frazierwa

I just received the attached finance information on the planned purchase of a 2018 RX450h F-Sport. I would appreciate help to understand if the numbers and terms look correct. Specifically, the residual value and lease terms (payment amount). Also, this was calculated as a 7,500 miles/year lease. I know there is some way to determine from these numbers what the money factor is, but I don't know how to do that. I am scheduled to meet with the dealer on Tuesday so I'd like to learn as much as possible to negotiate better lease terms if appropriate. I plan to ask to make the maximum number of multiple security deposits to reduce the monthly payment. Also, please note the 'one-pay' calculation they performed (which may be the best option).

Thanks for any help you can offer!

mikemu30

I don't lease but this doesn't seem like a great deal. Roughly 5% off MSRP and only 7,500 miles per year? I think you can do better. I also don't see the residual value but that's probably non-negotiable- those that lease can chime in.

ravenuer

7500 miles a year would be a deal breaker for most people. Unless that's all you drive in a year.

frazierwa

I don't put a lot of miles on, so 7,500 will probably be adequate. I'm interested to know if the numbers are correct given that low annual allotment (and other factors) though.

CaliTravel

Wayyyyyy too high. For comparison sake...

I have a 2017 RX450h. MSRP was $65,989. I added everything to the car. I have 12,000 miles per year. Walked away paying $4,000 out the door. 36 month lease and my monthly payments are $529 + tax per month.

Skygc

I suggest not to put any down payment. If a leased car is totaled or stolen, the lease just terminates. The buyer doesn't get back the down payment.
My brother put $10,000 down payment for a lease on a brand new Land Rover Range Rover. He total his car within 4 months in NY and he didn't get his $10,000 back from the insurance. He smack himself for putting such a down pay.

Oldfart

$57,800 MSRP
36months/10K per year
$1,500 out of pocket
$485 + tax
I am sure there were different rebates available in November

JeffKeryk

You need to know the residual, or the purchase price at the end of the lease.
Remember, a lease is simply you paying the depreciation on the asset.
Lexus owns the car.
A low mile lease means the RX will be worth more in 3 years; a 15K per year means the car will be worth less.
It generally makes sense to put no or low money down, because finance teaches us to not put $$ into a depreciating asset.
As others have said, it the vehicle is totaled, it does not matter how much you have paid; the insurance will try and pay as little as possible.
The lease has gap insurance built in.
If you really drive that few miles, this is less of a risk.
Also, the more you put down, the less your interest expense.
What is nice about a lease is, if you choose to buy the vehicle later, you pay tax on the residual vs new purchase price.
It looks like the discount is $3,600, which is lower than I would expect.
I would expect at least $4000; perhaps $5000 on an expensive car like that.
As the year goes by, expect the discount to increase.
Good luck.

frazierwa

Do you know what your capital cost was after deducting incentives and any other payments? That payment of $529 is really low unless there were a lot of reductions from MSRP. Did you make multiple security deposits?

frazierwa

The residual percentage listed on the worksheet is 63.

raslui10

There's two parts to each lease payment - monthly depreciation and monthly rent (interest). Based on these numbers it looks like your:
residual value is 38836 (MSRP * 0.63)
so total depreciation: 19115 (Cap cost - residual value) or 57952-38836 (I used your total payment: 58652 - 700 down payment for this cap cost)
so your monthly depreciation is 530 (19115/36 months)

given you monthly pay of 700 then you have a monthly rent charge of 170 (700-530)
your monthly rent calculation is (cap cost + residual value) * money factor,
reverse engineer for money factor (57952 + 38836) * MF = 170, so MF is 0.00175
0.00175 is approximately 4.2% interest rate: (MF * 2400)

frazierwa

Thanks very much! That's exactly the analysis I was looking for.

Based on your experience, do these numbers look 'right' to you? I know some of these factors are regional and some may be under the dealer's control so I'm trying to negotiate the best lease treatment. At first blush, it looks like the MF is high, but again, I'm not sure what the range is for leasing. I have a perfect credit rating and numerous prior leases with LFS but I don't know if this impacts the dealer's offer. I didn't get a substantial discount from MSRP so I'd like to minimize my lease costs.

mikemu30

Another reason I'll never understand leasing. Doesn't GAP insurance get that covered somehow? I guess not. I get it it - many folks lease because they can't afford otherwise to buy it. Bad reason to do so. There are plenty of nice Hyundai products for well under $30K.

raslui10

As others have said, try to get a better discount and ask for the base Lexus MF (dealers mark it up for more profit) esp if you have
excellent credit. With 0.00175 you are looking at over 6k in interest for three years.
Also, buy down the base MF using refundable multiple security deposits. You get this back at lease end.

frazierwa

I've used the MSDs on prior leases and intend to this time also. Do you know is you can use MSDs if you use the 'one-pay' option?

The dealer said the lease payments were calculated with an MF of .001 (2.4%).