1) So as not to waste time, The salesman might point out when you are viewing the Quest or Odessy that you could get them into this vehicle for around $500 a month. Then there will be no surprises for anyone. If they then say that they were thinking about $350 a month you could steer them to the 2-3 year old domestic minivan.
My experience though is that the conversation usually goes something like...
Them - How much does your budget support for a car payment ???
Me - Oh say $500 a month
Them - Oh great then let me show you the base Ford Focus. I think that we can just squeeze you into that.
2) Leases - My take on leases is that they are not a great value. My take on them is that the lease payments for say a 3 year lease are about what a 5 year car loan payment goes for. So a lease leaves you in a very inflexible situation should you decide to sell sooner/drive more miles - whatever. There are always exceptions where one of the OEMs are trying to move their tired cars but they don't want to discount them, so they put on a subsidized lease.
3) The honesty goes both ways. How do you salesguys respond when someone asks - "What kind of a discount are they giving on these babies" or "What did you sell the last one of these for ?" I never seem to get a straight answer from questions like these so why should I offer a straight answer back.
You can lease a $32K BMW 325i right now for $400/mo. for 36 months.. Financing that same car, assuming a $1500 discount would result in a payment of $561/mo. I don't think a 40% increase in payment is inconsequential, and I don't think new BMW's are damaged goods, or loss leaders.
Leasing is just an alternative method of financing a car. It may not be for you, and may not be right for a lot of people. But, most of what you say about it is just wrong.
I agree that a lease is just a financing vehicle but with very inflexible rules.
The subsidized 325i lease is a great example of where a lease may make some sense. BMW's lease well because of their relatively high residuals and manufacturer subsidy.
Why didn't you pick a Honda Accord or a Ford Taurus for your example instead of one of the few exceptions.
would be a great example along with the BMW. The Ford Taurus is a poor candidate for leasing, due to its terrible residuals (usually). I guess my point is that it varies.. Sometimes leasing is a no-brainer, assuming you can meet the mileage requirements. Other times, it isn't a good idea, even if you normally like to lease. It just isn't that black and white.
Although, for some people, it would be a bad idea no matter what... If you can't sleep at night worrying about your mileage allowance, or don't take the time to understand the financing, I'd recommend against it. It isn't for everyone.
Ouch! Although I'm not a GM fan, I do know of one 1994 Chevy K3500 that's still kicking around and doing really well. Its even the dreaded 6.5L TD. I think the last time I saw it......hmmm, that would have been when my Ford was pulling it out of the ditch......it had about 155k on it. All I care is that it keeps running until we get the remaining 9 payments on it.
........ Many reasons, but mostly money (or conservation of) ..
When the first T-Birds came out they were run through "just" to test the waters and to see what they would do, obviously they did well and most dealers received MSRP++ .. the Mini's the same thing, the VW Cabriolets and Touaregs, Vipers, Prowlers the same deal .. back in the old days, the Miata's and the list goes on ....
Why do they do it when they can sell it to a customer .? .. why wait.? .. depending on the dealer, the area and the time of the year, they may have a bunch of hi-mileage dinged-up trades and sitting on a large inventory with a big fat floor plan.
And before the floorplan ignites and eats all the profits up, they will run 3/4/5 of the heavy hitters through, get the cake (or refuse the bids) send all the junk in with it, get what you can for that and all of a sudden ~ life is good, you bought some nice clean stuff while you were there and it's "black city", plus no commissions were paid, no floorplan, no brain damage (or little of) and it didn't take 30/40 days, it took 3-4 hours .... simple.!
I guess it's a different view point when you drive by a dealership and you say "their loaded up with all those ABC's" I bet I can buy one for less than cost .. what they don't realize is, the popular ABC's sell in that 30/40 day period and potential customers are looking at the 2nd or 3rd batch.
leasing isnt inflexible...just the opposite. you have more choices at the end than you do after 36 months of a 5-year contract. the key is to STRUCTURE the lease properly, which, as kyfdx said, requires fore-knowledge.
a 2005 nissan altima 2.5s goes for 24 months at $355/mo. with only first payment due. this includes 6% tax. a 60 month finance including 6 % tax goes about $420/mo. 36 months is only $270. these are things that are called "no-brainers".
Some of the leases mentioned are really big incentive discounts from the manufacturer. They don't want to lower their prices so they offer a sweetheart lease to move the metal. BMW is good at this practice. Porsche has also caught on.
If in the rare case the residuals are so great then your comparisons need to subtract off the equity that a payment buyer would have after 36 months for a 60 month loan.
As you all know, sometimes (but not always) a buyer can take an incentive as a low interest rate or even a rebate. So your lease/buy comparisons should include the low interest rate or the rebate in the analysis.
