NJRonbo

I got a great offer on a 2008 Tech RL lease

$529 mos.
36 mos.
10,000 miles yr.
$2,999 down (exclusing tax and extra fees)

Now....

Where I am afraid I'm going to get ripped off is the
added dealer fees.

I'm also not certain how I am being taxed (our state is 7%)

Am I being taxed on the total purchase or just $529x36=$19,044?

Also, the dealer is only telling me over the phone that a $529
base fee will be added. I am also sure there is Motor Vehicle and
maybe another fee?

I just don't want these guys to slip in any extra fees to make money.

Can anyone give me a rough ballpark on my final down payment
that starts at $2999 before taxes and fees?

Thanks so much in advance for the urgency of reply.

NJRonbo

Here is what I was quoted for a 2008 Tech RL.....

3852.93 down (all taxes, fees, etc.)
$556 for 36 months
10,000 miles per year

What do you think?

TampaRLX-SH

RL leases are not great compared to other luxury marques.

For that payment, I think the mileage allotment is too low and the cash required too high.

lland

10,000 miles/year is not much. I drive 15,000 and don't seem to go anywhere.

LL

NJRonbo

I would try to get them to "up" that to 12,000 per year.

I only put 6,000 miles on my car per year anyway.

Just need to know if that lease rate sounds right to perhaps
anyone who recently got one.

VOdoc

OK, here we go. To evaluate a lease properly, you need to know a bunch of things. There is a great tutorial on leasing at Edmunds.com.

Briefly, the "capitalized cost" of the car is the actual selling price that the dealer will pocket. You need to negotiate this as if you were buying.

The lease is financed by a bank using a "money factor" that can be converted to an effective interest rate by multiplying by 2400. A "capitalized cost reduction" is your money that is being applied to reduce the capitalized cost from MSRP to some lower figure. The dealer pockets this too. Calling a CCR a "down payment" is not truthful, since you do not own anything when you lease. Basically it is money flushed down the toilet from your perspective. That probably accounts for the bulk of that $3K. There may be a $600 bank fee hidden in there too.

The difference between the capitalized cost and the residual value (predetermined value as of the end of the lease) is the depreciation. Depreciation is divided by the number of months in the lease to start figuring out the monthly payment.

The monthly payment consists of depreciation, plus interest determined by the money factor (that's your $529); to this is added sales tax. Taxes differ by state. In California, you are taxed on the CCR and on each monthly payment.

"Drive-offs" include the CCR (money flushed down the toilet) + sales tax on the CCR + first monthly payment + bank fee + DMV fee + documentation fee paid to the dealer + any useless crap like Lojack that the Finance and Insurance guy manages to trick you into signing for. There may be lease-end fees such as a "disposition fee" or excess mileage, wear and tear, etc. if you choose not to buy the car.

If all of this sounds daunting, you may not be ready to lease. There can be advantages--tax deductions for business use are simple, and you just hand back the keys at the end--but remember that, for all that money, you are renting--you don't own anything.

If the manufacturer "pushes" (exaggerates) the residual, that tends to lower the monthly payment but makes it more of a ripoff to purchase at lease end. If the manufacturer "subvents" (subsidizes) the money factor, leasing can be more attractive than buying. I've done it both ways. You just have to do the math.

A 10K mile lease generally makes no sense for the average driver. Your mileage may vary! Hope this is helpful. (Removing green eyeshade.)

NJRonbo

Vodoc,

I appreciate your summary. It's all Chinese to me.

I have no choice but to lease if I want to get into this car. I can't
afford the payments otherwise.

If they give me 12k miles a year on that deal I'll jump on it.

Thanks again!

CGTSX2004

iTrader: (1)

Seems pretty competitive to me...

