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Prices Paid: Buying & Leasing Experiences Lexus IS 250 / IS 350 Lease Questions
1165 messages, Last post on Nov 17, 2009 at 6:18 AM
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Replying to: mmarketos (Apr 28, 2009 1:07 pm)
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Replying to: kingpcgeek (Apr 29, 2009 4:19 pm) I can't get my head around the residual value thing. From what I've read, the higher the residual value, the lower your payment. This seems like a good thing.... but then, if there's a higher residual, then that also means if you want to buy the car (to keep or resell it), then you're gonna be spending MORE to do that. So am I correct to assume that a higher residual is good if you only want to lease and not keep? thanks very much
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Replying to: valuehunter07 (Apr 29, 2009 5:10 pm) From going through both forums, it seems the better deals for the IS are around $415 a month (12K), while the TSX deals are around $345 (15K). Also, on the deal listed by Greeneyes, there was around $1500 in upfront fees, and also another $3200 for a deposit. With the TSX deal, there was no money down. I'm just trying to gauge the difference in cost, and wondering if I'm understanding and assuming correctly? thanks |
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Replying to: valuehunter07 (Apr 29, 2009 5:10 pm) A lease is based on the selling price of the car (MSRP or negotiated price) minus what the estimated value will be at the end of the lease term (Residual Value). The Residual Value in the lease contract is quite often much lower than what the car will actually be worth at the end of the lease. For instance, you're leasing a car priced at $35,000. The lease contract is written for 36 months and is based on the Residual Value (or 'Value at Lease End;) is stated at $20,000. The monthly lease payment would be based on the $15,000 difference (plus the finance/money-factor rate and sales tax, etc). In reality, the car is worth $25,000 at lease end. If you simply turn the car back in to the dealer, he will make $5000 by selling it! OR you can purchase it for the $20,000 listed in the original lease contract and you'll be buying a $25,000 car for $20,000. The majority of leased cars are returned at lease-end, which is what the dealer prefers because he will profit from re-selling/leasing it. You won't find lease deals with residual values overestimated for a particular model, especially in the current economic climate. If anything, leases are becoming more conservative in the residual value estimation- making the payments higher, but also making the cars a better deal for you to purchase at the end of the lease term! Cars such as Honda, Acura, Lexus and Toyota have some of the highest residual values in the market. As such, these are the vehicles that should have the lowest lease payments (relative to their competition).
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Replying to: igozoomzoom (Apr 29, 2009 6:22 pm) but this is what I don't understand so far - I keep hearing "don't negotiate the monthly rate, negotiate on the price, with a lease" Ok, even if you negotiate a low price though, they can always add fees on top right? And the residual that you just explained, that is still a subjective figure right? I mean, the dealer can make any residual figure they want right? So when setting up a deal, if they want to get me paying a certain amount for the 36 month period, they can just adjust the residual, to get their desired amount. To me, in my VERY rookie and dummy level of understanding here, it seems like the exact thing that should matter to me most, is how much I'm gonna pay monthly. Unless I buy the car at the end (which I most likely will do... probably to re-sell myself), that is the only thing that makes up the cost for me, other than any upfront money I pay. Am I understanding correctly so far? Thanks for helping me out. I have Friday off, and plan to go out to dealers all day on Friday. I don't want to rush, but I'd like to make a move as soon as possible, because my Grand Prix has the issue, and I don't want to push it, and my other car is a real bucket. If I understand the numbers, I can understand and target exactly what kind of deal I want, and then I'll be sitting pretty. Thanks so much!!!
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Replying to: valuehunter07 (Apr 29, 2009 8:53 pm) They can raise the money factor to make a little more profit, but if you ask they need to tell you so. I would not hit the lots without first laying the groundwork by negotiating with the dealers via email. Here is a sample email I used when I last went shopping: I am looking for a G35 Sedan with premium package in platinum graphite and black interior. If you could please provide all of the following information it would be greatly appreciated. Please do not respond with a give me a call so we discuss this email, nor an email with a monthly payment only. MSRP Selling price Dealer doc fees Dealer Add ons Residual for 36 months Money factor for 36 months Registration/Plates/Misc Govt Fees Payment with only first months payment at drive off My last three cars have been totally negotiated via email. All I did was go in to sign the paperwork. Visit a site like Lease Guide and learn exactly how a lease is calculated, and the reasons why you may or may not want to lease before you hit the lots and the sharks.
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Replying to: greeneyespsu (Apr 29, 2009 12:58 pm) I've learned a lot over the past few days, and it's all starting to sink in, and I'm getting the concept down. HOWEVER, the monthly payments, still aren't quite adding up, according to my math.... Let me use greeneyes deal for an example.... Here are green's figures: --------------------------------------------------------------- MSRP $37,656 (IS250 RWD, Nav, Prem, 18" summers) Selling price $32,448 (under invoice, with no rebates/incentives at the time) 36mo/12k (53% residual) MF lowered to .0006 (.114%) with 9 MSD (now I wonder, could I have made it .0000 with 10??) Down $4680 (I think) -- $3825 of that was the MSD -- no cap reduction. Got $1000 from trade -- '98 Chevy Cavalier with 122k+, fair condition (I thought this was fair considering it had scratches, some rust underneath, broken A/C, cracked head gasket causing overheating, though I'm pretty sure they only knew about the scratches) 35 months at $411.xx, but now increased to $415.xx because of tax increase. ================================================== The net cap here is $31,593 ($32,448 minus the down amount that wasn't part of the MSD). The residual is $19,581 So the Depreciation fee is $333.66 ($31,593 - $19,581/36 months) (Net Cap - Residual / term) The Finance fee is $30.70 ($31,593 + $19,581 x .0006) (Net Cap + Residual x Money Factor) Adding these two together we get $364.36 for a monthly payment (without taxes), yet green's quoted price was $411 (without taxes). Did green get ripped off???
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Replying to: valuehunter07 (May 01, 2009 11:52 am) With my numbers on JUST the car, the depreciation is $357.41 ($32,448 - $19581.12/36 months) multiplied by 1.0825 sales tax = $386.90 per month. Add in acquisition fee of $700 = $406.34. Plus interest and any other little fees I'm missing would probably equal the $411.xx per month. Also, my residual was 52%.. I was wrong in my previous post. I thought it was 53% last month on 12k/36 but the $19581.12 is 52% of the MSRP ($37,656).
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Replying to: kingpcgeek (Apr 30, 2009 10:42 am) Just wanted to say thanks for sharing this format/letter. I think it's pretty straight to the point and well done. I also think I'll use it, or something very similar. Thanks so much. |
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Replying to: greeneyespsu (May 01, 2009 6:16 pm) Thanks (again  ) for all of your help. This really does help a ton. |
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