[Edited] Price Paid for Lexus GX460 Premium Lease

Year:2019
Make, Model, and Trim: Lexus GX460 Premium
**Months/Annual Mileage:30 mo / 15k **
Zip Code: 75080

Hello LeaseHackrs and Community,

I have have been able to obtain following best offer after hard work and learning lease 101. Could you comment on quality of this offer in DFW, TX market.

GX460 Premium

MSRP $57,724.00
Dealer Disc Price $51,951.00
Dealer Disc Pct % 10.00%
Rebate Disc $4,000.00

Sales Tax $2,996.94
TT&L $340.00
Acquisition Fee $795.00

Cap Cost $52,082.94
Residual $32,902.68
Residual % 57.0%
Term 36.00
Mi /Yr 15,000
Money Factor 0.00190

Depreciation Cost $19,180.26
Dep Cost Mo. $532.78
Finance Cost $161.47
Monthly PMT $694.26

Total Out of Pocket Cost $24,993.27
Total Out of Pocket Cost Yrly $8,331.09
Cost Per Mile $0.56

  • first payment is due at signing + TT&L $340.00

I believe lease financing is thru LFS. Can I use MSD to drive down MF? I have seen some supporting data point but I wanted to check here before reaching out dealer.

Could please let me know if there is room for improvement before I sign the lease.

Thank you,
ccuser011

Your cap cost (adj cap) of 52,082.94 includes the 340 registration fee. In other words, it’s capitalized. Also capped is the 795 acq fee as well as the 2,996.94 sales tax. Unless you received tax credits, the sales tax should be…
6.25% x (49,751 + 4,000) = 3,359.44 based on the information you provided.
Customer rebates are taxable in TX as far as I know. And, even if they aren’t taxable, the sales tax would be 6.25% x 49,751 = 3,109.44 which is still higher than 2,996.94.
The 0.00190 money factor seems high (about 4.56%) and may have been marked up. Assuming your credit is 720+, you should qualify for the buy rate (no mark-up). Check edmunds.com for the buy rate. If you can use MSD’s in TX (I think you can but not sure), you can use them to drive down the buy rate.
Also, your sell price looks high to me. Again, check edmunds and this website to see what others in your market are paying. Have you checked inventory of area dealers to get some sense of supply? How strong is demand?
Be sure you’re getting all rebates/incentives (check LFS website and edmunds). Next, you may be able to add another 10% discount of your own just to have a place in which to start negotiations. Strongly recommend you create a lease proposal similar to the one given in the link below and email it to the dealer. Make sure that you are controlling the deal, not the dealer. Here’s the link…
Control the Deal

Questions? Please let me know.

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@delta737h
Please know that I appreciate you helping out a newbie here. I know I am asking alot here. Please see my line response below.

I am looking forward to ramp up my 101 and start contribute here in future.

Regards
Ccuser011

…In other words, it’s capitalized.

I read that its better to prepay TTL. Therefore I am planning to prepay it all (reg, acq, sales tax etc). On a relevant note, why is TTandL encouraged to prepaid? what if I roll it all into cap and let’s say I total the vehicle in 2 months. Am I liable to pay these fees or will lease GAP insurance will cover it?

Unless you received tax credits, the sales tax should be…6.25% x (49,751 + 4,000) = 3,359.44

Tax is calculate as following = (51951-4000) * 0.0625 = $2,996.93

Customer rebates are taxable in TX as far as I know

Agreed! That’s what I thought. Another dealer was applying rebate after tax but this dealer is applying rebate before tax. Should I correct the dealer or stay quite?

The 0.00190 money factor seems high (about 4.56%) and may have been marked up.

They started with 0.00252…I haggled them with .00165 counter. MS stated that their buy rate is 0.0018 and they want to make money on it. SM is not budging. Hey only came down to 0.0019 when I said competitor is offering it.

If you can use MSD’s in TX (I think you can but not sure), you can use them to drive down the buy rate.

I have not asked the dealer yet. I am not trying to scare them with flood of data request. I am negotiating in small bite sizes. I will confirm if its available here.

