Upfront payments when trading in on and old lease
#16
It really shouldn't depend on what you can afford every month. If you are leasing because you cannot afford the payments, you should not be leasing.
When you put money down on a lease, you are just prepaying lease payments. If the vehicle were to be totaled or stolen or something, you loose that downpayment money because the insurance company pays the vehicle owner...Lexus Financial Services...not you.
If you have some amount of money to put down, put it in a bank account and make a chunk of the payment out of it every month, then the money stays with you and is safe.
If you rented an apartment would you put $5000 down to lower the monthly rent? No...same thing here.
When you put money down on a lease, you are just prepaying lease payments. If the vehicle were to be totaled or stolen or something, you loose that downpayment money because the insurance company pays the vehicle owner...Lexus Financial Services...not you.
If you have some amount of money to put down, put it in a bank account and make a chunk of the payment out of it every month, then the money stays with you and is safe.
If you rented an apartment would you put $5000 down to lower the monthly rent? No...same thing here.
I've never leased before and probably never will.
But aren't most advertised lease specials predicated on a certain amount of money down? I guess what i'm asking is, is the down payment always negotiable?
#17
Down payments are negotiable (but it changes the monthly payment), and like the comments above, I would put no money down on a lease. Typically the promotional money factor is such that it is better to invest the money than pay down the lease.
#18
Lexus Fanatic
You can always put nothing down, it just increases the payment.
#19
Has anyone tried one pay lease options? I see these advertised at various dealerships and they tend to be 20-30% cheaper in aggregate than staggered lease payments.
It would make sense to get in a one lease payment agreement and put the balance on a credit card with zero % APR for like 21 to 24 months. Slowly paying off the credit card would mimic having a staggered lease only cheaper, no? Has anyone tried this?
It would make sense to get in a one lease payment agreement and put the balance on a credit card with zero % APR for like 21 to 24 months. Slowly paying off the credit card would mimic having a staggered lease only cheaper, no? Has anyone tried this?
#20
To all:
I've never leased before (always financed and paid off as soon as I can). That's why I asked. It seems silly to put a downpayment on the lease (After all, you're "renting" the car rather than financing) but I wanted to see what the opinion was. I understand mmarshall's idea of pre-paying your lease ahead of time but it seems odd to me.
However, I've noticed that some leases are $0 but on Lexus Canada's site, they incentivize you with "Reduce lease rate by 0.1% with every $1,000 security deposit). Now, I'm guessing that the security deposit is different than a downpayment in that you get that deposit at the end of the lease. Is that a safe assumption?
Thanks.
Thanks.
Some manufacturers here allow you to make a one-time lease payment option - basically your entire lease in one lump sum at delivery. I'm not sure what the advantage of that is over monthly payments. I've done the math and the total outlay is the same (so no savings in interests). I've never inquired.
I've never leased before (always financed and paid off as soon as I can). That's why I asked. It seems silly to put a downpayment on the lease (After all, you're "renting" the car rather than financing) but I wanted to see what the opinion was. I understand mmarshall's idea of pre-paying your lease ahead of time but it seems odd to me.
However, I've noticed that some leases are $0 but on Lexus Canada's site, they incentivize you with "Reduce lease rate by 0.1% with every $1,000 security deposit). Now, I'm guessing that the security deposit is different than a downpayment in that you get that deposit at the end of the lease. Is that a safe assumption?
Thanks.
Depends on what you think you can afford each month. In general, the more money down up front, the less the payments will be each month. That's why dealerships and automakers advertise their lease rates based on either X number of $$$$$ (or no $$$$$) down.
Though not everyone may agree, I myself tend to be of the school of thought that it is better to get as much of one's payments out of the way, as quickly as possible, and have less of the balance hanging over your head each month in debt.
Though not everyone may agree, I myself tend to be of the school of thought that it is better to get as much of one's payments out of the way, as quickly as possible, and have less of the balance hanging over your head each month in debt.
#21
Lexus Fanatic
Some manufacturers here allow you to make a one-time lease payment option - basically your entire lease in one lump sum at delivery. I'm not sure what the advantage of that is over monthly payments. I've done the math and the total outlay is the same (so no savings in interests). I've never inquired.
#22
Lexus Test Driver
However, I've noticed that some leases are $0 but on Lexus Canada's site, they incentivize you with "Reduce lease rate by 0.1% with every $1,000 security deposit). Now, I'm guessing that the security deposit is different than a downpayment in that you get that deposit at the end of the lease. Is that a safe assumption?
MSD are only useful if the money factor for you is really high. Its just like for financing, lets say for whatever reason you are not tier 1 credit, so you dont qualify for the lowest rates available - if you put more money down, the banks will lower your rate for you. If for whatever reason you dont qualify for tier 1 MF, you can "buy down" the MF by applying MSD.
