Teach me about leasing a car
10-21-13, 04:13 PM
#1
Lead Lap
Thread Starter
Teach me about leasing a car
I am not familiar with the whole leasing deals. Can some expert here explain it to me?
1. what is the money factor? how to calculate it?
2. what is the effect of having high/low money factor?
3. some are saying that there is a maximum security deposit? what is this? and how does it bring up/down the money factor?
4. any tricks and tips for finding a good deal on lease?
I'm so confused yet curious about this.
1. what is the money factor? how to calculate it?
2. what is the effect of having high/low money factor?
3. some are saying that there is a maximum security deposit? what is this? and how does it bring up/down the money factor?
4. any tricks and tips for finding a good deal on lease?
I'm so confused yet curious about this.
10-21-13, 05:00 PM
#2
I am not familiar with the whole leasing deals. Can some expert here explain it to me?
1. what is the money factor? how to calculate it?
2. what is the effect of having high/low money factor?
3. some are saying that there is a maximum security deposit? what is this? and how does it bring up/down the money factor?
4. any tricks and tips for finding a good deal on lease?
I'm so confused yet curious about this.
1. what is the money factor? how to calculate it?
2. what is the effect of having high/low money factor?
3. some are saying that there is a maximum security deposit? what is this? and how does it bring up/down the money factor?
4. any tricks and tips for finding a good deal on lease?
I'm so confused yet curious about this.
2. Lower the rate the lower your payment
3. Each security deposit can lower your money factor normally by 0.00007apx this is limited normally between 5 and 9. Each manufacturer is different.
4. The first number back to you is always going to be a fishing expedition. Some people bite at the high rate if the monthly payment is near what they want.
-First thing you do if you have a trade is go to carmax get an offer for your car. DO NOT tell the dealer you have a trade.
-Second thing you do is you negotiate the price of the car not including tax and tags those are fixed numbers. You get the bottom dollar you are willing to pay for the car.
-Third thing you do is work out the lease payment you want to pay. (My case they came back with 780 a month for 36 months. Sent them back saying I am paying in the 400 per month range. I stood up ready to walk out. You have to be willing to walk out even though you want the car.)
-Fourth once you got the deal you want you throw a wrench in it and tell them you got a trade. You already know how much carmax is going to offer see what they are willing to offer. If its not a good deal get out your carmax offer. Hopefully you have one near you.
Not sure what part of Texas you are in but if you are in the Houston area and want an F-sport good luck getting them to come off sticker. They have one 250 F-sport at the dealer I have my car on order through right now. They can't get the cars currently. Seems they under ordered the F-sports by a long shot.
10-21-13, 05:13 PM
#3
Pit Crew
That's a great write up.
A few other things:
1. Don't put any money down outside of the general fees for drive off (should be less than $1,500) and security deposits. Anything down to lower your payment can be lost if something happens to the car so be aware. Lexus Financial Services allows up to 9 security deposits, and that amount is based on the payment amount x number of security deposits you want to put towards the lease. As mentioned, each security deposit reduces the Money Factor and therefore the interest rate over the lease. That lowers your payment and since you get the money back, you're actually earning value for your dollar over the life of the lease. If you treat the car right, you'll get all of your security deposits back at the end of the lease.
2. Understand that LFS does not offer a second chance on miles, which means if you go over then it's .25 per mile. BMW for example allows you to buy more miles after you're in your lease at .16 which was nice. To compare on my 24 months, 12k lease I had them run the numbers for 15k a year. It added another $400 in security deposits and about $1,176 over the life of the lease. It will cost me $1,500 if I went over on those 6k miles, so to me, I'm willing to risk it for less up front and only a few hundred difference over two years.
3. Check on a lease protection program. It can cover extra damages and such, but don't pay more than $600 for it. If you drive in an area with bad roads, have to park against curbs a lot or are in a ding prone area - it can be worth it.
Get their best price, at the very minimum invoice pricing. I'm getting close to $2k under invoice on my IS 350 F-Sport. Once you have the price then tell them how you want to finance/lease it and once you have that wrapped up, introduce your trade as mentioned above. Don't be shy of Carmax, they are very easy to work with and in my experience have made me very fair offers on my vehicles.
A few other things:
1. Don't put any money down outside of the general fees for drive off (should be less than $1,500) and security deposits. Anything down to lower your payment can be lost if something happens to the car so be aware. Lexus Financial Services allows up to 9 security deposits, and that amount is based on the payment amount x number of security deposits you want to put towards the lease. As mentioned, each security deposit reduces the Money Factor and therefore the interest rate over the lease. That lowers your payment and since you get the money back, you're actually earning value for your dollar over the life of the lease. If you treat the car right, you'll get all of your security deposits back at the end of the lease.
