Hello,

I have been in close contact with a dealer near me about leasing a 2007 Acura TSX in Royal Blue (Black Interior). I have a few questions that maybe some of you could help me out.

1) What should I find out before I sign the lease agreement. I know that I will be putting a total of $3,000 down which includes the 1st month, bank free, taxes, down payment. He said he would throw in a pair of all season mats but what else should I try to get.

2) This package is for 15,000/miles year. If I wanted to buy it outwould I pay what I owe on it?

Thanks!

 

Leasing 101 says never put money down on a lease because it's gone the minute you sign on the dotted line (compared to a down payment on a loan; someday you may actually own the car). First months payment, security deposit (although that seems to be less common now), and whatever else they can dream up to get up front is all you should have to put out in order to drive her away. No money down will increase your payment, but if you do the math and can make the right deal, it's the only way to go. Remember, it's not money down, it's basically a forward payment on the rent (and leasing is a fancier term for what you're doing; renting a car for a set period). As far as the buyout goes, read the terms in your agreement. If you want out early, there's always a penalty (it's spelled out in the rental agreement). If you want to buy the car at the lease end, that's spelled out too (residual value). Be sure you're comfortable with the deal; there are a bunch of ways dealers can make money on a lease. The more you educate yourself on the process, the better you'll make out.

 

Money down isn't necessarily gone when you sign on the dotted line. A "capitalized cost reduction" is essentially a downpayment on the lease. If you put $1000 down at inception, it will probably save you about $75 over the course of the lease (i.e. if you didn't put the 1000 down, it would cost 1075 through the course of the lease).

Financial experts will tell you to put as little money down as possible, but they also expect you to invest all of your liquid assets in to appreciating investments.

If the minimum you could put down at inception were 1400, and you were going to invest the other 1600, then the experts are right. If you are like me and you would just blow the money somewhere else, you should put it into the lease.

Long story short, you should negotiate the selling price (if you want to sound like an expert, call it the "Initial Cap Cost"). The current lease program on the TSX uses a subsidized money factor, so that is set by AHFC. All the dealer can play with is the price they use to calculate the lease, everything else is set by the factory.

 

I spoke with the dealer and heres what I got from it:

Total selling price for the car is $27,800 for a pearl white TSX with a parchment interior

$3000 down includes the bank fees, taxes in NYS etc..

Please let me know what you think, it would be $329/month for 15k miles a year and 10% off all service.

Thanks!

 

If it's with Nav it's a good selling price - if no Nav it's an awful price. Let us know and then we'll comment on the rest of the lease!

 

OK - I've taken a look at the regional TSX lease offer on the Acura website, and I see they're actually trying to lease you an 07 TSX non-Nav with a selling price of $27,805.99 (net cap cost of 26,560.99 plus a cap cost reduction of 1245).

The lease terms themselves are good - money factor is .00110 (2.64%). So - the problem is with the selling price. I know the prices on the East Coast recently have been quite a bit higher than here in California, but even so . . .

The first thing to negotiate on a lease is the selling price - exactly as if you were buying it. The good thing is that once you do this on a TSX you get to take advantage of AHFC's excellent lease terms (assuming you qualify for their Super Preferred credit tier). It's the dealer's/manufacturer's game to focus on monthly payment - it's the customer's job to focus on the selling price of the car, and then to be sure there's no funny business like excessive dealer fees added on to give the dealer back the profit he "gave away" because of your negotiating skills.

 

Well I will be going over there tomorrow and I will try to see if he can do that same deal with for the TSX with Navi if not I will keep looking around. Anyone know what a good selling price is and is reasonable so I dont look like a jerk?

Thanks

 

If he gave me the lease with the selling price for 27,800 with Nav would that be reasonable?

 

Who said there was sucker born every minute? Oh yeah...Ripley.

Sorry, I don't like leases. At 1.9% financing a la Honda Financing Company, you should be buying the car. Did you ask the price the car will be leased at? Near invoice or above MSRP? So, in effect the dealer can lease you the car at whatever undisclosed total price, maybe $33,000, you then lease the car over so many years, fork over your money, then the dealer sells the sucker...uh sorry...you the car for $25,000 plus taxes, for a three year old car with 45,000 miles on it. Sounds great!

