I recently started my search for an electric daily driver and have been getting quotes from various dealerships. I thought I understood the fundamentals of leasing (this being my first time leasing) but this quote from a Colorado Genesis dealer for a GV60 has me confused.
I was under the impression that the monthly lease payment is approximately (and fundamentally) just (“My Price” - “Residual Value”) / lease period. The quote I was given lists looks absolutely nuts! I feel like they either plugged in the wrong numbers or applied some absurd interest rate. For additional information, my credit is >800, and there is no trade in.
Also, yes, I’m aware that this whole quote is absolutely absurd. I have no intention of doing anything but sending it to the digital incinerator. But it’s the first thing they sent to me when I asked for an estimate and I’d like to understand it.
PS - I found it humorous: when I stated that I’d be open to doing a single pay if it made a material difference over the lifetime of the lease, they responded that I was the first person to have ever asked for one.
That was probably the most unhelpful comment I’ve seen on this site. Okay, obviously, that’s not all that goes into it (which is why I used the qualifiers “approximately” and “fundamentally”). Maybe this will assist you in developing your own understanding.
Monthly lease payment = monthly depreciation + monthly finance charge (aka “Rent Charge”). The monthly depreciation is calculated exactly as I stated. The monthly finance charge can be calculated based on the “Money Factor”, which to me is basically APR with different units.
If we look at the example I provided, the monthly depreciation, excluding all the BS dealer addons, is (52340.0 - 44340.9) / 24 = $333.3. In order for the monthly lease payment to reach $998(!) then my monthly finance charge would have to be approx $665. Let me repeat that: $665 in interest PER MONTH. I’ll phrase that in a way that you might understand: that’s almost $16,000 over the life of the 24 month lease. In order for that to be the case the “money factor” would have to be .0069 which, I think, works out to an APR of 16.5 which is completely absurd for tier 1 credit.
So my question stands: am I missing something, did the dealer just botch the numbers, or are they really just trying to take advantage of me?
Thank you, @asha952! These are genuinely helpful tips. I’ve asked the dealer for clarification on those numbers but I think it makes sense to have given them my numbers from the start. Definitely going to engage additional dealers as well. Color doesn’t matter to me (I’m even flexible on make and model) and I’m in no rush at all. So I feel comfortable making some mistakes and learning from the experience. When you say “start at the beginning and buy at the end of the month” is that because there’s additional pressure to make a deal towards the end of the month or because the process simply takes that long?
dealers usually use one main part to make money, marking up the money factor.
Theylll also tack on weird stuff like ceramic coating, trackers/alarm systems (lojack)
but the main thing is definitely the money factor. That’s how they make most of their money for leases.
Try to compensate for that by making them reduce the selling price. also try to target aged inventory (although im not the best to ask for that as i havent been successful with that specific strategy).
Yes, exactly that, usually volume dealers have inventory to get rid of and targets to be met.
I’m not in the market for a lease right now but I’d definitely check out any Ioniq 5 from 2024. I think lease support will end for them soon, if not this month.
It’s a year old but a limited trim will have features akin to your gv60.
I think genesis apart from a few months hasnt leased too well (at least in california where i’m from). Also take into account how youll charge if you havent. Then base your decision on that
Ha! Yes, they tacked on $3500 in crummy add-ons (in addition to $800 in doc fees and $12k in “money factor” payments beyond what I expected). I had assumed the money factor value came from the corporate financial division and wasn’t inflated by the dealer. So thank you for that explanation. I know to keep an eye on that going forward.
And it’s funny that you mention the Ioniq 5 Limited, I test drove one today and loved it. I thought I’d be disappointed in the power vs the GV60 Perf but it was perfectly adequate. My local dealer has a ton of 2024’s (including one Ioniq 6 Limited). Going to try to leverage your advice this time around. Cheers!
Unfortunately your quote includes all the dealer addons plus taxes, tags, registration and acquisition fee all paid for over 24 months. That is adding $200 a month in base rent charge. All of that is also getting charged a very high interest rate because they don’t know your credit without getting you to submit a credit app.
