muadib

I just returned from shopping, and I'm still in shock. I want a typeS with nav and agreed on a price of 31900. Higher than I wanted to pay, but I can live with it. We then talked money factor, and agreed on .302 . I'm putting down 6400. What would you guys say my payments should be?

Also what fees must you pay? They had a $149 documentation fee which I thought was crazy.
And what exactly do you pay tax on?

8ball

Not sure about your tax question, as I've never leased. But you're dead right about the $149 "documentation fee" being crazy. That is nothing but a way for the dealer to take a little extra out of your pocket. To me, it's like the grocery store telling me I owe them an extra $5 because they're giving me an itemized receipt detailing my purchase.

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Steveb

Why on earth would you put so much money down on a lease??? That makes no sense.

Lrpba300

I agree with Steveb about money down for a lease. Unless you want to have a lower monthly payment, which in turn affects your amount of tax each month, this will lower the payments some.

muadib

I'm looking for a lower monthly payment. I'd rather pay up front while I have it. Is this a big no no?

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roadman

Putting money up front is up to you to decide. Just say you're car is stolen, you completely lose that up-front money. Paying tax up front is another thing you need to decide on. Most people I have spoken to would not, it's like paying takes in advance, why give the state taxes ahead of time.

The rate factor and the residual are affected by the term of the lease, ex. 36,42,48 months. The amount of miles you use 12k vs 15k also affects the residual. Is is much cheaper to buy miles up front, but again if the car is stolen, you lose that money. Alternative lease companies are also an option (Chase), also look at the wear and tear allowance, as well as any disposition fees.

There are a couple of lease calculators that would help you evaluate you're options. Good Luck

dagg

http://www.leasesource.com/

GO there!

Generally putting money down on a lease is a bad idea, because you are giving your money away earlier that you would if you just make the payments. For instance, lets say your lease payment with NO money down is $400 * 36 months. The total you pay to drive the car is $14,400. Now if you were to put down $4,400, your payment would drop to $277 because $277 * 36 is roughly $10,000 plus the 4,400 you put down. You would then have a lower payment each month, but you would still have paid the $14,400. It isn't like financing, where if you pay early, you save a little interest. Put the down payment cash in a bank accout, and make the payment out of that account, at least you earn a little interest that way..

BUT BOTTOM LINE..

Do what you want!

Now go to http://www.leasesource.com/ and do some homework..



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muadib

I will. Thanks for the link.

Xorg

I've leased four cars, and know all the tricks, tips, and gotchas.

First off, what is the term of the lease? A money factor of .302 is impossible. It should be .00302, but even that is way high.

Second, putting down $6,700 on a lease is insane and throwing money down the toilet.

Third, you need a lot more info take a smart decision on the lease.

Foruth, check my topic on the lease calculator I created. LeaseSource is a good start, but my lease calculator spreadsheet has *everything* you need to make a smart choice.

muadib

First off, what is the term of the lease? A money factor of .302 is impossible. It should be .00302, but even that is way high.
You are correct, it is .00302, I left the zeros off. What do you mean it's way too high? I've seen quite a few posts saying.342 was good.

Second, putting down $6,700 on a lease is insane and throwing money down the toilet.Why? I thought it was a pay me now or pay me later sort of thing.

Third, you need a lot more info take a smart decision on the lease.
That's why I'm here. I really appreciate the help everyone here has given me.

Foruth, check my topic on the lease calculator I created. LeaseSource is a good start, but my lease calculator spreadsheet has *everything* you need to make a smart choice.
I'm not knocking it, but you want money.




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roadman

muadib

Putting that much money up front is up to you, think of it this way, would you give Uncle Sam $6,000 for income taxes on wages that you would earn in 2004 ? Of course not, so you need to ask you're self why would I give a leasing company money now when I can hold onto it for those three years.

If you look at the risk vs the reward, it is very risky putting that much money up front, and the reward is minimal. BUT the choice is up to you.

The lease factor does sound high, what term was that for, was it from Honda.

