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ALL About Leasing and Buying

 
Old 07-05-14, 11:02 PM
  #16  
joebruin
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Originally Posted by SW13GS View Post
But thats exactly it. Because I traded the lease in instead of turning it in the mileage doesn't matter. I'm always over my miles...(I lease with 15k per year)...and I never pay mileage penalties because I don't turn the car back in. I've never leased a car that I haven't been able to trade out of without having to turn it in.

I usually have to buy a set of tires, but typically not brakes. Since I'm trading in though a fresh set of tires increases my trade in value...so I get that back. Also remember my numbers are based on having to pay $50 more a month for the same car in 3 years...that may or may not be the case.

But, in your scenario lets say I did have to pay mileage penalties...$.20 a mile. So every year I'm going to pay $300 in mileage penalties, or $1,500 over 5 years. So in that case its cost me $1,390 more to lease for 5 years than it has to "own" for 5 years. I haven't paid for brakes, I wouldn't HAVE to pay for tires. I've never been out of warranty. No higher up maintenance packages. No downside risk of loss. Quite frankly...$1,390 is not a lot of money to be able to drive a new car every 3 years like I want to and to mitigate that risk...that comes out to $23 a month. I loose that in change...

The point is, all these numbers are projected estimates. The point is you don't save much, if anything buy buying and trading every 5 years vs leasing every 3 years. If you want to save you need to keep the car for longer than 5 years.
How do you go about trading in a lease and consistently get over $1k equity? Do you need to negotiate the price with many dealers? Is there some magic formula such as it has to be 36 month lease, a certain residual value, or something else? You say you usually trade in with about six months left on lease. What is significant about this amount of time left on a lease? Also, does it require getting into another lease?

I currently have about 18 months left on my 27 month es300h lease an am already starting to think about the end game.
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Old 07-05-14, 11:08 PM
  #17  
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I always lease for 36 months, that's just the extent of my experience. Not to say it wouldn't work with. Shorter lease, I just lease for 36 months. I know those 27 month leases have high residuals, so I dunno.

I've found that 6 months is about the time where I can get the residual plus the remaining payments, plus a little out of the trade value. I always get quotes from a few dealers, but it isn't hard. If I waited longer I'd actually do better because every month the payoff drops by each lease payment you make.
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Old 07-06-14, 02:17 AM
  #18  
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Thanks for all the info! Great stuff!
Sorry but I still don't understand some parts. Where do all the APR(0.9%, 1.9%, etc...) on auto websites come from? Banks or dealerships? and how does my credit score(money factor) affect the APR? Is the money factor/interest rate negotiable? and how do the dealerships make profit out of it?

Do all these rules apply to Canadian auto market as well?

Thanks in advance.
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Old 07-06-14, 07:42 AM
  #19  
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How do you go about trading in a lease and consistently get over $1k equity? Do you need to negotiate the price with many dealers? Is there some magic formula such as it has to be 36 month lease, a certain residual value, or something else? You say you usually trade in with about six months left on lease. What is significant about this amount of time left on a lease? Also, does it require getting into another lease?

I currently have about 18 months left on my 27 month es300h lease an am already starting to think about the end game.
There are many thing come in play when it come to being able successfully trading the Leased vehicle:
1. The car must keep its value. Usually Toyota's and Honda's keep its value just fine.
2. Whether your state allows Trade-IN tax break
3. How much miles you have at the end of the term. The Lower the mileage the better the Value.
all this information you can find in my Original posting. Please go back and read, dont just skim it

Thanks for all the info! Great stuff!
Sorry but I still don't understand some parts. Where do all the APR(0.9%, 1.9%, etc...) on auto websites come from? Banks or dealerships? and how does my credit score(money factor) affect the APR? Is the money factor/interest rate negotiable? and how do the dealerships make profit out of it?

Do all these rules apply to Canadian auto market as well?

Thanks in advance.
Banks provide the MF and Residual value.
That information can be also found online
Your score plays a big role in the Lease or any Car buy. If your have a good score ONLY then you can qualify for the Tier 1 MF. If your score is so so you may be able to qualify for the Tier 2 or Tier 3 MF.

