Useless is as useless does. It is just a guideline and simple starting point. Feel free to provide us with an example of a “daily driver” lease available today that would be a bad lease following the this simple guideline. Sure, there are lots of people blowing $1,000 a month on “excellent” leases, but not all of us are in that market. So getting the lowest payment is more important than the lease deal itself. What changes is what you do at the end.
Heres the problem. People post this 1% drivel, people that dont understand it treat it as gospel, and think it actually is a useful starting point.
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Oh god not this shit again.
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What happened to financing the Telluride when it arrives?
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Oh settle down. If your figures are way over this, as this Telluride’s are, it is a red flag. Not everyone has the time or interest in learning fully how leases work. To be honest it really isn’t necessary. The worst thing that could happen… you got a car for 2-3 years you could afford, drove it, and turned it in. Even with the “worst” lease deal. 
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The whole purpose of this forum is to learn how to make educated decisions regarding leasing. The 1% rule is the antithesis of why anyone would come here.
The worst thing to do give people that dont want to take the time to figure leases out is a bs rule of thumb that will lead them astray.
But let’s dive deeper…
When two people can get the exact same discount in the exact same car, and one person’s deal is 1.2% and the other person’s deal is .7%, you should know everything you need to know about the validity of using a percent of msrp as a target.
The problem is people are looking for a shortcut metric to inform them of the validity of a deal and it just doesn’t exist.
A better approach for looking at the validity of something like the 1% rule is to ask “for a rule to be useful, what do we need to it to tell us?”
If that’s the question, I would say it would need to say one (or more) of the following:
- Is this a good deal on the car? (Meaning how does the deal compare to what is possible on this vehicle currently)
- Is this lease a good value? (Meaning how does the deal compare to other competing vehicles)
- Is this better to lease than buy (Meaning over the period of the lease, it would cost less to lease than to purchase and sell)
Now, let’s caveat this with one more assertion: it would also be helpful if the rule applied to at least a good chunk of the people that want to apply it.
So let’s look at each of those…
- Is it a good deal for the car?
It certainly doesn’t tell us that. All one needs do is look at the vast change in incentives and regional pricing to determine that. I’ve seen incentive swings between two people of $10k before. Two people can get the exact same discount, but because of incentives, be hundreds apart on the monthly payment. Throw in regional taxes and you can literally have the same deal be off by .5% of msrp per month. Further, even when incentives are standardized and taxes/fees are ignored, what is a good deal for a vehicle varies wildly. On some cars, 1.25% is essentially impossible. On others, .75% is mediocre at best. There are definitely times when 1% is a good deal, but it varies by month, by person, by region, by vehicle, etc. A stopped clock is right twice a day.
- Is the car a good lease value?
Obviously as payment as a % of msrp decreases, you’re getting more for your dollar relative to msrp, but so what? Some brands have a marketing strategy where they inflate the msrp and then offer large incentives so you feel like you’re getting a deal. Others don’t subvene their rates to hold value. There isn’t some magic % where this suddenly becomes a good thing.
- Is it better to lease than to buy?
The argument that gets used often with the LH score is that it gives some inclination as to when it makes more sense to lease than to buy. This, of course, assumes that you purchase at msrp with no incentives, no taxes, no fees, no interest, etc. The problem is that it doesn’t actually compare the lease terms against the financing terms. When the msrp gets subvened by significant incentives, a % of msrp number is suddenly a % of a completely irrelevant number.
So here’s where that leaves us… We have a rule that isn’t applicable to a variety of people, doesn’t tell you if something is a good deal, doesn’t tell you if something is a good value, and doesn’t give you any insight as to if leasing is a better financial decision.
So maybe if you’re looking for a bmw 330, in North Carolina, in January, after leasing a previous bmw, joining bmwcca, and are named jason it applies; but you’d only know that after actually calculating and researching, which is exactly what you need to do to actually answer any of the above questions.
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How would this work for someone with no meaningful budget constraints? Just pay whatever?
For a small fee, folks can go with a broker in the Marketplace section of this forum. Brokers advertise pre-arranged deals, making it headache-free for those who do not have the time to be bothered about figuring out all the details about leasing.
You’re absolutely correct and I’m not disagreeing with you. However, there are MANY people after the lowest payment for a reliable daily driver. You’re proving my point by bringing up a BMW (luxury sedan) as your example. Loyalty deals and MSD’s change things, but I’ve never benefited from them and I’ve been leasing since the 90’s. Every $1,000 is only $27/mo in a lease. If you’re in the market for a BMW or Lexus it is rather irrelevant. I’ve even leased a Lexus and several Infiniti’s, but never a BMW.
