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So did you literally walk out of the dealership with a new car and didn't spend a dime? Or do they at least want the first month's payment?
No. Both times, they delivered the car to my house. Actually, for my wife's, they went to her office. But she decided to buy her latest Caddy and just keep it 10 years.
Went through third party leasing. Every time I do the research, they beat the pants off the dealership, they are WAY more customer service oriented, and they pre-inspect your lease return and fix it up for you before returning it to the bank.
Yes, I did pay the first month's payment. But the way their contract works, you pay in advance. So the last month and turning in the car...there is no payment involved.
No. Both times, they delivered the car to my house. Actually, for my wife's, they went to her office. But she decided to buy her latest Caddy and just keep it 10 years.
Went through third party leasing. Every time I do the research, they beat the pants off the dealership, they are WAY more customer service oriented, and they pre-inspect your lease return and fix it up for you before returning it to the bank.
Yes, I did pay the first month's payment. But the way their contract works, you pay in advance. So the last month and turning in the car...there is no payment involved.
Who did you go through for 3rd party? My current lease is up in a year and the dealership has called me, trying to get me to turn in my car early. If I could go 3rd party and get a new lease for a lower monthly payment, it might make sense, other than registration (plates) cost would go up.
I think the current Prius ('12) runs around $22K. How do you figure a reasonable range for the monthly payment considering I would put $0 down?
Who did you go through for 3rd party? My current lease is up in a year and the dealership has called me, trying to get me to turn in my car early. If I could go 3rd party and get a new lease for a lower monthly payment, it might make sense, other than registration (plates) cost would go up.
I think the current Prius ('12) runs around $22K. How do you figure a reasonable range for the monthly payment considering I would put $0 down?
They were cheaper than the dealership overall by quite a bit.
I don't know how they do it...volume or what.
The first car, it was a savings of over 100 a month.
The second car, closer to 80.
No fee for returning the car.
And like I said...way better customer service.
Before I got my first car, they took me test driving some fun stuff...like a Bentley GT Continental...whoo hoo!
They were cheaper than the dealership overall by quite a bit.
I don't know how they do it...volume or what.
The first car, it was a savings of over 100 a month.
The second car, closer to 80.
No fee for returning the car.
And like I said...way better customer service.
Before I got my first car, they took me test driving some fun stuff...like a Bentley GT Continental...whoo hoo!
I don't want to test drive a Bentley... I'd never want to drive anything else I'll look into 3rd party leasing next time for sure! Thanks.
You kidding right? Assuming a 6% sales tax, 4% interest rate over 60 months, with a $3,500 trade in on a $21,000 car you could have purchased the car for $337 a month and OWNED it a the end of 5 years. Something is not adding up there. Maybe you have really lousy credit and your paying a high interest rate.
Quote:
Originally Posted by denverian
So did you literally walk out of the dealership with a new car and didn't spend a dime? Or do they at least want the first month's payment?
I'm leasing a 2008 Prius and I think I got ripped off. I had a trade worth something like $3500, so that was my "down payment" or cap cost reduction on the lease. It's a 60 month lease, so I have a year to go, but the payments are $350 a month. The original value of the car was about $21K.
The Prius works well for my needs, I only drive about 6K miles per year, so I'd like to just upgrade/lease a new Prius in a year. Leases are so confusing, I feel like I got ripped last time and don't want to again. I remember them trying to get me to pay even more down at the time and I told them the trade was enough, and was going to walk. I didn't even know there was a possibility of nothing down at all.
If VW is better with zero down leases, I'd be willing to go with a Jetta Diesel next time around. I just want good gas mileage, ability to have two booster seats in the back, and not a huge car.
Never EVER put positive equity of any kind, especially a trade in, into a lease. Remember, at the end of the lease, you WALK AWAY with nothing. That is both good and bad - bad if you put money down (or a trade).
Also, never ever lease for 60 months. Are you 100% positive you LEASED your Prius?
A lease is a finance of depreciation. A large majority of a car's depreciation takes place in the first 2-3 years. After that you're paying down actual value. Unless there is a business advantage of a longer term lease (high mileage, corporate lease, etc), NEVER lease for longer than the manufacture's standard.
Some have already been discussed, I will highlight those and elaborate on some others.
