xyooj123

why is this lease quote so expensive?! I have excellent credit and it's a 2016 model!!!

1Louder

This is a good source to look at: http://www.edmunds.com/car-leasing/c...e-payment.html

Your lease payment is made up of three components.

1) Base payment (Adjusted Cap Cost - Residual Value) / Term = (44236 - 29181)/36 = $418 base payment
2) Interest (Adjusted Cap Cost + Residual Value) * Money Factor = (44236 + 29181) * .0021 = $154 interest payment
3) Tax (Total tax / term) = (1133 / 36) = $31 tax

So your payment is $418 + $154 + $31 = $603

The cost drivers are your Cap Cost, Residual Value and Money Factor.

Cap Cost is just your negotiated deal - negotiated price minus any money you put down, so you can influence your payment by lowering the sales price or putting more down.

Residual Value - this is an "assumption" that your dealer is making. Typical % is 45% - 60%. Yours is 58% - that's actually pretty good. The higher the better.

The Money Factor looks high - that's another place you can attack. It's basically the equivalent of an interest rate for leases. 0021 is 5% interest. Edmunds says .00125 would be more typical (3%). I did a quick check - with all the same numbers and a money factor of .00125 your payment would be $541 after tax.

So I think you have two levers to push on - negotiated price and money factor. But aside from that, things look correctly calculated.

Gerxiong89

Xyooj i can possibly get you a better deal if your in socal. I got my 2016 is350 msrp was around the same price for $463 taxes included. I was quoted $389 for the 200t model and msrp was 46500.

JDR76

Residual is set by Lexus Financial Services, not by the dealer.

xyooj123

thats what I've been seeing on this forum. Does MF vary from state to state or region to region? I'm willing to buy from socal if I can save that much but I'd have to have the car delivered which I have no idea how much it'll cost.

Gerxiong89

Not sure but did you go talk to a regular sales man? If you did they can't get you the best prices. Go straight to the fleet manager. Thats your best bet.

E46CT

Excellent post! Thank you. I knnow cars but not this stuff.

So if you put a larger down payment down, you can reduce your cap cost thus your interest? Since you multiply cap cost * money factor

1Louder

Thanks!

Correct - lowering your cap cost improves your base payment and also improves your interest payment. It won't alter your tax, which is based on the negotiated sale price. So additional money down does help.

Leases can be complicated to figure out, which is why everyone should really understand what's going on. Also there is no free lunch with leases - it's just math. If you see a $45K car with a $300 monthly payment look at the fine print - in my experience they usually want $7K or more down or you can only drive 6K miles per year. Which reminds me the other thing that can alter the deal is the mileage per year. If you want more than the mileage limit they are offering (say you want 10K per year and they are offering 8K) then you pay for that. Figure like 25 cents per mile, so at 2K extra miles that's $500/year, or about $42/month more.

TTechLexus

iTrader: (3)

Ideally you shouldn't put money down to reduce cap cost, put money down towards MSDs instead

to the OP, i'd assume you can get a better money factor than that

Just off the top of my head BMW is doing 66% residual and a MF .0035 (10k 2 year), use that to help them work the numbers in your favor

E46CT

Are you necessarily paying more to lease a car then buying it after the lease vs. just buying it right out?

kyoungjook

It depends, but generally, buying a car out after a lease is going to be worse than having just bought it outright from the start. The reason is that the buyout price at the end of a lease is based on the residual value as applied to the MSRP. However, when you lease the car, your payments are based on the net cap cost, which is far lower than MSRP. So, even if you negotiated a great lease deal by getting them to significantly reduce the net cap cost to far below MSRP, you will lose the benefit of that once the lease is over, and you decide to buy at a predetermined price, which is based on the full MSRP.

For example, my IS350 F-Sport's MSRP was about $50k. I negotiated the price down to about $44.5k. The residual was about 65%, meaning the predetermined buyout price at the end of the 36 months is going to be about $32.5k. So, I will only reap the benefits of the $44.5k negotiated price during the term of the lease. AND, this is assuming that the money factor for the lease is comparable to the interest rate you would have gotten on a loan. In my case, it was pretty close - MF was 0.00075, which comes out to about 1.8% (MF x 2400 = APR) - I doubt I could've gotten a loan for much less than that. However, if the MF is higher than the interest rate you would have otherwise gotten on a loan, then you lose out there as well.