When you do all this and account for the manufacturer subsidy for some slow movers then I stand by my post. Leases are in general not very flexible and that the payment (less equity build up and subsidies) is about the same in a 36 month lease as a 60 month loan with interest or rebate incentives.
Leases are inflexible. You sign the contract and you live with it. What if you change jobs and have to put on quite a few more miles on the car then you get to pay the penalty mileage rate. What if your job change allows you to drive alot less miles ? Do you get any credit for the fewer miles that you signed up for ?? What if you can't stand the car or want the newer better one ?? You can bet it will cost you dearly to get out of your lease. What if the car runs pretty good still and you would really like to keep it another couple of years - that will cost you more than it should too. What if you paint your car pink (or modify it somehow) - well that will cost you bigtime.
I just don't see how a lease is flexible. Sure if you know the future you can plan a lease for it. The problem is, is that plans change.
So, My advice to someone looking for a car is to avoid leases unless there is a whopper lease subsidy and no other incentives.
So your "no brainer" really hasn't been thought through very well.
I agree with both bowke28 and rroyce10, sort of. Leasing is inflexible, until the very end of the lease when you have more options than if you had bought, in particular all things being equal you can hand back the keys and walk away, not usually an option in a purchase transaction.
leases don't offer any more flexibility at lease end. They just offer cost certainty.
Basically, anytime you want out of a buy, just sell the car for whatever it is worth. After 36 months, it might be more or less than the residual would have been.
It is also (almost) certain that the woman that leases a Miata and 12 months later has twins is going to take a pounding to get out of the lease early.
Well I was drinking coffee and scanning the car ads this Saturday morning as I often do.
There is a local Nissan dealer who is blowing out his whole lot of Altimas S at $16795 (after a $1500 rebate). The ad claims they have more than 15 Altimas at this price so it's not a come-on one-of-a-kind screamer ad.
My credit union will do 100 percent (ie. nothing down - including tax) car loans for people with good credit at 4.09 percent interest. With this interest rate and adding 6 percent sales tax I get a 60 month payment of around $336 - not the $420 that bowke28 posted.
When you compare the $336 5-year payment to the $270 lease then the lease is better in terms of short term cash flow. However if the car builds up any equity in 3 years then the lease may not be such a great deal. For around twenty percent more ($66 a month difference) you could own the car rather than just rent it.
This particular lease deal (the Altima) is somewhat better than many of them. There are lots of other cars/trucks where the difference in the payment between a purchase and a lease is even less compelling than the Altima.
Therefore I remain convinced that leases are in general not that good of a deal (both financially ad from a flexibility point-of-view)and I would recommend that someone purchase a car instead.
From a salesmans point of view leases are great because you know that your customer will be back soon to do another deal and that will add to your bottom line.
my comparison was at MSRP for BOTH payments. every $1000 that you drop from a 24 month lease drops the payment about $45 a month.
so your $336 payment on the 60 month loan goes along with a $188 payment on 24 months.
keep making your "points", my friend.
also, the scenario where you change jobs?
dont you think extra mileage affects the resale value of your "owned" car as well? heck..the NADA book can charge as much as $0.25/mile on high mileage charts.
example:
36 month lease at $270 on 15k miles/year. the residual is about $11500. if you take the $420 payment (again, im dealing with MSRP here, and 6.5% for your normal buyer, so please try to stay with me) times 36 months, you've paid over $15,000. you also have about $9500 left in total payoff. now...adding them all up brings it to about the same money, but thats not my point here.
lets say you drive 75000 miles those first 3 years. your trade value will be around $5000 with a $9500 payoff. to trade it in, you have to either write a check for $4500 or roll it into your next car.
in the lease, you are over by 30k miles. 30,000 x $0.15= $4500. amazing how that works, huh?
my actual point is this: one way, you are out $4500 after making a $400 payment for 3 years. the other way, you are out $4500 after making a $270 payment for 3 years.
...... Loss leaders ..? uum, depends on how you look at it ..
That particular one is a base: no slider, no leather, no tune upgrade, no Auto, no back-up beep beep, no heated seats, no sport pack or cold pack ... if you add those options (thats a standard seller) you will be just shy of $37grand ... payment is around $420 X 36, plus tax so figure "around" 7%, so thats "around" $450 a month, plus that is with $2,500 *down*, Plus the first and security, plus acquisition fee and plates .. so figure "almost" $4grand *out of pocket* and your sitting at $450ish a month with 12k a year - and the rest you will pay at the end, one way or another, you pay ..
Just like that little ol' lady used to say in the Wendys commercial ~ "Where's the Beef" .! .l.o.l..
1) You can actually get an Altima for a lot less than MSRP. Just try to get a 3 year lease for a lot less than $270 with nothing down.
2) As you pointed out driving miles cost you money. It's just that when you exceed your milage alotment that you pay more than you do when you own the car. Usually the milage penalty is greater than the real drop in depreciation.
