Thinking of leasing a 2014 IS350 AWD F-sport
02-04-14, 09:25 PM
#62
Pole Position
I don't think you can do MSD in NYS.
02-04-14, 10:08 PM
#63
Pole Position
"
How do you roll the down payment into your lease payment? Doesn't that increase your monthly payment that the down payment is supposed to lower?
DON'T: Put a Down Payment or Security Deposit
When possible, you should always try to lease a car without a down payment (also called a capitalized cost reduction).
In cases where a down payment is required, you can usually roll it into the monthly lease payment. The main reason you want to do this - if your car is totaled or stolen, the insurance company will provide a payout to the leasing company, but you will have lost your down payment."
When possible, you should always try to lease a car without a down payment (also called a capitalized cost reduction).
In cases where a down payment is required, you can usually roll it into the monthly lease payment. The main reason you want to do this - if your car is totaled or stolen, the insurance company will provide a payout to the leasing company, but you will have lost your down payment."
02-04-14, 11:53 PM
#64
Driver School Candidate
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Thought I would give the figures on the car I just leased (January 26th)in SoCal since I found this forum to be really helpful when I negotiated my lease (many thanks to all)I am a first time Lexus owner. Just got out of 14 years of mom cars -Nissan Quest Minivan and Lincoln Navigator L. Now it's sexy time haha
Lexus IS350 F Sport, Black on Black with Mark Levinson, Blind Spot
MSRP 48,148
Negotiated price 43,753
Annual Miles 12,000
27 month lease
Residual 71%
I did the max MSD's (9) and added a $775 excess wear and tear package so I don't worry about door dings, windshield cracks or tire wear since my insurance deductible is $1000
My monthly payment is $464.45 (Tax, license all included)
$5275 due at signing but $4275 of this is my MSD's I get back at the end of lease. So technically I put $1000 Down.
The dealer I went to parked the car with the Mark Levinson and without next to each other and I listened to my ipod in both and my decision was easy (Sound is very important to me)
Hope that helps others looking to lease...
Lexus IS350 F Sport, Black on Black with Mark Levinson, Blind Spot
MSRP 48,148
Negotiated price 43,753
Annual Miles 12,000
27 month lease
Residual 71%
I did the max MSD's (9) and added a $775 excess wear and tear package so I don't worry about door dings, windshield cracks or tire wear since my insurance deductible is $1000
My monthly payment is $464.45 (Tax, license all included)
$5275 due at signing but $4275 of this is my MSD's I get back at the end of lease. So technically I put $1000 Down.
The dealer I went to parked the car with the Mark Levinson and without next to each other and I listened to my ipod in both and my decision was easy (Sound is very important to me)
Hope that helps others looking to lease...
02-05-14, 06:31 AM
#65
Lexus Fanatic
Again...a down payment is just prepaid rent. Theres no such thing as a "down payment" on a lease. Note they don't even call it that, it's a "capitalized cost reduction". Yes, anything you roll in increases the payment, but you don't want to shop based on the payment. You want 0 out of pocket at drive off.
02-05-14, 10:17 AM
#66
SW you glossed over the point of a lease being terminated over a totaled car, if a leaser puts zero down and the car gets totaled the leaser is on the hook for what the insurance paid and what the leasing company wants to pay the lease off which could be thousands depending on how early the car was totaled in the lease. If you have gap insurance you would be good, if not it can get expensive in a hurry. You made it sound like if you total a leased car you jump out of that one and jump into another one, its not quite that easy, you have finish paying off the first lease.
As far as the poster that put the $8,500 down, he didn't put up "rent" money he lowered his cap cost by $8,500. His cap cost is around $40,500 with his $8,500 down. If he totals the car right away and the insurance pays say $46,000 ACV, the lease company gets around $40,500 and he would get around $5,500 back. That's not great but he would not be out the whole $8,500 like you said.
As far as the poster that put the $8,500 down, he didn't put up "rent" money he lowered his cap cost by $8,500. His cap cost is around $40,500 with his $8,500 down. If he totals the car right away and the insurance pays say $46,000 ACV, the lease company gets around $40,500 and he would get around $5,500 back. That's not great but he would not be out the whole $8,500 like you said.
