push us into a 39 month lease instead of a 36 month. We were told it worked out better for us if we signed on for 39. I'm a bit of a skeptic, so we stayed our ground and got 36 months.

My question is, other than lower payments, does 39 months really benefit me, or the dealer?

Thanks for the help.

aldehyde · November 2003

I think Edmunds should put up a section with up-to-date info on the various states' leasing tax laws... in Maryland you pay tax on the entire value of the vehicle you are leasing and then you pay it again on the residual if you buy the car at the end of the lease like the poster above described for Texas. In Ohio, you pay sales tax on each month's payment only. There's nowhere on the web this info is collated, what better place than here?

I'm moving to Washington state and I'd love to find out how they handle leasing sales tax... does anyone here know, by any chance?

CarMan@Edmunds · November 2003

No problem, explorerx4.

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CarMan@Edmunds · November 2003

Hi again metmdx. Although some banks do still lease vehicles to consumers who live in New York, many of them have stopped leasing to NY residents, offering them contracts that are known as a balloon notes instead. Balloon notes with the option to turn vehicles in at the end of their term, are very very similar to leases in that they give consumers relatively low monthly payments. One main difference between leases and balloon notes are that with balloon notes, the consumer's name is on the vehicle's title instead of the banks, thus limiting the bank's liability. Another is how taxes are calculated on them. In many states, consumers end up paying more sales tax on vehicles with balloon notes than they do on the same model if they were to lease it. The last main difference is in how leases and balloon notes are calculated. Rather than using a money factor, like many banks do to calculate lease payments, balloon notes are calculated using interest rates. Even though they have become a little more popular because banks have switched to them in some states to prevent vicarious liability lawsuits, they still are much much less common than leases and I do not keep tabs on manufacturers balloon note programs.

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CarMan@Edmunds · November 2003

Hello rowemowe. Kyfdx was right on the money. Thanks kyfdx

.

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CarMan@Edmunds · November 2003

Hi rowemowe. The highest mileage allowance that Lexus Financial Services publishes residual values for is 15,000 miles per year. If you need to drive more than that, you will have to purchase additional miles on a per-mile basis. It is to your advantage to do so at lease-signing if you are positive that you will need the additional miles because banks almost always charge less for additional miles purchased at lease inception than they do for miles when consumers exceed their mileage allowance.

As far as the length of your lease goes, the 39 month contract would probably provide you with a lower monthly payment because this model's 36 month and 39 month lease money factors are exactly the same, but you would be spreading out the initial depreciation hit out over another three months. One negative to leasing for only three years is that many vehicles only come standard with 3 year / 36,000 mile bumper-to-bumper warranty coverage and the leased vehicle will be driven for three months without a full warranty. However, this is not a problem with Lexus models because they all come standard with 4 yr. / 50,000 mi. basic warranties. As such, I personally would have leased this model for 39 months instead of 36, provided that the 39 month term provided a lower payment.

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chrism124 · November 2003

Car_man,

Can you provide me with lease information based upon 3yrs/12k for the following;

04 Acura MDX w/ Touring & Nav

04 Lexus RX330 w/ Premium & Nav

Thanks,
Chris

rowemowe · November 2003

Thanks Car_man, for the reply.

It sounds to me that the money factor normally varies depending on the length of the lease? Does the residual value also remain the same for a 36 and 39 month lease, like the money factor? And if I purchase more miles at inception, I imagine the residual will decrease?

Sorry for all the questions, but they're related so I figured I'd put them all in the same post.

Thanks again.

atlclay · November 2003

What is BMW Financing and Chase's current Money Factor on a 2003 Z4 2.5 for 42 months? Thanks in advance. Clay

euzar · November 2003

Hi Car_Man,
I was wondering if you could post the current Mazda 6 MF & residuals for 36/39 month programs with 15k miles? Thanks, Edmund.

explorerx4 · November 2003

had a little eureka, regarding saab residual. actually i'm better off with the up front lease support and lower residual(3k/48% vs 0k/56%), if i want to buy the car at lease end. the payments are no different, but the buyout is lower. now i have to look at replacement items(tires, etc.. just had new front brakes/rotors at 30k), and maintenance over the next 3 years. property tax will definitely be lower.

CarMan@Edmunds · November 2003

Greetings, Chris. Both Lexus and Acura have either just published or are scheduled to publish their new November lease programs. As a result, I have not seen the information that you are looking for yet. Please feel free to check back with me at the end of the week and I should be able to give you an idea of what these models' new programs are like. Talk to you then.