Again - leases are inflexible so why use one. You usually don't save any money and makes you pay on someone elses terms.
I'm not going to argue with you anymore Bowke28. There is sound financial advice in my posts, if you want to ignore it with your blue-sky logic be my guest.
I know this subject had been beat to death, but I am still somewhat confused.
I have leased an Odyssey a couple of months ago. I was generally satisfied with my purchase experience, but the salesman and the “accessories lady” tried to slip a few “exaggerations”, nothing outrageous, within the expected range.
A couple of days after the purchase I received the CSI call from Honda. I gave them all 5s. Two weeks ago a received the “fill in the blank” survey from Honda. The survey says: “When completing the survey it is important that we receive your objective views. In order to help your Honda dealer ensure your total satisfaction with your new vehicle, we need your DIRECT and CANDID opinions.” As you know, the questions are in 1 to 10 range from Unacceptable to Average to Outstanding. I mostly gave them 10s except for honesty and ease of doing business and determining the price where I gave them 7s and 8s.
1. Will my 7s and 8s hurt the dealership or the salesperson in anyway? Because that wasn’t my intend. 2. Does Honda really expect the Outstanding marks on all surveys, if they do, that doesn’t make sense. If everyone is outstanding then outstanding becomes average.
Actually, Terry... Those lease numbers I quoted were with the down payment and acquisition fees rolled in. The actual ad price is $289/mo. I realize that isn't a car that most people will want, without all the goodies, but the numbers still stand up in comparison, even with the loaded models. It is an extremely generous lease program, but of course it isn't as good as the advertisement makes it seem.
My point was, and still is.. that when manufacturers load on the lease incentives, and don't have comparable buy incentives, it can make more sense to lease. If the leases are low because of high residuals, and you intend to purchase the car at lease end, then the incentives don't do you much good... But, if there are cap cost reductions for leasing, and highly supported money factors. (.00125 in that lease example), then leasing can sometimes be advantageous. My example above was an apples to apples comparison.
If you aren't financially savvy, and are the type of person that gives away $1K in the finance office on the way out, then leasing is probably too complex to be considered. But, for some, it can be a great deal.
It isn't for everyone, but it isn't only for those that can deduct their payments for tax purposes, and shouldn't be rejected out of hand.
My wife and I went to a Lexus dealer last week with the intention of purchasing one. Due to limited competition in the immediate area, the dealer was giving only a $2000 discount, plus the attitude was bad. I felt like I was pushed into signing the offer. I resisted it but it was a bad experience.
I am planning to turning the table around by faxing by specs to all five Lexus dealers within 3 hour drive and have them give me a quote. To be more aggressive, I was going to setup a website and give them a week to bid on my business. The website will display the lowest quote during that time. As a dealer, what do you think?
actually, its not bad. as long as you give all of them access to your low bid, its quite fair. personally, as a dealer, i would set it to alert me by phone every time a new bid comes in.
however,
i would be careful to jump on one dealer over $50 or so. also, dont rule out your home dealer out of hand. it can be very advantageous to have them on your side in the future. to me, it would be worth a few hundred extra to do business close to home. lets do the math:
first of all, time:
how much is your time worth? since you are buying a lexus, i assume you make very good money. 3 hours each way is 6 hours of driving times your professional compensation per hour, and this can be alot of money.
secondly, fuel:
6 hours of driving would be something like 300-400 miles, which is about a tank of gas.
third, locality:
doing business locally increases your circle of influence. wouldnt you want to do business with people that can do business with you in your profession?
all-in-all, i think your idea is neat, but i also think you might be outsmarting yourself over what will probably turn out to be only a few hundred dollars.
many dealerships will not bid on a sale unless your buying a fleet... This eliminates many dealers who will offer a quality experience and maybe a better price. Simply, the best dealers don't need to sell cars that way.
also, somebody who is in front of me, ready to buy now....gets all the attention and effort. The guy who is threating to buy a week, month year from now may not get the lowest available price.
Key question for me would be is an internet manager going to actually pay that much attention to a "bid for my business" website over a week's time? Especially when it probably wouldn't turn out to be a high profit deal just moving a unit.
tvnam- good thought though. If you do it please post back how it went. I'm sure a lot of people would like to know.
"[..] somebody who is in front of me, ready to buy now....gets all the attention and effort."
That makes a lot of sense, somehow.
I'd like to throw out that I always take cash with me; $500 or a little more. That says you're serious much better than a checkbook or credit card can.
Of course, I may be wrong... "Cash paid on the barrelhead will mark a loser", or words to that effect; Jay Jacobs, "Winning the Restaurant Game".
"many dealerships will not bid on a sale unless your buying a fleet"
Audia, I guess you lost me on this one. Is not a dealer bidding whenever they quote a price to a potential customer? It may be a sealed bid or an open bid, depending on the customer's shopping methods. How do you see this as different?