In which case you pay more Interest.

MF is negotiable ONLY if the dealer is not giving you the correct one you actually qualify for.
For example, your score is 725, which will qualify you for Tier 1 MF in most dealerships. Tier 1 MF say is .0002, the dealer will not know your credit right away, so he will quote you with a MF .0015 (Tier 3). So you have to make them run your credit and give you .0002 MF that you deserve, bc if you dont they will sell you a car with .0015 MF.
I do not know about Canadian market, sorry.

Please re read all the stuff that me and SW10GS wrote, as I edit them frequently.

I also agree with SW13GS about everything 100%. I also trade in cars that are 36m lease in 2.5 years. 9 out of 10, I make money.
I only did not make money once, but it was a wash. I never lost money on the TRADING IN a Lease.

As I said before and I will say it again, NOT all cars can be traded and make $, The cars have to hold value and have low mileage, I would say under 15k m. a year

Last edited by FastTags; 07-06-14 at 08:03 AM.
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Old 07-06-14, 07:47 AM
  #20  
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The key is knowing what the base MF is going in. You can find that online and from people posting here. Like I said before, dealers will routinely mark up the MF for profit. They get paid a commission for selling the financing and just like any other loan, if they charge more interest it increases their commission I've only once had a dealer quote me a lease with the proper base MF upfront. Sometimes they are VERY off. For instance on my latest Jeep lease the base MF was .0005. I was quoted. .00262. Thats a HUGE swing. Rate should have been 1.2%, they were trying to stick me with 6.3! Thousands of dollars in profit for them. Once they knew I knew my stuff, low and behold the MF comes down.

Its all relative. In that situation I could not get them to give me the base MF. They just would not, and they would not show me what the MF was from Chrysler (BIG red flag. Why would they not show me except that its way off from what I was being offered). In that situation though I did the deal anyways. Why? This dealer had a group buy price on the Jeep that was several thousand dollars less than what any other dealer could do. So...that made up for the inflated MF and I was able to get a lease that was fair, but not incredible as it should have been with that great price. But, they had the Jeep I wanted and the deal was what I would have been able to accomplish with another dealer without the group buy so I did it.

Last edited by SW17LS; 07-06-14 at 07:51 AM.
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Old 07-06-14, 08:19 AM
  #21  
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Folks lets please keep this thread for a leasing details discussion, not a lease vs purchase debate (some OT pruned). There are tons of other threads on that topic or feel free to start a new one.
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Old 07-06-14, 08:21 AM
  #22  
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Originally Posted by DaveGS4 View Post
Folks lets please keep this thread for a leasing details discussion, not a lease vs purchase debate (some OT pruned). There are tons of other threads on that topic or feel free to start a new one.
Thank you Dave.
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Old 07-06-14, 08:49 AM
  #23  
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MSRP $58,000 GS350
Negotiated price $52,000
Residual 61% ($35,300) 12k miles per year
Say, I actually drive 15.5k miles a year, so in 2.5 years its 37,500 miles

In 2.5 years I decided to buy a new car, my car with 39,000 miles most likely will be worth around $38,000.
Trade in Value maybe around $35,000.

So, Residual is $35,300 + 6 more month of payments (550 * 6=3,300), so I need around $38,500 to pay off the car.

The dealer may offer $35,500 for my car, which mean I am upside down around $3,000, The dealer MAY offer more if you are buying a car IN STOCK right NOW)
+ I would get around $2100 in TAX credit (6.25%), because I paid TAX on the FULL $52,000.

So now I have $3,000 -$2,100= $900 Up side down.

Not bad considering I would be over my mileage limit in 36month by 10,500 * .25(cents per mile), about $2500, maybe even more.

Now, I only owe $900.

These figures are proximate, but they are to show you how Trading IN the vehicle can be a Benefit.

