Last post on Jan 19, 2003 at 8:38 AM
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Dodge Intrepid, Engine
#60 of 63 No - and no offense to anyone using a 60 month
Jan 18, 2003 (12:58 pm)
or longer lease, but it really is a slam to your wallet.
Many dealers push 60-78 (yes, 78) month leasing and the problem is that the residual that is used is simply fictious. On a $22,000 Intrepid, there is simply no way the car will be worth $8-9K after 6 years of driving. The remainder of the lease payment that isn't part of that $14,000 that you "financed" is additional profit and money factor markup.
I've written leases that gave the dealer over $5,000 in finance reserve alone - that doesn't count the profit on the sale of the car (front end gross).
For instance, on a 66 month lease (seems very popular lately), using a lease price (capital cost) of $22,000 with an $8,000 residual, standard money factoring would add about $2,500 in lease charges to the $14K remaining. That's a $250 payment if you didn't put any cash down.
I've seen lease paymenst with the same terms with a $400 payment. There's $9,900 extra in there! ($150 x 66)
The only leases I have ever recommended for consumer is short term (24-30 mo) leases with very little down on a vehicle with a HUGE residual factor at 24 mo (like 55-70%). The Ford Expedition was in this arena in '97 when it came out. It had a 2 year residual of 74% and I leased one with first pmt down for $340 a month - a $32,000 truck.
Jan 18, 2003 (6:53 pm)
....my payments on a 60 month lease ended up being $325, while if I would've bought the car and financed it for 60 months the payments would've been about $450 a month. At the time, our monthly household income was considerably less than it is now, but in retrospect, we probably could've afforded the payments. The extra $125 a month would've left me owning the car after 60 months, instead of being in the situation I'm in now. I will never lease another vehicle, though I suppose leases are still good for some, depending on the situation.
My intrepid isn't bad enough for me to worry about the person I sell it to taking me to court. I estimate the oil consumption at about one quart per every 1000-1500 miles. The upper tranny line going into the radiator is leaking a bit right where it connects. Not a big deal. I can fix this myself. The car actually still drives nice and quiet, and it still looks pretty good too. This car just hasn't aged well with me. I've outgrown it, and I'm ready to move up to a minivan.
#62 of 63 Makes sense - fix it and keep driving.
Jan 18, 2003 (7:10 pm)
Leases are weird and only fit a few consumers - they really work for folks who own business and are able to either residualize the car down to nothing (A REALLY COOL TRICK) or write off the cost of the lease and/or depreciate the vehicle in their books.
#63 of 63 Like I said.........
Jan 19, 2003 (8:38 am)
......my family and I have outgrown this car. Keeping it isn't an option, so I'll just have to do the best I can when the lease expires.