Can someone please explain to me the reasoning behind a 39 month lease? Why isn’t it simply 36 months?
Sometimes (not always) 39 month leases might have a slightly lower payment compared to 36 because the residual changes little if at all compared to 36. Advantage: (sometimes) a slightly lower payment. Disadvantage: you have the car 3 months longer for purposes of tires, brakes, inspection, etc.
And in some areas, like SoCal, where a tag for a $50k car is near $500, the savings can be very quickly wiped out, if one has to buy a tag and only use it for 3 months.
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OP is asking why the number 39 months is chosen not the difference between 36 and 39 months.
Works well in Colorado because you get a 2 month temporary plate to start and then a 1 month grace period to renew plates at the end! You can get away with just 3 years of plates.
That extra three months also puts you into the 4th year of depreciation and increases the odds of needing to replace the tires. Seems like there are nefarious reasons is why I ask.
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In my experience with dealers and with deals I have seen on here is that the 39 month lease is a dealer trick. Every time I hack a vehicle I always get the canned rebuttal we can do that deal but at 39/10
You could try to do a 3-6 month pull-ahead at month 33-36. Don’t know if any makes still offer that to everyone or just targeted.
I took a 39 month lease a few years ago, lease was up in April 2019, I brought the car back 3 months before it was due. Now have a 36 month that I’m sure I’ll bring back in the 32nd or 33rd month of the lease.
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Tough to count on pull-aheads… just ask BMW customers right now (which I am one).
@RVguy might be able to weigh in, I know this has been asked before but not really answered. I would guess some manufacturers prefer 39 month terms based on their residual value projections. Infiniti for instance more or less is always a 39 month term because it offers the best RV and MF combo. Volvo which I noticed you tagged in the thread seems to flip flop a bit. For the larger majority, its really just the dealer playing into the monthly payment numbers game. 3 extra months stretches the term so you shave money off of the monthly but as others have said here, many people don’t factor in the extra wear and tear + registration fee implications
BMW doesn’t off pull aheads?
I thought most if not all car companies did pull aheads. No?
My apologies. Was just trying to help provide OP rationale.
My guess is that a car is worth about the same at 36 months as it is at 39 months. Thus, it benefits the leasing co. to get 3 extra months of payments as it’s almost pure profit (or at least mitigates the loss they take at auction).
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Most of them do at some point or another. The point is not to expect it, as there isn’t a guarantee it will be there. BMWs have had very limited pull ahead support recently. GM has a limited private offer pull ahead that you’re chosen for and not everyone gets it. Nobody knows how they pick and choose either. Just 2 examples.
39mo is a seasonal thing for lenders. Dealers aren’t doing any voodoo to push 39mo. The math works best in some times of the year with some lenders to have the best payment on 39mo.
To set an accurate RV you need to understand the seasonal pattern of wholesale prices at auction since that is where most off lease units end up. Historically, auction prices are lowest in Dec to early Feb and then peak in the spring after tax return season. They slide fairly smoothly through the summer with a slight bump again in Aug-Sep and smooth through early fall in most years except 2018 was unusually flat the 3rd and 4th quarters.
So the 39mo lease originated in Nov-Feb will bring those units back to auction in better seasonal auction price environments and allow for minimal increased risk to the lender when the RV is near or even with the 36mo RV.
The extra 3 months on the term dilute the depreciation the lesser needs to pay and you get a lower payment.
Some lenders will put their special rate on the 36mo term in most months and the shift it over to 39mo when it makes sense. Others will have similar rates on those terms and the slight variation in RV creates the payment opportunities on the specific terms that the lender is targeting.
As one poster mentioned, the 4th full year of tags is a necessary expense in some states but with a lease through a credit union, you have the option to trade it out early with no additional penalty.
Nissan’s captive stated recently that they are going to start shifting their focus out to 48mo to get to a lower lease payment point. This is what Canada’s lease market has always been focused on so it will be interesting to see how that strategy works with US consumers.
If it is cost effective to go out to 48 with an extended warranty rolled in and if you have the option to swapalease early, it could work very well.
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Eww. 48 month leases…
I’ve seen 39 month leases year-round, any evidence to support that they’re seasonal?
We leased our Cadillac for 39 months . For some reason the residual was 61% for 36 mo and 62% for 39 months. Both figures obviously inflated to move cars. Reality is in the low 40% range
The inflated residuals will always mean that there is no equity throughout the length of the lease. Makes it harder for people to get out of lease earlier without paying for it.
Which is a real advantage of leasing… because if you buy this vehicle and then try to trade it in that 20% difference is big. Leasing means to me… I’ve pre-sold the car back to the OEM. That simple.