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CarMan@Edmunds · November 2003

You're welcome, rowemowe. While many vehicles' lease money factors do indeed vary depending upon the length of the lease one is interested in, that was not the case with Lexus' lease program for the RX330 last month. The reason why the 39 month lease would have a lower payment than the 36 month lease is that even though the 39 month term has a slightly lower residual value, by leasing for the longer term you are able to spread the huge depreciation hit that vehicles experience during the first 12 months of ownership over a larger number of payments.

As far as the additional mileage goes, purchasing additional miles at lease signing does not lower your vehicle's residual value. By paying $.15 per mile, or whatever Lexus Financial Services charges, you are paying for all the depreciation that your vehicle will experience up front.

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CarMan@Edmunds · November 2003

Hi Clay. I haven't seen BMW's November lease program yet. I suspect that I will have had an opportunity to take a look at it by the end of the week. Please feel free to check back with me then and I will let you know what I have been able to find out.

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CarMan@Edmunds · November 2003

Hello Edmund. Great name by the way (get it Edmunds.com

). I haven't seen Mazda's November lease program yet. I would be more than happy to give you an idea of what this car's program is like once I have had an opportunity to take a look at it. Please check back with me late this week and I will let you know what I have been able to find out for you. Talk to you then.

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burrsr · November 2003

I am looking to purchase (traditionally finance) a 2004 Passat GLS Wagon 1.8T 5M in the next month or so. VW had some attractive APR (1.9%/36, 2.9%/60) and manuf-to-dealer incentives ($500) in October, but they did not seem to carry through to November. Do you know if VW plans to offer incentives later in the month of November on 2004 Passat Wagons? Or, perhaps offer some year-end incentives in the month of December?

I apologize for askng a traditional financing question in a lease board. Thanks in advance.

kyfdx · November 2003

I'm not sure how Lexus FS works, but when I did an 18K miles per year lease with AHFC, a per-mile charge was assessed, but it did indeed lower the residual by that amount. Rather than pay it up front, they just used the lower residual, increasing the monthly payment. On my 36mo/54K lease, the residual was lowered by $900 (.10/mi multiplied by 9000 miles)
This actually resulted in my per mile charge being lower than $.10, as I saved approx. $2.15/mo in finance charge, due to the lower residual. I think when I figured it all out, I was paying about 9.2 cents per mile extra. I've done this with 3 different AHFC leases in '94, '99, and '01. The first was an Acura, and the other two were Hondas.
Other companies are probably different.. thought you might be interested in how AHFC does it.

regards,
kyfdx

newtisme · November 2003

Hi

CLPurnell has been very helpful -= suggested I write to you for this info. I want to lease a loaded '04. estimate 20K miles/year, 36 month term. What do you know, and what do you suggest? MSRP is 53,980, Invoice is 47,904

Many thanks
newtisme@comcast.net

newtisme · November 2003

Hi,

Here's the data:

Basic MSRP 44,375; Invoice 40,144
Options MSRP 9060; Invoice 7215

Total MSRP 53,980; Invoice 47,904.

Lease quote 36 month term, 8.25%sales tax:

MSRP 53,980
Cap reduction 12.54
NCC = 53,967.46
MF = .2350
Excess miles = $900 ( I asked for 20K/year)
Net Residual 27,709.40
Total Deepreciation 26258.06
T-sls tax on Pmt 2736.35
T-Sales tax 50.12
Est Tot Lic Fee 3369.00
Total Payments + Res = 63,613.64
DMV Fee 1123
Doc Fee 45
State Fees 5

Mo. Rent 191.94
Mo. Depreciation 729.39
Mo Sales Tax 76.01
Mo. payment 997.34
Drive off - 2783
Acq Fee 550.00

Can you analyze this and give me your feedback? Many MANY thanks!!

Rick

multiplechoice · November 2003

That seems like an awful lot for a FX45. You could try talking to a Porsche dealer on a Cayenne. I've seen some ads for a Cayenne S for around $700/mo (I do not know the details of that lease program though).

jerhot · November 2003

Hi,

I am looking to lease an '04 Honda Odyssey EX-L Res. Can you give me Honda's current numbers on this lease, including the residual and the money factor? I can easily do 12,000 miles a year. I don't suppose Honda would do 10,000?

