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We've never leased a vehicle - and I'm curious as to how it actually works (Please - no comments about don't lease - etc.). Does the dealer negotiate the price - or is it straight from list? Can you negotiate the down payment? Anything else we should consider?
Do some searching on the Internet, you'll find some guides on how it works.
I've leased 4 cars and will keep doing it as long as it makes sense for me.
1. Don't put money down. If you total your car, you won't get that money back from insurance. Keep the money in your bank account and use it for your payments.
2. You negotiate the capitalized cost with the dealer. This includes rebates and whatever else to get the price lower from MSRP.
3. The residual value is based on MSRP.
4. Find a car you like and have multiple dealers give you a $0 down, sign and drive numbers. This means first payment, acquisition fee, etc rolled into the 36 months. This will allow you to compare the deals. This is how I always do it and it works well for me. As long as you have excellent credit, you don't need to give them a dime until the second payment is due 30 days later.
5. Edmunds.com's forum has a leasing section for each type of car. Lots of good info there and they will give you the moneyfactor (MF) and residual for the car you are interested in. Dealers will sometimes quote you a higher MF to make more money. Know all of the numbers before you go in.
Thanks for your replies. We are looking for a 3rd vehicle - a fun vehicle, but only want to lease for 2 years, just because it sounds like a great idea to have a fun car - but will we really use it? We are 100% debt free with plenty in investments/retirement/bank, and we could afford to purchase the car outright.
Given this - We are looking at leasing a Jeep Rubicon 2 dr. Almost impossible to find used to buy (we've been looking for months). MSRP 35k. Lease has a downpayment of 15% (although there is a sign and drive deal going on so I don't get the 0% if you need $5K down). And $356/mo. So what gives in this situation? What should I negotiate?
I'll be watching this thread with interest. PokerMunkee, in particular, I'm wondering if you have any sense that going back to the same dealership repeatedly serves a lessee well.
We just signed our third consecutive lease with the same Honda dealership and I'm sorta feeling like I got a little hosed. We were returning a leased Odyssey with a bit of body damage (a scrape along a passenger door that extended a little on to the rear quarter panel) and interior wear-and-tear but well within the mileage limit.
I'd seen ads for great lease specials on Odysseys and Pilots, but (of course) those rates were nowhere to be seen at the dealership. I understand about taxes, fees, and so forth but is it really true that the lease payments we see advertised on national television are literally unobtainable? Cite an ad saying $279 for an Odyssey LX and they practically laugh (besides the fact that there are no LXs to be had in northern NJ).
I ended up having to downsize to a CRV just to keep my payments the same as what they were, even though what's being advertised is much lower. Leasing still makes sense--we don't have any downpayment money to purchase, and don't want to borrow that much at this point--but how can I reassure myself that I didn't get taken advantage of?
Sanderling, taxes on leases vary state to state, so that may be why you can't get the deals you see advertised. Some states only charge sales tax on the payment each month, others (like here in Texas) charge on the negotiated sales price of the vehicle. So in Texas if I lease a car for $30k I'm paying tax on that full 30k up front (likely rolled into the lease). That right there could add $50-60 on my monthly payment for a three year lease.
Do some homework online. Find out the money factor and residual before going to the dealership. Learn how to convert money factor into APR (MF x 2400). Find out how your state collects sales tax on a lease. When you go to the dealership negotiate the sales price. Residual is based on MSRP, so you're really paying for the difference between the price you negotiate and the residual. When at the dealership calculate the numbers yourself. There are free apps for phones that allow you to figure approximate payment based on MF, residual, MSRP, negotiated price, acquisition fee, and state of residence.
Leases can be great if you know what you're doing. Many lease promotions have an interest rate under 1%, so if you only plan on keeping the car a few years you can do very well and you always have the option at the end of purchasing for the residual. Some cars such as Hondas might have a higher trade-in, so if you're lucky you may be able to take it to a dealership, get an offer greater than the residual, and pocket a little bit of money.
True about the taxes. I pay taxes on my monthly payment here in Colorado, so about half the amount if I paid cash or financed it.
I have no loyalty to a dealer or car maker, so I put them up against each other to see who gives me the lowest payment on a car I want to drive. The acquisition and disposition fees are almost never negotiable. I've only turned in one of my leases. If you leased the right car, it will usually be worth more than your buyout. I always have a bit of equity at the end of my lease that goes towards the next car. Of course it's a numbers game, but which dealers gives me the best numbers for a lower monthly payment with $0 out of my pocket wins my business.
I am very interested to know the numbers for a Jeep Wrangler. The Wrangler has the best resale value of about any car out there, but not many people lease them. Might be better off paying cash for it and selling it for $28k 2 years later. I'd personally go for a 2008-2009 Corvette convertible. I doubt you are going to take a $35K Rubicon off roading, so get the sports car that holds it's value almost as good
On the Jeep- You are willing to spend $8400 to borrow a Jeep for 2 years as a toy? Why not just rent one from a car rental place when you are feeling the urge to take a Jeep ride?
On negotiating: Email the dealer's internet sales dept and hit surrounding dealers. My sister just did this on a new BMW X3 lease. 11 dealers within 200-250 mile range and she had a $240 per month difference between the highest lease price and the lowest on the identical terms/vehicle. That obviously included a dealer that wasn't serious and just quoted a high rate and then a dealer that wanted to give the truck away Most were within a $90 per month range.
I am very interested to know the numbers for a Jeep Wrangler. The Wrangler has
the best resale value of about any car out there, but not many people lease
them. Might be better off paying cash for it and selling it for $28k 2 years
later. I'd personally go for a 2008-2009 Corvette convertible. I doubt you are
going to take a $35K Rubicon off roading, so get the sports car that holds it's
value almost as good
OK - here I go, boring y'all with the details - but DH is a car guy. He gets it into his head that he wants a particular car - buys it, drives it for about a year and then wants a different one. I get stuck with the details of selling, insuring, tagging, etc, and I'm sick of it. He did the corvette thing a couple of years ago - and the car LITERALLY sat in the garage. Couldn't take it out - in case it rained. Washed it every weekend (???), and then couldn't drive it because of sprinklers. When he did drive it - he was concerned about bottoming it out, damaging the rims, etc....this is supposed to be a fun car?
We had a jeep back in the early days, so maybe this a bit of reclaiming our youth. He wants something to be able to take the top down - and I'm against a sports car due to our previous experience. The only reason I'd like to lease it is due to the boredom factor, and being able to dump it off in 2 years. If it was me, I think renting it woud be a great idea - I know the look I'd get if I suggest it.
Seriously considering buying one rather than leasing.........
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