All it did was lower your payments by the amount of the downpayment divided by the term of the lease. Thats all a downpayment does on a lease, it prepays rent. You gave the leasing company $8,500 in rent upfront, in exchange they reduced the total payments owed over the life of the lease by that amount.
As for the insurance you don't understand, and its important that you and others do before they decide to do this. I know exactly the type of insurance you are talking about. You have to understand you don't own this car, you are renting it. The leasing company owns the car. Your insurance is not going to pay off the vehicle's owner...the leasing company...and then BUY you a newer car. That sort of insurance policy is just a gimmick, the nuts and bolts of insurance are the same. The car is worth X, they pay X. Perhaps with your coverage they value the car at 1 year newer. In a lease you will not benefit from that.
When the car is totaled, there is a value assigned to it by the insurance company. That value is made payable to the leasing company when its a lease...because they own the car. When you are financing a vehicle YOU own the car, and thus are the payee if the vehicle is totaled. The insurance you have is of no value on a lease. if the car is totaled, the lease is terminated and you lease another car. Its just a long term rental car. No need for a car "1 year newer" you just go lease (rent) a brand new car.
If you total the car tomorrow, your $8,500 is gone.
http://www.realcartips.com/leasing/0...-leasing.shtml
As for the insurance you don't understand, and its important that you and others do before they decide to do this. I know exactly the type of insurance you are talking about. You have to understand you don't own this car, you are renting it. The leasing company owns the car. Your insurance is not going to pay off the vehicle's owner...the leasing company...and then BUY you a newer car. That sort of insurance policy is just a gimmick, the nuts and bolts of insurance are the same. The car is worth X, they pay X. Perhaps with your coverage they value the car at 1 year newer. In a lease you will not benefit from that.
When the car is totaled, there is a value assigned to it by the insurance company. That value is made payable to the leasing company when its a lease...because they own the car. When you are financing a vehicle YOU own the car, and thus are the payee if the vehicle is totaled. The insurance you have is of no value on a lease. if the car is totaled, the lease is terminated and you lease another car. Its just a long term rental car. No need for a car "1 year newer" you just go lease (rent) a brand new car.
If you total the car tomorrow, your $8,500 is gone.
http://www.realcartips.com/leasing/0...-leasing.shtml
02-05-14, 10:25 AM
#67
Lexus Fanatic
SW you glossed over the point of a lease being terminated over a totaled car, if a leaser puts zero down and the car gets totaled the leaser is on the hook for what the insurance paid and what the leasing company wants to pay the lease off which could be thousands depending on how early the car was totaled in the lease. If you have gap insurance you would be good, if not it can get expensive in a hurry. You made it sound like if you total a leased car you jump out of that one and jump into another one, its not quite that easy, you have finish paying off the first lease.
When you total a leased car it really is like jumping out of one car and into the other. The insurance company pays off the leasing company and the contract is terminated.
As far as the poster that put the $8,500 down, he didn't put up "rent" money he lowered his cap cost by $8,500. His cap cost is around $40,500 with his $8,500 down. If he totals the car right away and the insurance pays say $46,000 ACV, the lease company gets around $40,500 and he would get around $5,500 back. That's not great but he would not be out the whole $8,500 like you said.
You have to remember, you have no ownership interest in the car...the insurance owes you nothing. Downpayment money is truly just prepaid rent...there is no equity build in a lease. Paying extra doesn't create a gap between what you've paid and what you owe like it does with a finance...you just pay rent upfront instead of out over the term of the lease.
Last edited by SW17LS; 02-05-14 at 11:06 AM.
02-05-14, 01:27 PM
#68
No. You need gap insurance, the vast majority of leases include gap insurance (I have never seen one that doesn't), its included on an LFS lease. The insurance company pays the leasing company DIRECTLY. You never receive anything.
When you total a leased car it really is like jumping out of one car and into the other. The insurance company pays off the leasing company and the contract is terminated.
You are incorrect. The insurance company pays the leasing company, not him. He would have to then convince the leasing company they owed him some refund after the insurance payout. Good luck.
You have to remember, you have no ownership interest in the car...the insurance owes you nothing. Downpayment money is truly just prepaid rent...there is no equity build in a lease. Paying extra doesn't create a gap between what you've paid and what you owe like it does with a finance...you just pay rent upfront instead of out over the term of the lease.
