Last post on Nov 14, 2013 at 11:30 AM
You are in the Prices Paid - Buying & Leasing Experiences
What is this discussion about?
Dissecting the Deal - How To Spot a Good Lease
10 Steps to Leasing a New Car
The "Residual Value" of Leasing
Calculate Your Own Lease Payment
#41 of 194 What should the difference in mo payment be re 10k mi vs 12k mi a year?
Jul 09, 2010 (8:52 pm)
Iím planning to lease a 2010 Toyota Prius II, & have done a lot of researchóall of it on 12k miles a year. However, as I currently drive under 10,000 miles a year, I realize I should get a lease for 10,000 miles a year. duh. (Both my lease & insurance would be cheaper, & itís highly unlikely Iíll be driving 12k miles a year.) Toyota is currently offering specials, including .00020 money factor. Hereís my dealerís offer: 0 down, & $200 a month for 36 months re a 12,000 miles a year lease. (This includes taxes, bank fee, destination fee, & DMV fee--& is way lower than what other dealers have been offering.) My question is: If I lower my mileage down to 10k instead of 12k a year, what should my monthly payment be? (How much less should I pay a month?) Thank you so much! I appreciate your response. Best, Artwheels
#42 of 194 Re: What should the difference in mo payment be re 10k mi vs 12k mi a year? [artwheels]
Jul 10, 2010 (5:16 am)
It's rare times like this that I wish that the edmunds website supported mathematical fonts.
Using differential analysis, the formula for the change in payment, given a percentage change in the residual, with all other variables held constant is...
%P = (f - 1/N)S(%r) **
%P = monetary change in payment
f = money factor
N = term
S = Adj MSRP upon which the residual value is calculated
%r = percentage points change in the residual factor
Consider the following hypothetical data...
Adj. MSRP = 25,000 (some options may only be partially residualized or not
residualized at all which lowers the MSRP hence "Adj"
Money Factor = 0.00200
Term = 36 months
Net Cap = 20,000
Res. Factor = 60%
Res. Value = Res. Factor x Adj. MSRP = 0.60 x 25,000 = 15,000 for 12K miles
Using the money factor formula, the above data yields a payment of...
P = 0.00200 x (20,000 + 15,000) + (20,000 - 15,000) / 36
But, if we lower the mileage to 10K, the residual factor may increase from 60% to 62%... a 2 percentage points increase (+2% or +0.02)... the residual value increases to 15,500 (0.62 x 25,000) and so, the new lower payment is...
*P = 0.00200 x (20,000 + 15,500) + (20,000 - 15,500) / 36
Observe that the payment dropped by 12.89 (i.e., -12.89).
We can easily calculate this payment change (-12.89) by using one formula instead of two and circumnavigate a lot of work just by using the above forrmula...
%P = (f - 1/N)S(%r) **
= (0.00200 - 1/36)(25,000)(+0.02) (the positive sign indicates an increase)
= -12.89 (the negative sign indicates a decrease)
This formula has the advantage of quickly determining how your payment will change (up (+) of down (-)) and, by how much.
** Toyota is notorious for not residualizing the destination charge and floor
mats. I'm not sure if they deploy residual factors or not. If not, then they use flat dollar amounts instead. In this case, S(%r) is simply the change (up (+), down (-)) in the residual dollar amounts.
Questions? Please let me know.
All the best...
#43 of 194 Re: What should the difference in mo payment be re 10k mi vs 12k mi a year? [artwheels]
Jul 10, 2010 (6:08 am)
Probably about $12 per month less. What did the dealer offer?
#44 of 194 Re: What should the difference in mo payment be re 10k mi vs 12k mi a year? [delta737h]
Jul 10, 2010 (9:01 am)
Thank you so much, John. That is most helpful! Alas, I have just discovered the question is moot, as the Toyota special doesn't include 10k miles leases, only 12k miles. It's such a great offer, I'll go w it & have a large margin re mileage. I appreciate your prompt and thorough explanation--most interesting!!
#45 of 194 Re: What should the difference in mo payment be re 10k mi vs 12k mi a year? [jwilliams2]
Jul 10, 2010 (9:03 am)
I've just discovered it's a moot question--the Toyota special is only for 12k mi leases. It's such a good offer, I'll go w it. I appreciate your input, it's very helpful!
#46 of 194 Security Deposit
Aug 13, 2010 (6:09 pm)
Has anyone ever leased on with putting down a security deposit to lower the money factor? Dealer explained that the entire security deposit would be reimbursed at end of lease provided not over miles, no excessive damage etc. This is just another way of leasing a car.
Any feedback appreciated.
#47 of 194 Re: Security Deposit [pazzo1]
Aug 14, 2010 (2:22 am)
Sometimes, fund providers, especially the manufacturer finance captives (e.g., BMW, IFS, etc), will reduce the money factor in exchange for a refundable security deposit. Some will even allow multiple security deposits (MSD's) in exhange for an even great reduction in the money factor. MSD's are usually fantastic no-brainer deals for the consumer. For instance, let's assume that each security deposit reduces the money factor by 0.00007 and that the limiting number of MSD's is 7. This means that the max reduction is 7 x 0.00007 or 0.00049. So, if the prevailing money factor is 0.00200 and 7 MSD's are advanced, then the adjusted money factor is 0.00200 - 0.00049 = 0.00151
Hope this helps,
Aug 14, 2010 (5:04 am)
Making a security deposit on your lease with a bank is pretty straightforward.. Your turn-in fees at the end of the lease aren't dependent on the amount of your security deposit... If you are due money at then end, they'll pay it..
It isn't like dealing with a sleazy landlord, who makes up charges just to keep your money..
Now their end-of-lease charges may be onerous, and out of line.. but, it won't be related to the size of your security deposit...
#49 of 194 Help w/ Advertised Leases
Aug 22, 2010 (4:33 pm)
I am about to conclude my 2nd lease with Honda and am now looking at the market to see what vehicle I would like to move into.
The last time I leased with Honda, I waited until I saw an advertised lease that I wanted and then walked in to the dealership and signed up for that lease - amazingly enough at the advertised price.
This time, I am looking at a 2010 Honda CRV, and while they are advertising the LX model for $239 month with $1999 down, I want the EX model.
So my question for you guys, is how do I determine what I should pay to move up to the EX model? That is of course with the thinking that I can get the same 'market rate/percentage' like I did last time.
Thanks for the help!
PS. All my Honda leases have been with the same dealership, if this matters at
#50 of 194 Cant nail the payment down, help please
Oct 11, 2010 (10:25 am)
We are looking at getting into a 2011 Honda Odyssey EX, and I just canít seem to get my calculation right, I keep coming in less than quoted payment of $422 w/ tax. Any help would be greatly appreciated! Below are all the figures the dealer provided to me
$30392 agreed price
cap cost $31025 (not sure where the difference comes from between agreed price and cap cost?)
12000 miles per year
$21259.10 or 67% residual
.00200 Honda Finance lease money factor
250 doc fee
$595 Acquisition fee
Rolling first month into lease so 0.00 out of pocket at lease inception