BMW 535xi
$639/month for 36 months
$3,789 Cash due at signing + TTL

MB E350 4-Matic
$629/mo. For 27 month lease
$4,274 Total cash due at signing + TTL

Audi A6 3.2T Quattro
$527/month for 36 months
Amount due at lease inception: $4,651 + TTL

VOdoc

Ronbo,

If you'll allow me some brotherly advice...and please don't take offense. I learned some of this the hard way. If your finances are such that purchasing the car would overstress your cash flow, then don't lease. Choose a less costly car instead. The reason is that the lease is a contract that obligates you to pay around $20K no matter what. So in case of job loss, unforeseen expense, etc., you could get pushed over the edge. If you finance the car, you could sell if need be. Yes, you could be upside down at certain points, and yes, there are websites that trade leases around, but the basic principle is to be conservative with your money. In the long run you will be better off and able to choose whatever you want.

lland

Then you're paying for miles you won't be using. Money right into the dealer's pocket.

LL

CGTSX2004

iTrader: (1)

While I agree with your initial assessment regarding overstressing one's finances, you are incorrect about the inability to sell a vehicle on a lease. Every lease comes with a full pay-off amount on each monthly statement, same as a financed vehicle. Therefore, you pay that pay-off amount and the car is yours, same as the pay-off amount for the financed vehicle. Leases can be handled much in the same way as a financed vehicle in many cases.

But again, if one is stressing one's finances to drive a bigger better car, perhaps one should re-evaluate their need for that car. Perhaps consider some alternatives...

Rexorg

Great explanation of the leasing process. I have leased a couple of cars, including my current RL, and you certainly spend more to lease than buying. Also, you can negotiate the length of the lease with the dealer and the miles, etc.

CL6

How is that..?

black label

While you are very correct, if you finance a car for 5 yrs and don't put 10-20% down, you'll be upside down for at least 3 years of the loan. If you find yourself in an unfortunate financial situation, you're screwed one way or the other.

But if you are pushing the limit of your monthly payment range, the TL might be good alternative. The lease programs are much better the residuals are higher which means you are paying for less of the car.

I also think they should have you at a $499 per month payment without the taxes and fees and 2999 down, if they were at 529, they're holding about $1000.

VOdoc

The mechanism for getting out of a lease varies by state and by leasing company. In California, if you return a car more than 30 days before the end of the lease, they can charge you basically whatever they feel like--the closed-end provisions don't apply. Infiniti tried to screw me this way once because I returned a leased QX4 32 days before scheduled lease-end (I couldn't stand driving it one more day!) Honda Finance does not allow third-party sales, so if you don't have the cash yourself, you can't "sell" the lease to someone else. (Plus you have to pay sales tax on the residual value.) And if you are jobless, no way can you suddenly come up with $20 large to buy yourself out. Hence my advice.

VOdoc

The mechanism for getting out of a lease varies by state and by leasing company. In California, if you return a car more than 30 days before the end of the lease, they can charge you basically whatever they feel like--the closed-end provisions don't apply. Infiniti tried to screw me this way once because I returned a leased QX4 32 days before scheduled lease-end (I couldn't stand driving it one more day!) Honda Finance does not allow third-party sales, so if you don't have the cash yourself, you can't sell the leased vehicle to someone else. (Plus you have to pay sales tax on the residual value.) And if you are jobless, no way can you suddenly come up with $20 large to buy yourself out. Hence my advice.

mondo540

And good advice it is. I do not understand how people go into these things not even knowing the basics of the transaction, while stretching financially to do it.

black label

99.9% of VOdoc's points are true but how to structure a lease depends on the individual. His explanation is right on for someone who uses their liquid assets to make them more money and writes the lease off on their taxes. Not everyone is able to manage their finances in the same way so on some points here is the other side to the coin.
True, but the dealer doesn't pocket the cap cost, only the part between invoice and cap cost.

The dealer doesn't pocket the CCR, it's the same as a down payment on financing it just lowers your monthly payment over the course of the lease and hides some of the cap cost from the finance charge. If you use a $2000 CCR, the difference in the monthly payment over the course of 36 months will ad up to about $2200.

