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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
You are in the Prices Paid: Buying & Leasing Experiences Forum. Your Hosts are car_man & kyfdx
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Replying to: bmhaven (May 08, 2009 5:04 pm)
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Replying to: kingpcgeek (May 07, 2009 12:28 pm) I don't think you know exactly how leasing works. The money factor (MF) on a lease is the interest rate (APR) that you pay per year on the TOTAL price of the vehicle. You pay MF on both the lease price (depreciation) AND the residual value of the vehicle. Feel free to Google this if you still don't believe me or understand it. In my case, I'm paying MF on $32,448 (selling price of my MSRP $37,656 IS250). So no, my return is not 1.5%. It is well over 10% per year. Let me break it down for you so you understand. My lease price for 3 years (depreciation) is $12866.88 because my residual is $19581.12 (together these equal my $32,448 selling price) -- ignoring tax/etc for simplicity. Which means per year of the lease I pay $4288.96 towards the depreciation. When the MF is applied to the lease it is MF x $32,448 for the first year. For the second year it is MF x ($32,448 - $4288.96). For the third year it is MF x ($32,448 - $4288.96 - $4288.96). You are only leasing for three years of depreciation, but you are RENTING the rest of the car's value and therefore you are paying interest on the WHOLE value of the car, NOT just the depreciation. Therefore, if you have the same MF on a lease as an APR on a purchase, you would pay more interest over the life of the lease than the purchase because you pay more per year towards the purchase than you do per lease (you decrease the principal by more -- i.e. higher payments). Let's put actual MF values in here and you can see what I'm saying. The ORIGINAL (pre-MSDs) MF was .0007 (1.68%). Tax aside, if I used the formulas above for calculating my interest I would pay the following (again, I would actually pay slightly more than this because this does not include tax, acquisition fee, etc): YEAR 1: .0168 x $32448 = $545.13 YEAR 2: .0168 x $28159.04 = $473.07 YEAR 3: .0168 x $23870.08 = $401.02 TOTAL INTEREST OVER LEASE: $1419.22 The MF I got by putting MSDs down was .00006 (.144%). Tax aside these are the formulas: YEAR 1: .00144 x $32448 = $46.73 YEAR 2: .00144 x $28159.04 = $40.55 YEAR 3: .00144 x $23870.08 = $34.37 TOTAL INTEREST OVER LEASE: $121.65 $1419.22 - $121.65 = $1297.57 $1297.57 (savings) divided by $3825 (MSD) = 33.9% return over the life of the lease. I think that's a pretty darn good investment, especially considering I pay no taxes on that return since it's really a savings. Why do you think every leasing forum you go into preaches about putting down MSDs?? If you'd rather keep $3825 in the bank now and spend $1297.57 more over the life of your lease, that's your perogative, but it seems pretty counter-productive to me. If you don't have an extra $3000 in your bank account, you really can't afford a Lexus. |
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Replying to: kyfdx (May 08, 2009 3:04 am)  I wish I had seen you replied supporting my answer before I took the time to write out all the details in that last post! haha Oh well, hopefully it'll help some new people coming into the forums who don't quite understand MSD. I know this forum (and a little googling about leasing 101) helped me tremendously when I got my IS and I understand leasing better now (from NOTHING before!) than I ever could have imagined! The sad thing is, I actually understand leasing a little better than some of the people that WORK at Lexus! 
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Replying to: newnmpr0ved (May 31, 2009 7:56 am) |
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Replying to: greeneyespsu (May 31, 2009 2:45 pm) Do you get all or part of the MSD? I know that any cap cost reduction is gone in this scenario. |
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Replying to: greeneyespsu (May 07, 2009 11:24 am)  greeneyespsu Actually you're not saving 1.5% on $37,656, you're saving 1.5% on 48% of 37,656, which is $18,074, or the amount you're financing over 3 years.
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Replying to: rohitg (Jun 21, 2009 9:12 am) The average amount financed over the lease term is: (CAP cost + Residual) / 2 regards, kyfdx |
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Replying to: rohitg (Jun 21, 2009 9:12 am) My gosh.. please please PLEASE read the thread and do your research before replying. I've already addressed this more than a handful of times. When you lease a car, you pay interest on BOTH the lease amount and the residual. You're driving around in 100% of the car, not 52% of it, so your MF/APR is calculated on the total value of the vehicle (actually, the total price of what the agreed to sell the car to you for.. this is why it's important to negotiate the price of a car you lease, just as you would one that you'd buy). The residual is the residual is the residual. It's ALWAYS calculated off the MSRP so it will NEVER be negotiable. It's always the % of the MSRP. In my case it was $19,581.18. The difference between the residual and the selling price of the car is the main portion in determining your payments. For the last time, the interest you pay on a lease is based off of the ENTIRE MSRP of the vehicle. If you have the same MF on a lease as you do APR on a purchase you will PAY MORE interest on the lease because the prinicipal is reduced less each year on a lease than a purchase. If you can find a lease anywhere on the planet that you just pay interest on the 48%, please take it without even thinking about it, then come back here and post so the rest of us can get the most amazing deal in the history of the planet -- because it doesn't exist. If you still need more proof or still don't understand money factors/interest, here are two good sites I found from googling just now. http://www.leasetips.com/calculating.htm (see STEP 3) http://www.leaseguide.com/lease08.htm (see Finance Fee) If you still don't understand how leasing works, you probably should just finance. There's nothing better to a car dealer than being able to prey on a person who doesn't know how a huge financial deal works (that will profit the dealer). If you're still set on leasing, at least read this first. http://www.edmunds.com/advice/leasing/articles/48365/article.html |
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Can anyone confirm the June Lexus Financial Services MF's and residuals for the 2009 IS250 AT? This is what I have seen on other posts... 36 months, 15k miles, 50% residual and .00040 MF 48 months, 15k miles, 41% residual and .00060 MF Add 2% residual for all 12k mile leases. Also any thoughts on what July may bring as we approach the end of the 2009 model year? Thanks!
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I'm looking to get a Lexus IS250 and will probably go with a used 2007 model (listed at $25K) but my mother's husband has offered to co sign a lease if I wanted to get a 2009 model. With my current credit history (only 3 cards showing with a total credit line of $ 1100.00 and a student loan that is from 1989 and has no lates - another $ 2700 more to go before it's all paid out) I don't think I would be able to qualify for a lease on my own - hence why I am looking to buy a used model. Will having him co sign help at all? Keep in mind that he is currently financing his own car (2008 Honda CRV), is retired, has a nice nest egg from selling their house a couple of years ago and scores are in the high 700's. Thanks for any input. -P. |
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