Also, your sell price looks high to me… inventory of area dealers to get some sense of supply? How strong is demand?.. … add another 10% discount of your own just to have a place in which to start negotiations

I have not seen any data point suggesting people are getting more than 10% off of MSRP (before rebate) in DFW market on 2019. There are 2 companies controlling all of DFW dealerships. Couple of them are sold out on GX with 1-2 week lead time. Online they show 15-20 in stock. I think it is low (compare to rows and rows of RXs). What are your thoughts? Is it realistic to drive down dealer discount more than 10% in DFW. Should I expand my search to nearby cities?

Be sure you’re getting all rebates/incentives

Yeah, I checked LFS and Edmund. Looks like $4k is the only rebate available. There is college grad rebate. Can I tap that if I am in “collage” :wink:. Any idea how do they verify?

Make sure that you are controlling the deal, not the dealer. Here’s the link…

Thanks for sharing the link. I will certainly re-calibrate my approach based on your input.

Let me address each one of your concerns…

1st. "I read that its better to prepay TTL. Therefore I am planning to prepay it all (reg, acq, sales tax etc). On a relevant note, why is TTandL encouraged to prepaid? what if I roll it all into cap and let’s say I total the vehicle in 2 months. Am I liable to pay these fees or will lease GAP insurance will cover it? "
Whether you prepay or not depends upon the cost of money and your opportunity rate of investment. If your lease rate is effectively, say, 0.9% and you can invest at 3% after taxes, then it’s best to roll those fees into the lease and conserve your cash for other better-suited opportunities. Your GAP policy is designed to cover the “gap” between the lease balance and the actual cash value (ACV = what the car is worth from the perspective of your insurance carrier) of the vehicle less any deductible. Capping fees will naturally trigger higher lease balances. If the lease balance exceeds the ACV less applicable deductible, gap covers the difference. Strictly speaking, GAP is an acronym that means Guaranteed Auto Protection or, more generally, Guaranteed Asset protection. Because cars depreciate most rapidly in the early years of its life, lease balances often exceed the ACV. The book depreciation (the amount of principle paid each month) is usually less than the car’s actual depreciation resulting in lease balances exceeding the ACV. I could go on and on but, I’ll spare you the details. So, the more your capitalize, the greater the lease balance. Your GAP should cover. By the way, never ever buy GAP coverage from a dealer if it’s not included in your lease. Ask your insurance carrier if they offer a GAP rider. This can be purchased for roughly 0.1% of the MSRP.
You should avoid putting money down on a lease. Money down means the same thing as cap reduction. This will only serve to lower your lease balance. For the life of me, I have no idea why people make cash cap reductions as it makes no sense especially if the effective interest rate of the lease is less than their after tax opportunity investment rate. In they want lower payments, then stick the cap reduction money in the bank and use it to subsidize lease payments.
2nd. “Another dealer was applying rebate after tax but this dealer is applying rebate before tax. Should I correct the dealer or stay quite?”
There is nothing illegal in applying the tax either way. However, it is in your best interest that the tax be applied after the rebate especially if it is used as a cap reduction Here’s why… assume a rebate of 4,000. If the tax is applied before the rebate, then the effective amount of the rebate at a tax rate of 6.25% is 4,000/1.0625 = 3,764.71. This means that the amount of the cap reduction will be reduced by the difference or 235.29 which increases your monthly payment as follows…
0.0019 x 235.29 + 235.29/36 = 6.98. The difference in tax is 235.29 x 6.25% = 14.71. As such, pre-paying the tax saves you 14.71 but costs you an additional 6.98 in monthly payments.Those residing in states where payments are taxed means an additional tax levied on the 6.98.
3rd. “I have not seen any data point suggesting people are getting more than 10% off of MSRP (before rebate) in DFW market on 2019. There are 2 companies controlling all of DFW dealerships. Couple of them are sold out on GX with 1-2 week lead time. Online they show 15-20 in stock. I think it is low (compare to rows and rows of RXs). What are your thoughts? Is it realistic to drive down dealer discount more than 10% in DFW. Should I expand my search to nearby cities?”
Sounds like demand is pretty strong in the face of short supply at this point in time. How long can you wait or, want to wait? You may want to expand your search to nearby areas. Nothing wrong with discounting by another 8% - 10%. Remember, you can always come up but never down. Also, insist on the buy rate and confirm it via edmunds. In other words, negotiate.
4th. “There is college grad rebate. Can I tap that if I am in “collage” :wink:. Any idea how do they verify?”
Yup, they’ll check to see if you are a recent graduate. Not sure what is meant by recent.