Thanks for the advice. You could be right. However, the experience we had in the local Lexus was so unpleasant that I have to do this. In a way, I was hoping the purchasing of car worth more than $35,000 should be enjoyable?
So, should I shorten my time frame to make the quote more relevant? For example, I can give the dealers three days time frame instead of week. The only question is whether the dealers will care enough to reply quick enough.
At the same time, isn't bidding a thing coming of age sooner or later. Just look at eBay
Unless it's truly a no haggle store, very few dealers are going to give you their best price as their first quote. They're going to give you revised quotes in response to new information that you present, such as revised offers, quotes from other dealers, etc. To assert that this differs from getting into a bidding war seems like semantics. Where a dealer chooses to exit the negotiation, or bidding war if you like, will depend upon that dealer's business model, for example higher margin per unit vs higher volume, and the state of their business at the particular point in time, units sold that month, etc.
Tvnam's idea sounds like an interesting experiment. I hope that he/she tries it and lets Town Hall know how it works out. I would say that if you start the bidding approach, you should also be committed to actually buying from the lowest bidder. If you create a bidding war and then select based on geographic proximity or other factors other than price, it would border on Inconsiderate.
since it is almost a given that the local guy will follow up with you, i would wait till then. once he calls you and asks the big question: "what do i have to do?" then i would say "i will buy for $xx,xxx only. if you do it, i will come get it."
this makes it simple, and also allows them to save face from their treatment of you. chances are that they will be a bit nicer from now on.
Bidding over a car in race to the bottom would be pretty silly for any dealer. "Negotiating" is different. Negotiations happen when there are committed offers. The dealer giving $2000 off MSRP is making a commitment to sell at that price. The buyer wanting $3k off had better make a committed buy offer and back it up if he wants to be taken seriously. A bunch of numbers on someone's web site are very different. Let's not forget this is a Lexus dealer we're talking about; it's not like they're selling distressed merchandise. Negotiating hard is a good thing, but the proposed scheme sounds pretty silly to me. -Mathias
"since it is almost a given that the local guy will follow up with you, i would wait till then. once he calls you and asks the big question: "what do i have to do?" then i would say "i will buy for $xx,xxx only."
Sounds like pretty good advice, Bowke28, except that the issue, if I understand Tvnam correctly, is that he/she truly wants the $xx,xxx figure to be the lowest price available among the 5 dealers. The bidding process *may* provide a means of finding out what that lowest price is. My concern is that once you initiate the bidding process, then it would be Inconsiderate to buy from any of the dealers except the one that gave the lowest bid, even if it's not the closest dealer, geographically.
my issue with it, though, is that the lowest bid might be the farthest away, and only be $50-$100 lower than the local guy. in that case, it is considerate to buy from the lowest bidder, but in the process, he will outsmart himself by doing so.
tvnam...
you said in your original post that they pressured you into making an offer. how can you expect more of a discount unless you offer it? this fact passed by me when i read it the first time, but now that i see it, i would say that you and the dealer are equally responsible for you feeling pressured.
would you negotiate on selling your house without a signed offer from the buyer?
Yup, Bowke28, I think our concerns about Tvnam's situation are similar. Of course, whether going to a farther away dealer to save $50 to $100 constitutes outsmarting oneself really depends upon a person's priorities. So, we should let Tvnam tell us what those priorities are.
How, Bowke28, do you recommend that Tvnam arrive at the $xx,xxx figure without initiating a bidding process?
Of course, I am not looking at saving $50 to $100. Personally, I hate the negotiation process of buying a car. For me, a honest dealer would do what most store would do to post a real price. For example, Walmart never sells at list price but at the price it posted so why can't a car dealer do the same. Carmax sell at a fixed price. I would feel much better this way. The problem with a negotiation approach is that your price depends on how good you negotiate not how sincere is your offer. For a consumer, I felt like I need to protect myself.
From a consumer view point, I hope you also realize that it is very difficult to estimate what is a fair market price. Take the RX330 I am interested in. I got the following from Edmunds.com and from Carsdirect.com
So what do you think is the fair price in CA and in NC? I wrote by email and got a quote of $35,200 from a Lexus dealer in CA. For NC, my email got me a quote of $37888.
please understand that I find this obsessive behavior about trying to crawl into a dealership's accoutant's computer programs more than a little "over the top".
All of this research to keep a dealer from making a 3-10% margin, when I guarantee that every day, 99% of your other purchases and completed blindly and without concern for cost or overhead.
I won't have to if all car prices are fixed. Please remember as consumer we are at the mercy of the dealers in general and not the other way around. It is only with the wide spread use of internet that the consumer started to understand the cost structure. As for the 3-10% margin, the dealers need to show that it is worth paying for the 10% margin when he/she could be paying for 3% margin.
