Is there any thread or faq that explains how leasing works?

[Dory]

I would rather buy, but with the new model coming out in 2021 I am afraid 2 years from now I will be sad that I have the "old model."

My main question is whether or not I have to choose what is on the lot or if I can custom order and lease. Thanks.

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[YOLO]

I would rather buy, but with the new model coming out in 2021 I am afraid 2 years from now I will be sad that I have the "old model."

My main question is whether or not I have to choose what is on the lot or if I can custom order and lease. Thanks.

Sure. Unless you own a business and can write it off, Leasing sucks balls in most cases.

For a car that Highly Depreciates you want to Lease.

If you want a Monthly Lease Payment that is Low then lease a car that will Keep its value, aka Lexus.

You can actually lease a car that cost $20,000.00 more (same monthly payment) if it has High Residual Value.

That's what a lease is based upon. How much value will the car lose during the lease term.

Like I said, it's rare that a Lease is better in the long term. Plus they can be full of issues like Double Taxation, Gap insurance, etc...

Buy the car and have full control.

 

[Zodiac]

I would rather buy, but with the new model coming out in 2021 I am afraid 2 years from now I will be sad that I have the "old model."

My main question is whether or not I have to choose what is on the lot or if I can custom order and lease. Thanks.

Go to the website leasehackr.com and read up. You can custom order and lease, just note Mustang lease terribly.

Leasing can be great if you know what you're doing.

Most of the advice above is terrible...

 

[sdiver68]

A quick example but Zodiac has it perfect above.

Depreciation is what it is. It's equally applicable to someone who owns and someone who leases. If a car is predicted to be worth 50% of MSRP in 3 years, it doesn't matter if you've leased it or own it...your $40K has turned into $20K. In the case where your car does not depreciate that much, you come out ahead either way. In the case where your car depreciates more than 50%, the lease may come out ahead because now you can "walk away" from a car valued @ $17k.

Below is the picture of a lease vs buy calculator with a slightly subsidized lease. Not a Mustang, at least not right now. But rather a Lexus. The lease program in the example below has chosen to subsidize the lease by (1) offering a higher residual than actual expected depreciation and (2) waiving the lease fees. This is not fantasy, this happens often with certain cars! My last car (Lexus IS350 F-Sport) had (1) subsidized lease interest rate (called Money Factor), (2)paid me a cash rebate greater than purchase rebate and lease fees combined, (3) had 0 deposit and (4) predicted below normal depreciation.

You can see the net cost to lease is lower by about $1500. This includes asset value and investment value.

 

[GDDYP]

When you look at the payments it seems appealing, but to get that tantalizingly low monthly payment you have to make a pretty substantial down payment. Then also consider the logic of making a down payment on something you will never own. It's never really made sense to me.

 

[Lionorion]

Leasing a car is not negotiable, you agree to their terms. Really the only way to make money is if the lender misjudges the residual value at the end.

Pluses for a lease is other than gas, oil, tires, filters and windshield wipers, the lender pays for maintenance. Minuses are restrictions on mileage and non negotiable terms. Another way to look at it, is if you’re planning on keeping the car longer than three years, it doesn’t make much sense.

 

[YOLO]

When you look at the payments it seems appealing, but to get that tantalizingly low monthly payment you have to make a pretty substantial down payment. Then also consider the logic of making a down payment on something you will never own. It's never really made sense to me.

85% of leases are BS.

Leases were designed to sell more cars, whatever it takes.

It's a FACT that the more expensive cars became the more leases were underwritten.

We went from 36-month loans, to 48, 60, 72, 84, and now they have 120 months (10 years on Exotics). Just another way to sell cars because the average person can not afford them.

Now they even have programs where you can Rent your car for 1 day or for a half day to subsidize your monthly payment.

85%+ of ALL leases are like handcuffs. Not easy to get out of and tons of fine print and BS to get you in trouble.

Like I stated before, if you can write this off via your business it can be a benefit.

Personal Leases almost never a good deal.

Try reading an Entire Lease agreement and you'll see why.

 

[YOLO]

Leasing a car is not negotiable, you agree to their terms. Really the only way to make money is if the lender misjudges the residual value at the end.

Pluses for a lease is other than gas, oil, tires, filters and windshield wipers, the lender pays for maintenance.

Minuses are restrictions on mileage and non negotiable terms. Another way to look at it, is if you’re planning on keeping the car longer than three years, it doesn’t make much sense.

Well said.

Residual screwups normally happen with New model cars where there is no history. Every once in a while you can come out ahead. Not on a Mustang, no screwups.

Don't bother Modding your car cause you'll have to remove it when you turn it in.

Don't take out a lease longer than the Basic 3 year/36,000 mile warranty cause you will pay.

Leases SUCK, end of story.

