LexusPia

My cousin who's on an overseas assignment now has asked me to find her a new RX350AWD when she returns to IL next month but she wants to lease instead of to purchase. She said leasing usually has much lower monthly payment than say a 36-month financing. Since I've always purchased outright with all my cars, I don't know a thing about dos and don'ts on leasing nor do I know what is negotiable. I need some help from you guys who've done it. Let me know what I'm supposed to look for and what to negotiate.

The Lexus salesman I talked to said there's no negotiation on price for leasing especially if there's a factory leasing promo available which I find hard to believe. Currently Lexus has a special $449/month lease on a 36-month lease term for a 2009 RX350AWD but it expires this month. This won't do my cousin any good since she won't be back until mid next month. He said he won't be able to even give me a ballpark leasing figure until next month (I think he's blowing smoke).

I did some researches in Consumer Reports as well as other websites including this one but none will tell me the details on how to negotiate a leasing deal. I personally feel purchase outright is a much better deal than leasing since you still own that vehicle after 36 months whereas leasing doesn't give you any equity (just my own opinion). Hope you guys can help. Thanks.

BounceNY

iTrader: (9)

You should negotiate the selling price just the same as if you were going to purchase the vehicle. Biggest suggestion I would make is not to negotiate based on monthly payments but on this selling price. Once you(she) are happy with the selling price, then figure the monthly payments. Also, for leases try to get as low of a down payment as possible.

Tom H

Check out this web site. I've used the information for several vehicle purchases with good results.

http://www.carbuyingtips.com/

Lexmex

LOL

I was getting a kick out of reading these, http://www.carbuyingtips.com/scams.htm

and also these one-liners,

Funny one liners salespeople like to use on you. Did they take the same sales training course?

* "You're stealing food from my baby's mouth"
* "Everybody pays this fee"
* "We're losing our shirt on this deal"
* "The web sites you got the prices from are wrong."
* "This car won't be here tomorrow"
* "The bank requires you to buy the extended warranty to get loan approval"
* "Do you want the car? What will it take to make you sign today?"

Crimex

Sounds to me like you need to find another dealer or at least another salesman. Here is some good information about leasing a Lexus. You'll do much better being more educated about how it works.

First leasing is not a good deal if you drive more than 15k miles per year. Leasing is usually at a 10k, 12k, 15k mile per year limit. However, if you drive 25k miles in one year and only 5k miles the next (like some military people) you are ok because the mile limit is for the term of the lease.

DON'T PUT ANYTHING DOWN. Do not make a down payment on a lease...you're giving away your money. You will have to come up with around a $200 lease fee and first month payment on delivery. Those special offer deals are usually not a good deal and are only designed to get people to come in a look at a new car. Fine print will inlcude about $4k down.

You can negotiate price on a lease...however, beware of the lease rate. For example, I negotiated a price on a new RX 350 with a MSRP of 44841 and they are going to sell to me at $40500. Sounds like a good deal, right. The lease payment was $679 for 36 months. Now here is the strange part...another dealer offered me $41341 on the same MSRP vehicle with a lease payment of $635. So what is the better deal? The lower payment is of course. So be prepared to negotiate lease payment over purchase price on a lease. However, don't do this on purchase but it's ok to do on a lease.

Here are the lease rates on a RX350 2009

2009 Lexus RX350 2WD
24 Month – Residual 61% of MSRP – .00135 Base Rate
36 Month – Residual 54% of MSRP – .00135 Base Rate
48 Month – Residual 43% of MSRP – .00135 Base Rate
60 Month – Residual 35% of MSRP – .00245 Base Rate

2009 Lexus RX350 2WD w/RSE
24 Month – Residual 59% of MSRP – .00135 Base Rate
36 Month – Residual 52% of MSRP – .00135 Base Rate
48 Month – Residual 41% of MSRP – .00135 Base Rate
60 Month – Residual 33% of MSRP – .00245 Base Rate