Also, I do not purchase blindly 99% of the time. Don't treat the customers as stupid please. This is the common problem of dealers if I may say so.
what are you waiting for then.... if you feel you can get a better price in CA, buy one-way ticket, fly out there and buy it...
yes, no suprise same cars are selling for different prices in different areas.... your local dealer can't compete with a dealer in CA, completely different markets with different styles, etc.. the rx maybe selling very hot in NC, but a little cold in CA.... why would the guy in NC discount if he can't keep them on the lot? just sit back and think about it, your beating yourself over the head.....
...."As for the 3-10% margin, the dealers need to show that it is worth paying for the 10% margin when he/she could be paying for 3% margin....."
i think the price your paying for the car is more dependant upon how the market values the car rather than what the dealer thinks... the market will determine what a car is worth, ie - the rx's are fairly hot and more than likely holding close to MSRP, if not MSRP in some areas, fairly well. Look at most Ford's, you'll find STEEP discounts from MSRP... this also depends on where you live. I have a feeling Ford's have better retail in Detroit, then let's say, in the South. Just because Ford's are heavily discounted, doesn't mean a Lexus will be.. Ford, IMO, have their MSRP set too high, therefore the reason they have to put heavy incentives on vehicles. Seems Lexus' are fairly close to where they should be, they don't seem to be having a problem selling many models.
Those "selling" prices are set by the consumers, you, your neighbor, etc... what are you willing to pay. Lexus' are a high priced car, don't beat your head against the wall disputing MSRP/invoice/% of this that and the other, its just as easy for them to turn their back and sell to the next dude that walks in the door, its not high distressed merchandise. Same thing at your BMW, MB's, etc... pay up or don't play.
Go to a Ford/Hyundai/a lot of Gm's, different story.... they'll do anything to push the cars off their lot..... different cars, different stories....
Have you thought about Saturn with their no haggle no hassle policy? The car may not be exactly what you are looking for but it would eliminate the process that you dislike so much.....
Seriously I admire anyone who has done their research as you have. That's great. Just don't get paralyzed by over analysis.
Do good research and you will get a good deal. Will you ever get ( or know) what the absolute bottom dollar on the particular vehicle from a particular dealership is? Probably not. The main thing is to be comfortable with whatever deal you strike. If you are going to be constantly questioning yourself as to whether you got them to accept bottom dollar don't do the deal. Peace of mind is worth more....
Comments
And I love going to car dealers!
My experience though is that the conversation usually goes something like...
Them - How much does your budget support for a car payment ???
Me - Oh say $500 a month
Them - Oh great then let me show you the base Ford Focus. I think that we can just squeeze you into that.
2) Leases - My take on leases is that they are not a great value. My take on them is that the lease payments for say a 3 year lease are about what a 5 year car loan payment goes for. So a lease leaves you in a very inflexible situation should you decide to sell sooner/drive more miles - whatever. There are always exceptions where one of the OEMs are trying to move their tired cars but they don't want to discount them, so they put on a subsidized lease.
3) The honesty goes both ways. How do you salesguys respond when someone asks - "What kind of a discount are they giving on these babies" or "What did you sell the last one of these for ?"
I never seem to get a straight answer from questions like these so why should I offer a straight answer back.
Leasing is just an alternative method of financing a car. It may not be for you, and may not be right for a lot of people. But, most of what you say about it is just wrong.
regards,
kyfdx
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I agree that a lease is just a financing vehicle but with very inflexible rules.
The subsidized 325i lease is a great example of where a lease may make some sense. BMW's lease well because of their relatively high residuals and manufacturer subsidy.
Why didn't you pick a Honda Accord or a Ford Taurus for your example instead of one of the few exceptions.
Although, for some people, it would be a bad idea no matter what... If you can't sleep at night worrying about your mileage allowance, or don't take the time to understand the financing, I'd recommend against it. It isn't for everyone.
regards,
kyfdx
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http://money.cnn.com/2004/03/22/pf/autos/bc.autos.gm.leapyear.reu- - t/index.htm
When the first T-Birds came out they were run through "just" to test the waters and to see what they would do, obviously they did well and most dealers received MSRP++ .. the Mini's the same thing, the VW Cabriolets and Touaregs, Vipers, Prowlers the same deal .. back in the old days, the Miata's and the list goes on ....
Why do they do it when they can sell it to a customer .? .. why wait.? .. depending on the dealer, the area and the time of the year, they may have a bunch of hi-mileage dinged-up trades and sitting on a large inventory with a big fat floor plan.
And before the floorplan ignites and eats all the profits up, they will run 3/4/5 of the heavy hitters through, get the cake (or refuse the bids) send all the junk in with it, get what you can for that and all of a sudden ~ life is good, you bought some nice clean stuff while you were there and it's "black city", plus no commissions were paid, no floorplan, no brain damage (or little of) and it didn't take 30/40 days, it took 3-4 hours .... simple.!