Last edited by FastTags; 07-06-14 at 09:33 AM.
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Old 07-06-14, 08:52 AM
  #24  
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And the great thing also is that if you wait two more months, that $900 may evaporate to zero since the buyout reduces by $550 each month.
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Old 07-06-14, 09:25 AM
  #25  
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I agree. Lets keep this thread about Leasing techniques and relates questions. Please read everything, before going ti the dealer as it may save you tons of time and money.

Last edited by FastTags; 07-06-14 at 09:51 AM.
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Old 07-06-14, 09:37 AM
  #26  
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FastTags, i deleted a ton of the asterisks in your earlier posts that were forcing the page to be super wide. appreciate you skipping that kind of formatting in future posts.
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Old 07-06-14, 10:09 AM
  #27  
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omg, no wonder dealers like leasing, there's so many ways to confuse (take advantage of) the consumer. feel like i need to bring an accountant and a lawyer to the deal.

but great thread, thanks for all the info.
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Old 07-06-14, 10:18 AM
  #28  
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Originally Posted by louisp_p View Post
Thanks for all the info! Great stuff!
Sorry but I still don't understand some parts. Where do all the APR(0.9%, 1.9%, etc...) on auto websites come from? Banks or dealerships? and how does my credit score(money factor) affect the APR? Is the money factor/interest rate negotiable? and how do the dealerships make profit out of it?

Do all these rules apply to Canadian auto market as well?

Thanks in advance.

No. In fact it's much simpler up here, but at the same time simplicity = less flexibility = less negotiation = (contributes to) higher lease prices.

In Canada:
- A lease rate applies to the lease term and it's typically non-negotiable.
- Your credit is checked only to approve or decline the lease, that's it - no Money Factor here.
- To decrease the rate, you provide a refundable deposit (refunded at lease end) which for TFS (Toyota Financial Services) is 0.15% reduction per $750 deposit increments.
- The residual value is also rarely non-negotiable for import cars, less so for the domestics.

- In short, contrary to the strategy for US consumers, in Canada, your negotiation is simply an amount off MSRP since all other factors are "fixed". In today's day-and-age, you can at least know exactly what your total monthly (MSRP) cost (incl tax and all fees) is from the vehicle's Canadian website. From this amount, you know what you feel is a reasonable price for you want to go down below MSRP. Buying from an invoice price here is the exception, rather than the "best practice" in the US. Of course, you typically have more wiggle room with the domestics.

So a Lexus at MSRP 900$/mth 48 mth lease (at 3.8% TFS rate), 0 down, you're lucky if you get it for $800/mth unless you put money down or refundable deposit.

If someone in Canada has further insight and techniques, please feel free to share.
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Old 07-06-14, 10:30 AM
  #29  
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Originally Posted by bitkahuna View Post
omg, no wonder dealers like leasing, there's so many ways to confuse (take advantage of) the consumer. feel like i need to bring an accountant and a lawyer to the deal. but great thread, thanks for all the info.
It's unbelievable. So many ways to get screwed in a lease if you don't know what you're doing. Most people don't either.
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Old 07-06-14, 10:34 AM
  #30  
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Originally Posted by bitkahuna View Post
omg, no wonder dealers like leasing, there's so many ways to confuse (take advantage of) the consumer. feel like i need to bring an accountant and a lawyer to the deal.

but great thread, thanks for all the info.
Honestly, its not that complicated. The reason why many think it is, is because they are not used to the Terms that are used in a Lease and the public doesn't understand how the Sales process REALLY works.. MF= APR, Residual- a new term, and that's it. Everything else is the same. The dealer tries to screw you based on the Price and APR/ MF.

Just like you can get screwed in a BUY, pay a ridiculous APR, even if the dealer has 1.99% APR advertised, it ONLY applies to Tier 1 customer, so if your credit is 625 FISCO, you will not get a 1.99%, but you may never know this., BECAUSE you negotiated a Monthly payments!!!!!!

If you read thru the whole thread 3-4 times, you will become a PRO at buying and leasing. The dealer does uses many strategies, but it all comes down to weather you understand the basics or you don't.

Last edited by FastTags; 07-06-14 at 11:20 AM.
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