Hi All,
After doing research I’m seeing advice from others in the forum that it makes more sense to put as little as possible down up front.
Currently I have a quote from a dealer where if $0 is due at signing then monthly will be $392 a month. So total over the span of the lease ($392 x 36) is $14,112
However, the dealer says if I do $5k down and $2420 drive off then the monthly drops to $108 a month. So total over span of the lease (108 x 36 + $7420) is $11,308.
Why would there be such a drastic total cost difference between the two? How would you approach this? Or would you push back on the dealer? I’m needing some advice…
Thanks so much!
You’ll usually get a better deal by putting money down because the finance company can give you a better interest rate (money factor). The dealership also can pocket some of this money and thus will work for a more aggressive deal behind the scenes. If you have a lot of money up front and prefer lower payments it may be advantageous to do this. However there is one BIG caveat - if you total the car, your insurance company will only pay the remaining balance to the finance company and you’ll be out all the money that you loaded up front in the down payment.
That actually isn’t true at all. You do not get a better money factor if you put money down. You get the same money factor as someone who does a sign and drive lease, but you do pay less interest on the amount that is financed, thus making it cheaper. The OP is not utilizing MSDs, so the MF is not getting reduced
Additionally, the dealer won’t necessarily work for a better deal if you have a large down payment. The best deal I’ve gotten was sign and drive with no massive down payment.
You should multiply by 35 months instead of 36 for figuring the cost of the lease…for $0 due you would just have 35 payments and for the money due at signing the first payment would’ve been included in the drive offs.
Post more details of the deal. $7420 wrapped into the lease should not cost an extra $2500+ over the lease term. The math doesn’t add up. Either it’s an astronomical MF or they are using different numbers for each version of the deal.
The OP didn’t list all the details of the lease so it’s quite possible the MF changed dependent on the down payment. Some financing companies do this, I’ve seen it. Dealers like to get money up front and don’t give you their best numbers in the beginning so they have many ways to fudge the figures up or down. There’s lots of financing companies out there and not set rules of how they all do this.
For myself, I do minimal down on leases and put money that I would of put in a downpayment into a bank account that is only used to pay monthly payments on the lease electronically. That way my monthly payments are lowered but I keep the money in case of accident and also make interest on it instead of the finance company. It also serves as an extra reserve of cash that I can dip into in case of emergency.