Guest

Here are my thoughts on leasing:

The TL-S will be the third car I've leased. For my purposes, the bottom line is I lease because I can drive a nicer car than I can afford to buy. With the TL, depending on t's and c's of anyone's particualr deal, this can represent as much as $250-300 per month in payments. For perspective, it's the difference between $450 and $700 per month. And while it's easy to say, "Put the $6400 in an interest-bearing account and make the payments from there with nothing or little down," in real life, that can be difficult to do from a cashflow standpoint. Sure it's intelligent, but it's not always doable. And how much interest are you really going to realize over three or four years on $6400 in the type of account that would allow you to make payments from it? Sure you could dump it in a stock fund and get lucky, but again, realistically, what are the chances of that and what are the chances the value of that account could go down and then you're stuck with a high payment that you can't handle comfortably out of your own monthly cashflow.

I see and respect everyone's point on this matter, but for me, I say if cashflow is an issue (and I assume it's at least a factor due to the large amount down - can only assume that this is to lower the payment to a comfortable level), then go ahead and put it down and enjoy the low payments. I know I do.

Added benefit of significant lease down payment: Easier to get out of lease by "selling" to third party for payoff. Exactly like a purchase, you will be less "upside down" with more money down up front. I know because I've sold both my 36-mo. leases before end of term and didn't pay a dime. The buyer made the payoff including tax and I walked away, free to get another car. If I had done a nothing-down scenario on either of those cars (Maxima SE, Volvo Turbo), I would have had to PAY up to several thousand to get out of the cars because payoff would have been much higher than I could have gotten from a buyer.

I guess I could go on and on, but each individual's finances are different and the importance of driving a particular car is different to each as well. I'd rather sacrifice a bit of cash up front and have a nice, comfortable monthly payment.

Just my two cents. Enjoy the TL, however you get it!!

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tblvinnie08
2002 Type-S
Black/Parchment

zman

.00302 money factor calculates our to a roughly 7.25% interest rate. That's is OK but my credit union is offering a 6.99% for 48 months lease. You'll probably want to check around for a better money factor.

Steveb

You didn't have to pay a dime because you put so much money down! You paid for it with the big down payment and I'm sure they gotcha good.

The fact is, any professional money manager or leasing expert will tell you it's irrational to put that much money down on a lease. Unless you like to give your money away to profit organization there's no other reason to put that much money down except ignorance.

Xorg

Maudib> I'll tell you what I'll do for you - send me all the lease figures you have, and I'll plug them into my spreadsheet and send it to you FREE. Really. It sounds like the dealer is playing games with you, and when you see how all the fees and figures wash out, everything will be clear. If my spreadhseet saves you over $500, you can toss me the $5 bill :-)

The money factor on a 36-39 month lease should be around .0028, .0027 for 42 month, and .0026 for a 48 month. (Depending on mileage.)

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roadman

tblvinnie08

You make an excellent point about being able to manage one’s cash flow and being comfortable with you’re payment. An idea came to mind that may be an option if someone wished:

Put the $6,400 in a brokerage account and invest in a tax free fixed income fund. Then each month have a portion of the principle, for example if you had a 36 month lease then have ($6400 / 36) direct paid to the leasing company. The remainder of the monthly payment could also be directly paid from a separate account to add up to the total payment.

You end up with a lower monthly payment out of you’re day to day account, and you are earning a safe and tax free return on you’re $6,400.

The idea here is that we can only offer opinions, you have a lot of options,

Guest

You can base your decision on a hunch of what is better, on what makes you feel good, or on what the numbers say. However, you shouldn't confuse one with the other.

The decision is simple. You do not borrow money at guaranteed rate X% to "earn" a guaranteed rate less than X%. You invest your money in the highest returning investment, period.

In this example, we don't have all the facts. We need the full lease details including the term, then calculate the difference in payments that the $6,400 investment yields, then calculate the rate of return of that "investment". That return is then compared to the GUARANTEED after tax alternative rate of return, not to what you hope to be able to earn on Cisco stock.

There are basic common sense assumptions, things like the down payment money isn't your life savings, etc. But the calculation is a simple one, and to deviate from what it tells you is to act for non-financial, subjective (although valid) reasons.