2. Understand that LFS does not offer a second chance on miles, which means if you go over then it's .25 per mile. BMW for example allows you to buy more miles after you're in your lease at .16 which was nice. To compare on my 24 months, 12k lease I had them run the numbers for 15k a year. It added another $400 in security deposits and about $1,176 over the life of the lease. It will cost me $1,500 if I went over on those 6k miles, so to me, I'm willing to risk it for less up front and only a few hundred difference over two years.
3. Check on a lease protection program. It can cover extra damages and such, but don't pay more than $600 for it. If you drive in an area with bad roads, have to park against curbs a lot or are in a ding prone area - it can be worth it.
Get their best price, at the very minimum invoice pricing. I'm getting close to $2k under invoice on my IS 350 F-Sport. Once you have the price then tell them how you want to finance/lease it and once you have that wrapped up, introduce your trade as mentioned above. Don't be shy of Carmax, they are very easy to work with and in my experience have made me very fair offers on my vehicles.
10-21-13, 07:06 PM
#4
Lead Lap
Thread Starter
1. Money factor is a leases equivalent to a interest rate in a loan.
2. Lower the rate the lower your payment
3. Each security deposit can lower your money factor normally by 0.00007apx this is limited normally between 5 and 9. Each manufacturer is different.
4. The first number back to you is always going to be a fishing expedition. Some people bite at the high rate if the monthly payment is near what they want.
-First thing you do if you have a trade is go to carmax get an offer for your car. DO NOT tell the dealer you have a trade.
-Second thing you do is you negotiate the price of the car not including tax and tags those are fixed numbers. You get the bottom dollar you are willing to pay for the car.
-Third thing you do is work out the lease payment you want to pay. (My case they came back with 780 a month for 36 months. Sent them back saying I am paying in the 400 per month range. I stood up ready to walk out. You have to be willing to walk out even though you want the car.)
-Fourth once you got the deal you want you throw a wrench in it and tell them you got a trade. You already know how much carmax is going to offer see what they are willing to offer. If its not a good deal get out your carmax offer. Hopefully you have one near you.
Not sure what part of Texas you are in but if you are in the Houston area and want an F-sport good luck getting them to come off sticker. They have one 250 F-sport at the dealer I have my car on order through right now. They can't get the cars currently. Seems they under ordered the F-sports by a long shot.
2. Lower the rate the lower your payment
3. Each security deposit can lower your money factor normally by 0.00007apx this is limited normally between 5 and 9. Each manufacturer is different.
4. The first number back to you is always going to be a fishing expedition. Some people bite at the high rate if the monthly payment is near what they want.
-First thing you do if you have a trade is go to carmax get an offer for your car. DO NOT tell the dealer you have a trade.
-Second thing you do is you negotiate the price of the car not including tax and tags those are fixed numbers. You get the bottom dollar you are willing to pay for the car.
-Third thing you do is work out the lease payment you want to pay. (My case they came back with 780 a month for 36 months. Sent them back saying I am paying in the 400 per month range. I stood up ready to walk out. You have to be willing to walk out even though you want the car.)
-Fourth once you got the deal you want you throw a wrench in it and tell them you got a trade. You already know how much carmax is going to offer see what they are willing to offer. If its not a good deal get out your carmax offer. Hopefully you have one near you.
Not sure what part of Texas you are in but if you are in the Houston area and want an F-sport good luck getting them to come off sticker. They have one 250 F-sport at the dealer I have my car on order through right now. They can't get the cars currently. Seems they under ordered the F-sports by a long shot.
1. How do you calculate money factor? Does this affected by your credit score etc?
2. Each security deposit lowers your money factor by 0.00007 means 0.00007% lower in interest?
3. Do you always get ALL of your security deposit back at the end of the lease?
4. For IS350 F-Sport, what's considered a good deal: money factor and how many security deposits?
10-21-13, 07:15 PM
#5
Pit Crew
1. Money Factor is based in part by the market, LFS and your credit. I believe I started at .00130 and I put 9 security deposits down. Your credit will outline where you start with the Money Factor, but you need to have pretty good credit to get the lowest tier.
2. Correct. It lowers your APR, thus lowering your payment. Since you get the money back, if you have it available, you can actually earn money on your security deposits by lessening your monthly expenses during your lease.
3. Wear and Tear along with missed payments can be withheld from the security deposit. However if you take care of the car, understand the acceptable wear and tear limited and pay your lease on time - then yes, you should get it all back. If you have wear and tear items, it's either going to come out of your pocket or the security deposit. Since the security deposit saves you money over the long run, it's the best way to go.
