2019 Lexus RX350L with Premium package, Accessory package, Navigation, 20" rims, Panoramic camera, Heated/Ventilated Seats and touchless rear door opening.
MSRP: $56, 623
Sales Price: $51,187 (9.6% discount on MSRP before incentives)
Monthly Payment: $499
Drive-Off Amount: $852 (First payment ($499) and Texas Fees ($353))
Months: 36
Annual Mileage: 12,000
MF: 0.00005 = .12% APR
Residual: 55% (This is the “L” model so the residual is 1% less than a normal RX350)
Incentives: $3500 Lexus lease cash, full Texas tax credit except for 1% L&M fee
Region: Texas
Leasehackr Score: 9.1 yrs.
Leasehackr Calculator Link:
This month is a very propitious time to get into a Lexus. My dealer in Texas told me that all Lexus RX 350 leases will have a full tax credit offered by the dealership on top of any national promotions that Lexus is also running. In Texas a lessee normally must pay 6.25% sales tax on the full amount of the car sales price up-front at the time of lease initiation. Needless to say, that stings quite a bit and it will easily add ~$100 to the monthly payment if it is rolled into the lease. So, a leasehackr worthy car lease in Texas MUST have a tax credit in order for it to be a good deal.
A note on the tax credit. In the past, I’ve been offered full tax credits by Mercedes and they simply put $0 on the line where they note the tax due. Mercedes did not charge me any ancillary fee for taking advantage of this tax credit. However, Lexus told me that in order for me to receive the full tax credit that I would have to pay a 1% L&M (Lenders & Members) fee that is charged by their accountants to keep tabs on all of the tax credit information for the dealership. This smells fishy to me, but as a practical matter I have no way of pushing back on it. It’s either I take the 5.25% effective discount on the tax after paying the 1% fee or I pay the full amount of the tax credit. I was also quoted this L&M fee by Volvo (1.2% in their case) when I inquired about tax credits so I think that this fee is more widespread than I originally thought. Both dealerships told me that the fee was “non-negotiable”. In my deal the 1% fee comes out to $485 or $13/month.
In addition to the tax credit, the money factor they are charging this month is a joke. .12% interest? They are practically financing your lease for free. In my deal the finance charge comes to $4/month.
I rolled the acquisition fee of $795 into the gross capital cost of the car.
I think that their price floor is a 13% discount on the car if they make no money on the back-end when the money factor is marked up. How do I know this? In May I started shopping for a new lease about three months before my current lease was about to expire. I was offered $595/month with $5600 up front including MSDs (but no cash down payment) AND with the dealer offering to write me a check for $2100 to cover my final three lease payments. The deal was tempting, but I knew that if he was able to scrounge up cash in the deal to cover my lease payments that I could get an even better deal if I waited a few more months until my lease was up.
I was curious about how his “deal” was structured, so I looked up the money factor and rebates for May and I backed into his MSRP discount on the deal. If I took his $2100 check and applied it as a CCR payment with a full tax credit and market rate on the money factor, I calculated that I could get to a payment of $477/month back in May. If I played around with the spreadsheet and did a no down payment deal with the same parameters then that same monthly payment of $477/mo. would equal a 13% discount on the MSRP. How was the dealer able to discount the car so much and still cut me a check for $2100? He was not going to make any money up-front on the sale of the car, but he was artificially marking up the interest rate to .0012. Thus he would make a commission on the back-end. But wait, wouldn’t marking up the interest rate result in a higher monthly payment? Under normal circumstances, yes. But he structured the deal so that I would use security deposits to buy the money factor back down to the market rate. In this case, it would go to .0004 which was the market rate during that month. I only mention this because it shows how ingenious (nefarious?) my dealer was. He was hoping that I wouldn’t know that the market rate was .0004 so that he could jack up the money factor in order to score a commission, while simultaneously offering me what seemed like a good deal after I used $5600 dollars of my own money in MSDs to buy the interest rate back down. I only discovered this after I ran the numbers in my own spreadsheet and discovered his treachery!!!
A few days ago I walked back into his office and took 4 printed spreadsheets showing his deal back in May and explaining how I knew that his discount on MSRP in that month was 13%.
The Lexus lease cash increased $1000 dollars from $2500 in May to $3500 in August, but the residual dropped 1 percentage point. So that’s why the $477/month deal in May turns into $455/month in August. If I ran my spreadsheet simulation with a full tax credit (minus the 1% L&M fee), the market rate of .00005 for the money factor, 3500 lease cash from Lexus, and capping the acquisition fee then with the following MSRP discounts I’d get the following payment structures.
13% discount 455/month (there’s no money anywhere in this deal for the dealer. He wouldn’t take it unless he needed the sale to make his numbers for the month.)
12% discount 461/month (dealer’s profit is approximately 250 dollars)
11% discount 477/month (dealer’s profit is approximately 800 dollars)
10% discount 493/month (dealer’s profit is approximately 1,350 dollars)
9.6% discount 499/month (dealer’s profit is approximately 1,600 dollars)
I have no way to objectively verify these numbers except to say that I worked through the scenarios in my spreadsheets and I’m using my judgment based on how the dealer reacted when I presented him with my spreadsheets and the various discounts. The dealer told me to my face, “I need to make 2 grand off of you somehow or else I can’t sell you a car” when he saw how aggressively I was negotiating. I think I could have pushed for 475/month if I actually left the lot or threatened to walk out, but at the end of the day the deal was good enough for me. Dealer was countering with $525/mo. and we ended up splitting the difference. With the tax credit and the Lexus cash, the deal made sense.
Sorry this is so long, but I’ve learned so much from this site that this is my way of saying thanks and paying it forward.
Let me know if you need any additional information.
