Thanks for all the help for first time leasers to understand about lease here! This is my first time leasing - Not completely clear whether this is a good deal with the trade in (~$7500):
2020 GLC300 AWD - 36month/10K miles
MSRP: $45,920
Sell price: $37,474.91 (on contract)
Residual: 58% Monthly: $253 after tax
The rent value listed: $1,475.18; which would make MF 0.00064? The dealer made some of the trade-in as a down payment of $6.3K, so there was a 9% tax (~$573) on that downpayment.
Is this a good deal? Is it better to get trade-in in cheque or included as down payment? Also, I’m not sure whether the rent value listed on the lease is the right way to calculate MF - cuz if I use the lease caluculator, with the same data, and $6.3K as downpayment, the MF is around 0.0013.
(My friend seemed to get a better deal even though the MF they got was 0.001 based on the rent charge listed on their contract: $50K MSRP, 36month/12K miles, for $480 monthly after tax, $1700 drive off). So I’m not sure if the “Rent Charge” listed on the Lease agreement is a source to see whether the deal is good.
Thanks for your help! I tried to read many posts to try to find the answers - so apologize in advance if they were posted elsewhere.
What is on your contract and what does the calculator say?
Edit: a couple posts got combined.
Putting $7500 down through trade in is a horrible idea, as you’ll lose it all if the car is stolen or totalled.
I’m a bit confused as to how you’re trying to calculate the mf through the calculator. You shouldn’t get a different MF number with a big down payment vs without.
To back calculate the mf from the rent charge, you need to use the adjusted capitalized cost, not the sales price.
I’m hoping to understand whether this deal is good - trying to digest all the info I read from the forum - any advice on how to evaluate the deal with a trade-in? (whenever I thought I understood the deal, I got more confused.)
and you are right - I realize it’s risky now - is there another recommended way to trade-in the old car? want to do it with the same dealer instead of selling to a private party to avoid the hassle.
The contract: (Monthly: $253 after tax)
MSRP: $45,920
Adjusted Capitalized Cost: $37,474.91 + $1,095 acquistion fee
Residual: 58%
Rent Charge: $1,475.18
Down payment: 6,282.89
Due at Signing (which was paid with the car trade-in):
You need to step back and figure out the actual details of this deal.
What MF is the dealer actually charging? Are they marking this up? What are the available incentives? Are they being rolled in to the dealer discount or included separately? What is your current vehicle actually worth?
Go go carvana, shift, and vroom and get an actual purchase quote for your current vehicle so you can see what kind of equity you actually have in it. You can sell to one of them in lieu of trading in to save the hassle of selling private party if the dealer’s offer is low. Go to Edmunds and post to verify the mf, RV, and incentives for this trim in your zip. With that info in hand, then you’ll be able to figure out if this is a good deal or not.
Thanks for responding! In terms of what my old car is worth - I’m hoping to sell it at $7500 with the dealer (after done my research.)
“What MF is the dealer actually charging? Are they marking this up?”, can you help me understand how to find those out - I have been trying to figure out the MF.
Still, get a price from carvana, etc. It takes 2 minutes to do online.
Best way to find out what MF the dealer is charging is to just ask them. If they won’t tell you, say goodbye and find a new dealer. Edmunds will provide you buy rate MF, so you can compare this against what the dealer is charging to see if they’re marking it up or not.
You can calculate MF from.the contract numbers if you have the correct numbers. There’s no way the adjusted cap cost is $38569.91 if you’re putting $7k down though. You need to use the proper numbers.
Have you already made this deal and are just trying to figure out if it is a good deal of not or are you actually still shopping?
Ask the dealer what the MF is. It’s that simple. Trying to reverse engineer it from an incomplete picture is not going to work. Also putting the trade in as money down is a horrible idea and any money down should be avoided at any cost.
I asked on Edmunds, here are the MF, residual and incentive information.
AWD: .00068 MF and 56% residual
$1000 incentive
I wish I knew about the risk with putting trade-in as part of the down payment - as I was only focused on understanding how to get a deal in terms of numbers. A lot of new info to learn here! Also it was tough to sell my old car cuz it’s a Canadian car (therefore Carvana, Shift and CarMax won’t take it). I thought if I didn’t combine the 2 deals (trade-in & lease) together, I wouldn’t get a good number. (I think it’s too late to ask them to cut me a cheque or putting into monthly, now that I already agreed and signed the contract?)
For my future learning - minus the risk of downpayment - I really hope to understand how to figure whether the deal is good with a trade-in?
Based on the contract, the rent value is $1475.18. The MF seems to be 0.0006978 (=(1475.18/36)/(32287.02+26432)); Is MF the determining factor? (will dealer be able to purposely mark it down or up?)
While dealers mark up MFs all the time(they can’t mark it down from buy rate but they can mark it up), I highly doubt they marked it up from .00068 to .00069. That just sounds like a rounding error in your calculations. It’s a trivial amount.
With that said, the rent charge is only one part of the lease. It isn’t a metric of if this is a good deal or not. It is just the interest on the loan. The overall deal is what matters.
The big variable here is your trade in and what you got for it vs what it is worth.
Not sure if the way I view whether the overall deal is correct:
I just converted the deal to a monthly rate: which is $454/month after tax with no drive off (=($253*35+7500)/36), or $436/month after tax with standard drive off (first monthly + registration + doc fees). I view my car worth roughly $7500 (based on an average of KBB).
Which I thought the deal was decent (minus the risk of putting trade in as down), considering it might be hard to sell the car otherwise.
