355F1

Car is a 2017 UL in White with Black leather--the exact car I am looking for. But I drive 30k miles per year as its a work car. The 30k/year Lease option on the right looks really good, though, even if I decide to buy the car out at the end of the lease. Or so I think.....

Thoughts....???

I just sold my IS and need a new car now.

lesz

With either option, at this point in the model year, you should be able to do much better than a $2335 discount on the price of the car. Recent ES buyers have reported discounts more in the range of $6000-7000 (not including rebates) for 2017 ES UL cars.

Also, there is currently a $2500 rebate for the ES with a cash purchase. If that rebate cannot be combined with the 1.9% financing, I'd suggest looking for your own financing and skipping the Lexus financing if that would allow you to take advantage of the $2500 rebate.

355F1

this was their first offer-- I haven't countered with anything yet.

BUt I agree, on the discount not being very substantial, with the exception of the $4k of LExus Cash.

lesz

I notice that you are in Arizona. There have been a few posts from people in Arizona who have indicated that Arizona dealers don't seem to be nearly as aggressive with discounting as are dealers in other parts of the country, and the have reached out to dealers in Southern California and Texas. They have found that the inconvenience of buying out-of-state has been more than offset by offers that were several thousand dollars lower than what they were getting from the Arizona dealers. I'd suggest making email contact with some of the California and Texas dealers and getting their offers. If nothing else, doing so would give you a bit of leverage in dealing with the Arizona dealers.

355F1

I'm not working with any AZ dealers, only CA.

I just emailed 6 more dealers to see what they can offer.

355F1

Its basically a 0% APR lease deal AND $4k of LExus Cash.

The residual looks to be super low, too, no?

lesz

The residual value on your lease is going to be low because of the 30,000 miles per year that you are leasing it for. That mileage will decrease the residual value by about $7000 over a car that was being leased for 10,000 miles per year. Still, the $14,982 residual value that they are using is about $2000-3000 lower than what the car figures to be worth 3 years from now (based on the current trade-in value of a 2014 UL ES). That lower residual value is adding about $70 per month to your monthly payment over what it would be if the residual value being used was $2500 higher, and, if the residual value that they are using is about $2500 lower than what the value of the car is likely to be at the end of the lease, that translates into $2520 worth of extra profit for the dealer ($70 per month x 36 months).

jgscott

iTrader: (1)

If I'm not mistaken, the Residuals are set by months and miles in the Term, and not negotiable by the Dealer or Buyer. Last I knew about Leasing was that it was best to go after lowest price like it was a Cash Purchase. Then get them to plug in that Low selling price, into a Lease.

lesz

But the residual value is still worth considering to help to determine whether a lease on a particular vehicle makes sense because, if the residual value is low, that does mean higher monthly payments.

For the lease on the 2017 UL ES in question, a residual value of $14,982 (less than 30%) seems quite low for a 3 year lease, and it is substantially lower than the residual value of a similar mileage lease for a 2013 UL ES 4 years ago or 2014 UL ES 3 years ago. I suspect that the reason for the lower residual value for the 2017 ES now is related to the fact that, by the time the lease ends, that 2017 ES will be a "previous generation" ES, and historical precedent indicates that, as soon as the Generation 7 ES becomes available, Generation 6 ES cars will, depending on their model year, take an additional $2000-3000 hit in their resale or trade-in value. Thus, while the $4000 lease cash seems, at first, to be attractive, a good portion of its value is offset by the lower residual value, and the lease deal only becomes a good deal with a much bigger discount from the price of the car and, thus, lower monthly payments than what has initially been offered to the OP.

SW17LS

Can you write the lease off for business?

If not not it's a terrible deal IMHO.

355F1

Here is another dealer, for a 25k miles per year 3 year lease:

lesz

The key to understanding why a 25k or 30k miles per year lease is going to have a very high monthly payment and why it is probably not going to be a good deal is in the 2nd page of your attachment. For an ES, the actual impact that miles on the odometer has on the value of the car at resale or trade-in time is about $.09 per mile. If, in a lease, they are calculating the cost of miles over 15k per year as an “over mileage charge of $.20 per mile”, that means that, for those miles over 15k, you are paying over twice as much as what would be their actual impact on the resale value of the car.

Thus, for a 30k mi/yr 3 year lease, you are paying $9000 more than what you would be paying for a 15k mi/yr 3 year lease even though those extra miles are only reducing the real value of the car at the end of the lease by about $4000. If it is the case that you are going to be paying $.20 per mile above 15k miles in a lease, it is hard to see how such a high mileage lease can make much sense because you are ending up paying an especially large amount for those miles beyond 15k.

SW17LS

Not much I can add to the above...

lesz

Two additional points to what I said above.

First, if you are committed to the idea of doing a lease and need to drive the car 25k miles or 30k miles per year, you might well be better off just doing a 15k mile lease paying the miles overage charge at the end of the lease (as long as the mileage overage charge remains at $.20 per mile with the 15k mile lease). That would, based on the numbers you have gotten, reduce your monthly payment by over $250 month, and you would only be paying the mileage overage charge for miles that you actually used, or, if it made more sense at the time, you would have the option to avoid the excess mile charge by buying the car. But, if you do a 30k mile lease now and if you only use, say 26k miles, you will be paying a premium price for miles that you didn't even use.

Also, I would suggest that you would be better off by taking a different approach when contacting dealers. Instead of requesting lease quotes, I think you would be better off by first requesting quotes just for the price of the car. Then, once you have a firm offer for the price of the car, that would be the time to have them translate that price into a lease. When buying a car, you will always be better off considering only one variable at a time. When you combine into your negotiations the price of the car, lease terms, a trade-in, etc., you are giving the dealer the ability to muddy the waters by including multiple variables simultaneously into the negotiations.

SW17LS

They discount the miles slightly upfront. Lexus doesn't offer leases over 15k miles a year, what they do is simply charge you that mileage rate for all the miles over 15k a year and back that out of the residual. So at turn in, you would owe .25 a mile instead of .20.

The reason I asked if you could deduct the vehicle for business. If you can, you benefit from the big payment in the deduction, then when you get to the end you could always trade it or sell and pocket the difference between what the low residual is and the actual value at the time.

That's the only scenario where I could see this making any sense. Otherwise you're better off to buy it.

Agreed on not negotiating via lease price.