MDX with Tech Package CA tax rate 8%
Talking with a few dealers they all seem to think leasing is much better, even a dealer that couldn’t match my deal tried to explain it to me. Basically based on the 8% tax rate. At the end of the lease do I always have the option to buy at the residual value? If I put 10k a year on it does that make a difference? What if I end up putting 12k a year? Will the purchase price still be the same? They all say you want to estimate as closely as possible. Should I try to negotiate a lower Cash to drive off amount and how?
MSRP $48,380 plus $695 dealer installed options
$42,880-$1750 Lease Cash ($7945 Total Savings!!!)
Your Payment is $359 Plus Tax=$387 (35 Payments)
Total Cash & Drive off =$3980
Residual to Pay off the car at the End of your Lease $26,609 on 10,000 Miles per year
Money Factor 0.00020= 0.4%
Total cost to own $44134
To Purchase $42,880 Plus total 10% Fees = $47,168 Plus the Finance fees Base on the Rate
Yes - you always have the option to BUY the car at Lease End. But, you probably shouldn’t do this b/c it’s a terrible deal to buy at lease end , 99% of the time.
Residual value of your car is set (based on 10k or 12k) at beginning of the lease. So, that’s what your payoff/sales price will be based off when you try to buy your car when your lease ends.
However, if you do end up putting less mileage on your car, the value of your car maybe close to or higher than the payoff (this is very very rare). In this instance, it MAY be a good deal to purchase at end of lease.
As for does it matter to LEASE the car, if you drive 10k vs 12k miles per year,…your payment just goes up a little if you get 12k vs 10k / year. (your residual value goes down the more mileage you drive / year )
First, before you do anything, you need to learn the basics of Leasing from this site/google.
There are tons of resources.
Second, shop lease numbers from local dealers and use the lease calculator on this site to compare numbers.
Third, search this site and Edmunds Lease section for actual prices people paid for Leasing this exact car.
Do all this for a while and you will get a hang of what’s a good deal and what’s not.
As for your quote, what is the total sales price of the car ? What does the $3980 go towards ? MF is good, but it can potentially get lower if you put down multiple security deposits (MSD).
So you are actually wanting to purchase the vehicle, but dealers are recommending you lease and then purchase it at lease end?
That usually won’t make sense, but it could work in this case as long as there is no comparable purchase incentive to the $1750 lease cash and if there is no 0%APR offered.
You can lease for 10k miles per year and drive much more if you plan to purchase the vehicle at the end (they won’t care how many miles are on it unless you give it back). But the purchase option is an estimate of how much the car will be worth at the end of the lease. So if it’s based on the car having 30k miles and it ends up having 36k miles by that time, you will be underwater and buying the car for more than it’s worth.
You should also consider what rates might be available to finance the remaining balance in 3 years. If you don’t think you will be able to get anything comparable to the 0.48% APR you pay while leasing, you can opt for a higher mileage allowance on the lease. Opting for 15k miles per year will raise the monthly lease cost, but it will lower the residual value (purchase price at the end of lease), so you pay for more of it upfront with the lower finance cost.
You should be able to put less money down, but it will of course raise your payment.
Thank you for the explanation. It sounds like I would be Ok leasing even if I planned to buy at end of lease, but more likely to return the car. At least I have the option if the car is worth less and I stay in my allocated miles. So I will use my best estimate on annual mileage to be safe.
If one planned to pay cash for this car today and because of the extra $1750. Wouldn’t it make sense to lease since .48%APR is cheap financing and also to defer the 8% taxes?
Can you give us a breakdown of what total cash + drive off is? It looks like you are making a down payment… which is what you want to avoid.
Based on your residual of 55%, you would pay $2129 in taxes if you were to purchase afterwards.
If you did not put ANY money down, your payment would be 417 and your tax would be 33.35, for a total payment of 450.26, and a total tax of 1200 for 36 months. $1200 + $2129 due at purchase = $3329 total taxes.
If you purchase outright, you will pay $3290 in total taxes, for a difference of about $39 dollars.