I guess it's a different view point when you drive by a dealership and you say "their loaded up with all those ABC's" I bet I can buy one for less than cost .. what they don't realize is, the popular ABC's sell in that 30/40 day period and potential customers are looking at the 2nd or 3rd batch.
Terry.
a 2005 nissan altima 2.5s goes for 24 months at $355/mo. with only first payment due. this includes 6% tax. a 60 month finance including 6 % tax goes about $420/mo. 36 months is only $270. these are things that are called "no-brainers".
If in the rare case the residuals are so great then your comparisons need to subtract off the equity that a payment buyer would have after 36 months for a 60 month loan.
As you all know, sometimes (but not always) a buyer can take an incentive as a low interest rate or even a rebate. So your lease/buy comparisons should include the low interest rate or the rebate in the analysis.
When you do all this and account for the manufacturer subsidy for some slow movers then I stand by my post. Leases are in general not very flexible and that the payment (less equity build up and subsidies) is about the same in a 36 month lease as a 60 month loan with interest or rebate incentives.
Leases are inflexible. You sign the contract and you live with it. What if you change jobs and have to put on quite a few more miles on the car then you get to pay the penalty mileage rate. What if your job change allows you to drive alot less miles ? Do you get any credit for the fewer miles that you signed up for ?? What if you can't stand the car or want the newer better one ?? You can bet it will cost you dearly to get out of your lease. What if the car runs pretty good still and you would really like to keep it another couple of years - that will cost you more than it should too. What if you paint your car pink (or modify it somehow) - well that will cost you bigtime.
I just don't see how a lease is flexible. Sure if you know the future you can plan a lease for it. The problem is, is that plans change.
So, My advice to someone looking for a car is to avoid leases unless there is a whopper lease subsidy and no other incentives.
So your "no brainer" really hasn't been thought through very well.
You didn't print that with a straight face did you ...?
oooh, I get it - April Fools day, right.?
Terry.
Basically, anytime you want out of a buy, just sell the car for whatever it is worth. After 36 months, it might be more or less than the residual would have been.
It is also (almost) certain that the woman that leases a Miata and 12 months later has twins is going to take a pounding to get out of the lease early.
2020 Acura RDX tech SH-AWD, 2023 Maverick hybrid Lariat luxury package.
There is a local Nissan dealer who is blowing out his whole lot of Altimas S at $16795 (after a $1500 rebate). The ad claims they have more than 15 Altimas at this price so it's not a come-on one-of-a-kind screamer ad.
My credit union will do 100 percent (ie. nothing down - including tax) car loans for people with good credit at 4.09 percent interest. With this interest rate and adding 6 percent sales tax I get a 60 month payment of around $336 - not the $420 that bowke28 posted.
When you compare the $336 5-year payment to the $270 lease then the lease is better in terms of short term cash flow. However if the car builds up any equity in 3 years then the lease may not be such a great deal. For around twenty percent more ($66 a month difference) you could own the car rather than just rent it.
This particular lease deal (the Altima) is somewhat better than many of them. There are lots of other cars/trucks where the difference in the payment between a purchase and a lease is even less compelling than the Altima.
Therefore I remain convinced that leases are in general not that good of a deal (both financially ad from a flexibility point-of-view)and I would recommend that someone purchase a car instead.
From a salesmans point of view leases are great because you know that your customer will be back soon to do another deal and that will add to your bottom line.
so your $336 payment on the 60 month loan goes along with a $188 payment on 24 months.
keep making your "points", my friend.
also, the scenario where you change jobs?
dont you think extra mileage affects the resale value of your "owned" car as well? heck..the NADA book can charge as much as $0.25/mile on high mileage charts.
example:
36 month lease at $270 on 15k miles/year. the residual is about $11500. if you take the $420 payment (again, im dealing with MSRP here, and 6.5% for your normal buyer, so please try to stay with me) times 36 months, you've paid over $15,000. you also have about $9500 left in total payoff. now...adding them all up brings it to about the same money, but thats not my point here.
lets say you drive 75000 miles those first 3 years. your trade value will be around $5000 with a $9500 payoff. to trade it in, you have to either write a check for $4500 or roll it into your next car.
in the lease, you are over by 30k miles. 30,000 x $0.15= $4500. amazing how that works, huh?
my actual point is this: one way, you are out $4500 after making a $400 payment for 3 years. the other way, you are out $4500 after making a $270 payment for 3 years.
which way looks like the smarter decision?
That particular one is a base: no slider, no leather, no tune upgrade, no Auto, no back-up beep beep, no heated seats, no sport pack or cold pack ... if you add those options (thats a standard seller) you will be just shy of $37grand ... payment is around $420 X 36, plus tax so figure "around" 7%, so thats "around" $450 a month, plus that is with $2,500 *down*, Plus the first and security, plus acquisition fee and plates .. so figure "almost" $4grand *out of pocket* and your sitting at $450ish a month with 12k a year - and the rest you will pay at the end, one way or another, you pay ..
