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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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the loan your credit union is offering is simply a balloon note with a few new twists. it works like this: 1 -the balloon amount is set equal to the residual value. you can find the residual amounts for various terms at carwizard.com 2 - when the balloon comes due you have the option to pay the balloon, refinance, or return the car like a lease(usually with a nominal fee say, $300) regarding your question about calculating payments;the payment amount is the sum of two calculations. the first is the amount required to amortize the depreciation over the loan term. this is the difference between the loan amount and the balloon amount. figure it just like you would for a regular loan, use the 9% rate your credit union gave you. the second calculation the the cost to carry the remaining value of the vehicle. simply multiply the balloon amount times the interest rate to get the annual cost to carry and divide by 12 to find the monthly amount. add the amount from the first calculation and the amount of the second calculation and you'll be within a $4 or $5 of the monthly payment. some differences will occur depending on the accrual methodology and rounding. i have used this type of loan for four years and purchased three cars in that time. it is my favored means of financing. generally the credit union rates can't be beat unless there is a special lease/finance offer from the manufacturer. you have the payment that is lower, like a lease without some of the restrictions a lease may place on you. my credit union p;aces gap insurance on these loans automatically and is great to deal with. i generally apply for the loan and receive a sight draft that i can take to the dealer and negotiate as if i was paying cash. it removes a variable from the negtiation equation. good luck! |
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| Is there any way to break a lease, or is like a sales contract, very hard to get out of it, thanks | |
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Rgreasy, it isn't necessarily hard to get out of a lease way before your scheduled termination date, but it is very expensive to do so. When you agreed to lease your current vehicle, you signed a legally binding contract to pay the bank that you are going through a certain amount of money over a specific period of time. They are going to want all, or at least a significant portion of the money that you are obligated to pay them. Most of us would if we were in their shoes. Given the glut of off-lease vehicles that most lending institutions are forced to deal with, the last thing they want is your car back early. Car_Man Smart Shoppers / FWI Co-Host |
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I intend on leasing a new Acura MDX shortly. Being new to leasing (previously purchased my vehicles) I am not sure the proper way to handle this transaction. My original intent was to use my trade-in ($7200 94 Explorer) as a down payment to reduce my monthly payment. But after speaking with a Mercedes salesman yesterday he told me that if the car was stolen or totaled in an accident even after 1 month I would lose the money I put down. His suggestion was to put the money ($7,200) in a refundable security deposit account with the leasing company. Doing this would reduce my monthly payments by approx. $80 per month. In effect I would be receiving 12% interest tax free. Upon completion of the lease I would then be returned my $7,200. Is all this true? Is it common in leases. I've been reading all I can about leasing and never heard of doing this. Any information would be helpful. |
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Pinhi - I am also looking at MDX leases. American Honda Finance Corp, AHFC, offers 8.88% interest and residuals in the 64-69% area on the acura.com website. In the current buying frenzy, MDX dealers are trying to add a point or two of interest to their own, captive leasing company's rates - beware! Another alternative I'm checking into is at my credit union. They offer a LAP - Lease Alternative Program. Check out the terms at: http://www.centra.org/autos_lap.htm I don't have all their details yet but it sounds interesting. What's your experience been on shopping for MDXs? Jeff |
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I had a chance to stop by my northern nj Acura dealer this morning to discuss lease options. Chase Manhatten offers an "additional security deposit" option. American Honda Finance does not. With this option you can make an additional refundable security deposit at the lease inception totaling no more than 10 payments. Example: Lease MDX/Tour: $525.00 Month for 42 month 12K Leave refundable Deposit: $5250.00 New monthly payment:$475.00 You end up saving 9% tax free on your payments, plus you preserve your capital. If you already have the money (ie from a trade-in) I feel its the much better alternative than front loading a lease. The risk of losing it all early on in the lease is too high. I'm still going to ask questions and try and find other alternatives as well. As far as my buying experience...I visited most of the dealerships in the area, the salesmen did not impress me at all. Lexus and Mercedes were far and away the most professional and knowledgable. That being said, the salesmen didn't try to pressure me at all. It was pretty much leave your money to get a place in line if you want. |
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Pinhi - I guess I'm confused how Chase's "Add'l Refundable Security Deposit" plan differs from straight cash up-front. It must be that word "refundable"....? Chase has a rather uneven reputation in the car leasing business - if you want to laugh, have a look at this site: http://srd.yahoo.com/goo/%22chase+bank%22/3/*http://www.chasebanksucks.com/ The Acura website's AHFC lease calculator outlines a MDX Touring 42-month lease, 12K miles a year, with no cash up-front at $567/month plus taxes. With $5250 cash up-front, the monthly payment is reduced to $422 plus tax - about $50 a month cheaper than the Chase deal. But no "refundable" word in the downpayment receipt. The AHFC residual after 42 months is listed as $23,968 for your Touring MDX - is that about the same as Chase's? Jeff |
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| I recently received the 90 day letter on my 1998 Altima lease. I had not thought about the return process until now. Does anyone have any experiences about turning a NMAC lease in, that they would like to share? Currently I would like to "just walk away", and purchase another brand or car. | |
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Thanks for your response. Great Chase link too! Since posting I've visited the dealership and talked with the business manager. Chase offers "multipile security deposits" ('MSD's) on their leasing program. American Honda does not. With Chase there is a 10 month security payment maximum (ie lease payment 470.00/month can leave a max. of 4700) I was originally quoted $514/mo for 42  12k/yearBy using MSD program it's $470/mo for 42 12kNot bad. Save $44.00 and preserve the loot. I'll probably go that route. Kevin |
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car man: If I trade my leased car in to a dealer and assuming I can get enough trade-in to pay the thing off (early) will I still get the trade in value, deducted for tax purposes against the delivered price of the new car the same as if I owned the car? According to my contract if I decide to buy it for residual I will have to pay state sales tax on that amount plus "acquisition fee" Will I still have to pay that fee even tho I am not buying it but trading it? Will the dealer taking it in on trade have to pay that "acquisition fee" and thus pass it on back to me in the deal? Floridian |
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