russttu

I am contemplating leasing an RDX for 36 months. I have got an offer of 3k off msrp, which looks pretty good. This was on the base model, though I could probably get the tech package with the same discount.

I have never leased a car before, and I really don't know what the positives and negatives to leasing are. I like to change cars often, so thats why I was looking at the lease, and after putting 20% down, my payments would be around 320 a month.

Is putting 20% down a good idea? Do I keep any equity in the car when the lease terms are up?

Thanks everyone.

Skeandhu

Any money you put down for a lease only serves to reduce your monthly payments.

Once the lease is up, you can choose to purchase the vehicle or return it... Should you choose to return it, you have ZERO equity; maybe just a quick handshake from the dealership and an introduction to a new car they will want you to lease / purchase. If you purchase then you will still be paying the full residual amount, plus taxes.

Here's a site I like for lease info & calculators:

http://www.leaseguide.com/calc.htm

edit: If you can afford to put 20% down, you may want to look at purchasing. In 36 mths, the car may be worth more than what you owe so you could sell for a profit(-ish).

sasair

if you put 20% down and purchase you should always be ahead in equity especailly on an Acura.

If you decide to lease, and purchase at the end of your lease, you will end up paying alot more than if you just purchase it to begin with.

Some downsides to leasing....you can only put a certain number of miles on the vehicle per year, typically 12000-15000. If you go over then they charge you per mile. Can get very pricey if you go way over,a dn you don't get compensated if you are way under. You can't make any modifications to the vehicle and you have to pay for any damage inside and out. Depending on the leasing company, they can be very picky about damage, making you pay for every ding or scratch.

advantage to leasing is low monthly payments, so you typically need less disposable cash. if your lease payment is 320/month for 36 months, your purchase payment if financed for 36 months would be 700+/month, 60 months would be 400+/month.

My recommendation would be to purchase if you can afford the payments, especially if you are putting 20% down. You will always have positive equity in the vehicle as long as you have it. And at the end of the loan, you will have 100% equity.

It is hard to say what is better or worse without seeing the lease terms, but typically, leasing is another way for a dealer to screw you since they can work the lease numbers in their favor and many customers don't know what they are looking at, but if you do your homework and learn the ins and outs of leasing, you can work the lease in your favor just like the purchasing price.

c_hunter

You should not put a lot down on a lease. Roll as much as you can into the monthly payment. You don't want to commit much of your money up front if you can help it (it defeats the purpose of the lease, and you would lose it all if the car got stolen/totalled/etc. 20% sounds like WAY too much. If you have that kind of dough, definitely finance instead.

Also, the current Acura lease deal is not so great -- the money factor is kind of high. Right now, their finance deal is better.

To know if a lease is a good deal, you really have to understand all the terms. At the moment, it sounds like you need to do a lot of research and learning to come to that understanding.

russttu

I can put up to 12 grand down on a new rdx, but I was also planning on using some of that money to fix up my house, hence the reason I was looking at a lease. The terms from what I have seen on their website are decent, and I can easily get invoice for the rdx as there are several dealers up here with 30+ rdx's in stock. I drive less than 6k miles a year, so the mileage limits are not important to me.

If I put the minimum down on the lease, I would have around 7 grand to pump into my house.
Decisions, decisions.

c_hunter

Every time I get a new vehicle, I weigh all the options. In the case of my 05 S2K, the lease was by far the better deal because the terms were good and the money factor was significantly lower than any financing I could find (the lease money factor was equivalent to 1.75% APR over three years). Even if I buy the S2K at lease end (which looks more likely) I would come out ahead with the lease. For every other vehicle, however, the financing package has been a better option. That is especially true for the RDX. The lease money factor works out to about 5.11%, versus the 3.9% finace rate offered by Acura. Unless you want to spend more money on finance fees (interest = profit for AHFC) don't take the lease offer when you can get a better finace rate.

Mediocre lease deals serve primarily to suck in borderline buyers by making them think they are spending less money, or by putting them into a lower monthly payment versus financing. It sounds like you are falling into that trap. In a no-nonsense black/white financial sense, the only time you should lease is when it costs less than financing. Right now that's not the case.