When you total a leased car it really is like jumping out of one car and into the other. The insurance company pays off the leasing company and the contract is terminated.
You are incorrect. The insurance company pays the leasing company, not him. He would have to then convince the leasing company they owed him some refund after the insurance payout. Good luck.
You have to remember, you have no ownership interest in the car...the insurance owes you nothing. Downpayment money is truly just prepaid rent...there is no equity build in a lease. Paying extra doesn't create a gap between what you've paid and what you owe like it does with a finance...you just pay rent upfront instead of out over the term of the lease.
Take it for what its worth, I copied below a discussion on a Nissan GTR site about the same thing that I questioned about putting a large down payment on a lease. Im assuming the guy that answered him knows something about insurance, but I could be wrong. But in this case the owner of the car it looks like would have gotten money back, not a great deal I understand that but not a 100 % loss either on his down payment.
I do not agree with this. Insurance company pays what the car is worth at the time of loss period, whether the car is leased, has a loan, or straight cash purchase. You are telling me if I lease my new GTR today based on $85k price, I put $35k down, and I wreck it tomorrow, my insurance only pays $50k for my 1 day old GTR even though my car is worth more than $50k? .
Using your numbers in a simplified example: Cap cost of $85,000 minus cap cost reduction of $35,000, one year later car declared a total loss. Using a common first year rough depreciation number of 20% (doesn't matter if it is 17% or 22%, adjust the numbers accordingly), the insurance company will pay an ACV of $68,000 (85,000 – 20%). Since the GAP is equal or less than zero, the gap insurer is off the hook thanks to your down payment. Your insurer issues a check to the lease company for $50,000 – credits, + any additional fees due and you receive $18,000 + credits, - fees. In one year, you are out over $17,000, less payments credited, saved interest charges, etc. In your example, if you totaled the car the next day, the depreciation % would obviously be less, but it would actually be more expensive if calculated in dollars lost per day. Any car can easily lose 3-5%+ as soon as they are driven off the lot (I have seen some claims paid 7-10% below purchase price days after purchase). If you do the math on that, it doesn't come out too well.
02-05-14, 01:36 PM
#69
Lexus Fanatic
Let me see if I got this right The insurance company has to pay the ACV of the totaled car, so if your correct in saying that the lease company gets all the money from the Ins. Co that means the poster that leased a $49,000 car, put $8,500 down and if the car gets totaled and for example lets say the Ins. payout was $46,000 the leasing gets the $46,000 plus the $8,500 down. So now the leasing company ends up with $54,500 for a car that $49,000 originally. I just don't believe that. I understand you don't have an ownership in the car and but you don't have an ownership when you finance either and yet you can get a check from the insurance once the finance company is paid off for what they had coming.
You do have ownership when you finance, there is just a lien on the title, but the title is in your name. When you total a financed car you are issued the check, and it is up to you to pay off the lien, or in some scenarios the insurance company requires they get paid off first, but in that scenario you are a payee. You are never a payee in a lease.
Perhaps you have a claim for prepaid rent, but that claim is with the leasing company, and you have to collect that from the leasing company. Like I said...good luck.
Just do a Google search...this information is out there from many different sources.
Take it for what its worth, I copied below a discussion on a Nissan GTR site about the same thing that I questioned about putting a large down payment on a lease. Im assuming the guy that answered him knows something about insurance, but I could be wrong. But in this case the owner of the car it looks like would have gotten money back, not a great deal I understand that but not a 100 % loss either on his down payment.
I do not agree with this. Insurance company pays what the car is worth at the time of loss period, whether the car is leased, has a loan, or straight cash purchase. You are telling me if I lease my new GTR today based on $85k price, I put $35k down, and I wreck it tomorrow, my insurance only pays $50k for my 1 day old GTR even though my car is worth more than $50k? .
I do not agree with this. Insurance company pays what the car is worth at the time of loss period, whether the car is leased, has a loan, or straight cash purchase. You are telling me if I lease my new GTR today based on $85k price, I put $35k down, and I wreck it tomorrow, my insurance only pays $50k for my 1 day old GTR even though my car is worth more than $50k? .