Pick up a copy of Consumer reports quick, school yourself oncar buying, and never lease a car.

 

I said the selling price the dealer said was 27,800 and thats for non navi, I am trying to get the same price or lower for the same car with navi. If I like the car I will probably just buy it to own it..

 

The whole idea I am doing is basically negotiating the selling price, pay for the car for that 36 month period and if I like it I will pay the final ballon payment as if I was financing it to own it.

Thanks!

 

The best advice is to avoid leases at all cost. In the end, it always is a much more expensive way to buy the car. You can use the $15,000 you'll lose on the lease to buy the car. Chances are a three-year old TSX with 45,000 miles is really not gonna look to desirable when the next gen TSX has been on the streets for a year already. Instead you can be paying off the car, then trade it in or sell it, whatever, when the new TSX is out, you can switch over to that if you desire...or take your girlfriend to Hawaii or something.

10% off service? You don't own the car, it will be under warranty, Acura is responsible to fix it.

 

Well I honestly can't disagree with you but to be honest I am being really careful with all the terms and all but I do understand what your saying and your right it won't be desirable in 2010 to be driving a 2007 TSX. I honestly still might lease the car and at the end of the lease term we will see how I feel about it.

Thanks!

 

Excuse me if it sounds rough. My cynicism stems from helping my mom lease a car, which in the end was one of the worst financial decisions she made. People can either afford things or they cannot. Focusing on what one can afford monthly is incorrect. As someone else indicated earlier, the down payment and monthly payments etc... don't go towards anything to account for depreciating value. It is only for profit. The car is being rented.

If you look in the paper for three year old TSXs (2005), it should give you an idea what the dealer will be asking of you for a purchase price when the lease is over. The lease does not entitle you to any preferential treatemnt when it is over. The dealer will sell the car to someone else if he can or simply send it off on a trade.

 

To set the financial facts straight on leasing vs. buying, in this particular case: The low money factor and solid residual makes the lease very competitive with an upfront purchase, even with a loan at 1.9%. Over the course of 36 months, and assuming the car is purchased at lease end, the lessee will have spent 700-900 more in total than the buyer. To make it easy and to compare apples with apples this example assumes the buyer finances the full purchase price over 36 months at 1.9%. It also assumes the lessee deposits approx. $450 per month in the bank at 5% interest (this is the difference between his lease payment and his car payment). If he doesn't deposit these $$ the lesse will pay approx. $1700 more than the buyer over the 3 years.

The lessee, of course, retains the flexibility of purchasing his car at lease end for the predetermined residual; washing his hands of it by turning it in to AHFC; or trading it in on another car (if he gets lucky in the depreciation game his lease payoff may actually be less than the trade-in value - a nice little financial bonus).

 

Well basically to be honest I will be leasing the car and I am glad I seeked advice here as it made me much more educated in this process. Most likely at the end of the lease term I will be buying the car but basically I want to remain flexible as far as being able to return this car back to Honda. Thank you everyone for your advice, it is greatly appreciated!

Best Regards,
Dinis Passarinho

 

I think life lessons and the advice of consumer advocates to avoid leasing are more valuable than the hypothetical "best financial scenario" expectations...and what the dealer is pomising to happen three years down the road. $450 in the bank per month at 5%? Money market accounts don't even offer that. The last time I looked, a one-year CDs was offering about that much. The original post is from a person in high school!

 

Well thank you Zoopa I greatly appreciate your help and all but for me at this moment I feel its best for me to lease this car since I will most likely buy it out at the end lease term but still want to have the option to return it.

Thank you,
Dinis

 

I leased my 07 TSX and believe it is the best option for me. I did the three year lease with only 10,000 miles annually at $329 per month. The selling price with navi was $29,000 owing $18,700 at the end of the lease. I have the option to buy and would never consider not buying it considering a three year old TSX is worth over payoff. Not only that, my intrest rate is only 1.9%. Not bad cosidering I was going to buy a civic si with 9.99%. Anyway I love my car and would suggest the leasing option (saving the money you would have paid for buying the car outright)

 

T-Mac: Thank you for chiming in and basically the deal with me will be a Pearl White TSX (not the Blue as I originally posted) in a 6 speed MT with Navi. $3,000 down includes the taxes and bank fee's. My payment will be in the low $300 range and I plan on paying it off at the end of the lease probably anyways. Let me know any suggestions you have for me as well as your selling price.

