Hi All:
What is the typical, default downpayment on a lease based on? a certain % of MSRP? 10% of MSRP? 10% of some other number? A flat amount?
thanks!
The consensus here is that itâs best to do 0 DAS and if applicable, max out MSDs. Anything else is at a risk of loss if the car is totaled, stolen, etc.
got that, but what do the finance houses want typically by default? I understand that I can negotiate/request to a 0 DAS
When we âdefaultâ run a lease for a customer. Like if a customer just calls in for a quote and just asks for a typical lease and wont engage with me or wont let me ask any questions. I will usually run it with just up-fronts plus Ack. Something like $2,600. Covers doc, first payment, reg fees. If I am left with a lease at say $819 a month I will usually throw some CCR on top of that to get it under $800.
But ever dealer is different. No one really cares what you put down if you can qualify.
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I personally only like to do first month and govât fees (DMV, reg, doc(only $75 for me in NY)) up front. Roll all other fees in to the monthly (Acq, taxes).
As is commonly known zero to very low down is advised in case you total the vehicle, with the exception of tax purposes for a business lease. If you need a bigger write off for X year more than X year plus 1 or 2 etc.
They donât care what you do as long as you have good credit
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The advertised deals are usually backing into a nice, round payment. As others said, as long as your credit is good you can put at little as you want (Iâm a strict $0 DAS myself).
IDK where you found that âconsensusâ
In the absence of a first payment waiver by the lender, it makes no sense to capitalize your first payment.
It also makes no sense to pay tax on non-taxable items such as registration (depending on your state) by capitalizing them.
Yes, your points are valid. But unless the MF is super high, whatâs the difference rolling everything in, a few dollars? It shouldnât make a huge difference if youâre maxing MSDs (if you can). Anyways, I suppose OPs question would be easier to answer if he specified a make/model. But like I said, I think a lot of people on here would suggest 0 DAS.
0 DAS means sign and drive without putting anything down or 0 cap cost reduction? I definitely understand and agree with the latter, but any pros and cons to 0 sign and drive?
0 DAS is a sign and drive, correct. See @max_g âs point above about capitalizing the up front costs
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At less than 1% interest (0.74%) Iâm glad to transfer 100% of the risk. I have had a lease last less than a year.
But I take the point it isnât a consensus, more a preference. And most people here shop a deal to death and then pay 2-3%+ interest on it which does not compute to me.
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0 cap cost reduction for sure. Weâve seen some great deals where the dealer puts in like 500-1000 as cap cost reduction, you can always ask them to remove that.
As far as rolling all your drive offs into your payment, thatâs a case by case thing. Usually you donât want to pay any interest on something you should pay up front, but some MFs are so low that is probably worth it (for example, certain Lexus models - but basically any lease where you canât max MSDs is a good rule).
If one intends to transfer the lease, is it better to roll the registration, doc fee, etc. to monthly payment to minimize out-of-pocket during first ownership?
Assuming 0.001 MF (2.4% APY), rolling in $1000 up front fee only amounts to $1000*0.001 = $1/month rental charge ($36 in total for 36-month lease). Plus some tax (~$10) on non-taxable item like registration.
People transferring tend to avoid MSDs, itâs often easier to do so.
Transferring is like selling anything, itâs going to depend on supply and demand.
That being said, itâs probably easier to âsellâ a slightly higher payment than $1,000 due to you and a lower payment, even though the total cost ends up being the same to the new lessee.
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This is a good point, I see itâs not the just the low interest you pay on capitalizing those costs.
If you are certain you are driving the lease to disposition, yes. But do the math:
If registration in CA is $700 / 36 itâs $19.44/mo. At 1% thatâs $19.63 ($0.19 rent = $6.84 over the lease, or $0.84 more than what I save if I pay all six months of car insurance at once).
If I am out of that lease in 12 months (maybe it was totaled, maybe a lemon/buyback), I paid $235.56 with $2.28 rent on the $700 (of which I didnât pay $466.56) someone else would have paid upfront.
If I do a 3 month pull-ahead, I paid $6.27 rent to avoid $58.32 out of pocket in the first yearâs registration.
And thatâs just the registration.
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Ty, helpful