mctuners

Hi.
I already have an 07 IS250 AWD for myself, but I'm looking to lease a 07 RX350 AWD w/premium package for family transportation soon.
I called up a local lexus dealer and they quoted me at with $3,800 down, $499 of monthly payments and residual value of $24,000 after 36 months.
I was wondering if this is a good lease or should I try to lower the payment?
My credit score is good enough to get the tire 1+.

xfirechief

I would try looking for a better deal. Seems like residual could be lower.

mctuners

Thanks for your input.
Has anyone leased 07 RX yet??

rxdriver

The higher the residual value, the better. High residual = lower monthly payments.

Typical Lexus lease has residual at 59% after 36 months. That's how they get you with a lease - it's worth more than that in 3 years, so you're paying for depreciation that's not actually happening.

More important than the residual (because they won't budge on the 59%) - what's your capitalized cost? That's the actual cost of the car, just like if you were buying it. That should be well below MSRP.

xfirechief

Yes, the higher the residual the lower the payments but then when the lease is over you have to pay more for the car, if you want to buy it like we did. We only paid 23K for the RX which is selling for around 30K. Couldn't afford not to buy it.

I guess over the 3 years it would about balance out. But we do think when we get NEW we will buy it rather then lease it. The thing I do like about leasing is after the term I don't have to try to sell it or trade it in. Still haven't decided what is the best, any ideas on this would be great.

rxdriver

Yeah, you almost had to buy it out, xfirechief. Otherwise, you'd have lost $7K by turning in the car! Let's say the original cap cost was $43K. With a residual of $23K, you paid monthly lease payments totaling $20K. But in that time, the car only depreciated $13K. If you gave the car back to the dealer at the end of the lease, they would have $7K of built-in profit that you paid!

There was a post a while back about the pro's and con's of leasing. Personally, I think you should buy unless that creates a complicated tax situation involving a personal business. You have to pay sales taxes and a finance charge whether you lease or buy, so that's a wash.

Although a lease gives you lower monthly payments, you lose money by leasing unless the capitalized cost is as good a deal as you would get by buying, AND the residual value is realistic for the lease term. The residual is usually the catch - no bank is willing to write a lease that could put them in a position of having a car that's worth less than the residual, so they put in a giant cushion in their favor. Do you think 59% of MSRP is really fair for a Lexus after 36 months? No, of course not! You certainly can't buy one on a used car lot that cheap.

People like the low payment and the ability to return the car at the end of the lease rather than selling it/trading it. But believe me, you paid for that convenience through the low residual value that the lease was based on.