Newbie here so bear with me…but why does the sales price, residual and/or money factor matter at all?
Doesn’t it all just come down to getting the lowest total payments to use the vehicle for 3 years?
I’ve been offered $0 down and $289 a month for Tacoma Off Road V6. For a vehicle with a $37000 MSRP that seems like a decent monthly price. Especially compared to other $37K vehicles where $0 down leases are more like in the $350/month range (like a CX5).
Am I missing something?? I could see the calculator inputs being important to compare different leases but even for that, doesn’t the lowest monthly payment for same term/mileage/deposit always win?
You sound like the sales manager at Honda we encountered a few months ago.
The monthly payment can hide a lot of numbers if you don’t know what you’re doing.
knowing the incentives, residuals, money factors, sales price, dealer fees, and government fees can help you get the lowest monthly payment possible by having transparency.
Knowing how a number is generated is critical to the leasing process. Folks who don’t know all the numbers usually end up paying more than they should be and the Dealership makes a larger profit than they would have, otherwise. Good for the business, bad for the consumer’s pocket.
So you think 289 a month with 0 DAS is good for a 37k dollar Tacoma… I would present this argument to you… if you didn’t know what made up that payment and what kind of discounts are possible or what the incentives are, would you not have accepted anything between 289 and 400 a good payment, otherwise?
If 289 is a baseline for a “good” payment on this vehicle, then how did the dealer get there? Is it reproduceable? How much discount do you need to get? Gotta know how the numbers break out.
You are correct that at the end of the day, total paid during lease term is all that matters. Ie. if you’re getting a $100k car at zero DAS and $500/mo, who cares how they got there.
The other stuff is to verify that you’re getting max dealer discount, all applicable incentives, base mf, etc.
If something is off, knowing those details can help you get a better deal.
Great question. I agree that ultimately what matters is the total cost of the lease. If you’re choosing between two different offers for the same car, go with whichever one is cheaper – even if that particular deal has an inflated MF or useless add-ons. If it’s a great deal, it doesn’t matter how the sausage gets made.
That said, knowing the sales price, residual, money factor, and incentives helps you create a reference point for what constitutes an excellent deal that’s still within the realm of possibility. Otherwise, blindly throwing out numbers without any context (“I want this for $300 per month!”) will get you ignored by dealers. When I go shopping, I do the research first and have a target deal that I aim for.
I do understand all the numbers and the calculator. I’m just trying to determine best way to really apply it.
For the most part I just want the nicest vehicle I can get for the lowest total lease payment so I can get a Tesla Model Y in a couple years when finally available.
I’ve been shopping for about a month now. And while I have asked for and gotten the residuals and MFs for most of the vehicles I’ve looked at, at end of the day it’s kinda what I said… For a vehicle in that $37K range, monthly is usually $350 - $375 for 36/12/$0 Down. So this deal at $289 makes more sense based on that. I realize it’s because the residual on a tacoma is much higher than say a CX-5.
So seems like initial assumption is right… total paid over the term is all that matters but knowing the numbers just helps you verify you’re getting the absolute best deal. i.e. maybe I can shave an additional $20-$50 off… right?
If you prefer to treat it as a black box, with a mystery set of inputs resulting in an output which is monthly payment, you can rest assured you’ll pay more than rock bottom.
How much more depends on another set of hard-to-quantify variables.
Knowing the numbers can potentially help you shave more than 20 to 50 dollars off.
Based on monthly payment alone, then you should jump into the cheapest car possible. It may be something you don’t like.
There are a lot of factors as to why a particular car from a particular brand wouldn’t lease well or leases very well. Not too long ago, 50k dollar BMW’s were going for 250 a month. I’m not a big fan of BMWs, but at 250 a month; sure, I’ll take one!
Car dealers love the “monthly payment is the only thing that matters” for leases and then pull tricks like:
Trading in $5k worth of equity and using it to reduce your monthly payment
Asking for $3k due at signing and using it to reduce your monthly payment
Lowering mileage to 5k/yr (yes there are Ads for this on the forums) and reducing your monthly payment
Offering quotes that don’t include taxes and fees (final cash owed is significantly more than quoted).
As others have said, if you want truly amazing lease deals, you usually can’t be too picky about the vehicle you select. You are looking for vehicles with:
High residual
Low interest rate (money factor)
Large dealer discounts
Large factory rebates that apply to leasing (and more importantly that you qualify for)
MSD (Multiple security deposits) that can lower the payment even more
Discounts that the general public either don’t qualify for or aren’t aware of (Costco, USAA, Infiniti VPP, BMW OL, GM Card Bonus, etc., etc.)
I once leased a $36,000 vehicle for $155/mo+tax with zero due at signing and am currently leasing a $38,000 vehicle for $157/mo+tax with zero due at signing. I basically had to “trick” the dealers into doing these deals by asking for quotes with cash due at signing and then using my extra discounts to cover that cash.
Knowing all the background information also helps you compare apples to apples. The way I typically do my lease shopping is by getting all the facts first (i.e. Residuals, Money Factor, Rebates etc.). All that information can be obtained on the Edmunds forums. Once I have that I use the lease calculator to see what kind of dealer discount I would need to get a smokin deal. I usually try to keep it within reason compared to deals others have posted. Next I will email numerous dealerships showing them the lease calculation with the pretty hefty dealer discount and ask them to “match” it. Then it’s just weeding through the reply’s and communicating back. I got my Civic Hatch for $207/month, 2 Chevy Trax for $60/month each (2017 Unicorn deal), and most recently my Infiniti QX60 for $299/month through this method.
For those in California there are a few salespeople from dealerships (i.e. Trish) on this site who are completely transparent and post deals. I’m sure their margins on these sales are not huge, but the sheer number of sales they get by doing this has to be off the charts. I wish that were available in Chicago, but alas, none here yet.
Thanks for the responses. Definitely makes sense. So I did go ahead and get the full details. Only thing is when I plug into calculator I’m getting lower payment so not sure where the difference is.