4. Depends on the MSRP. I was offered nearly $2k under invoice for an almost fully loaded F-Sport. Mine is missing Adaptive Cruise/PCS and the rear sunshade. It has everything else. Sticker was $48,500 or so and I'm right below $43k for the vehicle price.
The more educated you are about buying/leasing, the less the dealership will try to work you over. When I test drove the IS 350 F-Sport this weekend and they tried to get me to buy a vehicle that didn't have the options I wanted, he did comment that I knew a lot about the car and a lot about the finance aspect of the equation. After that, they backed off and knew that I was after a great deal which they couldn't offer ($400 over invoice).
2. Correct. It lowers your APR, thus lowering your payment. Since you get the money back, if you have it available, you can actually earn money on your security deposits by lessening your monthly expenses during your lease.
3. Wear and Tear along with missed payments can be withheld from the security deposit. However if you take care of the car, understand the acceptable wear and tear limited and pay your lease on time - then yes, you should get it all back. If you have wear and tear items, it's either going to come out of your pocket or the security deposit. Since the security deposit saves you money over the long run, it's the best way to go.
4. Depends on the MSRP. I was offered nearly $2k under invoice for an almost fully loaded F-Sport. Mine is missing Adaptive Cruise/PCS and the rear sunshade. It has everything else. Sticker was $48,500 or so and I'm right below $43k for the vehicle price.
The more educated you are about buying/leasing, the less the dealership will try to work you over. When I test drove the IS 350 F-Sport this weekend and they tried to get me to buy a vehicle that didn't have the options I wanted, he did comment that I knew a lot about the car and a lot about the finance aspect of the equation. After that, they backed off and knew that I was after a great deal which they couldn't offer ($400 over invoice).
10-21-13, 07:28 PM
#6
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Skinnyfats, thanks for the awesome info! I am from Houston, TX.. More questions about it:
1. How do you calculate money factor? Does this affected by your credit score etc?
2. Each security deposit lowers your money factor by 0.00007 means 0.00007% lower in interest?
3. Do you always get ALL of your security deposit back at the end of the lease?
4. For IS350 F-Sport, what's considered a good deal: money factor and how many security deposits?
1. How do you calculate money factor? Does this affected by your credit score etc?
2. Each security deposit lowers your money factor by 0.00007 means 0.00007% lower in interest?
3. Do you always get ALL of your security deposit back at the end of the lease?
4. For IS350 F-Sport, what's considered a good deal: money factor and how many security deposits?
Use this site to manually crunch the numbers. Edmunds has a great forum that gives a lot of insight into the process. I had never leased before and got myself up to speed with a few hours of solid research and 20 minutes discussing it with the dealer.
http://www.edmunds.com/car-leasing/c...e-payment.html
http://townhall-talk.edmunds.com/dir...1.w4AzaeHYjxF@
Crunch the numbers yourself manually and read that forum as well as the club lexus forum on prices paid
https://www.clublexus.com/forums/is-...-350-a-13.html
I saved a lot of money by reading these resources. Ask questions and the forums will help. Whatever you do don't walk into a dealership unless you have quotes from multiple dealers. If you are not educated you could lose a little money. You can negotiate sale price the same as purchasing and the lease rate.
10-21-13, 07:33 PM
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1. Money factor is a leases equivalent to a interest rate in a loan.
2. Lower the rate the lower your payment
3. Each security deposit can lower your money factor normally by 0.00007apx this is limited normally between 5 and 9. Each manufacturer is different.
4. The first number back to you is always going to be a fishing expedition. Some people bite at the high rate if the monthly payment is near what they want.
-First thing you do if you have a trade is go to carmax get an offer for your car. DO NOT tell the dealer you have a trade.
-Second thing you do is you negotiate the price of the car not including tax and tags those are fixed numbers. You get the bottom dollar you are willing to pay for the car.
-Third thing you do is work out the lease payment you want to pay. (My case they came back with 780 a month for 36 months. Sent them back saying I am paying in the 400 per month range. I stood up ready to walk out. You have to be willing to walk out even though you want the car.)
-Fourth once you got the deal you want you throw a wrench in it and tell them you got a trade. You already know how much carmax is going to offer see what they are willing to offer. If its not a good deal get out your carmax offer. Hopefully you have one near you.
Not sure what part of Texas you are in but if you are in the Houston area and want an F-sport good luck getting them to come off sticker. They have one 250 F-sport at the dealer I have my car on order through right now. They can't get the cars currently. Seems they under ordered the F-sports by a long shot.
2. Lower the rate the lower your payment
3. Each security deposit can lower your money factor normally by 0.00007apx this is limited normally between 5 and 9. Each manufacturer is different.
4. The first number back to you is always going to be a fishing expedition. Some people bite at the high rate if the monthly payment is near what they want.
-First thing you do if you have a trade is go to carmax get an offer for your car. DO NOT tell the dealer you have a trade.
