But you knew nothing about how your friend’s deal was structured. If he rolled a ton of negative equity into the deal he may not of been “taken.” There are some cars where this 1% thing is accurate, but other cars, under even the best of lease deals is no where near 1%. That doesn’t mean it was a bad deal. There are just so many variables in a lease to account for.
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True. But then it’s also helpful still in that this person is “overpaying” for this car. The reason for that may be a lot of things, including negative equity from a prior vehicle. It still told me something was not good about their lease, but not what that something was.
He may not be overpaying if he rolled negative equity into the deal. There isn’t enough information known to truly asses the deal. On face value, over $600/month on a Cherokee seems high. But if $8k in negative equity is thrown in there… maybe not so much. Just saying it’s hard to gage the deal with basically no info known.
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True again. Overpaying is probably not the right word, because you’re right…context. How about this? - in this case the 1% rule was a good quick clue to me that this person got themselves into a bad leasing situation somehow, somewhere and now find themselves paying $650/month + 2k down for a Cherokee because that Cherokee they have is not a 65k automobile.
I would think about what the market is on the vehicle. You need to be able to compare with other to see if you got a good deal. Like premium models are almost always going to be 1.5%-2% of MSRP.
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Let’s say it was a 45K vehicle & they came to you before signing & would be paying $440/month. What would you tell them?
it is a good deal? & if you say yes, & they go sign it.
But what if there were incentives that weren’t included in that price & without any extensive negotiation, they could have gotten it for $330/month.
Totally agree with you, I was simply saying that it was useful to me in one instance where it told me something was very wrong with a deal.
If they asked me if something was a good deal I would refer them to leasehackr to read 101 and compare against similar deals.
You’re really clutching at straws…
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I actually think I’m in agreement with at least 1 of the co-founders of this site. 1% can be useful, in context.
It’s been debunked so much since then, no one puts stock in it any more.
Even your best attempt at finding one “useful” instance was far from persuasive.
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It wasn’t an attempt, it was very easily at the top of my mind. Maybe I can rephrase to say, for me, the 1% rule of thumb was at least helpful in sounding alarm bells that someone should not be paying $650 (+$2k down) for a Cherokee, whatever happened prior to get them in that situation.
I also agree that the 1% rule of thumb can be very dangerous when someone might think $429/month is a great deal on a $42,900 car when, with some research, they could have gotten the car for $359.
So, whatever, it Can be useful, it Can be very dangerous, it can be a lot of things.
Best advice, and simplest advice, I ever got here was research Edmunds for the incentives and MF, research the marketplace, and compare pre-incentive discount between dealers. Boom. That’s the secret.
What would you think if they said they were paying $650/mo with $2k DAS for a $65k Porsche Cayman?
I would have more questions for them. And I would need to research the Cayman
Why would your thought process be any different?
I guess because I was standing besides the Cherokee and I know a Cherokee isn’t $65k (leaving aside the $2k they said they put down)
So the issue isn’t with the 1% rule, but that the MSRP is inflated (which is further reason why the 1% rule doesn’t work) and the vehicle is a poor value.
For the 1% rule to be useful, it’d need to be agnostic to the vehicle in question.
Or the issue is they have neggie eggie and terrible credit. Don’t know and didn’t ask, but I still knew something went wrong somewhere to be paying $650 for a Cherokee, and for that I found the 1% rule of thumb useful in that scenario
Highest MSRP on a Jeep Cherokee is $42,860 anyway.
If we’re opening up the discussion to $65k Grand Cherokees, then a Grand Cherokee L Summit Reserve is $65k MSRP, and $650/mo with $2k down on that is actually a stellar deal.
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You know the cherokee isn’t $65k… but what if residual on it is terrible and there’s no lease support, and 1% simply isn’t an achievable metric on that car regardless of MSRP? Do you tell the person who wants a Cherokee that no matter what he does it’s a bad deal because there’s no way he can achieve 1% on it?
A “good” deal is all relative. If the average “deal” on a Cherokee is 2% of MSRP, and your friend is able to get 1.5% of MSRP, do you still tell them that it’s a bad deal?
Maybe the 1% rule of thumb is a better canary in the coal mine than it is an evaluator of whether a deal is “good”, which we know it cannot be. Maybe it’s a better signal to retreat, regroup and research if a lease quote is well above 1%. For the vast majority of the population that negotiates at the dealer, not the pros here.