AndreaL

As some of you know, I just leased my first Lexus a few weeks ago. Today I received the wear and tear bill from my previous car (Mazda). In my opinion, the Mazda was in excellent condition when I turned it in, and some of these charges are complete bulls**t, but that's a different discussion. It was never in an accident, and I went over it with a fine-toothed comb to make sure it was in A+ condition when I turned it in. Yes, it had a few door dings from careless people at the grocery store, and I did curb the tire once. But I had no idea the roof, trunk and hood "dings" existed. If the did exist, they must have been microscopic, because as I said I went over that thing meticulously before it was turned in.

Anyway, assuming I take the same level of care with my Lexus, and I turn it in in relatively the same condition as with the Mazda, what should I expect with Lexus? Are they getting out their microscope to find "dings" that can't be seen with the naked eye? Has anyone received over $1k in damage charges? Are they more lenient if you're going to lease with Lexus again?

Any advice is appreciated!

IS1911

Hi Andrea,

That's a pretty shocking bill you received. I have to believe that wasn't generated by Mazda but by the Mazda dealer. I've owned Mazda's in the past but they weren't leased so I can't add anything there. Most dealers have a paintless dent removal (PDR) guy that visits regularly and I'm sure they aren't paying anywhere near $45 per ding. One dealer I know of has their PDR guy come once per week and he bills them by the hour. I really enjoyed my Mazda's, I had two RX-7's and a Miata. This has to leave a bad taste in your mouth but keep in mind it's very likely this is the dealership nickel and diming you and probably not Mazda itself.

As far as your new Lexus goes, you should have that information in your lease agreement. It might be in the "fine print" but it should be in your paperwork what they consider to be more than normal wear and tear and what they will charge for it at the conclusion of the lease.

Spagolli94

Good god, those fees are insane. Hopefully that's not typical with leased cars because it's pretty much impossible to keep a car in perfect condition.

aitsu

I was afraid of the same when I turned in my BMW 335 a few years back. We went out, checked the tire tread and I pointed out the one door ding the car had just gotten the week before.. and I was told it was too small to count.

And that was it, I was charged the standard disposition fee and I was gone.

Granted, that was a BMW, not a Lexus, but that experience is what lead me to lease this car.

I'm willing to bet the fees above are driven by the dealer. Obviously, take care of the car like it's yours because technically it's not.

AndreaL

The Mazda dealer told me that the inspection would be completed by a 3rd party called SGS. I'm pretty confident that the dealer had nothing to do with this assessment because I had the sales manager go out and look at the car a few days before I turned it in and he said something to the effect of "there are a few minor issues but you should be fine". He was probably not the absolute best person to get an unofficial opinion from, but close enough, I thought.

I read the fine print on both the Mazda and Lexus leases and they basically said the same thing: Any damage greater than the size of a credit card is considered outside the scope of normal wear and tear. Here it is on the Lexus site if anyone is interested: https://www.lexusfinancial.com/pub/s...ear---use.html However, this leaves a lot of gray areas, as I found out the hard way with the Mazda. I had no idea that 1/2 the damages they found even existed, so they must not have been larger than a credit card.....

Greg, that's my point exactly. I'm scared to death that I'm going to receive another bill like this at the end of my Lexus lease term. If Lexus is expecting a car returned in better condition that how I returned the the Mazda then those standards are impossible and I'm screwed.

If leasing a car means paying $1k+ in damages at the end of every lease term then I made a serious financial mistake... Hoping this is not the norm with car leases.

P.s. Yes, I will be fighting those charges on Monday

gmanusmc

Hi Andrea - prior to the ES350 we have now, we had two leased IS's that we traded rather than turn in at lease end because they had some positive equity - you might have that option when the time comes - probably not many leased Mazda's are in that situation at lease end.

I did, however, have a couple Hondas that I turned in at lease end. I made an appointment with the inspection company and personally met with the inspector at the time of the inspection. That way, you can discuss any cited discrepancies right then and there and possibly resolve them at that time. I was given a written record of the inspection that listed the discrepancies - in Honda's case, they waive up to $1500 in damages, so I had no problems (they have recently reduced their waiver to $500). Anyway, my point is if you have to go through this again, insist on being present for the inspection - that way I don't think you'll have a repeat of that unacceptable billing - that is crazy.

Good Luck and let us know how it goes.

Bill G

IS1911

Hi Andrea,

I respectfully remind you that leasing is the MOST expensive way to have a car. It's nothing more than a long term rental and the worst part is that at the end of the lease you are left with nothing. You are continually paying for your cars. There is never a time when they are paid off because most people go from one lease to the next. The reason most people lease is because they can get into a more expensive car than they can afford to buy. With leasing you aren't buying a car, you are buying a payment. All that said, leasing can provide a tax advantage for some businesses that can generate enough profit and be able to "write off" some or all of the lease. I visited your website. If Miss Musique is your full-time business and it is your primary source of income and not just a side gig (the music biz isn't easy, I know because I've been there myself) then talk to your accountant and see how much he/she can "write off".

Good luck with your dispute and let us know how it turns out.

AndreaL

Yes, I'm able to write off the majority of my lease payment, so that's one of the reasons I decided to lease in the first place. Well aware that leasing as opposed to financing is more expensive in the long run, but was not expecting to have such unreasonable damage changes at the end of the lease. Haven't heard anyone (yet!) say that they've experienced something similar with Lexus, so hopefully it's just Mazda being a**holes and I won't go through this again!!

Spagolli94

I was on the fence about financing, leasing and purchasing. I here a lot of people say "I own my car." Most of the time, they don't. The bank does. If the car is truly paid off (or purchased with cash), then yes, they do own their car, but they own a depreciating asset. I bought my last two cars with cash and regret it.

