Full- and/or mid-sized sedans. Getting wildly different numbers on leases

Ask the Hackrs
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I am looking to lease a full-sized sedan, or maybe a mid-sized. I am tall and live in an area with bad weather, so I want a heavy car that performs well and has a lot of space.

But I am having trouble getting any kind of reasonable lease deal. I’ve read through the info on this site, which has been hugely helpful, nevertheless, so advice might be good

I have a credit rating of 860 (God-level) with a 200k income. I’ve leased a number of cars in the past.

But when I went to Kia to look at a Cadenza, the salesman put forth an offer with 5.2% interest (.0021), 46% residual (bad), and minimal incentives. I was like “why is the residual so bad”? And he said “the residual is always bad on a luxury car”. Is that true?

When I asked “why is the money factor so bad”? And he said “the factor is based on a credit score of 750 or above” (big difference between 750 and 860)

Needless to say, I walked right out of there.

At Dodge, they have a residual of .39% on a Charger, but a 1.6% interest rate.

At Chevrolet they had a residual of .43% on an Impala (probably because it is being discontinued) and .51% on a Malibu. Again, not good.

I haven’t swung by Toyota or Honda yet, but from what I am told, they will give me a good residual and maybe an average rate, but won’t discount the car or offer any rebates or incentives. So that might not work out either.

Am I simply looking at the wrong cars? Going about this the wrong way?

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Residuals are set by the manufacturer, and are not negotiable. MF however can be negotiated, check on Edmunds for what the MF and RV should be for the particular vehicles and your region. Some cars just really don’t lease out well, it’s all about the programs and available incentives ultimately at the end of the day. Where are you located ?

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I am in the western suburbs of Chicago

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Looks like Kia’s in general have terrible residuals–some of the worst in the industry. Guess I should have checked that before talking to them

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Don’t quote me on this, but I’ve read leases in The Chicago area are not the best. Most people actually benefit going the Balloon payment route out there then actual leases

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My car strategy is pretty simple. Are leases for my first 3 choices cheap? Yes, pick one and go for it. No, broaden the search and consider buying if the payments are in the same ballpark. If that doesn’t pan out look for grandma’s used ride but that takes a lot of time so I go to my fallback position which is Honda.

My first Accord lease about 20 years ago was at their special rate of $239/mo for 36/12. Honda will always have an Accord 36/12 special rate lease for $239/mo and its reviews are extremely favorable. Its kind of a no brainer.

If you gotta have a Kia here is what they’re offering in my area. Belzer’s can be a bit sketchy to work with, though.

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Only if you live in the actual city of Chicago can it be beneficial and not every captive lender offers a balloon lease. And generally speaking, not many dealers in the Midwest are giving lease hackr worthy deals.

But to touch on OP points:

Most captive lenders (i.e. Honda FS, BMW FS) have a minimum credit score for tier 1 financing. In BMW world, it is a 700 or higher, so it does not matter if you have a 700 or 900 score the rate is the same.

Also, some cars have bad residuals but huge rebates/low money factor and others have really good residuals but no rebates/high money factor.

And a Kia Cadenza is not a luxury car and the residual can be good on luxury cars. The BMW 3 series has a 61% residual for 36 months/10k miles and a .00137 money factor (3.29%). Plus there are plenty of rebates and discounts on them (search this forum for more info).

You have to decide if you want to shop a car or a payment. If you are targeting a payment goal (i.e. $400/mo), find the best bang for you buck. Or if you want a specific car, find the best deal available.

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Also aren’t Kias really bad at leasing? I haven’t seen many good lease numbers on the board except very few.

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It depends on the model. Right now SoCal area has Sportages for 180 a month with around 2k das from Rodo. But in general, the mid size Kia and Hyundais sedans tend to lease poorly - especially the Cadenza and the woeful k900. Atrocious residuals can’t be easily remedied unless you’re looking at a huge dealer discount plus manufacturer incentives.

Keep in mind Kia sells so little of these they likely have very few on lots. This will also lessen the chances the manager wants to take a large loss.

Don’t even ask me why Kia makes the K900 still. I’m still trying to figure it out.

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I am going for the best car for the money vs. a set payment.

