Zero Drive Offs vs Due at signing?

[EuroChuck86]

I am curious as what other leasehackrs think of this, is there a time where Zero drive offs are worth it ? Most of the deals i see here is individuals always going with some sort of due at signing… thank you all

[dtk101]

One reason zero drive offs can make sense is if you plan to transfer out of the lease early or do a pull ahead. In that instance you’re spreading the “up front” fees over the life of the lease so if you exit the lease early you technically avoid some of those fees.

On the flip side, when you do zero DAS you are capitalizing those fees and paying interest on them. While it won’t be a big amount of interest, it can certainly be worsened if you have a bad MF. In my recent deal I signed with an inflated MF but accepted it since the overall deal discount was satisfactory to me (not great though). Knowing the MF was high i paid all fees/TTL at signing and avoided a few hundred in interested on the capitalized fees.

Another point in the “con” column would be the tax aspect. In my case, tax is levied on the monthly payment. If I did 0 DAS and rolled in the 3K it’d increase my monthly pmt by $80 plus the 10% tax rate (so extra $8 in tax per month). That’s another $300 saved over the life of the lease.

[calbear]

If you have a low MF, $0 DAS esp for the reasons mentioned above…

[JamesBond]

Zero drive off is worth it all the time.

[jeisensc]

@JamesBond

Zero drive off is worth it

Usually, but you have to do the math

Brand new BMW 330i totaled

Related to the OP’s situation, someone check my math. Current BMW MF: .00082 / 1.968% $3000 down = $83.33/mo Additional rent: 83.33 * 0.01968 = $1.64 $1.64 * 36 = $59.04 additional rent to roll everything in. Also, in the unlikely event like this, having rolled tags/title/taxes in, you only would have paid 1/36 on that, so instead of trying to recover your upfronts you only paid out $83.33 in actual utility you got for 20 days, plus $1.64 for BMW to front it. Also as an aside, if you sold/…

And decide what you are trying to solve for? Lowest total cost? Least finance charges? Transferrability. Risk transferrence?

Not everyone is trying to accomplish the same thing. The only absolutes (down payments and equity):

@ElectricEliminator

[anamnesis111]

Also if you total your car, all the DAS will go down the drain. My rule of thumb is to do 0 DAS and max MSDs to minimize interests and risks.

[Qbrozen]

@dtk101

Another point in the “con” column would be the tax aspect. In my case, tax is levied on the monthly payment. If I did 0 DAS and rolled in the 3K it’d increase my monthly pmt by $80 plus the 10% tax rate (so extra $8 in tax per month). That’s another $300 saved over the life of the lease.

Ya know, I have always wondered about this. So someone could pay $10k up front to make their lease payment $10/mo and avoid paying sales tax on almost the whole lease? That doesn’t sound right.

[Hypnotics]

Dont you pay taxes on the money you put down (ie: cap reduction), aside from fees?

[mllcb42]

States that tax monthly apply tax at the time the payment is collected, so when a large cap cost reduction is applied, you end up paying taxes on the cap cost reduction up front. There’s no way around that.

Now, if you have untaxed fees due up front and you choose to capitalize them, you end paying tax (and rent charge) on an otherwise untaxed amount. Even worse would be if you had any upfront taxes that you then capitalized, as you’d be paying sales tax on the tax amount.