Edit: Most leases will NOT allow you to have a Higher Deductible than $500.00. So if you currently have a $1,000.00 or higher you will have to pay the increased cost to go to $500.00

 

[rocky5517]

I agree with all of the above explanations. Another reason why leasing usually sucks is you will NEVER really know what the net value of the car is. NEVER. There are too many ways for the dealers to double cross you. The notion of a lease, as explained above, is simple; you are paying for the amount of value you used the car for. A $50,000 with a residual of 50% at the end of the lease means you are "buying" $25,000 of the value of the car. Just divide by the months, ( and try to figure the interest and other b.s., and you have your payment, less upfront costs if any. If you lease a car that has a LOW residual , for arguments sake, 25%, that means at the end of the term the car is only worth 25% of $50,000, or $12,500. So, you are "using" $37,500 of the value. Divide that by say 36 months and you'll see why it never pays to lease a car that loses a lot of value.

 

[Zodiac]

When you look at the payments it seems appealing, but to get that tantalizingly low monthly payment you have to make a pretty substantial down payment. Then also consider the logic of making a down payment on something you will never own. It's never really made sense to me.

If you put a down payment on a lease you are doing it wrong.

 

[66Bronc1]

With a lease you are paying for the car for only the duration of the lease. You negotiate the price and payments same as buying but remember that the payments/total price is only for the period of the lease. You need to be able to wheel and deal, just the same as buying. Leasing can be advantageous in that down payment and monthly payments can be less than buying but in the end you will have no equity and need to turn the car in our buy it out.

Things to look for and remember in a lease:

-Mileage- negotiate the annual mileage. Do not go over the mileage- it's very, very expensive and you pay per mile at the end of the lease. If you are under the mileage, that's good- it will be in your favor.

-Insurance and registration may be higher- check before you lease.

-"Cookie cutter" cars with the lease specials are the ones with the best deals- you can google and find out what the best lease deals are. These are what the manufacturer makes the largest quantities of. If you are buying a one of or specialty car with a lot of options leasing may not be a good idea.

-Know what the residual value is at the end of the lease. This is the projected value of the car at the end of the lease. And what you can buy the car for. If you are under the mileage, you may even have equity as the car will be worth more than the residual value. If your mileage is over it could be less than the residual value.

-When leasing you must keep the car meticulous and no mods. At turn in time they will check for dings, dents, stained upholstery, ripped carpet, etc. and charge you big time.

-You can trade a leased car in- it's just like trading in a car you bought but they go by the car's current value and how much you owe on the lease. But you will be upside down and most likely have to pay to get out of the lease.

I have leased in the past and it worked out well. In one case I was way under the mileage and turned the car in before the leases's end and got a check for 3K.

My recommendation if you want to lease is negotiate heavily and ask for higher miles than you will actually drive the car- that way you will come out ahead in the end.

 

[MaskedRacerX]

Go to the website leasehackr.com and read up. You can custom order and lease, just note Mustang lease terribly.

Leasing can be great if you know what you're doing.

Most of the advice above is terrible...

Quoting this late into the topic, because it's even more applicable now ...

If you put a down payment on a lease you are doing it wrong.

Yep.

Per @Zodiac leasehackr.com is a terrific resource. There's a ton of sites with ways to figure out the effectiveness of proposed lease, of course LeaseHackr has a basic calculator, but this is also a good resource: http://www.realcartips.com/leasing/0439-good-lease-deal.shtml Basically the guy has simple formula of price-per-X amount (normalized for a few different types of vehicles, broken down by generalized manufacturer "tiers").

In general:

- Don't put anything down, that's [part of] the point
- You can negotiate the price of the car, including rebates (some are even lease specific), the interest rate, even included perks (maintenance, if not normally included is an easy one), we got ~$5.5K off MSRP, and a rate of 0.40%
- Educate yourself about the components of a lease, terms like Money Factor (it's just the interest rate, so it's trivial to calculate)
- If you want to drive a new car, always under warranty, then sync up the duration of the lease and warranty, when the car is no longer covered, you just hand over the keys
- Don't get too caught up "owning" as a psychological driver, until it's paid off, it's the banks Analyze it like any life cost, based on the car, the other lease parameters, it'll make sense when it makes sense (so to speak)

[edit]

More excellent input from @66Bronc1

 

[Ebm]

Don't lease or buy new. Buy used at least a year or two out and let someone else take the bigger depreciation hit.

 

[YOLO]

Don't lease or buy new.

Buy used at least a year or two out and let someone else take the bigger depreciation hit.

^^^^What he said.

The market is currently getting flooded with cars coming off 2 and 3 year leases.

Buy it, finance via a Credit Union and get an extended warranty and keep the bitch 10 years.

Some amazing deals out there on some really hot cars.

 

[Cardude99]

I'll chime in. Now I'm not the most experienced person to lease a car but it has value. It depends on the person. If you keep your cars a while then don't lease. If you want to drive a new vehicle every few yeara then leasing may be okay.i like to keep my cars so I bought my mustang. My wife gets bored and wants a new vehicle every few years so we just leased our new Ram.

Yes buying is the more financially sound play but if you just want to enjoy and trade up in two to three years then go for the lease. We just got our ram which is a 48k truck and pay $450 per month for it. If we were to buy it the payment would have been closer to $650 per month. Just my perspective.

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