This is probably a dumb question, but I’ve been having a hard time understanding a zero-drive-off lease. As I understand it, the first month’s payment is capitalized.
So does that mean that on a 36 month lease, there are only 35 payments? And so if I’m trying to calculate the total cost of a zero-drive-off lease quote, that it’s 35 x monthly payment + disposition? That seems to be what the LH calculator is doing when calculating “total cost”, though it’s off by a few dollars.
Yes, 35 payments.
That was fast 
Thanks.
A follow-up: Will the lease contract (from BMW in my case) explicitly say that there will be 35 payments? I’m just doing some final preparation before picking up, and want to make sure I confirm the necessary things.
Not familiar with BMW lease, others can chime in. However, my MB lease with $0 DAS showed $1k 1st payment followed by $1k x 35 payments. The DAS showed $10k including 1st payment, it is offset by rebates & non cash credit $10k. (numbers are made up but you get the point)
Your DAS amount doesn’t impact the number of ensuing payments, just how much each installment will be.
$0 DAS, however, ensures that you’ll pay the maximum finance charges possible during the time you have the car.
This is obviously less important with lower MFs, or if you plan to transfer out of the vehicle before the end of the contract term.
24,26,39,48,60,72. In most cases the first three.
Your contract will most likely still show 36 payments, this is 100% normal as noted. The dealer just “covers” your 1st payment.
It’s up to the finance manager on exactly how they want to structure the deal on their end to account for $0 DAS depending on the deal, term, rebates, etc.
On my $0 DAS lease for example, my contract shows all 42 payments with 1st payment of $950 due at signing to be paid in cash. So the contract is actually structured as $950 DAS. However the dealer just paid that $950 from their pocket.
Most lease contracts REGUARDLESS of how much you “put down” or have “due at signing” will say 35 payments REMAINING (if there is a 36mo lease)
Not necessarily especially if you have a large enough rebate to cover those inception fees including 1st payment. Consider the following lease scenario…
MSRP 67910.00
Sell Price 64656.49
Res Factor 55%
Residual 37350.50 55% x 67910
Term 36
MF .00200
Tax Rate 10.25%
Gross Cap 64656.49
CCR 5645.31
Adj. Cap 59011.18
Base Payment = .00200 x (59011.18+ 37350.50) + (59011.18 - 37350.50) / 36
= 794.41
Contract Pay = 875.84
Lease inception fees…
CCR 5645.31
CCR Tax 578.65
Doc Fee 85.00
Doc Fee Tax 8.71
Acq Fee 895.00
Acq Fee Tax 91.74
Title/Reg. 819.75
1st Payment 875.84
TOTAL FEES 9000.00
TOTAL REBATES 9000.00
DAS 0.00
Bottom line: DAS = 0 followed by 35 monthly payments of 875.84 each.
Nope. It will disclose the 1st payment followed by 35 payments for a total of 36 regardless of whether the dealer or a rebate covers the 1st payment at lease inception. A lease amortization schedule will always use 36 payments.
As long as their lease structure matches mine. For example, below is a lease proposal I recently created for someone else and that’s exactly how the lease contract was structured or, so I was told.
With jeep, it depends on if youre doing a regular $0 das lease or an actual “sign and drive” lease thats $0 das. The lease structure differs between the two
Yes, I agree. The way I understand it is with sign and drive, the manufacturer credits the lessee with the first payment meaning that the 1st payment would not be listed in Section 6(a) of the standard closed-end lease agreement. Sign and drive falls under the DAS = 0 (zero drive off) umbrella except with DAS = 0, the 1st payment is usually covered by a rebate of some sort.
EDIT: Zero drive-off and sign and drive imply DAS = 0.
Thanks for all the replies folks. I do think this is indeed not a capitalized first payment, and rather an application of a rebate to the DAS. Good clarification.
FWIW this is what I am trying to sort through: Deal Check: BMW i4 eDrive40
What I really want to know is what the difference is in “total cost” between their structure and a more “normal” lease where I pay fees and first month payment up front.
EDIT: From my attempt, this would be a lease where I pay up front: CALCULATOR | LEASEHACKR
So the difference is about $147 if that’s right.
With a sign and drive (at least with jeep), it still shows first month, but an additional incentive is added equal to one month’s payment. There is also a mf increase to offset the incentive.
What!!!??? That’s not very nice! So, am I to understand that Jeep isn’t really giving the lessor anything at all courtesy the increased mf?
They give an extra incentive to pay the first month payment, and then you pay for that extra incentive with a higher rent charge. Seems like a reasonable give and take.
Seems to me that the extra incentive and the increased mf offset. So, what is the advantage to the lessee? If Jeep is going to credit the lessee with the first payment, then they shouldn’t increase the mf to offset their generosity. Makes no sense to me. They give with one hand and take away with the other.
I don’t think we’re connecting. I would have to see a Jeep lease agreement that models that situation to completely understand this structure.
This worked well with 4Xe mania when everyone was flipping them, same with Hellcats, 392 4Xe to take advantage of one month wiped off for profits… otherwise it’s a wash or takes some months to catch up at least
That makes sense. But if I’m not flipping, there is no advantage for me. As you say, and as I’ve claimed, it’s a wash.