This is what happens when you ask a dealer for a quote instead of telling the dealer what you are willing to pay based on your research on this site. The dealer is throwing out a maximum profit deal hoping a sucker will bite. Sometimes they do because a business owner wants a maximum tax deduction and the salesman and finance guy get to take the rest of the week off.
Asking for quotes puts you at a fundamental disadvantage, as it signals that you have no idea what a lease for a given car should cost.
You are doing the right thing by taking the time to understand how the math works and where the pitfalls lie.
With that understanding, along with what constitutes an aggressive dealer discount for your target vehicle, you’re positioned to make actionable offers which will either be accepted or declined. If declined, move on.
Pivot to the offer approach once you have everything else figured out.
That is the wildest list of junk fees I’ve ever seen. What the hell is clear mask? Smart Shield? Courtesy Guard? LOL. Do they just randomly throw words together now for junk fees? I’d run away from that dealer.
They only leased well when they offered the 13 month lease with a 77% residual. I signed for mine on the last day of April 2024. Still not sure what shenanigans they pulled on the paperwork but $254/mth, 1st month due at signing, for the base model. I’ve loved the car and will hate to turn it in a couple of months from now.
Based on this one experience, Genesis definitely does not seem to be a very lease-friendly brand. They appear to get the same (or similar) incentives as the sister brands but they’re not willing to adjust selling price beyond a couple hundred dollars:
We do not have thousands in the Genesis product as they incentives their cars in the form of rebates. The invoice and MSRP are near identical to encourage brand perception.
And this specific dealership (Genesis of Littleton in Denver, CO) wasn’t willing to apply any dealer discounts or lower the money factor to something that seemed reasonable to me (while still allowing some room for dealer profit).
My takeaway regarding Genesis so far is that the cars are lovely, but this specific dealership left me with a sentiment that was decidedly “non-premium”. I’ve never leased before but I’ve purchased from the competition: Audi, BMW, Mercedes, and Porsche. The carelessness, lack of decorum, and predatory financing reminded me more of the New Jersey dealership that I bought a Mitsubishi Evo from, right out of college.
Oh well. There are options-a-plenty! May try another Genesis dealer just for giggles, but I’ve been having good experiences with the Hyundai dealer. Drove a Ioniq 6 Limited that impressed me. And I have an appointment to drive a XRT tomorrow. I’ll be deciding between those, I think.
One question I did have, @asha952, about the comment you made:
Do you show up with a sheet of paper with a proposed lease deal on it and then negotiate in-person, in the finance manager’s office? Do you take a business card and then just send your proposal in a email? For the few lease negotiations I’ve done so far, I just ask them to send me a rough estimate via email as a starting point. Though, based on your comment, I feel like there’s a better way. I’d be interested to hear your approach.
Yes, from my experience the Genesis lease offers havent been too good. The one “acceptable” offer I had was from the same dealer that gave me an amazing offer on my IONIQ 5.
But that was after I leased it for 2 years.
Definitely try your hand at another Genesis dealer, hopefully there are more around that play nice.
So #1 thing i forgot to mention but learned from other more experienced members here, (also keep in mind im certainly not the best but this is my best so far)
!!! don’t step foot into a dealership until the dealership has sent you a written quote and the offer has been (almost finalized)!!!
My strategy for the best lease I’ve got so far consisted of
first finding a really good offer either in the Signed! section in my area , and then trying to undercut it a bit by playing with the calculator (copying and then comparing)
Then calling dealerships around, trying to act like I know the sales manager helps lol. I pitch them that exact offer and terms. Plus final payment etc.
and they say yes or no. Maybe of 6 dealerships, 2 play ball but thats all you need
then take the 2 quotes and make the dealers compete. I say hey they got it down to this. can you beat it?
repeat. BUT make sure not to give the dealership info and be as respectful as possible.
and you need quite a bit of luck along with hard work.
Yes, never step foot in the dealership unless you are test driving or signing and taking delivery. Unless you want to be worn down and best up for hours.
Make actionable, unambiguous offers using data points from here, rebates and taxes as they apply to you. There is no need to pin dealers against each other, especially if they accept your proposed offer. Make offers using DAS and monthly payment only OR break out every detail, no in between.