The takeaway is the same. Americans love vehicles and sometimes just want what they want.
@Bluemkn57cars A broker doesn’t guarantee a good deal if you’re targeting a particular model, color, and options. That is one of the downside focusing on a lease “deal.” The best leases are often on slightly less desirable vehicles. Such as the Volvo Type-R trim for example; which I’d love to own. Not to mention not generally being able to lease “deal” a Toyota hybrid anything.
I’m not wrong here, regardless of the validity of the 1% guideline.
Just to be clear, your stance is that you agree that the 1% rule is bullshit that shouldn’t be given any attention because it doesnt actually inform if something is a good deal or not, but even if it’s invalid, youre not wrong by telling people to use it as a measuring stick?
I’m saying you don’t need a microscope, spreadsheet, or calculator to identify a good or bad lease either! I am suggesting some common sense. $600/mo for a Kia Telluride doesn’t fall into a common sense lease in my eyes. All you need to do is compare it to a Sorento at the dealership which I’ve done. I do that first and THEN I’d use a broker. I don’t trust ANYONE’s numbers but my own, btw.
Folks are free to compare broker deals vs what their local dealership is offering. I would have to disagree about brokers offering less desirable colors, options, etc…
Having been around this site for a few years, I have seen better deals offered by brokers on in-demand luxury cars (such as Audis and BMWs) compared to what my local dealer has been able to offer.
There are some cars/models that were terrible to lease even before the chip shortage, such as Audi RS models (RS3, RS6, RS7), Mercedes AMG models, BMW Alpina, and other niche cars. That has not changed. We can’t blame brokers for that.
I am not here to argue. I have made my point.
He also has something like $4,000 TX sales tax in there. Still high though.
I like the sorento, but it isnt a direct competitor to the telluride, and just because its less expensive doesnt make it a good lease deal. I havent seen a kia product worth leasing in quite some time because theyre all poor lease deals.
Theyre poor lease deals because the lease terms are such that the extra cost of leasing doesnt justify the offset the risk reduction offered by purchasing. One can only make that determination by actually working out the numbers.
Thats why i purchased my Kia instead of leased it.
I previously had a Hyundai Palisade that I got a fantastic lease deal on… which also was a good bit over 1% of msrp.
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I had the same problem and decided on the Telluride/EX. Things went well in the beginning. I agreed to pay MSRP, and picked the options I wanted them to order, with a $500 refundable deposit. Car came in at March, and things went from bad to worse at signing.
They included a $700 “Simonize” coating (dealer-added). Since it was already done, I had to eat it.
Next was an $800 “Maintenance Contract”. Dealer claimed KIA mandated this for leases…but an argument ensued as the document stated it was ‘optional’. I finally got them to remove this, but they weren’t happy. No way was I going to pay $800m for oil changes.
But here’s where I got screwed. I had initially used the KIA website to calculate the Money Factor/Lease Interest at my cost with 12K miles, and credit score of 800+. However, at signing, the dealer had bumped this WAY up. Their argument was that the website was only an estimate - but they had to increase it due to market conditions, inflation, market adjustments, etc. Apparently, dealers aren’t required to offer KIA finance rates - and can make a bundle increasing the rate to offset what appeared to be a good deal for me. This is probably what’s happening to you - on top of their “market adjustment” over MSRP and idiotic dealer add-ons.
Callcthem and get the money-factor. Multiply it by 2400 to get interest rate. Then compare it against your Model/credit score at the KIA website.
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Don’t do this.
The interest rates offered on Kia’s website for financing have no bearing on the mf available on a lease.
You need to instead gather the buy rate mf value thats being offered. The easiest place to get that is on the model specific thread on the edmunds forum.
You can then compare the mf the dealer is charging to that value.
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Several mistakes here. Order should have been placed at a dealer that says in writing that there are no mandatory add-ons or accessories. Thousands of people including myself have done this.
A determination should have been made ahead of time whether to finance or lease. Depends on the numbers.
And as already mentioned, lease buyrate MF =! finance APR/2400. The fact that the manager you dealt with gave you some gobledygook instead of knowing this basic fact says a lot.
Except you don’t have any real numbers. You just have this nonsense:
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Mazda CX-9 Signature.
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Another option BMW X7: $85k MSRP. $1400/mo. (first month plus tag so $2k not $1400 due at signing).