mjferguson

I am thinking about leasing a TSX and prepaying the entire amount. What could I expect to pay for a 36, 48, or 60 month lease? Thanks for the info.

NOSWAD

why not use all of that money for down payment? prepaying a lease is not smart. and most leases are only 24-39 months.... once you go above that you may as well buy it bc the depreciation rate will not keep up with what you owe on a lease.

mjferguson

In my current situation a lease would work best for me. I drive a new car every 3 to 4 years now and have a trade in that would probably pay the entire lease up front. I have heard you can save money paying it all up front? My options right now are basically trade my current car for a cheaper car that the trade will cover or get a new car and pay for the lease up front with my trade in. Any ideas what I would be paying up front on a 36 to 48 month lease?

biker

I don't get it but I assume the price would be the diff between purchase price and residual with no money factor since you're paying the whole thing up front. Ask Acura or some other leasing company for the residuals for the length you want.

NOSWAD

the lease would be best but not for more than 39 months..... there are 48 month ones as well but at 60 you may as well buy it..... if a dealer knows you can pay all the payments up front you may be taken advantage of so I would do the deal you want and then once your contract is processed make all the payments.....but also the more you put down upfront the lower your payments will be..... it is called a cap cost reduction.... you should use Honda financial services.

CGTSX2004

iTrader: (1)

Make sure that you get the dealer to apply your entire trade-in toward the cap reduction. By doing that, you should be able to avoid paying any form of interest.

erik7

What would happen if you totalled the car? That's the reason not to put a down payment on a a lease. That would be my concern.

NOSWAD

if it was totalled the insurance would pay off the cars worth and if that is greater than what is owed than the customer would get the money back.... if there was a large cap cost then the amount owed on the lease would be less and therefore he would get the cash back....

mjferguson

Just got back from the dealer and I have not pulled the trigger on this deal yet. I just ran some numbers and it seems like something isn't adding up. Sticker on the car I am looking at is $27,000 (that is for a 2005 without nav). I would basically be putting about $6000 down with my trade and getting $8000 cash back from them. What is strange is they still have the payments at $260 for 42 months. Lets see 6000 + 10920 (payments) = 16920. He gave me a residual or 16200 after 42 months. So why would I be paying almost $17,000 when the difference between the sticker and the residual is only about 11,000?

NickR

that doesn't make sense. they are playing with the #'s somewhere. that is the tricking part with leasing - there are a lot of ways to hide money. download the leasing spreadsheet from www.carbuyingtips.com - it's free and will get you within 5 cents of the dealer's #'s as long as you have the right money factor, residual, # of months and tax rate.

It's great. I use it everytime and it amazes the dealers what figures I can come up with after talking to the finance manage for 5 minutes over the phone.

mjferguson

I just played with the spreadsheet for a second and I am still confused. The payment actually comes close by taking many of the defaults in the spreadsheet. I am basically going from about 21,000 to 16,200 over 42 months and paying over 5000 in fees? Is this the way a lease works? To get $5000 out of a car you have to pay $10,000? Am I missing something here?

CGTSX2004

iTrader: (1)

Ok...let's go through this step by step...

1. Are you putting $6000 down (cap cost reduction) or $6000 towards the drive-off (cap-cost reduction + fees)?
2. What is your money factor?

Basically, a lease is similar to a loan in that you pay an interest in the form of a money factor. If you took your $11,000 difference between the sticker price and the residual, added in the interest, split it over 42 months, then added tax, that should give you a basic monthly payment.

MoFocker

why dont you just put the least downpayment down and instead of forking over YOUR money to the dealer, just open a seperate bank account with it and set up the payments to be witndrawn via EFT and leave it be. that way you dont have to worry about making payments or even that you need to make a deposit/transfer AND you still hold onto your money which is ALWAYS a good thing.

MoFocker

plus, even if you have great credit, it will do nothing but benefit you to have another form of car-credit tacked to your history that was paid in the green. Esp now since interest rates havent going back through the roof.

CGTSX2004

iTrader: (1)

That's actually not a bad idea...

Open a high interest savings account (something like the ING Direct savings account with the ridiculously high yield).

NickR

And you'll draw interest on the account if the bank lets you set it up that way. That's a good idea. But you will still pay your state's tax % on each monthly payment. That is the only money you save by prepaying the monthly payments.

Heck, just call Honda Finance and ask them if there is a prepayment fee. If not, do a zero down lease with the dealer then write one HUGE check to Honda American Finance on your first bill.

mjferguson

You would end up paying the same amount either way right? Just a much higher payment each month? Not sure on the money factor I need to find that out. After the down payment I am (or would be) basically paying about $11,000 to get from $21,000 to about $16,200. At this point I may not even go back to the dealer, but something tells me I will be getting a call from them shortly. $11,000 in payments to get $4800 in value doesn't seem close to me.

