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Smart Shopper Smart Shopper-Archives Lease Questions - Ask Here 
23872 messages, Last post on Sep 20, 2005 at 8:08 AM
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Okay, here is goes. Quick and simple. I'm ready to lease a Maxima. Never leased before, so what are the ends and outs of the process. What should be asked, known, and what I's and T's need to be dotted and crossed before signing? Can you still haggle with the price? Any and all help would greatly be appreciated. Thanks in advance.
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Hi moparfan2. Your name suggests that you love Chrysler products, but you are leasing a new Maxima. Interesting. Good choice in cars though. I helped my father lease a new Maxima a few years ago and he loves it. Although leasing appears to be very confusing at first, there are really only a few important numbers to concentrate on. The first one is the vehicle's capitalized cost. The capitalized cost, or cap cost as it is commonly called, is essentially the price that you would be paying for the vehicle that you want to lease had you paid cash for it. You are free to negotiate the price of a leased vehicle, just as if you were purchasing it normally. It is important to do so, because this is the main factor that you have control over as a consumer. The other important figures that are used to calculate your monthly lease payments are called the lease money factor and the residual value. The money factor is essentially the interest rate that you are paying on the money that the bank is footing for you to lease the car that you want. It is usually expressed in the form of a 5 digit decimal, such as .00240. This can easily be converted to an approximate interest rate equivalent by multiplying it by 2400. I definitely suggest that you find out what the lease money factor for the car that you want to lease is prior to signing any contract. Right now Nissan has supported lease money factors as low as .00260 on the 2001 Maxima. Make sure that the money factor that you're being charged is right around that figure. The last major component of a lease is the vehicle's residual value. Lease residual values are basically the bank's estimation of what the vehicle that you want to lease will be worth at the end of your term. This number allows the bank to charge you for the portion of the vehicle that you are using during your lease. For example, the a 3 year lease on a 2001 Nissan Maxima may have a 15,000 mile per year residual value of 52%. This means that on top of the interest that you are paying, your payments will be contain equal payments to account for the 52% of the vehicle's MSRP that the bank believes the car will lose during the life of your lease. If you choose to lease with fewer miles per year, like 12,000, then your vehicle's residual value will increase and in turn your monthly payments will come down slightly. Prior to negotiating a lease on your next car, I suggest that you pay a visit to a topic that I started a while ago here in the Finance, Warranty, and Insurance Conference. It is called "How to Calculate Monthly Lease Payments." I think that you will find the information that it contains very helpful. Please click here to go there: FWI Topic #35 "How to Calculate Monthly Lease Payments. Of course if you have any questions on a subject that I did not address in this post, please don't hesitate to ask. Car_Man Smart Shoppers / FWI Co-Host |
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| Okay, I drive to the dealership and ask to test drive the car I am looking to lease. Once I find the car's features to my liking, the dealings begin. What is the correct order in which to begin. Do I haggle the price first? (which by the way, what is a decent percentage should one begin the pricing war - e.g. should I offer them 27K on a 30K car?) Second, is it appropriate to ask the following: What is the Lease Money Factor and Residual Value? Is this info commonly released to the perspective buyer? Your previous explanation was quite helpful, but the nerves are going into overdrive. Lastly, one dealer has told me that the 2000 Maxima GLE have an incentive of $3,000 off. Is there an advantage of buying a 2000 vs. 2001 at this time of the year? _ Thanks again in advance. | |
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Wow Dan, you certainly were thorough in your research for your new truck. Good job. Both the price that you were quoted for this truck and the lease money factor seem very reasonable to me. The money factor certainly is lower than the unsupported GMAC lease rate that you would have had to use if you leased through GM. However, for some reason when I plug the numbers into my lease calculator I come up with a pre-tax 39 month lease payment of $522 and a 51 month payment of $478. These are quite a bit lower than the payments that they calculated for you. I suggest that you try plugging the numbers into the formula that I posted a link to in my previous message and then let me know if you come up with the same payments. Car_Man Smart Shoppers / FWI Co-Host |