For instance: I was looking at the Lexus ES 350, which has some decent lease deals going right now, but it has one problem: it’s small (42 inch leg room in the front seat, which is going to bother me). It’s also somewhat light compared to cars in the same class–so it will get blown around Chicago highways in storms.

The Lincoln MKZ and Continental look temping. The Continental has a 54% residual and is a lot of car with a lot of features. If anyone here has experience with leasing a Lincoln, please chime in (haven’t talked to them yet).

I could buy a car outright, but I have my “I’ll never buy another car story”. 15 years ago I bought a Cadillac STS and a Honda Accord. Both went to 0 resale value within one week: the Cadillac had a defect in the Northstar engine that caused it to burn oil. GM wouldn’t fix it, and I couldn’t even trade the thing in. The issue was not covered by the drivetrain warranty.

So I said “at least I still have my Accord”! Until I blew a rod on the highway. It had 88k miles on it.

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That used to be the case in the past when IL taxed the selling price AFAIK

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Absolutely.

Going to the dealer is useful for two things:

  1. Test driving the vehicles early on to figure out what you want
  2. Signing the deal that you agreed on before stepping back through the door

Dealers are generally horrible resources for anything related to the lease terms. You should know what they are long before you ever discuss them with the dealer.

@wam22 has the right idea here for the next follow up question. Are you trying to get the best car you can for a certain payment goal or are you trying to get the best deal on a specific car that you’ve decided you want? Figure out what your goals are and work from there.

But first, let me reiterate one more time: Stop going and randomly talking to dealers about lease price points.

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so I should do research on the Internet, then contact the dealerships electronically and negotiate from there? (and if I need to test drive do that separately)

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Correct. And if you don’t already know what your target lease offer is on the vehicle before talking to the dealership, you’ve already lost the battle.

I’d start by determining your car requirements (sounds like you want a larger sedan, probably awd, but what price point are you looking for?) and figure out what vehicles roughly meet those requirements. Then go drive those and figure out which ones you actually like. Meanwhile, spend some time learning exactly how a lease works, is structured, what values you can negotiate, etc. From there, deep dive on the deals to figure out exactly what they should be given different degrees of aggressiveness on dealer discounts. That’ll give you ammo to then start negotiating with.

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IMO, this is the simplest way to buy a car and not buy a payment. Do a little online research and find 3-5 cars that fit your needs and have good reviews/ratings. Then narrow that list down to a top choice (no more than 3, you will go crazy) then test drive it at your local dealer. From there spend some time on various forums (leasehakr, Edmunds, manufacturer specific) to get an idea of what is a bad, good, and great deal is. Lastly, contact the sales person (they deserve a chance to earn your business if you were happy with the experience) you test drove with and see if you can make a deal. If you can’t make a deal, contact more dealers or find a broker.

Now if you want to buy a payment, send every dealer in your state the same generic email. 90% will ignore you and the 10% that responds will say yes to your payment. Then when you get to the dealer that is the lowest, they will say it is plus taxes/fees and their non-negotiable protection package for $899.

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I think even simpler is looking through lease transfer ads here and on swapalease for bmw and Mercedes mid- and full-size sedans.

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Once you find the vehicles that you like would also suggest spending time in the Shared deal section and marketplace to get an idea of what the vehicles are going for in terms of payments, discounts, etc… to make sure they are still worth looking at. Not all brands and models lease well.

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Went back to the Toyota dealership where I leased three vehicles from previously (Toyota of Naperville), and told them I wanted to look at an Avalon and a Camry, and asked for the numbers

sales manager comes back with a 46% residual on the Avalon, 2.2% (.00092) interest rate, for a payment of $560 a month. I was like “you gotta be kidding me”. He then presented equally bad numbers for the Camry, and pretty much said “we don’t focus on leasing, and don’t really negotiate”

and the problem is, I will now eat the disposition fee when I bring back my Corolla, because these guys won’t operate in good faith.

Does this sound as bad to you guys as it does to me?

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Just go to another dealership

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the other issue I am having is that the residuals listed on Edmunds and other sites don’t match up to what I am getting from dealers. The Lincoln MKZ was supposed to have a .51%, but the dealership said it was .47%.