I spent $50k back in 2008. At the time, the dow was what, like 7,000 or something? Now that dow is around 17,000. I could have kept that $50k in the market and turned it into $100k, meanwhile only paying 1.9% interest on my car loan. Instead I had it all locked up in a depreciating asset. Granted, it's a company car, so at least the depreciation was a write off. But still, if somebody is going to give you money for 1.9%, take it.

If you buy a car with cash, you pay for the depreciation. If you finance or lease, you pay for the depreciation plus interest. If that interest is relatively low, it makes sense too put as little down as possible and keep your money in assets that appreciate.

When it comes to lease vs. finance, that really depends on how often you like to have a new car. Typically, financing does make more sense especially for those who keep their cars for 5-10 years, but if it's a commercial vehicle, leasing can offer tax advantages.

I've also tried to avoid depreciation costs buy going the CPO route. A couple year ago, I bought a CPO 335i for $32k. I just traded it for $18k. I had the car for 24 months, therefore this "purchase" cost me $583 per month - for a used car. My brand new IS350 F-Sport is being leased for less than that.

Yes, leasing is "renting" instead of owning. But when it comes to a depreciating asset, renting isn't a half bad idea.

I'm not a finance guy by any means, but this is just my personal philosophy.

IS1911

Spagolli94,

As both an investor and business owner I must respectfully disagree with your philosophy. Yes, 1.9% is cheap but when you buy the car in cash the rate is 0%. Also, in the history of the stock market the ride from Dow 7K to Dow 17K in only 7 years was extraordinary and may never happen again in our lifetimes. It's difficult to make the decision whether to lease or buy based on a market index. It takes a couple of years of data just to qualify a bull or bear market. Even if it took just a couple of months what's the take away here? Do you lease during bull markets and buy during bear markets?

I have purchased every car I have ever owned in cash. With the exception of certain Porsche models most German cars take a SERIOUS hit when it comes to depreciation. Last I checked Audi is still the worst but BMW is right up there. Sadly, the higher trim models of the German makers take an even larger hit than entry level models. Some Mercedes AMG models can drop a whopping 30% or more in their first year!

I think you'll be pleasantly surprised when the time comes to sell/trade your Lexus. Yes, it's definitely still a depreciating asset but it will hold its value much better than the German makers.

Spagolli94

You raise some valid points no doubt. I'm sure we could find dozens of varying opinions on this subject. As you can tell from my post, I had really bad timing to sink that money into a depreciating asset. No doubt I'd be in a much better position today if I had put it into the market instead. But you're right, it's impossible to time the market. But I would counter with, doesn't the market typically average 7-10% historically? Sure, sometimes it goes down for years on end - I'm speaking over the long haul. So, the odds are in your favor that it will go back up someday, so rather than have your money bottled up in your car (which always depreciates, unless it's a classic), might it be better to "average in" during down markets, thus continuing to buy more shares so you're sitting pretty when things eventually rebound?

I'm not a huge stock market guy myself. But I can think of other uses for $50k besides my car. For instance, maybe I could use the extra liquid capital to hire an extra employee, who would yield a return on investment far greater than any interest I'm paying as a result of my car lease? Or maybe I could use it as part of a down payment on a commercial space (a real asset) rather than making my landlord rich?

I'm not trying to prove you wrong because I don't think there is a right or wrong. I'm just simply saying that leasing has a really bad rap, but there are some cases where it makes sense financially.

Spagolli94

Oh, and Andrea - sorry for hijacking your thread!

wednesday

With my 2011 IS that I recently turned in, I didn't have any dings or curb rash but I had a few relatively minor but still noticeable scratches, a scuff on one mirror from some a-hole that hit it in a parking lot and left the scene and also a repaired rock chip in the windshield. A third party company inspected it prior to turn in and added up all of the wear and tear, mine fell below what they considered excess so I didn't have to pay anything, also because I leased another Lexus there was no dispensation fee. I should also note that I had 3 of the original tires that had 45k miles on them and they also fell within the normal wear and tear.

IS1911

I'll second that Andrea and I still hope you are able to prevail in your dispute. One other thing I'd like to add here. In fact it was Wednesday's post that reminded me of this thought. Thanks Wednesday! I was actually going to post it earlier but didn't want to get too long winded.

Did you happen to mention you were getting into a Lexus to anyone at the Mazda dealer? The additional scrutiny they put into your final inspection might be "punishment" because you are bailing on Mazda and moving up to the luxury segment. They may feel you are able to afford the additional charges and since you aren't going to lease another Mazda they have nothing to lose by trying to bill you for what they claim is beyond normal wear and tear. The car business can be pretty sleazy at times. Again, I do hope you are successful in your dispute. Please keep us posted.

Spagolli94,

Fair points on all, especially on using the additional cash to hire another person. I'm all for business expansion. Truth be told I wasn't a big market guy either until about 5 years ago. Prior to 2007 I was getting 4-5% on my principle which was mostly in CD's and I was okay with that because I have a healthy principle to work with. As interest rates began to drop my returns became ridiculous. You are lucky to get 0.5% on a one year CD right now. That means you are only earning a paltry $5000 for each million you have in the bank. That's ridiculous. I had to do something so I got into investing. I'm self taught and I like to think I've learned the right way. I do the research and make my own picks. I don't depend on software or any of those other silly methods of timing the market.

Spagolli94

I here ya! I saw a TV ad the other night bragging about a high yield savings account at .9%. Correct me if I'm wrong, but isn't that 2% below the average rate of inflation? Thus if I was to keep a bunch of money in an account like that, I'd slowly fall behind every year. In hindsight, I should've been a banker or a finance guy! They seem to know all the tricks. They take your money, give a half percent, then turn around and make 10% or more off it.