Just like that little ol' lady used to say in the Wendys commercial ~ "Where's the Beef" .! .l.o.l..
Terry.
1) You can actually get an Altima for a lot less than MSRP. Just try to get a 3 year lease for a lot less than $270 with nothing down.
2) As you pointed out driving miles cost you money. It's just that when you exceed your milage alotment that you pay more than you do when you own the car. Usually the milage penalty is greater than the real drop in depreciation.
Again - leases are inflexible so why use one. You usually don't save any money and makes you pay on someone elses terms.
I'm not going to argue with you anymore Bowke28. There is sound financial advice in my posts, if you want to ignore it with your blue-sky logic be my guest.
any thoughts??
Dealingbob1
I have leased an Odyssey a couple of months ago. I was generally satisfied with my purchase experience, but the salesman and the “accessories lady” tried to slip a few “exaggerations”, nothing outrageous, within the expected range.
A couple of days after the purchase I received the CSI call from Honda. I gave them all 5s. Two weeks ago a received the “fill in the blank” survey from Honda. The survey says: “When completing the survey it is important that we receive your objective views. In order to help your Honda dealer ensure your total satisfaction with your new vehicle, we need your DIRECT and CANDID opinions.” As you know, the questions are in 1 to 10 range from Unacceptable to Average to Outstanding. I mostly gave them 10s except for honesty and ease of doing business and determining the price where I gave them 7s and 8s.
1. Will my 7s and 8s hurt the dealership or the salesperson in anyway? Because that wasn’t my intend.
2. Does Honda really expect the Outstanding marks on all surveys, if they do, that doesn’t make sense. If everyone is outstanding then outstanding becomes average.
My point was, and still is.. that when manufacturers load on the lease incentives, and don't have comparable buy incentives, it can make more sense to lease. If the leases are low because of high residuals, and you intend to purchase the car at lease end, then the incentives don't do you much good... But, if there are cap cost reductions for leasing, and highly supported money factors. (.00125 in that lease example), then leasing can sometimes be advantageous. My example above was an apples to apples comparison.
If you aren't financially savvy, and are the type of person that gives away $1K in the finance office on the way out, then leasing is probably too complex to be considered. But, for some, it can be a great deal.
It isn't for everyone, but it isn't only for those that can deduct their payments for tax purposes, and shouldn't be rejected out of hand.
regards,
kyfdx
(who bought his last two cars)
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Just a question that came up earlier this week.
I am planning to turning the table around by faxing by specs to all five Lexus dealers within 3 hour drive and have them give me a quote. To be more aggressive, I was going to setup a website and give them a week to bid on my business. The website will display the lowest quote during that time. As a dealer, what do you think?
however,
i would be careful to jump on one dealer over $50 or so. also, dont rule out your home dealer out of hand. it can be very advantageous to have them on your side in the future. to me, it would be worth a few hundred extra to do business close to home. lets do the math:
first of all, time:
how much is your time worth? since you are buying a lexus, i assume you make very good money. 3 hours each way is 6 hours of driving times your professional compensation per hour, and this can be alot of money.
secondly, fuel:
6 hours of driving would be something like 300-400 miles, which is about a tank of gas.
third, locality:
doing business locally increases your circle of influence. wouldnt you want to do business with people that can do business with you in your profession?
all-in-all, i think your idea is neat, but i also think you might be outsmarting yourself over what will probably turn out to be only a few hundred dollars.
also, somebody who is in front of me, ready to buy now....gets all the attention and effort. The guy who is threating to buy a week, month year from now may not get the lowest available price.
tvnam- good thought though. If you do it please post back how it went. I'm sure a lot of people would like to know.
Duncan
That makes a lot of sense, somehow.
I'd like to throw out that I always take cash with me; $500 or a little more. That says you're serious much better than a checkbook or credit card can.
Of course, I may be wrong... "Cash paid on the barrelhead will mark a loser", or words to that effect; Jay Jacobs, "Winning the Restaurant Game".
-Mathias
Audia, I guess you lost me on this one. Is not a dealer bidding whenever they quote a price to a potential customer? It may be a sealed bid or an open bid, depending on the customer's shopping methods. How do you see this as different?
Duncan
At the same time, isn't bidding a thing coming of age sooner or later. Just look at eBay
Tvnam's idea sounds like an interesting experiment. I hope that he/she tries it and lets Town Hall know how it works out. I would say that if you start the bidding approach, you should also be committed to actually buying from the lowest bidder. If you create a bidding war and then select based on geographic proximity or other factors other than price, it would border on Inconsiderate.
since it is almost a given that the local guy will follow up with you, i would wait till then. once he calls you and asks the big question: "what do i have to do?" then i would say "i will buy for $xx,xxx only. if you do it, i will come get it."
this makes it simple, and also allows them to save face from their treatment of you. chances are that they will be a bit nicer from now on.
