Good deal on this lease rate?
#3
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Join Date: Apr 2015
Location: CA
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It depends...
Sounds like it's about on par with some others, but leases are pretty tricky. In my own experience, I think I got a "great" deal on the car, but not such a great deal on the lease financing. It seems that Lexus Financial Services isn't as competitive as many of the American manufacturers that practically give away financing; probably because they don't have to be!
Below are the major factors. Many of them are intricately connected. Dealers often talk about the down and the monthly, but just because you arrive at an agreeable monthly payment does not mean you're getting a good deal.
You want to make sure that the money factor represents a reasonable interest rate (MF x 2400 = ~APR). What I've seen from Lexus is in the 2.5-5% range (not very competitive!). The MF represents the rental charge--money you are giving the bank for the privilege of renting the vehicle on credit.
You also want to clear about the residual value, though it may not be negotiable. If you plan to turn in the vehicle at the end of the lease, you want the highest residual possible; the less money the vehicle depreciates over the life of the lease, the less money you have to pay for it. However, if you plan to keep the vehicle after the lease, a low residual MIGHT be preferable--the lower the residual, the less you'll have to finance later on.
Edmunds Lease Calculator can help you work through all the scenarios. Good luck!
Below are the major factors. Many of them are intricately connected. Dealers often talk about the down and the monthly, but just because you arrive at an agreeable monthly payment does not mean you're getting a good deal.
- Agreed vehicle price
- Down payment (i.e. capitalized cost reduction) and trade-in vehicle credit
- Lease term
- Mileage allowance
- Money factor - interest rate on depreciation
- Residual value - agreed value of the vehicle at lease end
- Stuff that's unlikely to change much: taxes, licensing, fees (including acquisition fee)
You want to make sure that the money factor represents a reasonable interest rate (MF x 2400 = ~APR). What I've seen from Lexus is in the 2.5-5% range (not very competitive!). The MF represents the rental charge--money you are giving the bank for the privilege of renting the vehicle on credit.
You also want to clear about the residual value, though it may not be negotiable. If you plan to turn in the vehicle at the end of the lease, you want the highest residual possible; the less money the vehicle depreciates over the life of the lease, the less money you have to pay for it. However, if you plan to keep the vehicle after the lease, a low residual MIGHT be preferable--the lower the residual, the less you'll have to finance later on.
Edmunds Lease Calculator can help you work through all the scenarios. Good luck!
#5
additionally, be sure to ask about the Lexus Single Payment (upfront) Lease. Ask about it after you have ironed out all the details... I lowered my total lease payment by over $2000.00 on a 24mo/12K per yr lease, and the "downpayment" line went to zero on the paperwork (compared to what I would have paid monthly over 24 months). I also negotiated pretty hard to round almost every line on the paperwork down to an even 10 or 100 or 1000 etc....
If you have the cash up front, it is the way to go.
If you have the cash up front, it is the way to go.
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