To answer a question about the $6000 would be total paid out the door.

NOSWAD

I work for honda finance and there is no pre pay fee..... also keep in mind the full payment doesnt take the principle down thats why multiplying the numbers isnt working out for you.... it would be like saying I pay 360 house payments at 1000 so I pay 360000 for a house that was 150000 when I signed for it. the difference is the interest, servicxe fee or whatever

mjferguson

But what I am seeing here is 17,000 to get to a residual that is about 11,000 less than the sticker. Does that seem right? Seems like an extra 6000 for interest and fees over 42 months is a lot to me?

NOSWAD

i would just take a good look at the lease worksheet and see where the funds are allocated.....pay close attention to the payment division.... how much goes to depreciation vs service fees...... the upfront costs totalling 6000 shoudl include all taxes and down payment but you really want to look at how much they are dedicating to cap cost reduction....also how many miles are you getting? 12, 15 or 18?

NOSWAD

also, the residual you listed is 61% of original cost which is inline with current values but probably they can do a little better than that

NickR

I think you're thinking about this too much. Go in order:
1. What is the dealership selling you the car for? $27,000
2. What is your total cap cost reduction? 6,000 (I think, its hard to tell from the thread)
3. How long is your lease? 42 months
4. What money factor are you getting? (i got .0022 or 5.28%)
5. What is your state's tax %? (dunno, mine is 6%)
6. What is your residual after 42 months? $16,200 - thats 60% residual, it seems a little low, but I may be wrong.
7. What are the other fees, if any? I usually pay for these separately. That way I can keep all of my figures clean related to the car (TTL, everything but destination. that needs to be figured in to the cost of the car. the spreadsheet does it for you.)

Plug these into the spreadsheet and see what you get. I get $207 per month, but I am probably off on your money factor. Make sure to get the decimal # not the percentage.

NickR

NOSWAD, can you give out your current money factor for a great credit score? If not, I understand, but I think it will help this guy.

NickR

Oh, and by the way, $27,000 seems high to me. I got my TSX 3 weeks after it was out in April 2003 for $25,500. MSRP, without destination is $26,990. You're getting a very good deal. Invoice, without dest, is $24,602 - you'll never get it at invoice, but you should be able to do better than what they're offering.

mjferguson

Ok, this thing is about to fall apart I think. They won't budge on the proce of 27,000. They say the interest is 5.9% and my sales tax here is 6%. With 6250 down the payment is still at 263 before the tax. Someone please tell me if this is anywhere close to a decent deal. Doesn't seem like it to me, but I like the car and don't want to lose it if the deal is decent?

MrChad

Why not do this instead:

Buy the car..... for say $27,000 get a 72mo. loan--should be about 5.0% apr

Put $6000-grand down.....loan is for $21000........payments will be $340 to own it.

With the depreciation from www.edmunds.com you should be able to sell the car in 3yrs for the balance left on the loan and break even.

Or keep the car and pay off the loan....

mjferguson

That would be great except the current situation I am in kind of blows that idea. see I have a trade that I can get about 15000 for right now. that is where the 6000 down is coming from. I need the additional 9000 cash for something else. I and the low payment of about 250 is doable right now. My other option is to trade for a high mileage used car and own it outright. The only problem with that is I really worry about a no warranty..

NickR

IMO, the price is too high. Are there any other Acura dealers around (within 90 miles)? After that you have to consider service, usually there is no problem buying a car at another dealership, but I have heard of the rare jerk dealership that almost refuses to service cars bought somewhere else.

Here's the #'s I put into the spreadsheet. See if your's match:

Selling Price: $26500
Dealer Acq Fee: $500
Money Factor: 0.002485 (or 5.96%)
42 months
6% ST Sales Tax
Cap Cost Red: $6250
Residual Amount: $16200

Those #'s work out to a base monthly payment of $200.15 + 12.01 taxes for a total monthly payment of $212.16

Are your #'s different on your spreadsheet? Where/how are the dealerships #'s different? You are smarter than they are, make them explain the difference to you. It's your money, you deserve to know what's going on with the second largest purchase of your life (or most people's anyway).

At the same time, its a car. They come and go. This is a great car and I love it, but I wouldn't take it if I was not getting a deal that I would be happy with for the length of my ownership.

mjferguson

My numbers are the same. I will take it in tomorrow and if they cannot come VERY close to those numbers I will walk. This is the only Acura Dealer within about 300 miles of where I live. Maybe that is why the prices are a little higher?