JayCT

russttu - why are you leasing when there is such a good financing rate being offered. We got the RDX base at $200 UNDER invoice plus the 4.9% financing. Of course that rate assumes you have a good credit rating. JMHO Jay

russttu

My rating is around 700, and I think 710 is the finance point where they will offer 4.9%. I have requested a credit application to see if I qualify.

creativeguy

No. I talked to a dealer who told me never to put more than $3000 down on a lease. You are losing interest on that money. Keep the down amount low. If you monthlies are higher, that is ok since $400 a month in 3 years is worth less than $400 today. You want to put off paying as long as possible, I think.

sasair

Not necessarily true, again it depends on the lease terms. The financing fee takes this into account. Much like an APR on a loan, your lease payment is based partially on this finance fee. so the more you don't pay off early, the higher the finance fee portion of the payment is going to be.

There are soooo many ways dealers can hide costs in a lease....

russttu

This is the best quote I found.

07 RDX with the Technology Package - $33,551*
07 RDX W/O Technology Package - $30224**

I could put up to 12k down if i finance, which would leave me with a $360 payment assuming I qualify for the 4.9 for 60 month financing. thats 21600+12000 down=33600 total price. Assuming I keep the car for the entire time. leaving me with a residual value of 19862 (59%).

With 3k down on a 36 month 12k mile lease, payments are 340. That would be a total 16100 spent over 3 years with no equity left in the car.

Kinda seems like a no brainier assuming I qualify for financing. The only problem is the 12k down which would not allow me to fix things up in my house.

creativeguy

The 07 RDX would seem to be a car to lease rather than buy at this point. People who paid MSRP have already lost $3000 of value since the going rate is now invoice. If sales don't pick up significantly, the price will continue to drop, and you'll continue to lose resale value. If the RDX is cancelled after a year or 2, that could also significantly affect resale value. This just doesn't seem to be a car to own unless you plan to keep it for many, many years when resale value won't mean as much.

JayCT

My deal worked out to $200 under invoice ($29,904) plus destination, tax and registration. Financing thru Honda Finance at 4.9%. We pick it up tonight. after I agreed to the deal, another dealer I had worked with came back with a great deal at $500 under invoice. It works out to a few less $ per month but it wasn't enough to make me break the deal I had and drive the 75 miles to RI. I do recommend them though. They are Inskip in West Warwick. Jay

russttu

ok this should put it into perspective.

Lease
250/36 months 6000 down = 15000 spent over 3 years or 5k a year to use the rdx. No residual.

Buy
360/60 months plus 12000 down. To make it even, ill assume that I would sell the RDX at 36 months and receive 19860 (59% residual)

360/36+12000=24960 spent. 24960-19680+1956(money still owed on the loan) =7236 /3 = 2412 per year.

I hope my assumptions and math are correct.

sasair

Your numbers are off. Your monthly payment of $360 would be for a 0% loan at 60 months if your loan amount is $21600. 21600/60=360. at 4.9% financing, your payment would be over $400/month. So then it become a question of if you can afford $400+/month as opposed to $250/month. But your basic ideas are right in that it is better to purchase if you can afford the payment.

Plus you should also figure in taxes on your purchase to make it more accurate... (3% in virginia)

mvwood

holy crap 3%?

another huge factor in Canada is that combined federal and provincial taxes are 14%.

We're getting hosed on the Canadian MSRP (exchange rate they use is way off, not in our favour), we're getting hosed on the crazy destination charges (more than twice US charges), we're getting hosed on discounts available off MSRP (both because supply has been kept a lot tighter here and because lease and finance rates arn't nearly as good) and we are getting absolutely taken to the cleaners on taxes.

Pisses me off.

sasair

wow 14%? That's crazy. It would be cheaper for you to fly to the US, buy one and ship it to canada. Course there's probably some weird import/export tax you'd have to pay on that too.

mvwood

yeah, you have to pay the 14% at the border.

completely changes the dynamics of purchasing/leasing a big ticket item like a car - Paying the 14% up front for a purchase just wasn't going to happen, and if I walk away from the lease at the end I've saved 14% on the residual value from not paying the taxes. That's almost 3 grand in savings IN TAXES from not buying, let alone the fact that the rest of the taxes are paid over time.

For the lease it still takes a $540 monthly and turnes it into $620 after taxes, which is just insane.