Thanks!

 

GiftMonster -

That would be an excellent price on a TSX with Nav. You could probably achieve that price easily here in California, based on recent quotes/sales I've seen. Might need to be $1000 higher in your area.

The Acura special lease offer says this about the $1245 cap reduction in your original lease quote:
"MSRP $28,760.00 (includes destination) less the capitalized cost reduction (which may be paid by the suggested dealer contribution) resulting in actual net capitalized cost $26,560.99."

So - that's what I'd try to negotiate - a selling price of $26,560. It's still above invoice and the dealer is making a profit and is moving an 07 which he needs to clear out before the 08's arrive. Once again, here in California $26,560 would be a high price. I suspect if you can do that in NY you'll have done quite well.

To make this post even longer . . . here's where you want to be on a lease:

Selling price plus AHFC's standard $595 lease acquisition fee gives you your "gross capitalized cost". You don't want to put any money upfront other than tags, title, dealer document fees and first month's payment - so your "adjusted capitalized cost" (also called net capitalized cost) should be exactly the same as your gross capitalized cost. The residual and money factor (the "money factor" doesn't show up anywhere on the lease agreement itself) are now applied to your cap cost to figure your monthly payment according to the following formula:

(Cap Cost – Residual Value)/Term = Depreciation
(Cap Cost + Residual Value) X Money Factor = Interest
Depreciation + Interest = Base Monthly Payment (before sales tax)

Here's an example using a selling price of $26,560:
selling price 26,560
acquisition fee 595
cap cost 27,155
16,680.80 residual (36 mo/15k mi/yr)
.00110 money factor

(27,155 - 16,680.80)/36 = 290.95 monthly depreciation
(27,155 + 16,680.80) X .00110 = 48.22 monthly interest ("rent charge" on the lease agreement)
290.95 + 48.22 = 339.17 monthly payment (plus tax)

Remember, this is with no down payment other than approx. 600-800 for tags, title, doc fees and first month's payment.

Some folks have reported success in taking a one sheet lease proposal (with the numbers set out as above) to the dealer and saying "This is what I'm prepared to do today."

 

GiftMonster -

The reasons the experts advise against making any upfront payment except tags, title, etc. are:

1) If your car is totaled or stolen you may never recover your down payment. The insurance company's primary obligation is to the finance company and they may very well pay off only the amount due AHFC - leaving you and your $$$$ down payment out in the cold.

2) On a "low interest" factory-subsidized lease such as the TSX special lease, you can invest your down payment $$$$ at a higher rate of return than you're paying AHFC.

 

Thank you,

I will be going over to the dealer tomorrow to discuss everything regarding the lease and hopefully he will allow no down payment and is willing to throw in a navi for that price. I will keep you updated.

Thanks!

 

One final question: I understand that the price with Navi for a 6 speed MT for 27,800 is reasonable but what would be a reasonable selling point for a 6 speed manual NON Navi?

Thank You,
Dinis Passarinho

 

I just leased my 07 with the afformentioned $3K down (NYS tax and tags included) and a $325 payment wit hthe 15K mileage limit. Cost on the agreement for the car is 27,400. Its a non navi. Guess I could have done a bit better, but Im pretty satisfied.

On the subject of validity of leasing? Look...I know you can run all kinds of accounting calculations to make leasing look bad, but for MOST PEOPLE, its either lease or drive a Toyota Corolla. I wasnt swinging the $500 some odd bucks per month to buy and nor do I want to. You can run all the calculations you want at me.....All I know is that I got the car I want, for a decent montly nut, and in three years, Ill have ANOTHER new car or will buy this one outright and decide what to do with it on my own. Yeah...the fees and terms of the leases arent always so nice to deal with, but for many, it gives people the opportunity to drive the car they want and if negotiated properly, offers the flexibility one needs.

Oh....and Zoopa....my residual on the car at lease end is $16,700, NOT $25K as you claim. With all due respect, get yer facts straight before talking down to people.

