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Lease Questions - New Buyer Looking Into a GX

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Old 01-23-10, 10:14 AM   #1
Wubbman
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Default Lease Questions - New Buyer Looking Into a GX

Hello. Its been quite awhile since I've posted on this forum, but I've been lurking for awhile and am interested in the new GX. I'm in the military and am currently deployed to Iraq, so it will be near the end of the year before I can get one, but reading others' opinions of the vehicle and seeing pictures help pass the time. I can see myself getting a premium model with the Mark Levinson audio, navigation system, and rear seat entertainment system. It is the only option package available for the premium model on the "Build My Lexus" page for the area where I'm from (northwest Arkansas; I figure I'll buy the vehicle when I'm home for leave). Now, onto my questions.

I've got the Lexus payment estimator from the Financial Services button on the Lexus website open in another tab. Under the buy section, if I put $32k down, it has me sitting at a 5.3% interest rate with a monthly payment of $618 (for 60 months). Under the lease section, if I put $32k down with the 15k mile/year option, it has a monthly payment of $249 a month for 48 months. Why is there such a substantial difference in monthly payments? Forgive my ignorance, but I have little-to-no idea of how a lease works versus buying. For reference, I use the $32k amount because I estimate this is the most I will be able to drop on the car at one time (there's no taxes over here and almost no expenses, so money tends to pile up while on deployment).

What are the advantages (if any) of leasing over buying? I plan on keeping the car long term (I've always planned to buy up until this point). Would leasing it for four years and then buying out the lease be the best option, or would it simply lead to problems (ie, drastically increased monthly payments)? If I lease, do I have to use the Lexus dealer for all servies (like oil changes and tire rotations)? What penalties are involved if I drive the vehicle over the yearly mileage limit? Thanks for any information anyone can provide.
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Old 01-23-10, 01:12 PM   #2
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Think of a lease as a "long term rental". The following numbers are purely estimated.

You purchase the car for $65,000 plus tax, title, and fees. At the end of 4 years, Lexus Financial Services estimates the vehicle to be worth $30,000. You pay the difference plus a rent charge (lease term for finance charge) plus any additional taxes and fees. If that total figure adds up to $45,000, subtract your Capitalized Cost reduction (lease term for down payment) and divide the balance by 48 months and you have your lease payment. At the end of the 4 years you can give it back to them or pay the $30k plus tax. If you go over the allowed mileage, I'm betting the excess mileage penalty is north of .25 per mile. If you plan on keeping the vehicle for a long time and /or driving more than 12000 miles per year, then a lease is probably not a great idea. Excess mileage can be built into a lease but it will raise the payment by lowering the residual value of the vehicle.

As far as advantages go, it depends on each individual person and their budget and tolerance for financial pain. I'm a salesman, I can make it go either way depending on your personal situation. Personally, I prefer to own, my wife likes to lease, but until she gets a job (other than cleaning up after me), she gets what I give her.

This is over simplified, any other questions, let me know.

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Old 01-28-10, 09:19 AM   #3
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Thanks for the reply. Does a leased vehicle require service at the dealer (ie, mandatory in the lease contract)? Is it a better value to offer a large capital cost reduction in the beginning (resulting in lower monthly payments) if you plan on buying the car at the end of the lease? I guess I'm curious of people's personal opinions of leasing over buying. Thanks again for the response and the info.
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Old 01-28-10, 10:33 AM   #4
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Quote:
Originally Posted by Wubbman View Post
Thanks for the reply. Does a leased vehicle require service at the dealer (ie, mandatory in the lease contract)?.
Generally, you are free to maintain your vehicle where ever you please as long as you keep a record of it (receipts from mechanic), even if you do it yourself (just retain your receipts for parts).

Quote:
Originally Posted by Wubbman View Post
Is it a better value to offer a large capital cost reduction in the beginning (resulting in lower monthly payments) if you plan on buying the car at the end of the lease? I guess I'm curious of people's personal opinions of leasing over buying. Thanks again for the response and the info.
Remember, car is NOT an investment. If you are considering keeping the vehicle for a long haul - buy it. If you are on the fence, and not sure if you will keep the car past 3-4 years - lease it, but DO NOT pay large cap cost reduction fee. You are better of investing the money somewhere else and have it work for you (hopefully at the higher rate than your lease percentage rate). Your monthly payment is going to be higher, but you will have the money "in the bank" in case you need to cover the payments. After a few years you can decide if you want to buy it, or drop it.

One more thing. There are always pros and cons to both: buying and leasing. You have to decide which one is right for you. I've done both, and leasing works best for me. I may fall in love with the vehicle when I see it at the dealer, but after a few years with it I may change my mind, or ... I may still be in love with it :-) , you never know.
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Old 01-28-10, 10:33 AM
 
 
 
 
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