Trying to understand my current lease in preparation for my next one

Ask the Hackrs
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1

Hi there - My wife currently drives a loaded 2017 Highlander Hybrid Platinum. Her lease was supposed to end May 1st, but given the current situation we extended it 6 months - not sure exactly what we’re going to replace with but thinking about either Audi Q7 or BMW x5.

Anyway, I’m trying to learn from reading through this forum to ensure I don’t get a crap lease on the next car. I figured I would start with trying to fully understand our current lease, and seeing if we got a bad deal back then.

I have the original lease contract and am trying to plug the numbers into the Lease Calculator, but I can’t get the monthly payment to match what we’re paying. I don’t understand what’s missing.

Also, I can’t find the original MSRP of her car, but searching on Google, I think it was around $48k. Our monthly payment is $589. They offered to end her prior lease after only 18 months, I think because she had very low mileage and they probably make a killing selling it CPO. Based on the lease contract, it looks like they took off $2118 from her prev vehicle as cap cost reduction, and I think we put an additional $1000 down.

The “Agreed upon value of the vehicle”, which we negotiated, was $46,663, about 2% off MSRP.

I’m not sure why I can’t tie that to the lease calculator. Is that meant to show what you should target paying? Or what your actual payment is? If the latter, why does the MSRP affect the monthly payment at all? Isnt the negotiated price all that matters to calculate this?

I’m feeling like we got a bad deal, but I don’t know where we went wrong. We negotiated the price of the vehicle across multiple dealers within 100 miles, and this was the best price we could get. No other dealers would give us that price. Did we screw up somewhere in the lease details?

Also, we are located in Westchester County, NY.

Here’s the summary of what our lease contract says:

Gross Cap Cost ($46,663 + ~$1700 tax + $1145 fees): $49,573
Cap Cost Reduction: - $2218.14
Adjusted Cap Cost: $47,355
Residual: $32,160
Depreciation: $15,195
Rent Charge (interest?): $6,011
Base Monthly Payment Total: $21,207
Monthly Payment (36): $589

Thanks!

W

2

It may be more helpful if you take a picture of your lease contract (with your personal information hidden) and post it. That’ll help in knowing what numbers go where.

Also, if you post your calculator link, we can better identify what information is incorrect.

Have you read through the leasing 101 section on how to calculate leases by hand?

3

Thanks. I actually understand now how the number was derived, just don’t know why I can’t tie it out in the lease calculator. Also still not understanding why changing the MSRP on the calculator changes the monthly payment. Although I think I see now that it is trying to use that to automatically calculate the residual? I was able to back into my residual with an MSRP of $48k.

Here’s what I have so far. I will try to post a pic of the contract later. I feel like I got a bad deal, but not sure if I did something wrong in the lease mechanics, or if the selling price I negotiated was just high.

Also, I found on another website how to back into the money factor using the “Rent Charge”. I think my MF was .002, which I think would be 4.9% APR (this lease was negotiated in April 2017).

4

Read up and do a lease calculation by hand, then it’ll make sense

5

The MSRP drives the residual value, which is provided by the bank as a percentage of MSRP rather than a dollar figure. On your contract, you have the dollar figure, so if that value is correct, the MSRP doesn’t matter.

You’re correct on the MF. I get .0021 from your contract.

You need to know how much you paid at sale on your lease, not the down payment amount. Currently, your calculator shows $487/mo with $3630 out of pocket on drive offs. From your write up, it sounds like this should be $3118. Your trade equity is not an incentive, but rather cash out of your pocket.

Adjusting for the .0021 mf and making the due at sale amount match (by manipulating the down payment amount) gets you just about there:

6

Thanks, that’s what I thought about the MSRP. I made the adjustments and still coming out to $495/month.

Anyway, did I screw this up somewhere or is it a decent deal? The impression that I always had about leasing was that it’s really the purchase price that matters most - there doesn’t seem to be too much variation in the other variables as far as I can tell. So are we really hacking the lease? Or are we hacking the purchase price?

7

Now you have $6000 due at sale.

You need the due at sale/drive off amount to be $3118, not the down payment.

8

No, this isn’t a decent deal.

1 Like
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We are doing much more than hacking the purchase price. We find out which cars are better to lease. We make sure dealers don’t mark up the money factor. We sometimes use things called MSDs to lower the money factor.

There is a whole lot more to leasing than purchase price.