You know, with 100% certainty that you will keep the car for the long term - aka - finance the car, pay it off, and drive it for another few years without payments. DO lease if you plan on paying off the car in 5-6 years and turn around and trade that car and buy another one.
Many factors come into play when leasing a car - its less about the MSRP & Invoice price of the car and more about the residual, which is the percent of leftover value after the lease. Someone mentioned the 60% sweet spot above - this is somewhat true, but also unrealistic in some cases. You want to compare the residual with OTHER cars in its class. The residual is measured in a percentage (normally 45%-60+%). During the course of the lease, you pay for the inverse of the residual over the term. Tack on some interest, divide by the term and you've got the monthly payment. In most cases, it’s that simple.
So - The inverse of the residual is the amount the bank (typically manufacturer) hedges that the car will depreciate over the term - or alternatively, the residual is the amount the car is thought to be worth after the term. Calculating residuals is just as complicated as estimating any future, so there are many things that come into play - fuel prices, miles driven on car over the term, known service on the car at maturity, etc etc.
Miles per year affects the residual, typically +/- 2 points per tier: if a standard lease has a 50% residual at 12k miles per year, if you take a 10k mile lease, your residual will be around 52%, or 48% for 15k.
Why does this matter? Well some banks set better residual values on their cars to promote leasing or because they know they will want the car to sell as used when the lease is up (and they know they can make money at that price). When you have a high value used brand – say BMW – you will see residuals around that 60% mark. That means you’re only paying 40% deprecation over the term. Compare that to another car in its class – say Audi with a 50% residual where you would pay the other 50% in deprecation. If both cars are $40k, this translates to a difference of $4k over the term – or $150 EXTRA dollars per month for the car with a 50% residual.
When I lease, I consider the residual OVER MSRP to determine a “good deal”, as a few percentage points on the residual can alter the payment greatly, as highlighted above.
Its worth noting that residual percentages are typically fixed by the bank and can only be altered in the case of extra miles. 99% of the time you cannot negotiate a residual with the dealer – it is what it is.
I mentioned that the 60% sweet spot is not 100% accurate. While 60% is a great number, it depends more on the other cars in the class. If you’re looking at an SUV, you’re not likely to find a 60% residual, but more likely closer to the 50% mark.
Lets take the midsize SUV class – if most cars are leasing with a 48% residual and the car you’re looking at leases at 55%, I would consider that a good deal, if all else (msrp) is relatively constant.
A first person example: I lease a 2011 Jeep Grand Cherokee about a year ago. At the time, it was a toss up between the Jeep and the Toyota 4 Runner. Toyota had an AWFUL lease on the 4 Runner at the time, causing the car to be roughly $200 per month more, with a similar MSRP. In this case, if I HAD TO HAVE the 4 Runner, it would have made more sense to buy, as the extra $200 in payments would have almost equaled the payments on a retail finance.
The financially sensible thing to do is to buy a car that you can either pay for right up front or within a couple of years. Then own it for 10 years. This is my parents' philosophy. Between the two of them, they have had 3 cars in almost 30 years. They have not spent money on cars.
I lease my primary vehicle for a couple of reasons.
I love cars. I love high end cars. I love changing them out frequently. I already own 2 (fully paid-for) cars. This is an entertainment cost for me (with the added benefit of peace of mind for a very long commute at odd hours). But I know it is an entertainment cost. I have already fully covered retirement, savings, my other bills, etc, before entering into this lease. I also don't want the hassle of selling a used car.
Another reason to lease may be if it makes sense from a business point of view.
A bad thing to do is lease to get into a car you cannot otherwise afford.
Possibly. I typically agree, but only if you're buying a used car that has already taken the hit on deprecation, and only if you are 94% sure the car is not going to have high dollar service issues later in life.
The *ideal* situation, you're right, is not to have car payments at all, but that is highly unrealistic for most people.
You made other good points about leasing - not worrying about trading in a car, knowing the car is covered by warranty, etc.
Never EVER put positive equity of any kind, especially a trade in, into a lease. Remember, at the end of the lease, you WALK AWAY with nothing. That is both good and bad - bad if you put money down (or a trade).
Also, never ever lease for 60 months. Are you 100% positive you LEASED your Prius?
A lease is a finance of depreciation. A large majority of a car's depreciation takes place in the first 2-3 years. After that you're paying down actual value. Unless there is a business advantage of a longer term lease (high mileage, corporate lease, etc), NEVER lease for longer than the manufacture's standard.
