evident

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?

wasjr

The "amount due at signing" would include deposits, fees, and the down payment. The down payment affects the capitalized cost and result in a change in the monthly payment. In my opinion, the advertised down payment is what is needed to get the advertised monthly payment to the manufacturers desired price point for their marketing campaign. In the case of Lexus, the December to Remember promo.

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.

SW17LS

Yeah the advertised deals all include money down. Its like anything else, what they advertise and what you can get or should get are different things.

You can always put nothing down, it just increases the payment.

vedro

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?

Nextourer

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.

mmarshall

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.

RX_330

That is correct. Multiple Security Deposits (MSD) allow you to "buy down" the money factor and save some money. MSD can be returned if you choose not to lease again, or can be applied to any future lease thereafter.

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.

One pay lease will save you two ways - 1) they usually will reduce the MF itself or because 2) there is no balance for the MF to be able to collect interest on. All other factors are usually equal - rebates, purchase price, fees, residual, etc.

wasjr

While legally you are renting the vehicle, I (an **** financial guy) look at it like I am buying the difference (essentially the depreciation) between the negotiated capitalized cost and the contracted residual. I know on the front end what my out of pocket is going to be, and it does not matter what the vehicle is actually worth at the end of the lease. At the end, I can hand back the vehicle, or buy at residual, depending on the actual market value and/or if I want to keep the vehicle.

I have a buddy that just came off a one pay lease of a GS. He did it because 1) the one pay was discounted more than the money factor of a multi payment lease, 2) it avoided hassle of regular payments, and 3) he was selling his current vehicle and had the cash.

tex2670

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.

wasjr

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.

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?

tex2670

Yes--I left out the legitimate reason. Once you have that, why add other rationalizations? "I prepaid because they gave me a sweet deal." End of story.

This:

mikez

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.

toyotatom

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.

mikez

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.

toyotatom

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?