 

RKFast:

Here is what I am trying to do: The dealer gave me the selling point for a Pearl White/Parchment White interior NO NAV for 27,800 in NYS I am trying to bring that selling point down:

The terms are as follows:

15k Miles per year for 36 months

The down payment is as follows for a total of about 3,053

1st Month Lease $329
Security- Waived
Bank fee- $595
Taxes: $994.61 and 83
Down- $1000


Basically it includes loaner car by appointment and wash/vac service (not that id use it since they MURDER the paint with swirls)

Let me know what ya think!

 

No need to be offended when that wasn't the intention.

http://biz.yahoo.com/pfg/e16buylease/

The Buy vs Lease Decision

You Auto Think Twice About Leasing a Car

By Suze Orman

It drives me nuts to see all the money wasted on car leases. In my opinion, leases are a drug for status-conscious people who need the rush of driving a "nicer" car than they can really afford. The auto-financing folks have basically perfected a way to let you think you can have your cake and eat it too. Can't afford to buy a BMW or Lexus? No problem, just lease it!

Well I am here to tell you it is a very big problem. The car dealers can make the cake pretty enticing, but if you really understood the true financial cost-not to mention the risks you are taking - you would be sick to your stomach.
The Emotional Leasing Pothole

Let's first talk about why leasing is such an ego stroker. As I just mentioned, it allows you to drive a car you couldn't afford to buy for yourself. And why is that important? Because you suffer from status-symbolitis. You want your car to be the talk of the office parking lot, or to turn heads at the stoplight. People, wake up. You are spending money you don't have, to impress people you don't really know. Where is the logic in that? more...

Article also contains:

* Getting Rear-Ended When the Lease is Over
* Leasing Bermuda Triangle
* There's No Airbag If You Hit a Financial Rough Spot
* The Lease Tax Break - A CAR-bohydrate You Should Really Avoid

Buy "New Used" Instead

So do I think the best financial move you can make is almost always to buy a car instead of leasing? You bet I do. In fact, if you are cutting it close financially, you should strategize a step further: buy a new car but make sure it is used. Let me explain. New cars depreciate 20 percent to 30 percent the second you drive them off the lot. So if you really want to be smart, make someone else's mistake your lucky day. Buy what I call a new used car more...

Article also contains:

* Go With Something Almost New
* Your Driving Test
* The Stupidest Financial Mistake I Ever Made

 

Nothing better than some philthy rich attention whore media elite lecturing to ME about ego and what car I should drive.

Sorry, Suzie. Not all of us have TV shows, book deals and columns published in major newspapers. I drove the same car for ten years and 200,000 miles, paid it off, paid off the credit cards and took care of my financial house. Its time for me to smell some LEATHER.

So eat me.

Not you, Zoopa...its all good!

 

Thats pretty much the deal I got from whom I got the car and from other dealerships I shopped around with. So it seems to be the "going rate", at least here on Long Island.

 

Hello,

I basically am prepared to go to the dealer tomorrow and show him the Edmunds paper on what others are paying for a 6 speed 2007 tsx non navi is $26,680 I will basically have to get him to come down $1,000 of his original quote of 27,800. Think he will do it? How does that deal sound overall as far as it goes?

Thanks!

 

MSRP is the same for AT or MT - so a good price for the AT will be a good price for the MT. Dealers may try to push the idea that the MT is "scarce" - but the other side of that coin is that there's little demand (among the general population) for the MT so the dealer should be happy for the chance to sell one!

Personally, I think you should be pushing for a mid-26K price on any non-Nav TSX. Remember "suggested dealer contribution" of $1245 in the TSX special lease offer? Beat'em over the head with that - "It's right here in black and white on Acura's website." Print it out and take it with you - point to the words suggested dealer contribution - "Why are you trying to screw me?" (The lease offer is, technically, for the AT - makes no difference - don't let'em bully you.)

Also - it's not a question of them "letting you" make no down payment. It's your decision - nothing changes except that your monthly payment is higher (because you're paying that $1000 down payment over 36 months instead of upfront).

Re security deposit: Don't let the dealer try to make you think he's doing you a special favor by "waiving" the security deposit. I'm not aware of anyone putting up a security deposit on an AHFC lease recently - in fact, IIRC, you can lower the money factor a tiny bit if you put up a deposit (not that I recommend doing it).

