From my understanding, it is recommended that one not put money down on a lease, and should instead pay only first month and/or first month plus taxes/fees at signing. Please help me understand why almost all of the pre negotiated deals require money down in addition to taxes/fees? Also, why are there rarely pre negotiated deals in the Chicago area? Thanks!!
First off, if you live in Chicago, you shouldn’t lease due to their insane taxation.
There are two main reasons why putting money down is frowned on:
-
People often ignore the money upfront for some reason. An extra $1000 down is no big deal, but an extra $20 a month seems painful. People will use upfront money to disguise the actual cost and overspend.
-
There is a non-zero risk of losing some/much of your upfront payment should the vehicle be totaled early in the lease cycle. By putting money down up front, you’re saving in rent charge but taking on higher risk. How much that risk is worth is going to be dependent on the individual.
With all that said, I just scrolled through the pre-negotiated deals on the main site here, and don’t see a single one that requires money down in addition to taxes/fees/first month’s payment.
Some of the marketplace deals include some money down so the brokers/dealers can advertise their deals at a certain number (ex. $499, $599, or whatever). You can always ask for a quote with zero DAS, which obviously increases your monthlies.
And aren’t taxes in the city of Chicago something like 18-19%? The highest in CA is 10-11%… it drives your lease costs up significantly.
This is a commonly-parroted (but gross) oversimplification, and depends on a number of factors including how high the MF is, whether you plan to keep the car til the end of the lease or swap early, and your tolerance for very small risks.
“There are no solutions, only trade-offs.”
–Thomas Sowell
It’s also to do things like estimate registration costs, since they vary so much state-to-state. I can’t advertise a car at $600 a month with the first month at signing since registration in one state can be $200 and another is over $1,000. The same goes for taxes, so it’s much easier to say “$2,500 at signing plus registration” and list it with first + fees + reg.
Not sure this has an answer but either way it is what it is.
Depending on your needs maybe you can secure a deal on your own. So what do you need?
Off-topic: did someone else quote Sowell here? I feel like I’ve seen his name recently in something I’ve read, and I have no idea who he is (so it’s not like I come across his name a lot)…
Probably me in another thread. He’s a favorite of mine.
Taxes might be worse in MD. We pay 6% tax on full selling price instead of on just the lease cost. So on a 3 yr lease of a $60k vehicle the taxes alone add around $100 month to the payment