When to a dealer and got the pricing below on a lease...

TL with Auto/navi for $33,500

Mnthly Pymnts: $499
48 mnths
15K miles
$1200 down to cover reg fees and other stuff...
$17,500 residual

Now if i do math, $499 x 48 mnths = $23952

so to buy it at the end i would add $23952 + $17500 = $41452

Should't I be paying something around $33,500 for the car if i decide tp buy it???

 

The residual is 52%, seems low to me. Also the MF must be huge. Definitely doesn't sound right.

 

I don't think it works that way. There is a money factor in that monthly lease payment that works like an interest rate and compound interest. It's complicated, changes every month, and it varies among banks. It's not as simple as adding the product of your monthly payments to the residual.

 

MikeTL-s and Mike H,
What should the MF and residual be??

 

That's what I'm trying to find out as well as I'm thinking about leasing one.

 

this is how i was told by my dealer how it works. the residual is 55% for 42 month here. if you divide the loss of the car over 42 months then add about 3% intrest. youl get the per month before tax then divide the tax by 42 months and add it to each month. i was quoted at $445 no-navi auto for 42 months 12,000ml a yr. and thats with everything included tax, title, reg., and $0 down. and about $23 less a month for every $1000 down. and every month you wait its about a 2% residual loss nad i was told that 48 or 42 months is about the same per month price.

 

The residual for 48 mos/15k miles is 48%, or 16,893.60
The residual for 48 mos/12k miles is 50%, or 17,597.50

Your price sounds about right, your residual is wrong though.

The Money Factor works out to being about 5.49% interest. Doing a Balloon Lease in my area is at 3.9%, so you're getting screwwwwwed

I am in the leasing business, I know my stuff..

 

Dips09,

Your math is flawed. How did you think you were going to lease the car for that long and still get for the same price as you would paying cash new??? The banks nail you for interest on the loss in value on the vehicle.

And to the guy that said adding the payments to the residual isn't valid, it most certainly is. If you try to terminate the lease early, you will be on the hook for exactly that, all your payments left plus the residual. If you tried to sell your car before the lease was up, you would have to pay the bank the remaining payments and the residual.

 

use this site:

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

that does sound a little high but there are a lot of unanswered questions:

What is the money factor? This is like the interest rate on a sale.
It should be around .00215 or .00225. Or around 5.2% or 5.4%. This is what Acura is currently offering on leases. The money factor is actually lower on a 42 month lease (.00215).

What is your sales tax in your state and how is it factored in the lease?

What is the residual value? Around 50% is not bad on a 48 month lease.

Lease prices typically go like this:

Monthly payment = (Finance Fee + Rental Charge) x sales tax

Finance Fee= (Capitalized Cost + Residual Value) x money factor

Cap cost is your agreed upon purchase price less any money down.

Rental Charge = (Capitalized cost - Residual value) / term of lease

using this formula and the above website with a 6% sales tax (my states) your monthly payment (with no money down) should be around:

$475 per month

I used a money factor of .00225 (equivalent to 5.4% interest), a residual value of 50%, and a sales tax of 6%, and a cap cost of $33500

Hope this isn't too confusing, it was too me.

 

TL23, did you read what I posted? His numbers are way off..The residual is 48%, not 50 for 15,000 miles. My guess from what he said about his driveoff fees are that they waived security, so the MF gets bumped from .00205 to .00215, and his sales tax is 10%. He's paying $45.06 in monthly use tax.

Ed

 

I should have been more specific, adding your monthly lease payments before taxes to the residual value doesn't equal the selling price of the car.

 

If you go by those numbers, you are paying 7,952 for leasing the car for 42 months. Think of that as the "rental charge". That money is in addition to paying for the 16,000 in depreciation of the vehicle. Also add that $1200 up front money to it.

You would be paying way too much!

 

According to my lease calculator spreadsheet - You are paying too much if the $499 does NOT include tax and license (paid monthly on a lease). If the $499 includes T&L it is about right, IF the residual is 50% for 15K/48mos.

With a residual of 50% ($17325)and a Money Factor of .0028 (6.7%) the payments are $458 plus T&L = $504. $316 is depreciation and $142 is rental fee (interest).

If you have good credit, your Money Factor should be .002xx. Giving you a good price and then screwing you on the interest is one way that dealers can gouge you. This is what the Acura dealer in Van Nuys TRIED to do to us.

The total of payments now is $24,224.49, + $17,500 = $41,729 to lease now and buy later.

 

How do you figure your residual? The residual of an MSRP of $35,195 for 50% is 17,597.50

American Honda does NOT have any higher or lower money factors based on your credit score. It's either approved or declined. Other banks do. Honda Finance does not. Some banks have tier ratings, and other's don't. If a dealer is trying to bump you on the rate because of your credit score for a lease thru AHFC/HVT, they are crooks! If you were declined by Honda Finance, the only way to get an approval is to put money down in a lease, or finance the car with money down.

Do yourselves a favor, if you don't know what youre talking about, don't waste your time confusing innocent potential buyers..

I think i've been in this business too long..

Ed