PS: I'd be interested in a breakdown of the $994.61 "taxes". Just to see if there's some bogus or inflated dealer fee in there. (I don't know the license and registration costs in NY - but that amount is definitely higher than I'd expect.)

 

Yep, I will be trying to push the selling price in the 26,000 mid range at most. He did try and tell me that they were scare and all and wanted me to put a deposit down to hold it but I didn't. I will discuss and see the difference overall in me not putting the 1,000 down up front and just paying the taxes and bank fee's. What is the suggested dealer contribution exactly?

Thank you!
www.giftmonster.net

 

I sent my previous post before seeing this. Sounds like you're on the right track - good luck! (He'll probably try to play the "oh that's just some internet stuff" and dismiss the Edmunds info. So I still recommend the "suggested dealer contribution" ammunition.)

Finally: Edmunds, "suggested dealer contribution", or messages from outer space - none of these are as important as you being willing to walk away. As long as the dealer knows you "have to" have that car - he's got you. I'd strongly consider taking in a printed proposal similar to the one I posted previously and say you're prepared to do this deal today. (Since it's a reasonable proposal, not something crazy, they can definitely do it. Whether they will depends upon two things: local market conditions and how they read you.) If they say no, thank them kindly and leave. They may change their tune right away; they may call you later; you can return at a later time and go at it again. And, oh yeah, some of the most powerful ammo you can have is email quotes from other dealers. Get several of these right now, if you haven't already. (This will also give you more info on the market conditions in your area.)

 

Take a look at the TSX special lease offer on Acura's website. It states an MSRP of 28,760 and a net cap cost of $26,560, with a $1245 cap cost reduction. This translates to a selling price of $27,515 (the net cap cost plus the cap cost reduction equals the selling price).

But Acura knows that a mid-27K selling price in today's market (gotta move 07's 'cuz the 08's are coming) isn't going to sell a lot of cars. So there's the "suggested dealer contribution" of the $1245 cap cost reduction. This brings the selling price down to the mid-26K range.

There are various factory-to-dealer cash incentives. Some of these presumably don't apply if the customer uses a special lease or finance offer. But the bottom line is - the dealer is going to make an adequate profit selling or leasing a TSX at or near invoice (dealer holdback, incentives we don't know about, wanting to sell more 07's at little profit to increase the allotment of 08's which can be sold near MSRP). And even tho it's not directly relevant to your situation in NY - TSX/non-Navs are being routinely sold/leased in California for hundreds of $$ below invoice. So it can be done, it is being done. I suppose we can give props to the NY dealers if they're able to maintain a TSX market $1000 - 2000 above the West Coast . . . but that doesn't mean you shouldn't do everything in your power to avoid being led to the slaughter.

Knowledge - and the willingness to walk away - is power.

 

Hello,

Thank you for the advice. I called the salesman again today and I asked if he could do a selling price in the mid 26.5k he said that would be impossible since there are no TSX's for sale in the area and the market is like that. He also mentioned how he has no AT's and won't have them for a while but has these two MT's in stock so hopefully the idea that he wants to rid one of the two MT should hopefully bring him down. I told him I would be down to discuss it around 2:30 so we will see how it goes.

Basically I am prepared to just thank him and leave if he cannot do a selling price of the mid 26,000 range at max.

Thanks!

 

Zoopa, STFU. You clearly do not understand leasing in terms of all of the various factors that can be involved and the various factors for the buyer.

Do not turn this into a lease vs. buy debate as this is not what the OP was looking for. There are plenty of threads on this already.

So in short, knock it off.

EDIT: By the way, the article from Suze Orman is total rubbish. Poorly researched and incredibly one-sided. I advise against anyone who is looking at buying a car from reading that article because it is so deceptive.

 

so i just started leasing my new 2007 TSX and here's what I'm paying. bought from a dealer in Boston, MA.

no money down, sign and drive
15,000/year
the price I got was $26,200 + about $700 in acquisition, license, registration fees.

i'm paying $345/month for 36 months.

i put $345 on my AMEX for the first month's payment and drove off...money factor(for leasing interest rates from Honda Finance) is 0.00110 which comes out to about a 2.2% interest rate which is much lower than the current car loan rates out there.

anyways, i think i got a pretty good deal.