If you get in an accident before the end of the lease and total the car you have GAP insurance through AHFC so you owe nothing, but if you put down a $2000 CCR that money is gone and you won't get anything back, even if it happened in the first week you had the car.

Some states like Maine will charge you sales tax on the Cap Cost, leasing loses some of it's benefit in those states. As you mentioned in CA you pay tax on the CCR and each monthly which is a lot less than paying it on the Cap Cost.

No disposition fee in a AHFC lease. They are also very generous with the condition requirements. Mileage charge is .15 for leases with a Cap Cost under $30,000 and .20 for leases with a Cap Cost over $30,000

All true except for the last half sentence, I'll get to that in a minute.

All true. But as you mentioned you did the math on the retail vs. lease to retail difference.

Leasing is just another way of financing, you're just financing a portion of the cars value instead of all of it. At the end of the lease you can buy it if you choose to and with a AHFC lease that buyout number is predetermined and cannot change. If the lease is up and the buyout is lower than what the car is truly worth at that point, you can trade it in and take the equity out of it or buy it out if you still want the car or just give it back.

If you finance it for 5 yrs, you're just making a longer commitment for a larger amount. Three years into the loan, you don't actually own the car the bank does, just like if you leased it, except you can't choose to bring it back and walk away.
AHFC does 10K 12K and 15K leases, the residual value drops as the mileage goes up. After 15K you can customize them and they basically charge you .10 per mile.

If you are writing off the lease on your taxes and intend to buy it at the end of the lease, the trick is to get the 15K lease even if you don't need 15k per year. You will be raising the write off amount and lowering the buyout amount. Work the system to your advantage.

CGTSX2004

iTrader: (1)

Hmm...that's interesting since I have done a number of deals now where individuals have traded in a leased vehicle, had the dealership write the check for the full write-off and gotten out of the lease completely.

I think the mistake that people make is telling the dealership that they are trying to trade the car into that it is a lease because a lot of dealerships try to make you buy out the rest of the lease as opposed to making use of the pay-off amount. In all the deals that I have worked on, I have never had an issue getting a dealer to pay the drive-off amount. Granted I have not done one of these in California in a while so perhaps the rules have changed there.

geronimomoe

So what did ultimately transpire? Did you get the car?

CL6

I'm still curious to hear how paying for miles you won't use goes 'right into the dealer's pocket.'

black label

I think he refers to the dealer and Corporate as the same entity. He also mentioned that the CCR goes to the dealer as well as the CAP cost.

But if he's doing a 12K lease and only drives 6K per year, he would be better off going with the 10K lease and pay for less of the depreciation.

lland

Pretty much plus when the car is turned in, the dealer can resell it for more with the lower mileage.

LL

lindros2

I don't really understand why anyone pays ANYTHING (other than motor vehicle fees) up front.

If you drive off the lot, and total the car, the money is gone. Gone.

I always only pay minimum fees (DMV/MVS whatever you call them) and first month's lease. On my TL, this = ~$1100 or 1200, and on my RL was about $1600.

In Georgia, you pay tax monthly (varies depending on county).

Anything more than "base" fees is basically cap cost reduction to make your payments look lower. So the "$2999" = $83.31/month that you would otherwise be paying monthly.

Comparing this to my lease (on a 2005 RL leased Nov. 21, 2005 for 36 months), my lease is ~$580+tax. "Purchase price" was $42,800. Leases when the car came out (2005 RL's leased in late 2004) were actually higher, since the MONEY FACTOR was higher on the new car.

And that's basically how they get you. The car/leasing companies (not necessarily based on interest rates) can set the money factor high or low (i.e. current leases on "new" 2007 Nissan Muranos have a money factor of .00024, which = interest rate of POINT SIX percent). The money factor on my RL was in the .0021 range, which = about 5%.

Just food for thought.

CL6

The person might turn the car in at a different dealer than the one which leased the car initially, the car might be in bad condition, the payoff amount might be bad compared to what the car's actually worth when the lease runs out... etc. It's not that clear.