You can try and collect a refund from the leasing company...but like I said...good luck. Thats where the guy is wrong in your included quote at the bottom. The insurance company pays the whole thing to the leasing company. Any refund to you is up to the leasing company. Like I said...good luck.
Here's an industry article on the subject, I will highlight and red the important parts:
http://www.autonews.com/article/2013...n-payment-risk
Should dealers give lease customers tutorials on down payment risk?
A friend recently wanted my advice on leasing a new car.
I've only leased a car once, but I knew enough to want to put zero cash down.
I let the lender bear the depreciation risk. But many customers don't know about that risk, and I imagine only some dealerships explain it to them.
So should a finance and insurance officer or a salesperson explain the risks of a big down payment to a lease customer?
That's the ethical question that Mike Conn, business manager at Dreyer & Reinbold dealership group in Greenwood, Ind., posed to his F&I peers on Facebook in a post expressing concern that a customer used his entire trade equity of $9,500 to reduce a lease on a $25,000 car.
Interestingly, many of Conn's peers who commented either didn't have a firm grasp of the issue or definite direction for their moral compass.
Here's the thing: Making a large down payment on a lease does not benefit the customer.
With a zero down payment, if the customer walks away at the end of the lease term, he got a two- or three-year test drive, with the lender taking the depreciation risks. Sometimes the car is a good buy at the end of lease, but often it's not, so if the customer put a lot of cash into that lease, that's money he will never see again with no trade equity.
And then there's the concern Conn expressed: What if a customer totals the car before the lease ends?
While the customer often will not be out any additional cash because the contract typically is protected by GAP, all the money the customer put in the down payment will be gone. Insurance money will be used to pay off the lease, not to the customer.
Some of Conn's peers wrote that certain financiers put a cap on the amount of capital reduction a customer can put on a lease.
Still others wrote they do explain the risks of a large down payment to customers because doing so creates trust. Wrote one manager: "They know you're looking out for their best interests, and they feel good when they get a check handed back to them. The beauty of having all that cash in hand is that if the resulting payment is too steep for them after you've suggested product, they can always dip a little into that cash to make it a little more palatable."
But in Conn's situation, neither he nor his salesperson told the customer what a "horrible mistake" the customer was making at the time.
Wrote Conn: "I just crossed my fingers and said a little prayer that the customer doesn't total the car."
A friend recently wanted my advice on leasing a new car.
I've only leased a car once, but I knew enough to want to put zero cash down.
I let the lender bear the depreciation risk. But many customers don't know about that risk, and I imagine only some dealerships explain it to them.
So should a finance and insurance officer or a salesperson explain the risks of a big down payment to a lease customer?
That's the ethical question that Mike Conn, business manager at Dreyer & Reinbold dealership group in Greenwood, Ind., posed to his F&I peers on Facebook in a post expressing concern that a customer used his entire trade equity of $9,500 to reduce a lease on a $25,000 car.
Interestingly, many of Conn's peers who commented either didn't have a firm grasp of the issue or definite direction for their moral compass.
Here's the thing: Making a large down payment on a lease does not benefit the customer.
With a zero down payment, if the customer walks away at the end of the lease term, he got a two- or three-year test drive, with the lender taking the depreciation risks. Sometimes the car is a good buy at the end of lease, but often it's not, so if the customer put a lot of cash into that lease, that's money he will never see again with no trade equity.
And then there's the concern Conn expressed: What if a customer totals the car before the lease ends?
While the customer often will not be out any additional cash because the contract typically is protected by GAP, all the money the customer put in the down payment will be gone. Insurance money will be used to pay off the lease, not to the customer.
Some of Conn's peers wrote that certain financiers put a cap on the amount of capital reduction a customer can put on a lease.
Still others wrote they do explain the risks of a large down payment to customers because doing so creates trust. Wrote one manager: "They know you're looking out for their best interests, and they feel good when they get a check handed back to them. The beauty of having all that cash in hand is that if the resulting payment is too steep for them after you've suggested product, they can always dip a little into that cash to make it a little more palatable."
But in Conn's situation, neither he nor his salesperson told the customer what a "horrible mistake" the customer was making at the time.
Wrote Conn: "I just crossed my fingers and said a little prayer that the customer doesn't total the car."
