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General Questions about Leasing Vehicles

403 messages,  Last post on Jan 22, 2013 at 9:10 PM

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Messages Page 40 of 41

#385 of 403 Why not care only about monthly price by mpl82

Oct 27, 2012 (10:17 pm)

I know that most experts say not to negotiate montly lease price but why should I care what the other factors of the deal are if I'm planning to give the car back (and not purchase) at end of lease.

#386 of 403 Re: Why not care only about monthly price [mpl82] by delta737h

Oct 28, 2012 (2:16 am)

Replying to: mpl82 (Oct 27, 2012 10:17 pm)
Think of it this way...
 
You would never buy a car based on payments only as that would be very foolish. The same holds true for a lease. Every leased car is a sold car. When you lease, you are actually buying that car on behalf of the fund provider or lessor. However, you're responsible for the payments and so it's in your best interest to negotiate selling price; not payment. The lease payment is dependent upon the selling price. The higher the sell price, the higher your lease payment. As such, you should know how to calculate the lease payment as welll as how to determine the gross cap, adjusted cap, and residual value. Remember the following...
 
Gross Cap = Selling Price + Amounts Financed (capitalized) in the lease
Adj. Cap = Gross Cap - Cap Reduction
 
Payment = MF x (AC + RV) + (AC - RV)/N
 
MF = Money Factor
AC = Adjusted Cap
RV = Residual Value = Residual Factor x MSRP
N = Term
 
As you can see, the sell price is a necessary ingredient in determining payment. When negotiating a lease, always ask for a quote. The best way to obtain a quote is to check the dealers inventory and select the vehicle you want (assuming it's in stock). Next, relay this information to the dealer and request a quote in the form of a Lease Worksheet which should include all of the following information...
 
MSRP
Selling Price (i.e., Agreed Upon Value)
Acq Fee
Documentation Fee
All government fees including license/reg/title fees
Sales Tax and Sales Tax ate
Customer Rebates
Money Factor (buy rate preferred)
Residual Factor & Annual Mileage Allowance
Residual Value
Lease Term
Payment
 
Now you have all the necessary data to craft your own one-page lease proposal. If you think the seling price is too high, you can change it and re-compute the lease payment. Two of the most costly mistakes people make when negotiating a lease are...
 
1. Negotiating payments instead of selling price
2. Allowing the dealer to control the deal
 
Hope this helps.
 
John
The AutoLeaeGeek

#387 of 403 Re: Why not care only about monthly price [mpl82] by mpl82

Oct 28, 2012 (10:44 am)

Replying to: mpl82 (Oct 27, 2012 10:17 pm)
thanks John - I appreciate your response but it didn't address the core of what I'm asking which is: if i'm giving the car back to the leasing company in a few years...why should I care about anything BUT monthly price...as long as i perceive it to be a low monthly payment...what else matters.
 
Purchasing a car I can see as being different because the total financing has to be in my favor...but, again with leasing, I'm having trouble seeing beyond mohthly payments.

#388 of 403 Re: Why not care only about monthly price [mpl82] by delta737h

Oct 28, 2012 (2:49 pm)

Replying to: mpl82 (Oct 28, 2012 10:44 am)
How do you know if you're getting the lowest monthly payment possible? How do you know if the payment reflects a fabulous deal or just a very mediocre deal? Calling five different dealers and selecting the dealer with the lowest payment and, then, hammering that dealer until they drop the payment by $5 or so does not, in any way, guarantee that you've gotten a good deal let alone an outstanding deal. I've seen cases where people thought they got a great lease deal only to discover that the sell price was very closed to MSRP when it could have been gotten for many thousands of dollars less. Those that are payment buyers are at risk for getting very bad deals. Dealers LOVE payment shoppers. It's like bringing a canary to the cat. The only way to guage whether or not you're getting a good deal is to look at the selling price which, in turn, drives the lease payment. It is the metric by which deals are judged.
 
The point is that what you perceive to be a low monthly payment may not even remotely mirror a good deal. Perceptions can be very misleading. Consequently, a lot of money is left on the dealer's table.
 
John

#389 of 403 Re: Why not care only about monthly price [mpl82] by sebring95

Oct 28, 2012 (3:50 pm)

Replying to: mpl82 (Oct 28, 2012 10:44 am)
Couple other points...even if you're happy with the payment. An inflated residual could haunt you if for some unknown reason you need to exit the lease early (or total the vehicle without GAP). Also, early payoff fees, end-of-lease fees, termination fees, mileage fees, options to trade/sell/return at the taie...all things that should still be considered even if the payment is right where you want it.

#390 of 403 Re: Why not care only about monthly price [sebring95] by delta737h

Nov 02, 2012 (4:43 pm)

Replying to: sebring95 (Oct 28, 2012 3:50 pm)
Absolutely agree! Higher residuals trigger higher lease balances which, in turn, inflate early termination charges IF one must terminate early.
 
There are several factors that must be considered in addition to those described not the least of which is the money factor. Inflated money factors mean higher payments. Those with excellent credit should always insist on the buy rate when negotiating a lease.

#391 of 403 Re: Why not care only about monthly price [delta737h] by mpl82

Nov 03, 2012 (7:12 pm)

Replying to: delta737h (Oct 28, 2012 2:49 pm)
Hi John - appreciate the feedback. I do think that's the strongest argument in favor of looking at all of the numbers when leasing - it's the only way to truly KNOW if you're getting a good monthly payment.

#392 of 403 What fees are included in the monthly payments? by mpl82

Nov 03, 2012 (10:04 pm)

Are taxes, tags and title included in the monthly cost calculation?
 
What fees can I expect to pay upon purchasing a new lease and what are ballpark estimates?

#393 of 403 Re: What fees are included in the monthly payments? [mpl82] by delta737h

Nov 05, 2012 (1:21 pm)

Replying to: mpl82 (Nov 03, 2012 10:04 pm)
You asked...
 
Are taxes, tags and title included in the monthly cost calculation?
 
They can be but don't have to be... it's up to you. All or some of these costs can be capitalized or paid up front at lease inception.
  
What fees can I expect to pay upon purchasing a new lease and what are ballpark estimates?
 
Can't provide ball park estimates. Taxes vary widely from state to state and bank acquisition fees and dealer doc fees vary as well. For instance, Honda charges a $595 acquistion fee whereas Mercedes-Benz charges $795. Texas and Illinois levy sales tax on the purchase price (i.e., Agreed Upon Value) while several states like Florida, Indiana, and Arizona levy sales tax on the monthly payment... a huge difference. The maximum dealer doc fee that dealers can charge in Ohio is $250 while in NY it's $75 unless, of course, these state mandated maxims have changed.
 
Hope this helps.
 
John
TheAutoLeaseGeek

Messages Page 40 of 41

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