NickR

you're welcome. i actually thought about taking my laptop in with me so that we could work the numbers at the same time. i wish that i would've. there are soooo many place to hide money in a lease. i ended up getting the payment that i wanted, but the dealership did it in a way that made them more money. it worked out well for both of us, but it wasn't until i got back home and to the spreadsheet to figure out what happened.

MrChad

I always take a PDA and a version of interest software in excell or an excell equivilent mini program.

Before the PDA... I would take a memo pad and my own calculator and cheat sheet...sorry if that makes me a jerk (or a nerd) but I like to work the numbers on the spot with confidence.

I would also take an edmunds.com print out incase they disputed TMV numbers with me too.

mjferguson

but I am now heavily leaning towards a BMW 325i because of the crap I am having to put up with at the Acura dealer here. The BMW dealer is willing to give me almost 2 grand more for my trade and the same payment on a 42 month lease. I love the TSX and am actually investigating a car 400 miles away as a last option. I can't believe the Acura dealer here doesn't want to sell me a car!!!

MrChad

Isn't BMW running a $299 per mo. lease deal right now? That's really good for a 325i. But I'd definately try for the TSX first...sounds like your dealer is trying to scam you on the trade in value of your car and sink it back into your lease.

mjferguson

I already called him on that one once. He all of the sudden said he would give me fair market value for my truck. I said OK sounds like we have a deal. Then he slipped the increased payment in there. I just have a sour taste in my mouth from these guys. I am now dealing with an Acura dealer almost 450 miles away. If I can't get something done with them I will just go for the 325i. That deal is 299 with 3000 down. If I put 6000 down and go 42 or 48 months hopefully I can get a GREAT payment!!!

MrChad

Well since you are looking for a new TSX finding a dealer at any distance willing to lease should be easier after all it's just a color combo game at this point and a numbers game for you. Hope you can find one.

just my once you start running leasing out past 36mo. you really start to loose the benefits of a lease. If you are leasing a car for 42-46mo. you would likely be financially much better off finding a Cert. USED something 2yrs. old and just buy the car with a 48mo. loan.

My feeling on a lease is always stick the lowest money down you can, let your money work for you in the bank. Then look for leases of cars that depreciate fast with good lease deals to clear them off the lots. GM has some nice 24mo. G6 (loaded) leases in my area right now ($2000 down $95.00/mo.). The point being you drive a good new car for 2yrs. and stick the dealer (GM financial) with an over inflated residual value based on "at lease start" financing games from the mfg. I'm just not sure these games work out well for a car like the TSX or BMW 325i. They hold resale value which in my eye makes them a terrible lease candidate. If you can't right off the lease to your advantage in the end (taxes, etc.) you are much better off buying something.

KC 2004 TSX

It's been a while but I'm sure they a screwing you. Some one correct me if I'm wrong but I thought Honda only allowed a 20% cap reduction on leases.

NickR

The 325i isn't a bad car. I'd rather have the 330, but who wouldn't?!? I hope something works out for you. Just do the right thing, don't jump just because the payment is right. If the dealership is making it too easy for you then you're losing money. I don't mind them making a fair profit (2-3%) but I hate to be screwed over and/or lied to.

If you upgrade the wheels & tires on the 325, it would look pretty nice.

biker

Try dealing again today - dealers will be desperate to finalize deals before the end of the year.

MoFocker

arent cars like a bmw or acura the best choices for a lease? they hold up best (usually) durring the lease period, and they lose the least value of most other manufactuers. with a lease, your paying for the amount of the depreciation, and since they depreciate slower, ist it better? for example, leasing a bmw for three years will (LETS JUST SAY) lose 10k where a GM would loose 15k. isnt it financially better to pay 10k as opposed to 15k? Also, if your saying they arent good candidates for a lease because the buyout at the end is still high, that doesnt make much sense since people who lease usually do so that they can get a new leased car after the three years. i hope this doesnt sound offensive i just dont know how else to explain my view on it. i could be wrong but thats just how i always viewed leases/mfg

MrChad

No you are right...but I'm referring to the better deal you get when the mfg. (big 3) over inflate their residuals to make the lease tempting. In these examples you get a lower lease payment (artificially low) but that's fine because you aren't stuck with the car. (Just don't do the buy out in the end or you are screwed.) Now if GMAC financing for example actually used what the real residual of the car would be then you loose out on this type of lease and the Bimmer and Hondas are intantly the better choice. I get supplier discounts on top of dealer incentives and many americans do, when this happens the lease paymenys become insanely cheap...this really hurts GM in the used market, but that's not my concern.

In my area lots of folks actually buy Hondas and such, but lease the GM's for the winter beater because of the tons of incentives we get...it's insane really and the only ones hurt in the end are the givers of incentives. If you know how to play the game you can really make out....but you need to have the tools or you get hosed bad.