g34343greg

Hi everyone,

I'm looking to get a 2014 IS250 AWD.
the msrp is $40,857 which is within ~$100 of the advertised lease deal Lexus has
$1,599 down
$349 a month + tax
first payment is covered by Lexus, 27 months, 10k a year

what should i shoot for?

Also, i have a 2012 VW Golf TDI with 25k miles. Edmunds true market value of $16,752

where should i start my negotiating???

carderoni

Sell the car, do not trade it in on a lease. If the new car gets totaled you don't get that car or any of its value back.

What is the $1,599 down for? The only money you should be putting "down" on a lease should be in the form of multiple security deposits, which lower your money factor and are fully refundable at the end of the lease or in the event of a total loss.

g34343greg

i'd like to sell the car, but there's a loan on it so it's tricky to do. i do have a friend interested so if he comes through, that would make things a lot easier.

the $1,599 is just so Lexus can advertise a lower monthly payment. I'm already aware that putting money down is pointless. I calculated that with taxes and zero down it comes out to $435 a month.

how much is a security deposit? what's the starting money factor for Lexus?
how do i calculate how much each security deposit will save me over the 27 month lease?

also, what should i aim for as the purchase price? there are only 2 Lexus dealerships in the Pittsburgh area and both are owned by the same people, so i doubt pricing will be very competitive.

gvan1998

Sometimes trading in your car is a better deal since your getting a tax credit towards the new car.

carderoni

Oh, right, the down payment is part of the special offer.

Security deposits are $500 each, with a maximum of 9, and each lowers your money factor by .0001, effectively lowering your rate by .24 percentage points. Where your money factor starts depends on your credit score, with 720+ being eligible for "Top Tier" rates or whatever Lexus is calling their best rate.

I don't remember what the best money factor is off hand, but this thread has a lot of useful information regarding leasing.

Negotiate the sales price first. Those bastards out in California are getting $4K-5K off sticker price, but here on the east coast we're lucky to get half that.

Renaeis250

i just purchased 2014 IS250 F Sport
Total Price 41,480
Dep. 1500 / 27 month lease
412 a moth tax included.

g34343greg

my credit score was 791 last time i checked

ok so:
-zero down (other than plate fees, registration, etc)
-negotiate purchase price
-discuss security deposits

is my math right here?
$349 x (27 months - 1 complimentary) + $1,599 = $10,673 + (10% sales tax) = $11,740 total

/ 27 months = 435/ month with zero down. correct?

so if i can get $2,000 off the msrp
$10,673 - $2,000 = $8,673 + (10% sales tax) = $9,540 total
/ 27 months = $353

or would this actually be less since the interest/ money factor is being applied to a smaller number?
and then i could buy security deposits to further reduce the amount.

can i negotiate the residual value too since i don't plan on buying out the lease?

gmanusmc

Not all locations have the tax credit option - in many states, tax is computed on the total selling price. Also, in the case of a lease, sales tax is based on the monthly payment, so you only pay tax on your total of payments. That's the way it is here in CA.

gmanusmc

You need to negotiate the lowest possible selling price, and calculate your lease payment based on the money factor you qualify for, the residual value for the mileage you want, and nothing due at signing. Your trade in is going to complicate the deal, so be careful. Never just accept the advertised lease deal - there is plenty of dealer profit built in those deals.

Bill G

g34343greg

Got some more info!

$40,737 msrp
73% residual value = $29, 738
money factor = .00095 ( x2400 = 2.28%)
27 months, 10k miles per year

what should i aim for?

carderoni

Ask for $37,000 selling price. Be happy if you get less than $38,700.

Sell your current car and use that money to put $4,500 into multiple security deposits, lowering your money factor to .00086 (x 2400 = 2.064%).

I can't urge you strongly enough not to trade the car in on a lease. You can always sell it to CarMax, or use a CarMax quote to sell it to the dealership for more if they'll do that sort of thing, but make sure it results in cash paid to you.

If you need to, use some of that to put a little bit down (on top of the security deposits) to help lower the payments, but I'd recommend no more than $1,000 or $2,000, tops. It'll be classified as a cap cost reduction (so would a trade in, effectively), which is something you will NOT get back at the end of the lease or if you wind up in a wreck. First model year cars like this tend to get totaled more frequently by insurance companies because of a lack of existing spare parts/donor cars, so you really don't want to overexpose yourself here.

gmanusmc

You should start by getting some appraisals on your trade in to see if it's worth more or less than your payoff - you need to know if you are looking at negative equity.

Then you should visit the pricing sites like this site, edmunds, kbb, true car, etc to get an idea of what the market is in your area. Determine how far you are willing to travel for the car and solicit quotes from all the Lexus dealers within your acceptable travel distance - the more dealers the better.

I must reiterate though that having a trade in complicates the transaction and provides the dealer an opportunity to play with the numbers if you are not careful.

Good luck - I hope you can make it happen.

Bill G

g34343greg

ok, so now i'm REALLY confused....
stopped at the dealership on my way home.

they said they would do $1,750 off the msrp
$40,857 msrp -1750 = $39,107
73% residual = $29,825.61
money factor = .00075
acquisition fee = $700

ok so i said the only thing i would pay up front is the plate, documentation, registration = $219

but i'm REALLY confused because he showed the payment as $421.90 + 10% tax = 464.09

if the original offer was $1,599 + 700 up front and that turned into $349 a month with money factor of .00095, how the heck does $1,750 come off of that (i spread the $700 over 27 months) AND i have a lower money factor but the payment is that much more?!?!?!

i'm so confused and frustrated. if it is that much, i'm not doing it.

g34343greg

ok, so i did the math and was able to match the dealer numbers. gotta figure out where the lexus ones came from now

gmanusmc

I sense that you are letting emotion enter your buying process. You really need to exercise patience and be methodical - try to leave emotion out of it or you might not get your best deal.

Get quotes from as many dealers as you can and work exclusively with dealers' Internet Depts via email followed up by phone. Do not physically go to the dealer (except for test drives).

You really need to find out what people are paying in your area - that way you know what you are up against. Here in CA, folks are getting from 4-6000 off msrp - we have numerous dealers which promotes competition.

Bill G