LexISFSpot

Hi,

I used to purchase a car with cash or finance.
I am still learning how lease works. I did some researh on lease, and I am interesting to lease an IS. However, most of the website won't go details enough.
I see a lot of members here are leasing their cars. Therefore, I would like to hear the input from the actual users.

1. What are the fee that are involved? (First month’s payment, a security deposit, the acquisition fee, dealer document fee, tax......monthly payments until the lease terms end......residual value of the car)

2. Would finance always be cheaper than lease in long run if I end up owning the car?

3. If I decide to own the car at the end of the lease, how the residual value works? In other words, does the dealer estimate the residual value in the beginning of the lease or at the end of the lease?

4. How does the dealer define the residual value?
Can the residual value be negotiated?

5. I heard people can trade-in the car, how can you trade in a car that is not owned by you? I am very confused on this. At the end of the lease, you are returning the car that was never owned. Do you actually get a trade in valve to leasing the next car?

6. If I want another new car at the end of the lease, do I just starter over the same lease process with the same dealer?
I am guessing you can't get a great deal for the next new car as the dealer know that you will get another new car from them anyways.

7. Does "returning a car at the end of the lease and lease a new car from else where" make a difference from "returning and getting a new car from the same dealer"? Do I lose more money by doing the first? From what I understand, I lose all the money I paid if I return the car.

8. Is it a must to go back to the dealer for service?
Who is responsible for the service material and labour fee? eg. regular oil change, brake pad and rotor, brake fluid, windshield wiper.....

9. If I return the car, would the dealer charge me for the damage or daily wear on the car. eg. paint damage, rock chips, windshield damage, dent. scratches in the interior.........

Feel free to add some comments besides my questions.
Thank you very much

JDR76

Not sure if you've seen this thread yet, but most, if not all of your questions are answered here.

https://www.clublexus.com/forums/car...nd-buying.html

gmanusmc

Welcome to the forum - you are doing the right thing by educating yourself BEFORE you enter into a lease transaction. Read the thread that JDR76 linked and research other internet resources related to auto leasing and you should quickly become familiar with how leases work. You MUST become as informed as possible on this subject before negotiating a lease deal or you stand to pay more than you need to.

If, after researching, you have more questions, feel free to post for advice and/or clarification.

Aeromotive

OP, since you're in Canada, a lot of what is said on the forums doesn't apply to you.

LexISFSpot

Thank you for the information.
Yes, a lot of the shopping trick doesn't apply to Canada. I was looking for the basis of lease, but it doesn't hurt if any Canadian share their lease experience here.

After reading the given thread, I have narrowed down my questions to the following. I hope you guys can answer.

1. How do you negotiated the residual value with the bank? You call the bank and ask for a lower price???

2. The term "trade-in" is still a little confusing for me. How does trade-in different from return? My logic is that you return the car to the dealer and then lease another car. However, this is basically just returning.

3. If you are leasing a car, how do you get a great deal on the next car? The dealer probably know you gonna need the next car. They probably won't give as much discount as you first leased car.

4. I read some member said you can return the car to any dealers even non-Lexus dealer. Is it ture?
Is it mean whichever dealer take my car will pay off the rest of payment?

5. Is it a mandatory to service your car at the dealer where you lease it?

Thank you very much

anamynous

1. How do you negotiated the residual value with the bank? You call the bank and ask for a lower price???

2. The term "trade-in" is still a little confusing for me. How does trade-in different from return? My logic is that you return the car to the dealer and then lease another car. However, this is basically just returning.

I could be wrong, but I think they are the same thing? You can just return the car after your lease, or after returning it you can go into another lease.

3. If you are leasing a car, how do you get a great deal on the next car? The dealer probably know you gonna need the next car. They probably won't give as much discount as you first leased car.

Yes the dealer knows you will need another car. However, you don't need to buy a car from the same dealer. You can always go to a different dealership or even go with a different make of car. Therefore you should be able to negotiate the price just as you did for the first one.

4. I read some member said you can return the car to any dealers even non-Lexus dealer. Is it ture? Is it mean whichever dealer take my car will pay off the rest of payment?

5. Is it a mandatory to service your car at the dealer where you lease it?

No. Although you should take advantage of the first couple complimentary services you are not obligated to service your car at the dealership. Just make sure to keep a good record of your services by saving the receipts.

JDR76

RE: Lease Return vs Trade

I assume that it works the same way in Canada, but in the US it works like this:

Return:

You complete the terms of your lease. You will get a notice several months before the end of your lease to schedule your lease end inspection and coordinate the return of the car. When the return happens, you basically bring the car and keys into the Lexus dealer and say "here you go!". You walk away, or purchase/lease another car at will.

Trade in:

This basically works the same as trading in a financed car. On a lease, where this can benefit you is if the trade in value of the car is more than the lease residual. All you owe is the residual. Any value over that is equity and it's yours.

So, for example, on my last lease, the trade in value was much higher than the residual ($24k vs $18k residual). The dealer gives me the $24k, minus $18k to pay it off, and I pocket $6k. It's basically the same as buying the vehicle at the end of the lease, which is always an option. Per your contract, you can buy the car for the residual amount (plus any outstanding payments if you're not at your lease end yet). Trading it in, just as in trading in a financed car with an outstanding balance, is essentially like buying it for the payoff amount, then selling it to the dealer for the trade in value.

If the vehicle's trade in value is less than the residual value at the time you're ready to move on, it would be best to just return it, as nothing would be gained on a trade in.

LexISFSpot

Awesome, thank you for your input.
Right now, I have only 2 questions left.

1. How do you negotiated the residual value with the bank?

2. How you return the car to a different dealer? What is the actual process?
For example, you lease a Lexus for 2 years. After one year and 10 months, you find a deal and want to lease a BMW.
Are you still responsible for the last 2 months payment?
Does BMW will take care the rest of payment and the car?

JDR76

Residual value is typically not negotiable. You can only negotiate the sale price.

Say you have your Lexus and still have 2 months of payments left on your lease. You go into BMW, and they make you a trade in offer. The money you owe on your Lexus would be the residual plus two payments. Assuming BMW's trade in offer was higher than that, they'd pay off that balance and give you the rest. If their offer was less than the residual plus 2 payments, you'd need to pay the difference out of pocket.

computerwi

1. As @JDR76 indicated, the residual value is not negotiable. In Canada, you will be leasing through Lexus Financial Services (aka Toyota Credit Canada), not a private bank. To reduce the residual value, you will need to negotiate a lower selling price or increase you mileage allowance. The latter option does not affect the sale price but does increase your monthly payments so that your end residual value is lower which will result in lower buyout price if you intend to purchase it after the lease expires.

2. Toyota Credit Canada prefers that you return the vehicle to the selling dealer. You may be able to return the vehicle to the another Lexus dealer, but not another brand. If you want to lease a different brand, you will need to terminate the lease and forfeit the remaining payments or buyout the car. It is likely you will have a loss if you terminate a lease less than 2 years old as most of the depreciation occurs early in the vehicle life.

FastTags

Trade in, is when you are taking your car and selling it to a dealer.

Lease return is not a trade in, its when you are returning the vehicle after the contract is up.

Although you can trade-in the lease vehicle as well, meaning you can sell the leased car to the dealer.

You can also sell the leased car to an individual as well. Same concept as selling a car that you owe money on.