As far as the numbers not lining up. Post the contract! We’ll be able to give you much better advice once we have that.

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What’s the difference? The only knob you have to adjust is the purchase price. Everything else is watching out for a low purchase price disguised by marked up mf and add ons or other things (MSDs aside).

2 Likes
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I see you are in Westchester County. I work at the Curry Hyundai next to Curry Toyota over in Cortlandt Manor in westchester. Where did you get your Toyota?

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We bought it in Greenwich CT. I will keep reading through this site to learn more about lease techniques. I figured it would be best to start by analyzing my existing lease contract and seeing where I went wrong. Now I have another 6 months, so plenty of time!

mllcb42 - you said this isn’t a decent deal, but why is that? Is it because my purchase price is too high? Or did I miss out on something in the lease itself? Where did I go wrong here?

And I still can’t manage to figure out how to get the lease calculator to make sense for my lease. Here’s a copy of the lease contract. Someone please tell me what I’m doing wrong!

Thanks again everyone for your help. I have a lot to learn here.

ToyotaLease
ToyotaLease2536×3496 2.53 MB

13

You’re showing a very very low discount. 2% doesn’t cut it around these parts.

Beyond that, it’s difficult to analyze. We don’t have any way of knowing if they marked up the mf, if they rolled incentives into that discount or how much equity they pulled from the trade in.

14

Welcome to the forum and prepare to learn a ton. As an aside, why are you considering going from one of the most reliable cars ever made to anything manufactured in Germany?

If you do in fact want to stick with BMW etc. Have you thought about buying one CPO? Considering you paid $21k over 3 years for the $48kHighlander you could have a CPO 2017 BMW X5 for $10k more (or less based upon negotiations).

Here it’s not only about how to get the best deal on a specific car but what car / truck / suv leases the best and how you can get the best deal on the best leasing vehicle.

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I know that’s the most economical way to buy a car, but this is our “splurge” car. We have two cars - mine is a preowned 2015 S4 which I bought, and will be paid off completely in a few months. That’s what I use for my daily commute, and then we keep one leased car which we like to have the latest model and technology, etc. Having only one car payment makes it much more palatable!

Isn’t that also one of the nice perks of leasing? The reliability doesn’t really matter because as soon as the car starts to reache the age where reliability is an issue, you just return it.

16

Not the best deal, then you extended it 6 months :ok_man:t2:

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I know - had to suck it up because we didn’t really want to go car shopping and test driving in this environment.

…But I still don’t understand what’s wrong with it. May not be a “deal”, but for what it is, and the research I did at the time, this was the best purchase price I could get. Still trying to understand if there’s something else wrong with this lease other than I only got 2% off MSRP? Should I have gotten a different car altogether?

18

A lot people have provided you with insightful information but it seems you still don’t get it?

2% discount is not a good deal even on a bad day. For a Lexus, 11-12% discount is decent, a great deal would include 13% and onwards discount.

19

There are poor deals on cars and cars that are poor values.

Poor deals are generally ones where the discount is low, the mf is marked up, incentives are rolled into discounts (kinda the same as point one), and dealer profit add ons are present.

Poor values tend to be due to high buy rate mfs, low residuals, and low incentives.

Really impressive leases are great deals on vehicles that are great values.

The biggest issue we can identify here is that very low discount. Without more information on historic lease programs, it’s difficult to determine if you had marked up mfs or incentives rolled into the discount.

There is definitely a very high MF and no incentives being applied, so you’re well on your way to a vehicle that’s both a poor deal and a poor value.

1 Like
20

Let’s go over the basics real quick. Here is a hypothetical deal structure, u can work everything out yourself based on it.

MSRP: 20K
Discount: 2K (10%).
Manufacturer Incentives / Rebates : 2K (10%).
Actual Sale price: $16K.
Residual: Say 50% => 0.5*MSRP => 10k.

Your actual depreciation would be total 6k. Now let’s add interest. Say your MF is x%, causing a 1.2k rent charge. Total lease price would be 6+1.2 = 7.2k.
Monthly Payment: 7200/36 =200/m + Tax
Due at Signing: 1st month, taxes on rebates, and inception fees (~300-1000).

  1. The only thing you can really negotiate is dealer discount
  2. Dealers will sometimes markup the MF to make more money but u can ask to get back to base.
  3. RV is fixed, nothing to do there.
  4. Always try to find more incentives you maybe eligible for.
1 Like