I have never leased any car before. I have few lease related question. If any of you leased a car before please do share your input!
Residual value is negotiable? Based on my reading on internet is, It is NOT. Only factors are 2, 3 or 4 year lease and 10, 12 or 15K miles per year. Lower number will get higher residual value. Any comments?
Lets say my purpose is only to drive a new car every few years and that’s why I am leasing.
Q1. Should someone only lease lowest possible years like 2 years when leasing? Would someone will save more money leasing shortest lease? Remember idea is to drive a newer car, and after 2 years next car will also be a lease. Is there any thing 1 year lease?
Q2. Residual value of the car is off MRSP or from the negotiated price of the car which is usually lower than MRSP minus any car makers incentives?
Q3. When you buy a car you have to pay sales tax. When you lease a car, do you have to pay any sale tax? I have seen on internet, where people are quoting lets say monthly payment is $300 plus tax. What kind of tax are they talking about?
Q4. With lease you are financing the depreciation. Let say you leased a 30K car for 3 years with Residual value factor of 0.6. At the end of 3 years car should be worth 18K according to lease agreement. Now lets say money factors is 0.02% (2% interest rate). Since my bank is not paying me any interest rate on my deposit. Can I just prepay depreciation of 12K in advance? Am I sort of day dreaming or has this been done? Remember idea is to get a newer car every few years and assuming I have 12K in the bank.
Q5. What is normal wear and tear? Some car dealers can be difficult when buying a car. How they determine normal wear and tear? Would they try to extract some extra dollar from you at the end of lease esp. if you decided not to get your next car from them?
Look at it this way, If you lease, you are just adding someone else who will be making money on this deal and you are the only one who is coming putting money in, charging you various cost, that you will not have if you just sell the car and buy new when you feel you want.
In general most of those on this forum do not care for leasing. In your case - you want to drive a new car AND you want to get a new car every 1, 2, or 3 years. Leasing might be a good option for you.
Q1: most leases are 2, 3, or 4 years. There are a few 1 year leases. You need to ask the dealer of the make of car you want.
Q2: residual value is set at the onset of the lease by the leasing company - not negotiable.
Q3: you don’t pay the sales tax when you lease. Instead you pay a “use tax” which is included in the monthly payment. This might differ in some states.
Q4: you pick the car and then see what your options are in leasing said car. If you wish to put more money out at the onset of the lease you might reduce the monthly payment. The residual value isn’t’ changed you are not buying depreciation since no values are changing. You will get a lower monthly payment, so in effect it is about the same.
Q5: this answer is really in the fine print of your leasing contract. In general; tire wear and brake pad wear are expected. Any body damage, cracks in the glass, torn or stained upholstery are NOT considered normal wear and tear. A car with these problems is either repaired by the owner before they turn in the car, or the costs of the repair is charged to the leasee (that’s you) as part of the final settlement of the lease.
I’ve never seen a lease that is better then buying and keeping it for several years. If you’re the type of person who gets tired of their car after 3 years and don’t drive a lot of miles…then leasing might be the way to go. But it’ll NEVER be financially beneficial to lease.
My brother-in-law was sales manger for a bunch of radio stations. They insisted he drive a car no older than 3 years. They also gave him $550 per month to keep a nice car as well as operating expenses like gas and oil. In his case it paid for him.
I own a business and can write off most of leasing expenses, but I still find it cheaper to buy a new car and drive it 6 years before switching to another one, while keeping the old one in the family.
Accord is 220/mo with 2200 down. Same deal for last 10 yrs. accord/Camry/fusion same deal. Just saw an altima for 189 nothing down. Hard to beat that deal.
Just to add that the shorter your lease period, the more you have to pay because the depreciation in the 1st year is higher than 2nd and so on. So a one year lease can be done (BMW does it at least), but it will be very expensive. Most people I know that lease, advice against a down payment or an upfront payment.
As far as wear and tear, read the contract. Friend was on the hook for tires on a X5 to the tune of $1500-$2000 (run flat), so he ended up leasing a Mini from the same dealer so they “forgave” the tire cost (probably added to the mini lease).
If I was going to lease, I would lease for the length of the full factory warranty, typically 3 years. That will also be cheaper. I can think of no reason besides vanity to lease for less than that, except if you think you’ll need a different type of vehicle sooner than that.
You should contact some leasing companies (as long as you have the willpower to not sign up prematurely) and ask them these questions. Regarding #4, you can pre-pay most or (in some cases) all of the lease cost on day one. Very rare to do this.
And your lease payment includes depreciation, interest, taxes, and profit to the leasing company. Not just depreciation.
I was also in a job situation similar to @Docnick’s brother-in-law. I leased for 3 years and then leased another and so on. It eliminated a hassle but the cost was covered by the company. It is never the cheapest way to go.
If you are a good negotiator, buy the car and trade it as often as a new one strikes your fancy. There’s no timetable, no stress to find a new car when your lease is up and no stress about the condition at turn-in.
The old saying about the devil being in the details always applies and by the time an assortment of fees and taxes is applied the deal becomes far different. However, with sterling credit a dealer will be more than happy to add all of that into the monthly payment…
One dealer here in OK on a lease ad even references charging the customer a “credit investigation” fee…