Last edited by SW17LS; 02-05-14 at 02:23 PM.
02-05-14, 07:17 PM
#70
Thought I would give the figures on the car I just leased (January 26th)in SoCal since I found this forum to be really helpful when I negotiated my lease (many thanks to all)I am a first time Lexus owner. Just got out of 14 years of mom cars -Nissan Quest Minivan and Lincoln Navigator L. Now it's sexy time haha
Lexus IS350 F Sport, Black on Black with Mark Levinson, Blind Spot
MSRP 48,148
Negotiated price 43,753
Annual Miles 12,000
27 month lease
Residual 71%
I did the max MSD's (9) and added a $775 excess wear and tear package so I don't worry about door dings, windshield cracks or tire wear since my insurance deductible is $1000
My monthly payment is $464.45 (Tax, license all included)
$5275 due at signing but $4275 of this is my MSD's I get back at the end of lease. So technically I put $1000 Down.
The dealer I went to parked the car with the Mark Levinson and without next to each other and I listened to my ipod in both and my decision was easy (Sound is very important to me)
Hope that helps others looking to lease...
Lexus IS350 F Sport, Black on Black with Mark Levinson, Blind Spot
MSRP 48,148
Negotiated price 43,753
Annual Miles 12,000
27 month lease
Residual 71%
I did the max MSD's (9) and added a $775 excess wear and tear package so I don't worry about door dings, windshield cracks or tire wear since my insurance deductible is $1000
My monthly payment is $464.45 (Tax, license all included)
$5275 due at signing but $4275 of this is my MSD's I get back at the end of lease. So technically I put $1000 Down.
The dealer I went to parked the car with the Mark Levinson and without next to each other and I listened to my ipod in both and my decision was easy (Sound is very important to me)
Hope that helps others looking to lease...
02-06-14, 04:52 AM
#71
SW, your probably right on the insurance thing but I would like to think a good leasing company would refund any over payment on lease contract to get another car for you. Im sure its like pulling teeth but I certainly wouldn't buy again from them.
I copied this paragraph from your last post down below and it just confuses me a little bit. I figured out a $50,000 car with a three year lease, 63% RV, .002 MF with zero down and $12,000 down. I didn't include taxes, fee's or anything like that cause its a wash for the most part. The zero down lease ended up costing around $900.00 more when the lease was over. The zero down loan was total cost was $23,900 and the lease with down payment was $23,000. My question is if you end up paying pretty much the same over the course of the lease why is such a big deal to not put money down to keep the payment down. From your paragraph below that you posted the person that wrote it said a "so if the customer put a lot of cash into that lease he will never see again with no trade equity. When in fact the zero down lease ends up paying more cash than the one with the down payment and neither lease will have any equity at the end of the lease. He singles out the customer with the down payment but in reality both customer are in the same boat at the end of the lease and the zero down customer is out $900.00 more at the end. I just don't understand why a down payment on a lease is such a bad thing when at the end of the lease both leases have zero equity and end up costing roughly the same. To each his own I guess, have a nice day SW
"With a zero down payment, if the customer walks away at the end of the lease term, he got a two- or three-year test drive, with the lender taking the depreciation risks. Sometimes the car is a good buy at the end of lease, but often it's not, so if the customer put a lot of cash into that lease, that's money he will never see again with no trade equity."
I copied this paragraph from your last post down below and it just confuses me a little bit. I figured out a $50,000 car with a three year lease, 63% RV, .002 MF with zero down and $12,000 down. I didn't include taxes, fee's or anything like that cause its a wash for the most part. The zero down lease ended up costing around $900.00 more when the lease was over. The zero down loan was total cost was $23,900 and the lease with down payment was $23,000. My question is if you end up paying pretty much the same over the course of the lease why is such a big deal to not put money down to keep the payment down. From your paragraph below that you posted the person that wrote it said a "so if the customer put a lot of cash into that lease he will never see again with no trade equity. When in fact the zero down lease ends up paying more cash than the one with the down payment and neither lease will have any equity at the end of the lease. He singles out the customer with the down payment but in reality both customer are in the same boat at the end of the lease and the zero down customer is out $900.00 more at the end. I just don't understand why a down payment on a lease is such a bad thing when at the end of the lease both leases have zero equity and end up costing roughly the same. To each his own I guess, have a nice day SW
"With a zero down payment, if the customer walks away at the end of the lease term, he got a two- or three-year test drive, with the lender taking the depreciation risks. Sometimes the car is a good buy at the end of lease, but often it's not, so if the customer put a lot of cash into that lease, that's money he will never see again with no trade equity."
