How much off MSRP should i be looking for? I understand all vehicles are different but whats a good average to shoot for?
No such thing as a good average. It’s completely dependent on the car.
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You need to decide the Brand / Type / EV or Not before you can start saying ‘is 1% good’
For example you can get a 60k Nissan Ariya for way less than 1%.
But you can’t find a 30k Honda Civic for less than 1% without a LOT of Down.
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Help everyone help you by being very specific about which make, model, year and trim
Whether you realize it or not you’re asking for broad sweeping generalizations which are useless to you.
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We probably need a sticky thread about some common misconceptions when car shopping. This 1% rule thing will be at the top of that misconceptions list. I don’t know who writes for LH, but the next blog post should address this 1% thing.
As with all rules of thumb, their intent is to simplify complex problems to establish a groundwork to understand a situation. However, a rule of thumb is terrible for decision making on a specific event since a rule of thumb cannot consider important factors unique to each situation.
I think a more reasonable approach to take is to assess a basket of competitive options, and how they are currently transacting. With the government’s $7,500 and some horribly mis-managed MSRP on monroneys, let’s wipe out the complexity and focus on a net price after rebates and incentives for a vehicle.
To do that in an somewhat easy way, let’s first pretend you’re in the competitive market for a AWD 5 passenger EV SUV (non performance).
The competitive set for this vehicle class would include the Tesla Model Y, Ford Mustang Mach E, Nissan Ariya, Hyundai IONIQ5, Kia EV6, Audi Q4 eTron, and MB EQB* (no VF8 or Fisker memes please).
So, let’s look at what these vehicles are selling used with low miles. While we’d all love to be @z0lt3c with access to MMR, most consumers only have access to online listings. So let’s take a look at low mileage USED examples on Autotrader.
Tesla Model Y LR is $43k
Ford MME Premium is about $38k
Nissan Ariya AWD is about $40k
Hyundai IONIQ5 SE/L AWD is about $37k
Kia EV6 GT is about $38k
Audi Q4 Etron P/PP is about $38k
MB EQB 300 is about $43k
These are list-used prices, so there’s room to haggle down.
But using the limited data we have, we can establish a way to approach trying to lease a good deal on a brand new EV vehicle in this segment in the medium trim level. Basically you’ll want the net vehicle price or vehicle-capitalized-cost (sales price minus any rebates but excluding taxes, fees, and other stuff) to be around $40k on the budget options up to $45k if you’re hunting for a mid-tier Benz.
Once you know this target, you can infer what the monthly pre-tax would be if you applied a reasonable money factor and ran this through the LH calculator on a pre-tax basis.
You’ll need to consider factors and situations when crafting a specific deal on a specific VIN. But this should at least set a general target to shoot for when you’re shopping and budgeting.
TLDR, look at a reasonable vehicle cap cost after all discounts and rebates instead of getting stuck on % off MSRP or whatever March Madness is happening.
(*) Note: I left out the Toyota/Subaru EVs since they’re weird
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Haha but this is from 2017…
The IRA $7,500 and Tesla’s pricing craziness didn’t power-bomb the net price calcs. It’s time for a re-do of the 1% blog post! I nominate @ursus.
The new rule is 1.5% or lower. 1% was pre-covid and market instanity
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It was more about the lease structure to compare 1% deals as apples to apples 
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I never understood why this article is still up in leasing 101 when we preach #1 and 2 on the list are BS. We tell new folks to read leasing 101 but then say ignore xyz. Makes it way more confusing.
100% agree. Leaving that drivel for people to read is doing anyone trying to learn a major disservice.
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There should be an article pinned at the top debunking the 1% rule and explaining why its not a good metric. Easy to link to as soon as someone mentions it.
Can just link to my rant here:
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2024 Ford F-150 MSRP $59,000
How about if the 1% rule works in your favor, say a 2024 Ford F-150 $59,000 msrp $590 a month with zero down?
What about taxes and fees?
1st month only. fee’s and taxes rolled in to payment
Show me a real lease quote instead of a hypothetical.
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I have no clue if thats an amazing deal or a horrible deal. The fact that it is at 1% of the msrp doesnt inform that at all.
A broken clock is right twice a day. Doesnt make it any good for telling the time.
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I think it’s established that the 1% rule is bad. The problem is there doesn’t seem to be a substitute method to help someone learn a new rule of thumb or approach to start framing a “good” lease.
That net pricing approach I put above doesn’t seem to have traction either. Not sure what would be a new rule of thumb other than ‘look in the LH marketplace.’