8ball

Well said, TLShopper, and welcome aboard!

Guest

Then you just go ahead and enjoy that big monthly payment till the last day of that lease, there, Bucko. Don't let me stop you.

What I wrote works for me (very well, I might add) and I think most here will agree that it's pretty bad form to call someone ignorant in this forum. You don't know me, you don't know my situation.....just as I don't know yours. The ignorance is all yours, Bud.

Have a great day.




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tblvinnie08
2002 Type-S
Black/Parchment

BarryH

First, -never- consider leasing unless you intend to complete the full term of the lease. The penalties for early termination can be staggering. Failure to complete a lease shows up on your credit report as a repossession.

A friend of mine defaulted on a 36 month Q45 lease after only 12 months because he lost his job. Infiniti Finance sued him and got a judgment for $14K. His credit is now trashed.

To tblvinnie08: What steveb was trying to say is that you still ended up paying an early termination penalty. Because you put down a bunch of money upfront, your lease payoff when you turned the car in was below the value of the car so you didn't pay anything on the back end. Assuming you put down $3K and terminated 12 months early, it ended up costing you an additional $150 per month ($3K divided by 24 months) over what your initial monthly payments were. You really didn't beat the system; you essentially paid for your early termination penalty in advance.

Anyone that drives tons of miles, doesn't take care of their cars, or even remotely thinks they won't fulfill the full term of the agreement definitely shouldn't lease. A lease is an enforceable contract and the major leasing companies don't mess around when it comes to upholding the terms and conditions.

mikester

If this is the case, then that person is almost certainly leasing a car they cannot really afford. What most banks say you can afford to borrow is usually much more than you could really handle comfortably. When we built our house, the bank qualified us for twice the amount we were asking for, but we would have never been comfortable with that a payment that high.

If you are leasing a car, and the only way you can qualify is to put a big down payment on the lease, then you are probably making a big mistake and should look at a less expensive vehicle.

Steveb

I didn't mean to imply that you were ignorant. I'm sorry you misunderstood what I was saying. I just don't think it's a wise decision to put such a large amount down on a lease. Just because someone makes an unwise decision regarding leasing does not, by any means, mean they are an ignorant person.

In your original post you stated a down payment of over $6000. Once you pay that amount it's gone. You can no longer spend it as you please. It's no longer there for an emergency. You cannot invest it as you please. Yes, the larger monthly payments will erode the $6000 but that will occur slowly over several years intstead of upfront. If your lucky you might be saving about 3% on finance charges with the larger down payment.(If you factor in an alternative investment in a Money Market account.) How many people wouldn't borrow money for only 3%? Is that 3% APR savings worth not having the money for an emergency? Just my two cent.

Guest

Understood, mikester and Steveb, you both make valid points. Again, though, I think it ultimately comes down to what your goals are and what your situation is.

If we're truthful, acquiring a new car by ANY means is a bad investment. New cars depreciate quickly and are horrible places to put your money. Leasing never gains any equity at all, financing a purchase entails that you spend thousands of dollars more than the actual value of the car over the length of the loan AND suffer amazing depreciation as well, and paying cash means you lose a good chunk of the money you plunk down very soon after you drive it off the lot. And then it depreciates steadily from there.

So the question we're really asking when we talk about any means of driving a new car is, "What's the best way to lose the least amount of money?" We're all going to lose, that's a given. So, knowing that, we all have to judge for ourselves the size of the hit we're willing to take. And I think that differs for everyone.

To mikester's point: I think it comes down to what the definition of a big down payment is. I drive a $40,000 (in '98) Volvo S70 T5 and put $3000 down. That's 7.5%. That $3K brought my monthly payment from approx. $600 to $500, a dollar figure I was more comfortable with. If I had invested that $3K at 10% (yeah, right) over three years, I would've made about $1K and I would have had to let it sit in an account...unusable. Putting the $3K down saved me $3,600 in payments over the length of the lease...money I was able to use to spend elsewhere on other things (including savings, emergencies, etc.). In my view, it's pretty much a wash, depending on your particular situation. And tell me where I can find a rock-solid 10% investment with $3,000 these days. Probably woulda LOST money!