02-06-14, 06:49 AM
#72
Lexus Fanatic
You have more faith in the "good leasing company" than I do LOL. These companies are not your friend, you have no leverage, and they have no contractual obligation to give you a refund? Life just doesn't work that way.
And the question is, WHY take the chance? All a downpayment does is prepay rent. So if you put $5,000 down on a 36 month lease, it reduces the payments by $5,000 / 36 months with a small reduction in the interest charge. Why not just keep that $5,000 in a savings account and reduce your payments yourself?!? Then you never have to worry about it.
I copied this paragraph from your last post down below and it just confuses me a little bit. I figured out a $50,000 car with a three year lease, 63% RV, .002 MF with zero down and $12,000 down. I didn't include taxes, fee's or anything like that cause its a wash for the most part. The zero down lease ended up costing around $900.00 more when the lease was over. The zero down loan was total cost was $23,900 and the lease with down payment was $23,000
You're muddling your loans and leases again. You say loan half the time and lease half the time.
Lets do the math using an actual lease calculator, this is the calculator I am using: http://www.leaseguide.com/calc.htm
$50,000 MSRP, $45,000 sales price, 62% residual, .002 MF 0 taxes or fees.
36 Month lease, 0 down:
Payment: $540.89. Total Payments: $19,472.04
36 Month Lease, $5,000 down ($12k down is absurd and most companies wouldnt do it)
Payment: $392.00. Total Payments: $14,112.00
Difference: $5,360.04
You save $360 over 3 years by putting the $5,000 down, reason for that is the interest charge built into the lease. .002 is a fairly high money factor, mine was .0007, if you use that MF it only saves you $126.04. That amount of money is not worth the risk of loosing it if the car is totaled.
My question is if you end up paying pretty much the same over the course of the lease why is such a big deal to not put money down to keep the payment down
You're putting a lot of money at a lot of risk for little to no reward, thats the issue. If you put money at risk, you want a bigger reward.
I just don't understand why a down payment on a lease is such a bad thing when at the end of the lease both leases have zero equity and end up costing roughly the same. To each his own I guess, have a nice day SW
02-06-14, 09:05 AM
#73
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All you guys in California do know that the Midwest/East coast dealers aren't going to be giving the same crazy deals right?
I am from Ohio, my dealer was allocated 1 F-Sport and it wasn't the color I wanted. I had to special order and they wouldn't budge on sticker at all. So I leased at sticker price. I'm happy with my car and my payment, sure it would be awesome if it were in the $400's, but I don't live in California, so it's understandable. I just see a lot of people all over these forms on the east coast asking if "x" is a good deal and guys in Cali saying "no you are getting ripped off". Each market is different.
I am from Ohio, my dealer was allocated 1 F-Sport and it wasn't the color I wanted. I had to special order and they wouldn't budge on sticker at all. So I leased at sticker price. I'm happy with my car and my payment, sure it would be awesome if it were in the $400's, but I don't live in California, so it's understandable. I just see a lot of people all over these forms on the east coast asking if "x" is a good deal and guys in Cali saying "no you are getting ripped off". Each market is different.
02-06-14, 01:56 PM
#74
Lexus Fanatic
For sure, deals in CA are way better than elsewhere. East coast/mid atlantic/FL are next...
02-06-14, 02:35 PM
#75
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to SW13GS. You are absolutely correct! It's amazing to me with all the free information at people's fingertips, they don't take the time to do the least bit of research.http://www.leaseguide.com/lease01.htm
Everyone has different opinions and those with the money to spend understand where I come from regardless. I lease because I like getting new vehicles every couple of years and like the added benefit of a revolving payment in my credit score.
My last car was a brand new 2011 Audi S4 and I did a one pay of $31K for my wife for Christmas. This was a security comfort to know no payments needed to be made for 3 years and just sit back and enjoy the car.