hello guys, in order to better understand leasing, i would like to ask few questions.
since there are lot of cars with different MSRP, residual value and MF, how would i know that i am getting a decent/okay deal? i think somebody mentioned >1% of MSRP of the vehicle is what I should aim for …?
As far as i understand, they DO lease used car, as long as its certified preowned, and less then 4 yrs old and has less then 40k miles… is this true? also, would you recommend leasing used vehicle?
Subaru told me you can’t lease any CPOs at all. BMW/Mini I believe said only on demo/loaners. Lexus said they lease actuslly used cars.
Leasing demos/loaners can be huge savings but not always. You just have to look at the numbers and compare. Leasing new can be cheaper than new. Just depends on the incentives available, residuals, selling price, etc
I’ve seen this 1% “rule of thumb” before and it’s BS…let’s do the math:
Monthly payment (excl tax) = D (depreciation) + R (Rent)
R is a financing-related charge calculated off the MF (which is just another way of expressing APR); it is based on the prevailing interest rates at the time (and to a certain extent how much the OEM is willing to subvent the going rate to spur lease-based volume).
Even if D stayed the same (it doesn’t), how much does your R go up when:
MF is .00001?
MF is .00010?
MF is .00100?
MF is .00200?
Nowadays, when rates and therefore MFs are so low, you’d be leaving money on the table on a lot of cars (particularly sedans) aiming for 1%
Pick a car (or a category) and read the threads here, or start another if it hasn’t been covered already. You’ll know from this website what to aim for (keep in mind the “best case” may not available in all regions depending on competition, availability, etc).
It’s not totally BS and described as such - a simplistic “rule of thumb” – this can be used to gauge if you are close or far away from the dealer’s offer but definitely you will NOT get the best deal. I’m sure you’ll agree that you need to put in the work. This is basically the least amount of work you can do (5 minutes) and still be in the ballpark. There are some people that hate negotiating and even after reading this forum, still decides to just pay the higher monthly to avoid the negotiation
Also, EV lease deals have to almost be considered separately, since they usually have huge incentives offered to cover the federal tax credit which screws up the math. But if the pre-tax monthly, $0 down payment is above 1% of MSRP, you probably are not getting a great deal.
I think you are going the wrong way with that article! If you read what @max_g said, he doesn’t even think that the monthly (including tax, $0 down, 36/10k) @ < 1% MSRP(read as LESS THAN 1% MSRP) is a good deal. @max_g is saying you should be aiming for 0.5 to 0.8% of MSRP.
On the article you linked, it is saying 1.25% MSRP which is even worse than the < 1% MSRP
It’s definitely very scary if you don’t know what is going on – but once you are educated, it’s really not that difficult. It actually becomes really fun to “hunt” for a deal, you will become the favorite family member. Once you know how all the numbers work by just reading all the deals going down on in this forum, it is very easy to walk away from bad deals or a dealer not willing to negotiate. If you get lazy, look for @loberant, he has good deals all over the place.
Listen the best time to buy a car is when you do not need a car. I negotiated the dodge charger deal in NY included above. However, i also got a Jeep Grand Cherokee limited for myself at a good deal as well. Now for the Jeep i could have pushed for another 10 or 15 dollars less but it was the exact car i wanted when 2016 were disappearing from dealer lots so i decided not to push more. I felt at .89% was fair and i loved the car. Plus i have two other leases coming due next year and wanted to leave some room with the dealer to get good deals for the next leases. Again, that is my perspective. Plus i feel i might have a better relationship with the dealer and salesman for next time or if any issues arise with any of the cars. (I even tipped the sales guy and the manager by 20 bucks each) Again, what i am saying is sometimes you have to look at the big picture.
The rule of thumb is exactly that - an easy formula to guide you. It is 1% not 1.018% or 0.9876% because it is easier to divide by 100 that 1.018%.
I am sure a more elaborate formula should consider the opportunity cost of money vs MF of dealer, the debt to income ratio, the current rate of inflation etc etc but this is a car forum, not a micro economics one
If your payment is much higher than 1%, you should pause and ask why? If it is lower, you should start thinking this is a good deal and you need to seriously put it on the shortlist. But ultimately if you are after a luxury SUV and a base corolla is leasing for 0.5%, then that number is not material to your decision.
It is perfectly ok to lease a car for more than 1%! Why? Because it is rare, has the right color/options, is your dream car etc etc. We have had Nissan Q60S sport Red, Jeep Wrangler Rubicon, AMG, M3/M5 fans and they could not get 1% but they loved their cars.
We had people who had no intention of buying maseratis (some already had Ferraris, BMWs and Mercedes) but at 488 for 73k MSRP, thought the deal too good to pass [maybe Ferrari for the mall and steak night and Maserati for the grocery store and drive thru ]
I think someone even leased a 48k MSRP volvo for 250 for his 16 year old child (lucky child, bold/fearless parent).
So lease a car you like at the price you can afford Life’s too short not to enjoy that Jaguar F type coupe you have always dreamt of (particular at less than 1% MSRP monthly lease)
This forum is here to educate/compare the basic principles, so when you are at a dealer, they don’t just give you meaningless numbers and you have no basis for evaluating or countering their offer.
Except it’s a formula that doesn’t guide one towards anything. If anything, it just encourages lazy thinking and absolves the necessity of doing research.
There are no shortcuts to doing some basic research.
If your research shows vehicles in your segment can be had for X%, you should be aiming for X% (knowing that you may have to pay more if your local market isn’t as competitive as, say, Socal or metro NYC).
If one doesn’t do research, pays 0.90% and thinks it’s a good deal since <1% when research shows the same car can be had for 0.6%, that person has just wasted a colossal amount of money.
Take the Maserati you cited for example. Someone paying $700/month instead of 488 will have wasted at least $7,600. In reality, it will be more because one who doesn’t do research will waste even more money in the Finance manager’s office.
OTOH if someone is aiming for 1% on a car that for various reasons (rarity, low residuals, high MF, no discounts, etc) does not lease well, one will continue to waste inordinate amounts of time chasing that elusive 1%.
Doing some homework is the only basis for evaluating a dealer offer, no formulas will ever offer a shortcut for that.
I believe someone posted they got two maseratis at 488 each. I asked if it was because they wanted always have one to drive when the other was in the shop
I also think at the start of the year, we had people who got free Spark EV if they qualified for the 4k CVRP CARB credit (income guidelines applicable). But then someone with such a 99 a month spark also posted that they felt the insurance required by Ally was too high (1.3k comprehensive a year versus the 400 or so for barebones statutory insurance they had on the old beater) and therefore wanted to return their lease. So can’t please some people, even with free leases lol.
At a minimum you can go to true car and find out what dealer discount is without the rebates. When you build the car truecar brakes it down by dealer discount minus rebates. Find out what rebates you qualify for (for leasing not purchase as rebates are different) and subtract those from sales price, which includes dealer discount. For my jeep the dealer discount was 3800( based on trucar) at 1500 under invoice, and minus 6500 in rebates. Could i have gotten more from the dealer? Yes, i probably could have but i felt i got every discount i could based on the available info. So maybe thats an easy way to go about it. MSRP minus dealer discount based on true car, minus all rebates you qualify for. This gives you cap cost and you can calculate things on your own from there.