But hey, at least our income taxes are higher too. Wait a second...

russttu

$350 is the monthly payment the acura calculator gave me with a 31k out the door price and 12k down at 4.9 for 60 months.

sasair

21600 + 12000 is 33600, not 31k. Looks like you are mixing up your numbers from the base and tech.

sasair

This is where it took a wrong turn.... Your numbers here are based on the 33551 of the tech and not the 30224 of the base, but your monthly payment of $360 is based on the 31k figure.

russttu

i always planned on getting the base unit. So that should be pretty close. I dont think I will go with the tech package if i decide to get an RDX

acurardx

That's cheap. It is CAD$698/month for 36 months and zero down in Canada !!!

acurardx

If you purchase the car and trade in later, you also save the taxes from the trade-in price as well !!!

acurardx

Yes, lot of Canadians are importing their cars from US, especially for those who live close to the border. They can basically drive over. Only two major issues:

1) Some manufacturers (such as Honda & Acura) void warranty if the car shipped across border

2) The US cars are in MILES in odometer. I don't understand why a supposed to be the most advanced country in the world - US still use imperial units but not metric

Note: For those Canadians who complain about us being ripped by the RDX exchange rate, check out other cars from other manufacturers. They are even worst than us. Some of them are using 1.5 or above as exchange rate (current rate should be around 1.12). Taking about another 35% different. We are also paying double destination charges, triple sales taxes, miss 2-3 grands discounts US dealers are currently offering. We, Canadians are being totally ripped off

mvwood

plus 14% tax per month in Ontario.

mvwood

not sure I follow. You saying if I pay 50k now for a car I trade in 4 years for 20k, then I don't have to pay tax on the 20k I "save" on the new car?

Does that basically mean I am paying tax on 20k now ($2800) in order to save $2800 4 years from now? Not as bad a deal as I though, but still not great.

You sure we are not actually supposed to pay tax on the new car without discounting the trade? Seems a little wonky as per regular tax principles.

acurardx

Whatever amount it worths when you trade it in, you can save taxes on it. Let say it worths $25,000 after 3 yrs and you trade in it for another $40,000 car. You will only pay taxes on $15,000. That's the advantage over private sale. You might get higher price from private sale, but you will also lose the tax saving. A lot of time, I just want to save the hassle and trade my car in if the difference is within $500.

newteez

That a great way of putting it.

Russttu, The lease option is a valid one, but when you consider the tax benefits as mentioned above, the fact that you are building equity (I know not really possible in a car) and the pricing that people have been getting due to overstock and holiday specials, you can really take advantage of the value of the car. One thing to consider is the budget numbers can get skewed by a variety of factors, you have to add in the tax as mentioned but should also consider an extended warranty. Acura's as a whole have a great record, but with the turbo engine and first model year introduction it would be a wise investment.

Good Luck

JD

creativeguy

That isn't how it works, folks. You always pay taxes on the total purchase price of the car. The trade in is a separate transaction and doesn't affect the taxed amount of the vehicle.

sasair

I think this tax benefit is a canada thing....correct?

c_hunter

I don't know about Canade. Here in the US, it's valid in some states, but Virginia is not one of them. No tax benefit here.

The CarMax websites lists some of the states where it is valid (I assume the only cover the ones which also have a CarMax store).

Pacer

Must depend on your state. It would save me some k where I live, I know b/c I've done it in the recent past.

JayCT

Here in Connecticut, the trade-in is deducted from the pruchase price of the vehicle and then the tax is applied to the difference. That is the way it worked with my new RDX, so it must be a State-by-State thing. Jay

Skeandhu

Yeh. In Canada, the value of your trade in reduces the pre-taxed value of the car you buy. Just to clarify the earlier post:

With trade in:
$45000 <- new car
$15000 <- Trade in
$30000 <- new Total
$ 4200 <- Tax (14%)
$34200 <- Purchase Price

No Trade:
$45000 <- new car
$ 6300 <- Tax (14%)
$51300 <- Purchase Price
$15000 <- Cash from private sale
$36300 <- What's left to finance

Purchaser has saved $2100 in taxes. To equate to the same amount in a private sale, the car would have to be sold for $17100.

Gotta love Canadian tax math....

sasair

So actually that seems about right. You should be able to sell a vehicle for about that much more in a private sale rather than trading in. It makes the decision to trade it in pretty easy.

Still blows me away that you have to pay 14% in taxes though!