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Moparfan2, yes price is the first issue that I would address when looking to lease a new car. The exact percentage of the vehicle's MSRP that you will have to pay will vary tremendously depending upon the popularity of and the supply of the vehicle in question. In order to get a good idea of what the car you are interested in is going for in today's market, I suggest that you either check out the Edmunds.com True Market Value for the vehicle by visiting its new vehicle pricing page on this site or visit the Town Hall Conference that is most likely to have fellow owners and shoppers that are interested in the vehicle that you want and ask them for feedback. The exact lease money factor and residual value for the vehicle that you want will also vary quite a bit depending upon what model it is. I personally would want to know this information prior to leasing any vehicle, but some dealerships are hesitant to share this information. If you keep after them they will probably tell you the money factor and residual that they are using to arrive at your monthly lease payments. If you would like, you can always ask me and I would be glad to let you know what I think a fair money factor and residual value would be for the vehicle that you want. There isn't a $3,000 manufacturer incentive available on the 2000 Nissan Maxima at this point. The dealership must be combining the $500 dealer cash incentive with a price discount to arrive at the number that they told you. There can be a definite price advantage to purchasing a left over 2000 model year vehicle this late in the year. In my opinion, purchasing a left-over vehicle is actually a pretty good idea in this particular vehicle's case because the 2001 Maxima remains virtually unchanged from the redesigned model that was introduced in the 2000 model year. Car_Man Smart Shoppers / FWI Co-Host |
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Car_man Can you please provide the current Residuals and Money factors for the following vehicles. Also, please let me know when each current program ends. Thanks in advance. Gregg 24 months up to 39 months 12k miles a) 2001 Honda Prelude (base) (5-spd) 2001 Honda Prelude (SH) b) 2001 VW Jetta GLS V6 (5-spd) c) 2001 Nissan Maxima SE (5-spd) |
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Car_Man Thanks for the response. Those numbers were from my calculations. I did make an error and not take into account the $4000 reduction on the cap cost when I computed the monthly interest. When I corrected it the numbers matched yours. Thanks for catching it.  I have not yet "gone to battle" with the dealer. I like to make sure all my numbers are correct first. I have done many leases for our small business. The last one on a Ford Pickup took well over an hour at the paper signing before they could get their numbers to match mine. They had included several "hidden" charges that they said were always added on leases as a matter of course. They said they had never seen anyone who actually understood the numbers and could calculate a lease payment. Looks like dealers are still used to steamrolling the consumer. It really isn't that complicated, but somehow only a very small percentage of people know how to figure it. Amazing how a little bit of education can save so much.... Do you have any concerns or red flags on the 51 month lease? Thanks Dan |
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Car_Man, Hopefully this will be the last question regarding the deal I'm currently working. What, if any, effect would the residual value have if at the end of the lease the car was just going to be turn in? Wouldn't an "Closed-End" lease basically be, I drive, they evaluated, car stays at the end of the lease. All the prescribed payments made, no more money owed? Does the person leasing have to pay any monies when turning the vehicle in (providing no excessive damage occurs)? The dealership is saying if a "Good Deal" can be struck with a loaded 2000 GLE, then the residual will not be a factor since we are not planning on selling, buuying or "trading in" the car at the end of the lease. We'll just lease another one. God I hope this makes sense because with all the jargon/mind playing going on, I'm wiped out. Thanks Again!! |
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Hi Gregg, I would be glad to help you out. Through January 3rd, the 24 month lease money factor and 12,000 mi/yr residual value for a 2001 Honda Prelude are .00386 and 65% respectively through American Honda Finance Corp. for both of the models that you mentioned. Through December 6th, Volkswagen Credit's identical lease parameters for the 2001 Jetta GLS V6 are .00335 and 67%. Finally, through November 30th Nissan Motor Acceptance Corp.'s money factor & residual for the 2001 Maxima SE are .00260 and 65%. Car_Man Smart Shoppers / FWI Co-Host |
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No problem, dspangenberg. I am glad to see that your numbers eventually matched mine. I generally advise consumers to lease for terms that are shorter than the 51 month term that you mentioned. I do so for a couple of reasons. One is that your vehicle's warranty will expire over a year before your scheduled lease-end date. As a result, you will have to pay for any necessary repairs to your vehicle out of your own pocket or else face lease end excess wear and tear penalties. Also, 51 months is a long time to be locked into one vehicle. One never knows what can happen during such a long period of time. Your financial situation could change so that you want a more or less expensive vehicle or you could just get sick of your Suburban. With such a long lease it will be extremely expensive for you to get out of this truck prior to your scheduled lease termination date. Car_Man Smart Shoppers / FWI Co-Host |
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