Negotiations happen when there are committed offers. The dealer giving $2000 off MSRP is making a commitment to sell at that price. The buyer wanting $3k off had better make a committed buy offer and back it up if he wants to be taken seriously.
A bunch of numbers on someone's web site are very different.
Let's not forget this is a Lexus dealer we're talking about; it's not like they're selling distressed merchandise.
Negotiating hard is a good thing, but the proposed scheme sounds pretty silly to me.
-Mathias
Sounds like pretty good advice, Bowke28, except that the issue, if I understand Tvnam correctly, is that he/she truly wants the $xx,xxx figure to be the lowest price available among the 5 dealers. The bidding process *may* provide a means of finding out what that lowest price is. My concern is that once you initiate the bidding process, then it would be Inconsiderate to buy from any of the dealers except the one that gave the lowest bid, even if it's not the closest dealer, geographically.
tvnam...
you said in your original post that they pressured you into making an offer. how can you expect more of a discount unless you offer it? this fact passed by me when i read it the first time, but now that i see it, i would say that you and the dealer are equally responsible for you feeling pressured.
would you negotiate on selling your house without a signed offer from the buyer?
didnt think so.
go sign your offer.
How, Bowke28, do you recommend that Tvnam arrive at the $xx,xxx figure without initiating a bidding process?
this is why people outsmart themselves so often. if you like the car, and can afford it comfortably, then there should be no other concern.
if he initiates a bidding process, all im saying is that he could end up with an 8-10 hour process to save a hunsky or so.
keep in mind...the low bidder isnt going to bid very much lower than the previous low guy. i would drop a hundred and call it a day.
to me, and to most people i know, thats not worth driving to timbuktu.
finally, if he were negotiating on a $3000 beater because thats all he has to his name, i would understand...but he's buying a freakin lexus, man.
;-)
From a consumer view point, I hope you also realize that it is very difficult to estimate what is a fair market price. Take the RX330 I am interested in. I got the following from Edmunds.com and from Carsdirect.com
Zip Code Edmunds TMV Price Carsdirect.
91789 (CA) $38116 $35571
31821 (NC) $37979 $40063
So what do you think is the fair price in CA and in NC? I wrote by email and got a quote of $35,200 from a Lexus dealer in CA. For NC, my email got me a quote of $37888.
tvnam
I don't understand the need to do this - make an offer, drive away in your vehicle.
All of this research to keep a dealer from making a 3-10% margin, when I guarantee that every day, 99% of your other purchases and completed blindly and without concern for cost or overhead.
Also, I do not purchase blindly 99% of the time. Don't treat the customers as stupid please. This is the common problem of dealers if I may say so.
yes, no suprise same cars are selling for different prices in different areas.... your local dealer can't compete with a dealer in CA, completely different markets with different styles, etc.. the rx maybe selling very hot in NC, but a little cold in CA.... why would the guy in NC discount if he can't keep them on the lot? just sit back and think about it, your beating yourself over the head.....
i think the price your paying for the car is more dependant upon how the market values the car rather than what the dealer thinks... the market will determine what a car is worth, ie - the rx's are fairly hot and more than likely holding close to MSRP, if not MSRP in some areas, fairly well. Look at most Ford's, you'll find STEEP discounts from MSRP... this also depends on where you live. I have a feeling Ford's have better retail in Detroit, then let's say, in the South. Just because Ford's are heavily discounted, doesn't mean a Lexus will be.. Ford, IMO, have their MSRP set too high, therefore the reason they have to put heavy incentives on vehicles. Seems Lexus' are fairly close to where they should be, they don't seem to be having a problem selling many models.
Those "selling" prices are set by the consumers, you, your neighbor, etc... what are you willing to pay. Lexus' are a high priced car, don't beat your head against the wall disputing MSRP/invoice/% of this that and the other, its just as easy for them to turn their back and sell to the next dude that walks in the door, its not high distressed merchandise. Same thing at your BMW, MB's, etc... pay up or don't play.
Go to a Ford/Hyundai/a lot of Gm's, different story.... they'll do anything to push the cars off their lot..... different cars, different stories....
Seriously I admire anyone who has done their research as you have. That's great. Just don't get paralyzed by over analysis.
Do good research and you will get a good deal. Will you ever get ( or know) what the absolute bottom dollar on the particular vehicle from a particular dealership is? Probably not. The main thing is to be comfortable with whatever deal you strike. If you are going to be constantly questioning yourself as to whether you got them to accept bottom dollar don't do the deal. Peace of mind is worth more....
Just my .02.
Duncan