Truth about infamous "1% rule"

[adamcar]

@Kalmaraz

Considering taxes and fees, etc as they vary by state and region, I have to believe manufacturers understand this to some degree and try to offset them by offering regional incentives, regional MFs and RVs to come up with payments that regional people in that market are comfortable with. Any thoughts on that?

I disagree at least with gm. I live in Central Virginia and my zip code is a different region than my neighboring zip code. I believe it used to be called the northeast for me and the southeast for the next county down.

[Ursus]

No, we are talking about general cost of a leased car. Otherwise, we can also start including the cost of Premium vs. Regular gas

[michael]

I frequently bring up the 1% rule, but voted for fiction. I would have gone for the “BUT IT DEPENDS” option.

As a general rule of thumb to see if you’re being screwed over (or if you’re getting a decent deal), 1% plus usual drive-offs is great. But there’s also:

• Government incentives (EVs tend to score well measured against their MSRP, but the “effective” MSRP should really account for the $7,500 tax credit, etc)
• Regional variations (a decent deal in California could be an amazing deal in Oklahoma)
• Supply and demand (people tend to like SUVs for some reason; a so-so deal on a $50K C-Class could be considered an amazing deal on a $50K GLC)

That said, sometimes you just know it! A $400/month F-TYPE or Maserati or a $50/month Cruze needs no rule.

[Ursus]

@michael

I would have gone for the “BUT IT DEPENDS” option

I didn’t want to give an easy way out of the question

[Electrifi38]

I think another component in this discussion of the 1% rule is questioning whether a manufacturer’s asserted MSRP is actually the true value of the car. In other words, is a $65,000 BMW X5 actually $15,000 more valuable than a $50,000 Jaguar F-Pace. I don’t think so. If you follow my drift, this changes the dynamic of comparing cars from one manufacturer to the next while using the 1% rule.

[NY13]

You know that is a very good point to consider.

[Boraxo]

The question like many polls is poorly worded. Is it 1% of MSRP or 1% of the negotiated price which will be thousands less? Assuming the former, based on leasehacker guiadance above. And as others have pointed out, the MSRP is not necessarily a good baseline as some brands (Maserati) and models have been known to discount 20% or more when others rarely go below 10%.

[Ursus]

@Boraxo

The question like many polls is poorly worded

LOL That’s exactly the point of this poll - what IS the 1% rule?
But of course it’s based on % of MSRP

[305Hackr]

I go by half or less normally advertised special for a comparable car. If I end up paying about half of what other people are paying with minimal out of pocket I consider it a good deal. I do it all the time and that’s my benchmark. I don’t get too scientific about it, life is too short.

So for example a 5 series is normally around 600/mo with $4000 out of pocket and I’m in the $300 range with basic inceptions (plus MSDs) then to me that’s a good deal.

[Phantomcypher]

Sounds like a smashing deal IMO. Mostly though I think great deals fall in the .75 range by volume not the .50 range on the payment with just inception costs…

The .50 and under deals are red herrings and are YMMV ex. 1 RWD Hellcat Challenger on special in Wisconsin in the dead of winter.

[max_g]

@305Hackr

So for example a 5 series is normally around 600/mo with $4000 out of pocket and I’m in the $300 range with basic inceptions (plus MSDs) then to me that’s a good deal.

Sounds unrealistic especially in today’s environment.

[305Hackr]

@max_g
timing is everything as @Phantomcypher just pointed out…hellcat in the dead of winter for example.

[max_g]

A 700+ HP RWD car is a bit of an extreme example. Can you explain how to achieve that on a (relatively) mundane car like a BMW 3/5 series or Mercedes C/E class?

[Jon]

I haven’t seen many .5 deals. Even the Ghiblis, Hellcats and F-Type deals, which were considered great, were around .67 (488/73000), .71 (500/70000) and .64 (418/65000), not including tax. There have been cheap .5 deals around $100/month on ~20k cars like Encores and Elantras, but those are boring cars. I’d rather get .8 or lower on a car I want/love than settle for a .5 deal car just cuz it’s a “great deal.”

[nyclife]

@Jon

I haven’t seen many .5 deals. Even the Ghiblis, Hellcats and F-Type deals, which were considered great, were around .67 (488/73000), .71 (500/70000) and .64 (418/65000), not including tax. There have been cheap .5 deals around $100/month on ~20k cars like Encores and Elantras, but those are boring cars. I’d rather get .8 or lower on a car I want/love than settle for a .5 deal car just cuz it’s a “great deal.”

All of the chevy conquest deals we saw a few months back were close to .5

[Jon]

That’s true, but that was a one month deal and I would lump those vehicles in the “boring” category. I didn’t see anyone take advantage of that $3k rebate on any Tahoe, SS, Corvette or Camaro (only Chevy vehicles that would perk some interest from me).

[nyclife]

@Jon

That’s true, but that was a one month deal and I would lump those vehicles in the “boring” category. I didn’t see anyone take advantage of that $3k rebate on any Tahoe, SS, Corvette or Camaro (only Chevy vehicles that would perk some interest from me).

I think the closest nice car that was up to .5% was the e300 (at one point with many incentives) or the i3 or the xe (.52 with tax)

[305Hackr]

The equinox for Example.
End of life cycle.
Big rebates
Bonus tag
Farmers bureau
December timing
All stars aligned.

On the BMW side it was mostly the combination of MSDs and demo loaner cars combined with timing. That’s kinda over for the time being.

.5 deals are few and far between but they happen. Almost everything I lease is .5 or close.

Takes alot of hard work too, dealers want to make a profit and you gotta convince them that they wont make any on you but the get to move another unit of dead stock.

[Ursus]

@305Hackr

and demo loaner cars

They shouldn’t even be included in the 1% rule when you compare leases. Especially ones with high mileage.

[Ursus]

Bump for eternal question