Okay, I see how they computed the tax. Sell price is 51,951. Subtracting the 4,000 rebate yields 47,951.
Sales Tax = 47,951 x 0.0625 = 2,996.94
But, this makes no sense since tax in NJ is based on selling price. However, the only way this would make sense would be if the rebate were a manufacturer to dealer incentive in which case the sell price is 47,951 and the 4,000 is not taxable. I’m betting this is the case.

Right, expect you lost track - he’s in TX.

Sorry guys. I dumped a lot of info in this thread. Its easy to overlook.

I am in TX, full sale price is taxed.

Meant to say TX, not NJ. Working with someone else who is from NJ. So, yes, I did lose track.

Ask for tax credit. Lexus offers tax credit that would take the rate to 1%.

Where are you in Texas? I’m in Austin, but bought from Park Place Plano because they offered the best deal of all the dealers I checked in DFW, Houston, Austin and San Antonio. Might be able to do better there?

You are correct about tax credit, but one the sales person mentioned that Lexus offers it on certain model only. He mentioned it is currently active on RX and (I think ES?) but not available on GX … regardless of that, I will ask - thanks for the tip!

I did research this topic here and Edmund, My takeaway was that dealer uses it strategically to clear out slow moving inventory.

I am in Dallas (DFW) area. I will expand my target region to other TX and OK markets.

Dealer has confirmed MSD is available in TX (at-least in DFW).

He mentioned following regarding tax credit:
"Lexus is not offering (tax)credits on the GX currently. Finance is willing to submit a deal to Lexus financial and see if they will do it."

  • Do guys think he is forcing me to do the app?
  • Is there realistic chance of getting tax credit?
  • Can I back out of lease in case tax credit does not go thru?

Thanks again for your feedback.

I wanted to share my signed deal as data point. I hope reader will find it helpful

First, I wanna thank @delta737h and @RobertR for your advice and time. Your feedback allowed me to reduce my cost by 23% (again, mucho gracias )

I signed following deal:

*** Finalized Deal GX ***
MSRP--------------------------- $57,8xx
Dealer Disc Price + Rebate-- $47,4xx
Dealer Disc Pct %------------- 17.9%
Sales Tax (L&M FEE)--------- $470
T,L & Reg Fee----------------- $183
Inspection Fee---------------- $7
Doc Fee ------------------------ $150
Acquisition Fee---------------- $795

Down PMT--------------------- $0

Cap Cost ---------------------- $49,xxx
Residual ----------------------- $32,xxx
Residual %--------------------- 57.0%
Term---------------------------- 36.00
Mi /Yr -------------------------- 15,000
Residual % Per Mo ----------- 1.2%

Money Factor ----------------- 0.00118 (brought down from .0019 with x9 MSD)
Refundable MSD x9 ---------- $5,175
Depreciation Cost ------------ $16,082
Finance Cost------------------- $3,484

Dep Cost Mo.------------------ $446.73
Finance Cost Mo.-------------- 96.80


***Monthly PMT---------------- $543.54 ***


MSRP:PMT Ratio---------------- 93.95Bps
Total Out of Pocket Cost------- $19,567
Total Out of Pocket Cost Yrly-- $6,522
Cost Per Mile -------------------- $0.43

Couple more post will follow with additional information.

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Great deal. Enjoy driving it.

Thnx Robert!

Hopefully, future GX lessee will find my DP helpful.

I’d like to ask trusted Hackr for feedback on my deal … hopefully (with your feedback) other can replicate it ever better deal

  • How could this deal be improved further?
    o Base MF could have 0.0018 dealer was not budging, insisted he wanted to mark up. I gave up on this battle front. Instead, I pushed dealer to open MSD option (initially refused)
  • I was aiming for 1% rule (I realize some consider it bogus metric, but I used it has base line to pull the trigger). I could have lowered my MSRP-PMT ratio below 94Bps with 39 mo lease and lessor miles but I get tired of car after 20ish months.
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Congrats on a great deal. I am going to use this thread as a baseline to lease a GX this month.

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