Can someone explain leasing to me?
- Thread starter codex57
- Start date
I look at it a different way. Is the car a new model which isn't going to be phased out? If it is, then check how much it depreciates each year according to KBB. Add your total lease payments up and determine if it breaks even, or if you will lose a little. If the amount lost is say a few hundred to a few thousand, and if you dont mind paying that to have a car you don't wish to own or have to baby, then it's a good deal.
To me all the arcane fees and calculations are irrelevant. That is why if I am leasing I would tell the salesman exactly what I want to pay and to "make the numbers work".
To me all the arcane fees and calculations are irrelevant. That is why if I am leasing I would tell the salesman exactly what I want to pay and to "make the numbers work".
Basically, leasing a car is "renting" the car for agreed-upon terms. The dealership takes the value of the car based on a "sale price" just like buying a regular car (you know, how you usually do not pay MSRP for a vehicle), and then you tell them how long you want the car for.
Usually this term is for 3 years, 36,000 miles. Now they take the initial sale price of the car and then they figure out a projected value of the car after it's 3 years old and has 36,000 miles on it. The difference of the sale price and its projected value is what you, the person leasing the car, has to pay. They take this price and put the typical interest/financing on it (referred to as "money factor") and calculate your monthly payment.
My father pays for 5 vehicles, all of them leased, and I always work out the lease deals and stuff for him because he hates that stuff and I love it. Basically, we only lease for 3 years/36K miles of 3 years/45K miles, and we only go for a minimum amount of money up front. I follow this simple strategy where the total of the 36 months worth of payments should not cost more than 50% of the car's MSRP value. This is just my "simple strategy" of getting a good lease deal on a car, as opposed to destroying myself on numbers and stuff.
For example, I was satisfied with my recent G35 Coupe lease deal because it went like this:
$40,300 MSRP for the car
NO money down, NO inception fees due at lease signing or to pickup the car (only first month's payment), $550/month for 36 months/36K miles, taxes included in monthly payment
$550 * 36 = $19,800 which is less than 50% of the car's original value.
You can put down $4,000 up front, for example, which helps lower the monthly payments. And a lot of dealerships have things like $600 bank fees and $300 motor vehicle fees, and blah blah blah. If you can beat these fees, awesome...usually I cannot.
Your friend will get the best deal by leasing a car that has the following characteristics:
-The car is being heavily discounted off its MSRP price
-The car has a high resale value (and whatever options help resale, such as auto trans over manual trans)
-The car company is offering and promoting strong lease rates at a certain time for that car
-It is readily available on the dealership lot, and not something that needs to be ordered or searched for
Usually this term is for 3 years, 36,000 miles. Now they take the initial sale price of the car and then they figure out a projected value of the car after it's 3 years old and has 36,000 miles on it. The difference of the sale price and its projected value is what you, the person leasing the car, has to pay. They take this price and put the typical interest/financing on it (referred to as "money factor") and calculate your monthly payment.
My father pays for 5 vehicles, all of them leased, and I always work out the lease deals and stuff for him because he hates that stuff and I love it. Basically, we only lease for 3 years/36K miles of 3 years/45K miles, and we only go for a minimum amount of money up front. I follow this simple strategy where the total of the 36 months worth of payments should not cost more than 50% of the car's MSRP value. This is just my "simple strategy" of getting a good lease deal on a car, as opposed to destroying myself on numbers and stuff.
For example, I was satisfied with my recent G35 Coupe lease deal because it went like this:
$40,300 MSRP for the car
NO money down, NO inception fees due at lease signing or to pickup the car (only first month's payment), $550/month for 36 months/36K miles, taxes included in monthly payment
$550 * 36 = $19,800 which is less than 50% of the car's original value.
You can put down $4,000 up front, for example, which helps lower the monthly payments. And a lot of dealerships have things like $600 bank fees and $300 motor vehicle fees, and blah blah blah. If you can beat these fees, awesome...usually I cannot.
Your friend will get the best deal by leasing a car that has the following characteristics:
-The car is being heavily discounted off its MSRP price
-The car has a high resale value (and whatever options help resale, such as auto trans over manual trans)
-The car company is offering and promoting strong lease rates at a certain time for that car
-It is readily available on the dealership lot, and not something that needs to be ordered or searched for
