gmanusmc

Steve - do you mean the lease factor? I've never seen a dealer mess with the residual but they sometimes play with the lease factor depending on your credit score. The residual is usually locked in by the manufacturer and only changes with length and mileage of the lease. Of course, I'm referring to the captive finance company and not a third party bank - in most cases the really good deals don't come from a third party. It's not likely he is overpaying with a 400 payment, zero due at signing , $43k msrp.

Bill G

SW17LS

I have absolutely seen dealers reduce residuals...

gmanusmc

Ok Steve - I guess we'll have to be content with your short answer without further elaboration. I've just never personally seen it happen but I will certainly watch out in the future. I've only ever leased Hondas, Acuras and Lexus's and the residuals are usually high enough that when combined with a well negotiated selling price and low money factor, the result is a good deal on the lease payment.

I still find it amazing that someone is able to lease a new ES350 for 400 bucks a month with nothing up front - that's a pretty good deal.

Bill

SW17LS

what is there to elaborate on? The residual is set by LFS, dealers cannot raise it, but they can lower it, and lowering it makes them back door profit. I have had dealers quote me residuals that were lower than the manufacturer's residual for the month, and I have taken my business to dealers who offer the proper residual.

I have been leasing cars for years, I have never had a lease calculated properly the first time. Dealers try and pad money factors, mess with residuals, apply taxes weird ways. Anything to get more profit, it's easy for them to do in a lease because there are so many terms and most consumers don't really know how a lease works.

gmanusmc

I understand what you are saying - If LFS allows the dealers this option, obviously customers unfamiliar with how a lease is structured could end up on the short side of the deal. Like you, I've been leasing many years - I like to get multiple quotes and and when I zero in on the most competitive, I ask for an itemized breakdown of the numbers so I can compare. I don't recall any disparity as far as the residual is concerned. It doesn't make sense that if a dealer wanted to be competitive, they would play with such an obvious part of the numbers - but dealers do strange things. As I said, I will take your info and tuck it away as something to look for in the future.

Thanks, Bill

prithvisri

This is so true. I got multiple quotes from different dealers and one of the far away dealers quoted me the .00060 MF and 37,038 price. I would have bought it but the final lease numbers showed 63$/month more (~1700 over the lease period) compared to my rudimentary calculations. Since I couldn't understand what he was trying to do over the phone, I went to the local dealer and asked him to match the faraway dealer's quote (gave MF and price to match. Not the per month amount). He came back with a similar number (~463/month). So, I worked him to get to the root of the discrepancy between my calculations and his... Eventually he came back with calculations that matched mine. That's when I signed the lease. Here is my lesson (and for those who are interested). Never trust the lease company calculations. They are prepared to confuse you. I am an engineer with CPA and MBA degrees and I am sorry to say that their calculations confuse me. I can only imagine what other casual buyers have to go through...

SW17LS

The whole way a lease is calculated and presented is designed to confuse the consumer...

prithvisri

Here is how I calculated the lease payment.

1. First I calculated the total lease payment amounts over the lease period. Then I divide the amount with number of months in lease. This is not an accurate number but is very close and is definitely more than what it should be so if your dealer gives you a bigger number, you know you are being screwed.
2. Lease payments can be put into three categories. (i) Depreciation. This is the difference between the purchase price (negotiated one, not the MSRP) and residual value (usually given by lease company. it is expressed as a %age of MSRP). In my case, this was 37,038-26,2581=~10,800.
(ii) Finance charges. You take the money factor and multiply with 2400 to get the interest rate (%/year). Since leasing a car means you are borrowing money to pay for it, multiply the purchase price with interest rate times no. of years in lease. In my case, interest rate was (.00060*2400=1.44%/year) so the total interest charges were 37,038*(1.44/100)*27/12=1200). The actual lease finance charges should be less than this since the value of the car is reducing every month, meaning you are borrowing progressively less.
(iii) Title charges and other fees.
When I added them all up and applied the 1800 lease discount that Lexus was offering, I got a number that was slightly above 400 but the dealer's calculation came back with 400. Probably a big explanation but I thought this is necessary to share since people can still be screwed over for 1600-2000 even after you are looking at good MF, residual, purchase price.

SW17LS

Easier thing to do is to just use a lease calculator

huffydogg

I bought my first Lexus last Sunday. My 2013 ES350 came with Luxury Package, Nav Package, Blind Spot Monitor w/ Rear Cross Traffic Alert, 18" wheels with Liquid Graphite Finish, HID Headlights, Power Rear Sunshade, Parking Assist, Rain Sensing Wipers, Wood and Leather Trimmed Shift **** and Steering Wheel, Rear Lip Spoiler, Trunk, Cargo Net, Whl Locks and Rear Bumper App. MSRP was $45,002, and selling price was $39,700, 36 months, 10k/year, residual 60%, and money factor .0006, with zero down, monthly payment of $428. I only had to pay first month. I am happy with my purchase!

joebruin

Leased a 2013 ES300h with luxury package last night for $389.14/mo for 27 mos 10k mi/yr, tax included with $2800 drive off (fully refundable security deposit). Here are the details:

$46577 MSRP
$41000 sale price
$1800 lease rebate
0.67 residual
0.00004 money factor (0.0006-7*(0.00008)) using multiple security deposit (7X$400), refundable at end of lease. Lexus allows maximum of 9 security deposits but limited to 7 because can't have negative money factor.

$10117.64 out of pocket over 27 months.

payments are ~$40 more a month when not using multiple security deposit, since money factor will be 0.0006.

Using this method, you can buy the car at the end of the lease for over $1k less than if you bought it outright from the start because of the $1800 lease rebate.

Never thought that I would ever lease a car but if I end up buying after, the $1k savings makes it a no brainer.

Lexusxoxo

Great deal! Where else can you make $40 a month on $2800 bucks..

gmanusmc

Way to go - great deal and very smart!

Enjoy your new car!

Bill G