Yes, I'm sure I leased it! I'm still learning... I think I'll do a 36 month lease the next time. I did a little research and it looks like I should be able to get a $0 down lease for 36 months in the $240 - $260 a month range on $21K - $22K cap cost for a new Prius.
Some have already been discussed, I will highlight those and elaborate on some others.
You know, with 100% certainty that you will keep the car for the long term - aka - finance the car, pay it off, and drive it for another few years without payments. DO lease if you plan on paying off the car in 5-6 years and turn around and trade that car and buy another one.
Many factors come into play when leasing a car - its less about the MSRP & Invoice price of the car and more about the residual, which is the percent of leftover value after the lease. Someone mentioned the 60% sweet spot above - this is somewhat true, but also unrealistic in some cases. You want to compare the residual with OTHER cars in its class. The residual is measured in a percentage (normally 45%-60+%). During the course of the lease, you pay for the inverse of the residual over the term. Tack on some interest, divide by the term and you've got the monthly payment. In most cases, it’s that simple.
So - The inverse of the residual is the amount the bank (typically manufacturer) hedges that the car will depreciate over the term - or alternatively, the residual is the amount the car is thought to be worth after the term. Calculating residuals is just as complicated as estimating any future, so there are many things that come into play - fuel prices, miles driven on car over the term, known service on the car at maturity, etc etc.
Miles per year affects the residual, typically +/- 2 points per tier: if a standard lease has a 50% residual at 12k miles per year, if you take a 10k mile lease, your residual will be around 52%, or 48% for 15k.
Why does this matter? Well some banks set better residual values on their cars to promote leasing or because they know they will want the car to sell as used when the lease is up (and they know they can make money at that price). When you have a high value used brand – say BMW – you will see residuals around that 60% mark. That means you’re only paying 40% deprecation over the term. Compare that to another car in its class – say Audi with a 50% residual where you would pay the other 50% in deprecation. If both cars are $40k, this translates to a difference of $4k over the term – or $150 EXTRA dollars per month for the car with a 50% residual.
When I lease, I consider the residual OVER MSRP to determine a “good deal”, as a few percentage points on the residual can alter the payment greatly, as highlighted above.
Its worth noting that residual percentages are typically fixed by the bank and can only be altered in the case of extra miles. 99% of the time you cannot negotiate a residual with the dealer – it is what it is.
I mentioned that the 60% sweet spot is not 100% accurate. While 60% is a great number, it depends more on the other cars in the class. If you’re looking at an SUV, you’re not likely to find a 60% residual, but more likely closer to the 50% mark.
Lets take the midsize SUV class – if most cars are leasing with a 48% residual and the car you’re looking at leases at 55%, I would consider that a good deal, if all else (msrp) is relatively constant.
A first person example: I lease a 2011 Jeep Grand Cherokee about a year ago. At the time, it was a toss up between the Jeep and the Toyota 4 Runner. Toyota had an AWFUL lease on the 4 Runner at the time, causing the car to be roughly $200 per month more, with a similar MSRP. In this case, if I HAD TO HAVE the 4 Runner, it would have made more sense to buy, as the extra $200 in payments would have almost equaled the payments on a retail finance.
Very helpful information. Now I see the connection to the residual and how it correlates with the monthly payment. Seems like this is really the number to be looking for.
Very helpful information. Now I see the connection to the residual and how it correlates with the monthly payment. Seems like this is really the number to be looking for.
The unfortunate part is that the information is not usually readily available. There are some research websites out there that post residuals, but since they are updated monthly (sometimes more frequently), its hard to keep up. Its very hard to compare without working directly with a dealership.
I should also add - residuals often differ by trim level (an XLE may have a lower residual than a Limited, for example, because the Limited will resell better), so its possible to have a more expensive Limited be relatively close in payment to the lower XLE trim level.
This was the case with my Jeep - well, the opposite. The Laredo X Package (which I got) had 4 points better residual than the Limited I wanted. Since I only gave up a few small features, it made more since to lease the Laredo since it was a better 'deal'.
When buying a car, either leasing, buying or financing, you'll get the best deal by looking at everything as a number rather than the car itself. Leave emotion out and let the numbers dictate trim level, model, etc.
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Actually, for my wife's, they went to her office. But she decided to buy her latest Caddy and just keep it 10 years.