2009 Lexus RX350 AWD
24 Month – Residual 61% of MSRP – .00135 Base Rate
36 Month – Residual 54% of MSRP – .00135 Base Rate
48 Month – Residual 44% of MSRP – .00135 Base Rate
60 Month – Residual 36% of MSRP – .00245 Base Rate

2009 Lexus RX350 w/ RSE AWD
24 Month – Residual 59% of MSRP – .00135 Base Rate
36 Month – Residual 52% of MSRP – .00135 Base Rate
48 Month – Residual 42% of MSRP – .00135 Base Rate
60 Month – Residual 34% of MSRP – .00245 Base Rate

* Residuals posted are for 15K miles/year. Add 2% to Residual for 12k mi/yr and 3% for 10k mi/yr on all terms
** Rates provided by Tarry Shebesta from Leasecompare.com

If this doesn't make sense...you're not alone. Here is how this works. Lexus determines how much value the car will still have at the end of the lease and they charge you for the new part. Basically guaranteeing you will not be upside down on the car. The base rate is the percentage interest rate that Lexus gives...however; this is where the dealer makes it money. They may give you a smoking deal on the car such as $5000 off of MSRP and then mark up the base rate from .00135 to .0025...this makes a difference of about $80 dollars per month.

After some negotiation I was able to get a fair payment that would have been an invoice deal at the marked up rate or about $1k over invoice with a lower rate. It doesn't matter on a lease...only payment and money down does.
This website offers good information, but doesn’t take into account how a dealer marks these up.

http://www.ridewithg.com/?s=rx350

I’m doing a 12K mile per year lease because that is all we drive this car and I want a new car every 3 years. So this is a good deal for us…but it’s not for everyone. If you want out early or drive too much then consider other options.

Since this person is in the military they will qualify for membership at this credit union.

https://www.penfed.org/

They have a deal for 4.75% for 72 months right now. They just gave me 4.25% for 72 month on my new Corvette purchase not lease. Good deal and much better than a dealer can do.

Good luck and hope this helps.

Crimex

Other things to consider:

If your credit is not real good...then buy because the lease rate will be to high.

If you want to keep the car longer than 36 months, buy.

Also look at what your payment would be on a low purchase price with a low rate such as 4.75% at 72 months. Then make sure you won't owe more than it is worth at the term of 36+ months. A lease should be much lower than a purchase payment even at 72 months with 4.75% by about $50-75.

www.bankrate.com has a good payment calculator with a chart showing how much you owe after each payment.

And last...negoiate by email. For some people it is easier to play hardball back with them when you have to time to research what they are saying. Be fair to the dealer, they need to make some money, just not get rich off of your one sale.

LexusPia

Thank you very much Crimex and others for your suggestions. Seems like leasing is more complex than just buying outright and if one is not careful, he can get taken easily.

I think what you are telling me is just because there's a factory leasing promo that has "attractive" monthly rate like the current Lexus promo, I should still bargain hard to get a big discount off the MSRP (which I assume is directly proportional to the amount of the monthly lease payment) as well as zero down. The question I have is how do I know what the dealer bottom line is on a lease? On a purchase, I know the dealer invoice which gives me a very good base to negotiate from whereas on a lease, how do I know where the threshold is with the dealer?

Crimex

Invoice and dealer cost are the same for a lease or puchase. It's just how you are going to pay for it. Dealer lease rate cost is 0.00135 on a lease right now for the RX350, they will mark that up to around 0.002

LexusPia

Should I not tell the dealer about my leasing interest initially but concentrate on negotiating the largest discount I can get on the MSRP first before informing the dealer that I'm leasing instead of buying? My thought is to at first get the biggest discount off the sticker and then negotiate with them on zero downpayment, annual mileage limit and monthly lease payment afterwards. Is this a good strategy? Or should I put everything up front?

AM1

iTrader: (6)

get the lowest price first. tell them that you are leasing after thats done. dont forget that they can sell for under invoice and still profit. and that this is the last year before a redesign.