A friend of mine has twice leased a new ES350 for 27 months......at the same dealership. Both times, they gave him a discount off of the total lease-amount if it was all paid up front, and not month-by-month (he didn't tell me the exact amount). There are both advantages and disadvantages to doing it that way, as has already been discussed in previous posts.
#23
A friend of mine has twice leased a new ES350 for 27 months......at the same dealership. Both times, they gave him a discount off of the total lease-amount if it was all paid up front, and not month-by-month (he didn't tell me the exact amount). There are both advantages and disadvantages to doing it that way, as has already been discussed in previous posts.
#24
Lexus Champion
I'm not sure, though, that you can directly compare auto leases to credit cards. A leased vehicle is only "yours" for 2-4 years, and doesn't really belong to you in the first place, but, legally, to the bank or dealership/manufacturer (in effect, you're renting it). Most of the things that people buy with credit cards (even if they max the cards out or over-stretch their credit limits) iare not things that they are going to have to return after a few years and have the physical condition of those things checked....it's charged to their account, it's theirs, and that's generally the end of it.
Here's a perfect example of how people make important financial decisions:
It's too much trouble to set up auto pay with the leasing company, and he's got cash lying around burning a hole in his pocket, so why not pre-pay and take the risk? People will rationalize their decisions however they see fit--but that doesn't necessarily make it a wise financial decision.
Last edited by tex2670; 01-06-16 at 08:49 AM.
#25
I wasn't intending to "directly" compare auto leasing and credit card financing. I was merely taking another example of what "a lot" of people may do with their finances, suggesting that merely following the crowd is not the way to make a financial decision.
Here's a perfect example of how people make important financial decisions:
It's too much trouble to set up auto pay with the leasing company, and he's got cash lying around burning a hole in his pocket, so why not pre-pay and take the risk? People will rationalize their decisions however they see fit--but that doesn't necessarily make it a wise financial decision.
Here's a perfect example of how people make important financial decisions:
It's too much trouble to set up auto pay with the leasing company, and he's got cash lying around burning a hole in his pocket, so why not pre-pay and take the risk? People will rationalize their decisions however they see fit--but that doesn't necessarily make it a wise financial decision.
Also, I don't understand your point about the risk in a one pay lease if you have the cash, vs a multi-pay lease?
#26
Lexus Champion
You conveniently left out my buddy's number one reason for his decision... that the discount for the single pay was more than the money factor on the multi-pay lease. He made a financial decision on what to do with his cash, based on this discount and potential investment returns.
When you put money down on a lease, you are just prepaying lease payments. If the vehicle were to be totaled or stolen or something, you lose that downpayment money because the insurance company pays the vehicle owner...Lexus Financial Services...not you.
If you have some amount of money to put down, put it in a bank account and make a chunk of the payment out of it every month, then the money stays with you and is safe.
If you rented an apartment would you put $5000 down to lower the monthly rent? No...same thing here.
If you have some amount of money to put down, put it in a bank account and make a chunk of the payment out of it every month, then the money stays with you and is safe.
If you rented an apartment would you put $5000 down to lower the monthly rent? No...same thing here.
Last edited by tex2670; 01-06-16 at 01:04 PM.
#27
For lease vs buy / finance, I never own a car for more than 8 years. That was my longest actually, my other cars I sold within 1.5 years.
Using this math, I was able to lease my car for x for 36 months, if I financed it for the same months, the payment would be 3x. So if I lease 3 different car for the same x monthly for 9 years, my lease payments would equal to buying 1 car.
Now if at year 9, I sell the car, I anticipate that if I put the same miles every year as my lease allowance, I will have a car with 100k miles on it, and I have never sold a car private, always trade, so I will go with a trade in allowance of maybe 4k. Using that math, I will have to own my car for than 8.5 years for the financing to make sense over leasing.
I didn't include the time value of money, but it would just swing it to maybe 8, or even 7.5 years, which frankly I probably won't keep the car for that long.
Using this math, I was able to lease my car for x for 36 months, if I financed it for the same months, the payment would be 3x. So if I lease 3 different car for the same x monthly for 9 years, my lease payments would equal to buying 1 car.
Now if at year 9, I sell the car, I anticipate that if I put the same miles every year as my lease allowance, I will have a car with 100k miles on it, and I have never sold a car private, always trade, so I will go with a trade in allowance of maybe 4k. Using that math, I will have to own my car for than 8.5 years for the financing to make sense over leasing.
I didn't include the time value of money, but it would just swing it to maybe 8, or even 7.5 years, which frankly I probably won't keep the car for that long.
