That’s bull
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The problem is that you are allowing them to play 3 card Monte with you. I’ve said it many times, and many others have too, the most important thing you need to get from the dealer is their selling price for the car before any and all rebates and incentives are applied. Once you have that, you can use your own research to calculate the lease payments and decide for yourself which term is most advantageous to you. It may be 24 months, it may be 36. Heck 39 months might work out best if the residual hit is minimal between 36 and 39 and the warranty is good enough, especially on a lower mileage lease. But for all the above mentioned reasons 48 months will most likely not be advantageous to you. Depending on the bank offering the financing, maybe there’s some extra money in the 48 month terms that the dealer can get? Sure, shorter leases equal more sales long term, but we all know that these places are living one month (Or quarter) at a time usually.
With the way the industry is headed in this cycle (Rates increasing, used prices weakening and transaction prices increasing at a historically fast pace) the only way to avoid sticker shock when customers come in off their previous lease is to offer them a longer term option or blow them away with an amazing redesign that they believe is worth paying a lot more for per month.
Our Credit Unions do a lot of 48 and even 60 month leasing but it’s mostly to cash buyers who come into an FCA or Toyota store.
With Most FCA models they can lease with the Credit Union and use the IDL lease incentive to drop their cap cost significantly ($3-10k on some trims) and then buy the lease out early after 2-4 years and save a ton of cash. Our lease contract is written to make it extremely easy to get out early. They work well with swapalease as well.
Toyota customer like the longer term leases on the trucks and SUVs because the products are so dependable and even with an expired warranty after 3 years, the total cost of ownership is reasonable. Plus the residuals aren’t overly inflated so they usually have a coupoe grand in equity at the 3-3.5 year mark on a 48-60mo lease (4Runner, Highlander, Sequoia, Tacoma and Tundras).
Nissan was the first to announce a decision to try to move to 48mo publicly because they may also be faced with a lull in new product launches. If their products are stale, that will require big incentives to keep customers re-leasing within their brand.
Most likely to pull it off with consumers and dealers, they will move their rate subvention completely or partially away from 36mo. It will be very expensive for the captive since rates are expected to rise over the coming years so if they lock in low interest leases for 48mo, their cost of funds in years 3-4 during those leases will be much higher than their cost in today’s rate environment so their yield will be far less.
But it allows them to get to super low advertised lease payments on their core products.
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It’s a lie. There’s almost certainly going to be negative equity. What they’ll do is take it in as a trade and work the negative into the next deal.
That said, if a 48 month lease is actually $100 less per month than a 36 month lease, and there’s a 4 year warranty on the car, I’d strongly consider the 4 year program.
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I think the biggest drawback towards 48 month leases is the fact that you are looking into purchase territory when you hit the 60 month mark. What kind of residual value will there be left in a 48 month lease to begin with. Point is to drive the depreciation, but I’ve seen some cars where the residual is so terrible it made no sense to lease it vs purchase it.
Read up on some of the lease basics that are provided on this site first, as you say it seems most dealerships here don’t seem to be trustworthy. But if you go in dictating your terms they wouldn’t try to sway you back and forth with the “new industry standards”.
Focus on the tried and true, it’s like going to a casino to play Blackjack and Baccarat they’re time honored games, and yes both sides gain some benefits. But when they start releasing these new table games they’re just trying to sway the odds into their favor. 24/36 month leases, understand your monthly payments, and depending on how you want to play the pay off game at the end of lease should dictate most of your terms.
I may be mistaken, but were you the OP who wanted that specific Mazda CX5? You’ll get way more traction and more deals if you’re more flexible with the car/brand/model etc though. Many of the people with the best deals I’ve seen here take payment as their main priority and prioritize things from that order onward.
Hi…Yes, I asked about the CX-5. I can be flexible on make and model. It sounds like I just need to read up a lot more on the basics. I spent quite a bit of time on understanding lease structures and the lingo about a month ago, but then had to take a breather from car shopping.
The issue I run into is feeling like I have to go in, test drive and sit down with someone before I can get ballpark figures for lease deals. That’s a lot of time and effort to figure out which make and model is leasing best. I’ve read that most people do everything via email and I’d much prefer that route. Just need to read up on the basics of how to do that! I’m not against hiring a broker, either, since I really need to purchase in the next month or so.
Thanks for your advice!
Yes, the VW bumper to bumper is 6y/72k now, which makes the warranty much less of a concern. If it really is $450 for 36m vs. $350 for 48m, the total cost of driving the vehicle goes from $16,200 to $16,800…and then of course it makes sense to take the lower payment for 48 months. However, I was told that’s what they thought they could get to (with more commitment on my part), but the only numbers I have are the below, which show a $378 payment (including tax) for 48 months (15k) with $2000 down…completely different deal.
Here are the details:
2019 VW Tiguan SE w/sunroof
Miles: 15K
MSRP: $30375
Cap Cost: $26,999
Lease factor: 0.00264
Term: 48
Residual: 51% (15491.25)
Cash Cap Reduction: $593.65
Lease Bank Fee: $675.00
Disposition Fee: $395.00
Adjusted Cap Cost: $27080.35
Lic/Doc Fees: $235.16 + 395.75
Cap Reduc Tax: $42.15
Drive off amount: $2000
Sales Tax: $1297.30
Monthly Payment (incl tax): $378.95
That’s because you’re the one getting to 376, not them.
Anyone can get a lower car payment with enough money down, but this dealer swung it as if they were doing you a favor by having you put your own money on to the deal. They’re doing you no favors.
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I leased this same vehicle (minus the sunroof) for my Dad last March. I don’t have all the details but can get them, 12k X 36mo, $1700 total down incl DMV & NYS sales tax for a total of $253 a month. Unless MF and residual have increased so dramatically over 1 year it seems the deal you posted is very inflated.
EDIT: My Father was eligible for a $500 military discount. This vehicle was also shipped in from out of state on a dealer locate because the Oak interior was very limited when the car first came out.
Good luck in your search
Wow…yes, seems quite inflated. Thanks for the comparison. I did ask for 15k miles and a sunroof, but that’s a LOT more to pay for only those two factors changing. Could there be that much difference between east and west?