Thanks!

jratcliffe · November 2003

Remember, this is a 20k a year (!) lease. Those $700 leases on the Cayenne are probably promo 10k miles a year leases.

djdez · November 2003

Wow -- that's a pretty SHADY looking deal if ya ask me ! You are basically paying sticker, except for that WHOPPING $12 cap reduction !!! And, if that's the case, you are listing $2783 as your drive off amount - WHAT does that include ?? Since you then list the $550 bank fee after that -- so I HOPE that's included in that $2753 - even if it was, and you really MADE that AWFUL $997 monthly payment, we're still only at $1547 -- where is the difference coming from - I'm guessing the fees you listed make it up, but come on, a DMV fee of $1123 ?? They gotta be kidding !!! That drive off amount seems WAY too high !

You list the MF (money factor) at .2350, I'm ASSUMING you meant .002350, which equates to around 5.64% APR .. I believe Infiniti's base Money Factor is .002 which should be 4.8% APR ... why didn't they use that ???

The $900 up front for the excess miles really isn't bad, but I'd definitely NOT do this deal -- you are paying just about FULL MSRP, and I can't see having a $900 a month LEASE payment -- OUCH !!! According to this dealer, what would a monthly PURCHASE payment be, like $1500/mo ? LOL!

euzar · November 2003

Car_Man, if you would be so kind as to post the Toyota MF & residuals for a 36 & 39 month lease with 15K miles? Thanks in advance, Edmund. Also I eagerly await what you find on the Mazda 6 as well!

s852 · November 2003

What is considered normal versus "excessive wear?" I under stand the vehicles are to be returned without cosmetic blemishes, dents and dings, fabric stains etc..
Suppose to lease car for 45,000 miles and the car has tires that are rated to last 50 or 60,000 miles. Are you supposed to put new tires on the vehicle before you return it or will they charge you the cost to recondition the car with new tires, brake pads, battery or other items not listed in the normal scheduled maintenance requirements that are wearing out at that mileage when you return the vehicle?

What if you get a rock chip in the windshield and you get the chip repaired (which is still visible)?
Most auto insurance companies wil not cover replacing an entire winshield over a rock chip. Will the the lease company expect you to
have the windshield replaced at your expense and so on?

CarMan@Edmunds · November 2003

Hi burrsr. Volkswagen will likely at least continue the special financing offer that it was providing on its vehicles in October. I should be able to find out exactly what its new program is like this weekend. Please feel free to check back with me then with a quick reminder and I will be more than happy to fill you in on what I have been able to find out for you.

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CarMan@Edmunds · November 2003

Thanks for the information, kyfdx. I always appreciate feedback from consumers who have leased in the past. I guess that the exact policy on this matter varies from bank to bank. Thanks again.

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CarMan@Edmunds · November 2003

Hello newtisme. I would be more than happy to give you an idea of what the lease program should be like on the car that you are interested in. If you were to lease a 2004 Infiniti FX45 through Infiniti Financial Services this month for 3 years with 15,000 miles per (IFS does not publish residual values for leases with more miles than that. If you need more you will have to buy them on a per mile basis) its base lease money factor and residual value should be .00200 and 53%, respectively. You may want to consider leasing this car for 39 months instead of 36 months. Doing so will likely provide you with a slightly lower lease payment. Its 39 month money factor is exactly the same, but its residual value would slip to 52%. Let me know if you would like me to calculate a sample lease payment on this vehicle for you.

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CarMan@Edmunds · November 2003

Greetings jerhot. I would be more than happy to give you an idea of what this van's lease program should be like right now, but first I need you to tell me how long you plan on leasing it for. Once I have this additional information I will be able to help you out.

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CarMan@Edmunds · November 2003

Hi Edmund. Toyota's lease program varies by region. In order for me to give you an accurate idea of what its current numbers for the Matrix are like, I need you to tell me what state you plan on leasing this car in.

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CarMan@Edmunds · November 2003

Good morning, s852. The guidelines as to what is considered to be excess wear and tear vary from bank to bank. You would not necessarily be required to put new tires on your leased vehicle once you put a certain number of miles on it. When evaluating leased vehicles at the ends of their terms most banks measure the remaining tread on cars' and trucks' tires and charge a penalty if they have less than .XX" of tread remaining. Again, the exact amount of tread that needs to be left to avoid a penalty varies from bank to bank. You should be able to find out your bank's exact policy on this matter by visiting their Web site or by giving them a call.