#28
Its sounds like you are advocating leasing as being financially more sound than financing over a nine year period and Im not sure thats correct. Typically a loan is twice a lease price and not three times as you stated for a 36 month period with zero down on both.
I ran an RC350 through the Lexus payment estimator with an MSRP of $45,965. Lease payment is $649 and finance price is $1,359 both for 36 months with zero down on both.
Leasing costs, for 9 years on the same car is $70,092, plus in CT the sales tax for 3 years would be another $4,380. Plus another 3K for fee's and things for three cars. Total payment for 9 years is approx. $77,500 for 9 years of leasing. After nine years you have nothing to sell or trade.
Financing costs, cost of car $48,924 after 36 months plus another $2,872 for sales tax bringing your out of pocket to $51,796. After nine year you would still have a car worth around 8 to 10K I would think bringing your out of pocket costs to around $42,796.
If my numbers are close it would cost around 34K to extra to lease for the same car for 9 years versus financing it. Granted there would be more maint costs on a 9 year old car but not 34K worth. The other thing is if financing in years 4 through 9 look at the cash you would monthly to spend with no payments to make.
I ran an RC350 through the Lexus payment estimator with an MSRP of $45,965. Lease payment is $649 and finance price is $1,359 both for 36 months with zero down on both.
Leasing costs, for 9 years on the same car is $70,092, plus in CT the sales tax for 3 years would be another $4,380. Plus another 3K for fee's and things for three cars. Total payment for 9 years is approx. $77,500 for 9 years of leasing. After nine years you have nothing to sell or trade.
Financing costs, cost of car $48,924 after 36 months plus another $2,872 for sales tax bringing your out of pocket to $51,796. After nine year you would still have a car worth around 8 to 10K I would think bringing your out of pocket costs to around $42,796.
If my numbers are close it would cost around 34K to extra to lease for the same car for 9 years versus financing it. Granted there would be more maint costs on a 9 year old car but not 34K worth. The other thing is if financing in years 4 through 9 look at the cash you would monthly to spend with no payments to make.
For lease vs buy / finance, I never own a car for more than 8 years. That was my longest actually, my other cars I sold within 1.5 years.
Using this math, I was able to lease my car for x for 36 months, if I financed it for the same months, the payment would be 3x. So if I lease 3 different car for the same x monthly for 9 years, my lease payments would equal to buying 1 car.
Now if at year 9, I sell the car, I anticipate that if I put the same miles every year as my lease allowance, I will have a car with 100k miles on it, and I have never sold a car private, always trade, so I will go with a trade in allowance of maybe 4k. Using that math, I will have to own my car for than 8.5 years for the financing to make sense over leasing.
I didn't include the time value of money, but it would just swing it to maybe 8, or even 7.5 years, which frankly I probably won't keep the car for that long.
Using this math, I was able to lease my car for x for 36 months, if I financed it for the same months, the payment would be 3x. So if I lease 3 different car for the same x monthly for 9 years, my lease payments would equal to buying 1 car.
Now if at year 9, I sell the car, I anticipate that if I put the same miles every year as my lease allowance, I will have a car with 100k miles on it, and I have never sold a car private, always trade, so I will go with a trade in allowance of maybe 4k. Using that math, I will have to own my car for than 8.5 years for the financing to make sense over leasing.
I didn't include the time value of money, but it would just swing it to maybe 8, or even 7.5 years, which frankly I probably won't keep the car for that long.
#29
I was able to lease my car for 3x less than financing on a monthly basis Lexus have horrible leases so I wouldn't use them.
Leasing makes sense on selective basis if you can get a good deal that's all. I have the cash to buy the car out right so for me I just made the choice that nets me a better deal based on personal preference. Certainly would not advocate buying, financing, or leasing if one can not afford the car to begin with.
Leasing makes sense on selective basis if you can get a good deal that's all. I have the cash to buy the car out right so for me I just made the choice that nets me a better deal based on personal preference. Certainly would not advocate buying, financing, or leasing if one can not afford the car to begin with.
#30
You must have put a pretty good down payment on the lease or the interest rate was very high on the financing to get a lease 3 times cheaper than financing. I just used Lexus as an example, what brand did you buy?
I was able to lease my car for 3x less than financing on a monthly basis Lexus have horrible leases so I wouldn't use them.
Leasing makes sense on selective basis if you can get a good deal that's all. I have the cash to buy the car out right so for me I just made the choice that nets me a better deal based on personal preference. Certainly would not advocate buying, financing, or leasing if one can not afford the car to begin with.
Leasing makes sense on selective basis if you can get a good deal that's all. I have the cash to buy the car out right so for me I just made the choice that nets me a better deal based on personal preference. Certainly would not advocate buying, financing, or leasing if one can not afford the car to begin with.