-Second thing you do is you negotiate the price of the car not including tax and tags those are fixed numbers. You get the bottom dollar you are willing to pay for the car.
-Third thing you do is work out the lease payment you want to pay. (My case they came back with 780 a month for 36 months. Sent them back saying I am paying in the 400 per month range. I stood up ready to walk out. You have to be willing to walk out even though you want the car.)
-Fourth once you got the deal you want you throw a wrench in it and tell them you got a trade. You already know how much carmax is going to offer see what they are willing to offer. If its not a good deal get out your carmax offer. Hopefully you have one near you.
Not sure what part of Texas you are in but if you are in the Houston area and want an F-sport good luck getting them to come off sticker. They have one 250 F-sport at the dealer I have my car on order through right now. They can't get the cars currently. Seems they under ordered the F-sports by a long shot.
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10-21-13, 09:29 PM
#9
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One thing to think about:
Unlike other states that only apply sales tax to the depreciation cost of the car (basically your monthly times x% tax per month), TX taxes you on the total sales price of the car.
Unlike other states that only apply sales tax to the depreciation cost of the car (basically your monthly times x% tax per month), TX taxes you on the total sales price of the car.
10-22-13, 02:28 AM
#10
Skinnyfats, thanks for the awesome info! I am from Houston, TX.. More questions about it:
1. How do you calculate money factor? Does this affected by your credit score etc?
2. Each security deposit lowers your money factor by 0.00007 means 0.00007% lower in interest?
3. Do you always get ALL of your security deposit back at the end of the lease?
4. For IS350 F-Sport, what's considered a good deal: money factor and how many security deposits?
1. How do you calculate money factor? Does this affected by your credit score etc?
2. Each security deposit lowers your money factor by 0.00007 means 0.00007% lower in interest?
3. Do you always get ALL of your security deposit back at the end of the lease?
4. For IS350 F-Sport, what's considered a good deal: money factor and how many security deposits?
2. Yes, each security deposit lowers your money factor which is your interest. It might not be exactly 0.00007 it could be 0.00005 to 0.00009 not sure what formula Lexus is using.
3. Depends on the condition of the car when you turn the car back in at the end of the lease. If the car is in excellent shape then you get most of your money back. If the car comes back needing repairs then they take money out of this deposit.
4. Can't answer that question yet I am still waiting for my car to come in and for them to run official numbers with me. So far since they can't get cars here in Houston they aren't really budging off the sticker price in our area. Truecar.com is saying the last 8 cars sold in our area were about 1000 dollars off MSRP. Not sure if that is true not a single dealer in Houston has a IS 350 F-sport they are all on order and sold before they even get to the dealers lot. What I am getting is them to throw in extras into the deal. So far I got 2 years service, tinted windows and all weather floor mats thrown into my deal. Still going to try to get them to come off sticker if possible.
Hope all this helps. I am going through Sterling McCall my friend has gotten 2 Lexus's from my salesman in the past so hoping to get a deal through him.
10-22-13, 02:53 AM
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Two things about the leasing system in the US I am curious about: How can you lose an initial payment if something should happen to the car? And why is 27 months a normal lenght for a lease? not 24 or 36?
10-22-13, 03:58 AM
#12
27 month lease is normally the shortest lease you can get not sure why they do it as 27 months. You can get 36, 48 and 60 month leases.
10-22-13, 04:58 AM
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I always assumed that if you total your car, the insurance will cover a new car and the lease will continue. But the more I think about it the more I'm convinced that's not the case... I think I have to find out!
Yes... 27 is an odd number. Due to regulations I don't think you can lease for less than 36 months in Norway.
10-22-13, 06:12 AM
#14
That actually makes sense
I always assumed that if you total your car, the insurance will cover a new car and the lease will continue. But the more I think about it the more I'm convinced that's not the case... I think I have to find out!
Yes... 27 is an odd number. Due to regulations I don't think you can lease for less than 36 months in Norway.
I always assumed that if you total your car, the insurance will cover a new car and the lease will continue. But the more I think about it the more I'm convinced that's not the case... I think I have to find out!
Yes... 27 is an odd number. Due to regulations I don't think you can lease for less than 36 months in Norway.
When people buy a car via the loan route and don't get the GAP insurance they are screwed if the check comes up 5K short to pay the loan off. This happened to me I had to pay 5K to pay off a car I could no longer drive.
10-22-13, 07:35 AM
#15
Car makers will often choose an odd set of months to smooth out their quarterly revenue. For a company like Lexus, that's always offers leasing deals at the same time of the year every year, they'll have a lot of people coming off lease in the same months 2 or 3 years from now. The extra few months of a 27 month lease smooth out the peaks.