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euzar · November 2003

Car_Man, I'm in New Jersey!

s852 · November 2003

A disadvantage of a 39 month lease in California is the vehicle registration fees. The registration fees are due yearly and you would end up paying for another year of registration by the 36th month, yet only have the car for an additional 3 months. You would then be returning the vehicle and leasing a new vehicle immediately paying registration fees again on the next car. Yearly registration fees are about 2% of the value of the vehicle so it could negate the savings of the slightly lower monthly payment of a 39 month lease vs a 36 month lease where you returned the vehicle before the registration due date.

jerhot · November 2003

I would be leasing the van for 36 months, unless Honda has other options. I am assuming that you give me Honda's numbers, and not those from other sources.

burrsr · November 2003

Actually, the VW incentives for November are now published in the Incentives and Rebates section. When I sent my request on Monday, it must have been "in between" months.

Thanks again.

lewh2 · November 2003

Thanks Car_Man for providing accurate information on the October MF and residual for the 2004 525. I leased the car on October 31. The dealer gave me a small cap reduction because I asked for it, and he said OK since I had leased a 525 from him in December 2001. I've read on other Edmunds BMW boards about the price increases with the 2004 BMW models, but found that my monthly payments are slightly less than with the 2001 model. Both models are similarly equipped. The residual is higher now (.62 versus .60 in 2001) and the interest rate is significantly lower. So thanks again for information that helped me negotiate what I consider to be a fair deal.

rbr · November 2003

Car Man:

Would appreciate your assistance with the November factory money factors and residuals on the following (asking for all at once so hopefully I only bug you once) We are located in Mpls., Minnesota and please assume 15,000 miles/year:

1. 2004 Accord EX V6 w/NAV -- 36 months

2. 2004 Acura TL w/NAV -- 36 months and 42 months

3. 2004 Lexus ES 330 w/NAV -- 36 months

Thanks in advance. BTW, I noticed that Honda is now offering financing of 1.9 % on Accords -- would this necessarily mean that the money factor is 1/24th of 1.9%, or does that rate only apply to purchases?

chrism124 · November 2003

Car_man,

Can you provide me with lease information based upon 3yrs/12k for the following;

04 Acura MDX w/ Touring & Nav

04 Lexus RX330 w/ Premium & Nav

Thanks,
Chris

newtisme · November 2003

Car_Man, thanks alot. I'll take you up on your calculation offer. Cap cost $49.1K, extra miles ( I drive 18K/year), sales tax 7.25%, $2500 down, CA registration, 36 month term.
Thanks again!

nbty · November 2003

Hi Carman,

Can you please give me the residual and MF on this vehicle. I live in nyc sticker price is 34500 and looking for 12000 miles a year. Also if you can give me an estimated payment.

thanks for this great service

brucee · November 2003

my lease is expring on my 2001 mdx. i now need to make a decison: should i buy out the car from the lease or purchase/lease a new car. i have enjoyed the mdx, but cannot afford to lease or buy a 2004 model. i can buy the 2001 mdx for about $26K, or buy/lease a ford explorer for about $28k. looking 3 years down the road on resale value, am i better off with a 6 year old acura with 72k miles, or a 3 year old explorer with 36k miles? any advice?

earcom · November 2003

Greetings Car_man. Ive used this board twice in the past to lease an Audi A4 and a VW Passat. Both times I was able to make a very good deal based on information youve provided in this discussion. Thank you.

Im currently considering a Honda for my wife and I was hoping you could provide lease information for the following in Utah:

Honda Accord Coupe V6 6spd manual (36, 48 months)
Honda Accord EX Sedan 4cyl 5spd manual (36, 48 months)
Honda Accord LX Sedan 4cyl 5spd manual (36, 48 months)
Honda Civic LX 4cyl 5spd manual (36, 48 months)

Sorry for not limiting my request to one model but perhaps others will find this information useful as well. Thanks.

CarMan@Edmunds · November 2003

Thanks for the additional information, euzar. I believe that if you were to lease a 2004 Toyota Matrix XR through Toyota Financial Services in your area this month for up to 3 years, its base lease money factor should be .00137. I have not seen TFS' residual values recently, but I the last time that I saw them its 3 year, 15,000 miles per residual value for a 2004 Matrix with 2WD is was around 56%.

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CarMan@Edmunds · November 2003

Very good point about California's registration fees, s852. I live in a state that has much more reasonable fees, but can certainly understand how that would be a consideration for consumers who live in CA. Thanks for the feedback.

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CarMan@Edmunds · November 2003

Thanks for the additional informaiton, jerhot. Here is the information that you are looking for. If you were to lease a 2004 Honda Odyssey EX-L with the rear entertainments system 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 .00215 and 61%, respectively.

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