Hey listen, as long as we're all driving TLs and we're happy with them, I say punch it and go eat an Audi for breakfast.




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tblvinnie08
2002 Type-S
Black/Parchment

mikester

My point was that if you HAD to put that money down, because you qualified for the $500 payment and not the $600 payment, then it is probably not the best thing to do.

Xorg

But you have to be very careful - some lease companies do not allow for any transfer of the lease - Nissan in particular had one of the nastiest multi-page lease agreements I ever read, while Chrylser's was by far the shortest and most agreeable.

When you get rid of a leased car ahead of time by any means, you are terminating the contract, and depending on what the contract says, you will be responsible for some serious cash. Some lease companies will let you transfer a lease (again, Chrylser makes this ridicuously easy, Nissan, forget it.)

You won't get a bad credit report unless you fail to continue making payments or pay off the term of the lease.

In my case, I started leasing cars for two important reasons. The first was that I could write off most of the lease as a business expense, since I used my car primarily to go to work and to visit clients. The second was that I was sick of driving a used car where every year or so I'd be facing a $1,000+ repair for something.

In the case of my Saab 9-3, the lease rate was so incredibly low (like 1.9%!), that I'd actually save money by leasing it then buying it after three years, rather than financing it outright!

I also like being able to try out the vehicle first for three years, with no commitment to buy. We're buying the Saab, its been a fantastic car, I returned my Jeep, it had too many repairs for me to consider buying it. The best used car you can buy is the one you drove!

Guest

Appreciate your input, BarryH, but I beg to differ that I terminated early.... and I KNOW I did not default. I simply sold the car to a third party for payoff plus tax and walked away free and clear. That's not early termination, that's paying off the lease in full. No termination fee, no nothing. The money upfront simply served to buy down the monthly payments to a level that was comfortable to me on an ongoing basis.

True, if I hadn't put money down upfront I would not have been able to get my payoff amount from a third party because I would have owed too much (and, to clarify, it was NOT $6400 as mentioned in the originial post on this topic....more like $3000). But for me, that is one of the nicer things about leasing, because I can lease for 36 or 48 months, pay much lower payments than if I were buying, and then approx. 2/3 of the way through the lease, the car's value and the payoff amount generally line up and I can sell it and get a new car. That's valuable to me because I'm a car nut and like to drive new cars every couple of years. I've done it for years. Hot new models come out and all of a sudden I'm tired of my current car and want to get one of the new ones.

The difference between selling price and residual value is a constant for a given term. It just is what it is and that difference is what the monthly payments are based on. So, with nothing down, the payments are a certain, large amount. But if I narrow the gap between selling and residual by putting a certain amount down, it follows that I would pay less per month. And that's exactly what I did.

For many people, they would not even be approved for the payment with nothing down. They HAVE to put $$ down to bring the payment in line with what the lender says they can afford. In my case, I simply was uncomfortable from a lifestyle/cashflow standpoint with a large car payment. I'd rather do other things. I want the nice car, but not at the expense of eating out, vacations, etc., etc. So, at the times when I have a nice chunk of money together for a new car, I have no problem putting some of that toward lowering my payment.

Bottom line here, I think, is that different financing options are available for a reason. Someone is going to need or want each one. If you're all about the car and don't care about anything else or don't have other expenses, then great....make the big payment, put the down payment money away and be happy. If you can pay cash for the car and that makes you feel good, then go ahead and do it (although I can't imagine putting that kind of money into something that depreciates like a car. You've REALLY got to have some money to do that, I think). And if I'm a car nut (which I am) and want the nicest car I can drive for as little as I can pay on a monthly basis and still have money left over for other things that interest me (savings and investment being one of them), then all I want to know is how that makes me ignorant. Guys, three grand down isn't all that much money in the grand scheme of things. I'm in the car, I do what I want in other areas, and I'm completely satisfied with that.



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tblvinnie08
2002 Type-S
Black/Parchment