Rule of Thumb on 24 Month Leases?

Is there a different percentage of MSRP used to evaluate 24 month leases?

I leased a 47k volvo for 24 months for 229 a month. What do you think?

Nope. No reason to. You just need to decide if 24 or 36 works better for you. Many times, a 24 month lease will cost less per month if you have a lot of incentives and a big discount from the dealer.

Many times?

Seems in limited cases that would be the deal, otherwise most people would do 24 months and not 36.

Just looking for a general rule here, 229/mo on a 47K vehicle wouldn’t be typical circumstances.

Here is a post from awhile back, see if this helps you see where I am coming from:

The lease vs. buy question can never be answered because everyones’ situation and needs and wants are different. Basically you can say for sure: If you plan/want to own a car for more than 5 years and end up with no payment - buy it. If you want/plan to own a new car every 2-3 years and have traded in or sold privately in the past, there is a good chance leasing may be your better option.

You will most likely save money in the long run by buying, depending on how long you keep it, and what type of incentives are available, tax credits, etc… Way too many variables to just flat out say one is “better” than the other.

Take the Cruze I just leased. I am paying $158 per month with nothing down. The car MSRP was $23,245. I can drive it 15,000 miles per year with no penalty. Let’s say I could have paid $20,000 cash out the door for it after discounts, rebates, tax, etc… If I keep that car for 10 years, it costs me $166.67 per month to own it. Keep in mind this is for the car only. This car will have 150,000 miles on it in 10 years. I will have had to buy brakes, wipers, tires, oil changes, who knows what else to keep this car going.

With my $158 per month lease, I am paying $10 less per month and saving $1,200 over the 10 years. Plus, I never have to buy tires, wipers, brakes, battery, oil changes, whatever else needs breaks and needs replaced to keep a car going for 10 years and 150,000 miles. I am under full warranty the entire time. I am even covered under GAP insurance since the GM leases have it built in. There is no fee to turn in a GM lease and lease another one. The only two risks I take is not being able to get another $158 per month lease in 2 years. I am willing to take that risk because I am sure this practice of incentives on leases of slow selling or outdated models will not change in the next ten years. The other risk is being charged for excess wear and tear on turn in. Again, I get to get a new car every 2-3 years so if it costs a couple hundred then so be it. It costs a couple hundred to change the transmission fluid or new brakes on 5 year old car with 75,000 miles.

The Equinox 24 month lease deal is < 100 for a 26k MSRP car. 100s leased at those prices. Any more questions?

You are mentioning extreme cases.

The Equinox is the deal of the year for a variety of reasons, most deals are not going to compare to the outgoing Equinox model that Chevy is aggressively pushing.

This site shares a little insight, so perhaps a general rule might be 1.25% of MSRP.

Got it. However, to me, leasehacking is to leasing what extreme snowboarding is to skiing the resort trail. So hence the extreme cases.

It doesn’t matter if your rule of thumb is 1.25 or 1.15 or 1%. Under 1%: good and start negotiating for more. Over 1%: think carefully and do the math and compare.

I don’t really care what car I drive, the point is it is cheaper over the long run to lease a new vehicle every 2-3 for less than $200 per month than to buy a new one and keep it for 10 years! Some people who would argue otherwise have never run the numbers on a calculator/spreadsheet! You should be able to lease SOMETHING every year for a steal. One year it might be an Equinox, next it may be a Trax or a Cruze. I don’t care as long as it is cheap!

Most of us never knew you could lease for so cheap. :slight_smile: Now that I know about this site, hopefully i’ll get these kinds of deals! Too bad I can’t do it on the Tesla Model 3 when it comes out.

Yes…residuals are different for every change in duration and mileage.

And, as a rule of thumb, 24 are almost always more expensive than 36+…benefit is you often don’t have to replace any tires etc, or perform maintenance. And of course, you get a new car every 24 months…which is almost always better!

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You pay the LAF and TTL 50% more often doing serial 2yr leases vs 3yr, but after all that if the payment is the same or lower, go for it.

I don’t believe in any rules of thumb. Just this season we’ve seen at least 10 deals here on LH that were 60-70% of MSRP (or lower). Anyone getting 90% would have left a lot of money on the table. OTOH there are that don’t lease well (low residual, high MF, etc) and you’ll be wasting time hoping for 1%

Prices will be whatever the market can bear, it just needs informed consumers.

Really? Just wait for the Fed start raising rates. You got spoiled for the past few years. We may soon only wish to get close to 1% “rule”.

I remember around 2002-2003 30 year mortgages were around 6% and auto manufacturers were offering 0% 5 year loans. You think raising rates a couple tenths is going to end cheap leases?

Not “couple tenths” and not right away, but it will.

In the early 90s, high-grade corp bond yields were in the 8s and 9s. And in the teens before then.

And most of those 0% financing offers were never truly 0%. You could get a cash rebate if you paid in cash, hence you basically paid the financing charge upfront in the form of a slightly higher sales price.

Another reason we’ve been spoiled is that depreciation had been low, keeping residuals high. In the 4 or 5 years following the credit crunch, an estimated 20 million fewer new cars and light trucks (SUVs, minivans, pickups, etc) were sold.

Take cars sold in 2009 or 2010 for example: when CPO or ‘lightly used’ car shoppers were looking for them in 2012-2013, there were a lot fewer of them to choose from. People naturally had to pay more than they did in 2007 for a 2004 model.

Resale values were higher than before, therefore leasing co’s could factor in higher residuals to lower payments to boost sales.

Either way car makers need to sell cars. Lease or buy doesn’t matter to them they still can make money. Fed can do anything; manufactures and consumers will adapt to it, cant control a free market of demand and supply (they raised import tax manufacturers moved factories back to the country, they raise rates manufacture lower price to meet the market demand etc.)
As consumers we should be smart and judge our spending on what work best for us. If in 3 years the rate is high for lease then buy! Treat automobile as spending instead of property we would come out better. Car is depreciate commodity, don’t invest on it! Set aside a budget for transportation and go with it.