Hey Everyone, Im going back and forth on a lease v buy on a 2024 GLS. Im happy with the price which is 88k on a 98k sticker.
In terms of the lease (36/7.5k) Ive been told the residual is 58k, Im not sure how they got to that math. Residual from edmunds is 57% or 58%. Is the residual calculated on the MSRP or the negotiated price? Either way 58k/98k = 59% and 58k/88k = 66%.
My sales person said MF 0.0025 which is also better than edmunds 1A so maybe they are buying it down or something or shes mistaken. I havent seen the actual contract. The total ends up being about $1300 a month with 3k OTD or a total of $47.5k.
Financing is 72 months at 5.5% from my credit union.
Id think my family keeps this vehicle 4 years at the most.
If the MF is 0.0025 which is about 6% annually and pretty close the finance rate, isnt the lease a better choice? Say the residual at 58k is fair to slightly high, seems like its better to take the lease, have the optionality and if i love the vehicle buy it out at the end.
Its just hard for me to swallow a $47.5k lease payment versus buying it. But after calculating depreciation of about 10% a year and 5.5% financing the cost to own for three years is about the same.
RV is based off the MSRP. Using RateFindr I do see the RV at 59% with .0026 MF. I’m guessing the Edmunds RV’s are for the 10k/12k mileage option, not 7.5k.
If you’ve done the TCO analysis and both options are about the same then it’s really a personal decision of lease vs buy. I would typically err on the side of leasing, especially on expensive German cars.
The option to turn it in and walk away in 3 years is a huge benefit if you dont like it, or it gets wrecked, or depriciates faster than expected, etc.
Ok you’re numbers at 59% and 0.0026 seem right. Maybe I misheard at 0.0025. But the 59% seems right and they appear to calculate it on MSRP vs negotiated price which I think is fine, since the higher residual means a lower payment.
Yes for sure an assumption and agree its non linear I did it to just do a quick back of the envelope calc. Id guess 50% depreciation on 4 year. Its about 10% off msrp so I guess 12.5% is a better number than 10%, which makes the lease more attractive.
Also agree, most likely to walk away, again favoring lease.
My main thought is that if the MF is reasonable, lease seems better.
Maybe I have a misconception then, I thought the total lease payments are the difference between the residual and sale price/msrp plus the interest rate (MF).
If residual is always on MSRP whats the benefit of negotiating a lower purchase price? sorry if its obvious.
I think you’re mixing things up. If a car is $100k MSRP and the RV is 60%, then the residual is always going to be $60k regardless of whether the sales price is $90k or $95k or $100k or anything else.
If you negotiate a sale price of $90k, then your payment is based on $30k depreciation (+ rent/taxes). Whereas if the sale price is $100k, then the payment is based on $40k depreciation.
All else being equal, lower sale price (cap cost) = lower payment.
