Help with a Lease
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Joined: Dec 2003
Posts: 3,734
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From: Seattle
Originally posted by rsa
Back of the napkin numbers: Say the residual is $21,000. $33,000-$21,000=$12,000. What's it cost to borrow $33,000 for two years? 5% per year? That's $3,300. Plus the $12,000 is $15,300. Subtracting your $5,000 down leaves $10,300. Divided by 24 months is $430 per month.
And the dealer ONLY wants five thousand down and two hundred a month?! Something's out of kilter: 1) My numbers are way wrong, 2) the lease is subvented, 3) the dealer made a mistake and the offer won't be on the table next time, or 4) the dealer DIDN'T make a mistake and the offer won't be on the table next time.
Run the numbers on http://leasecompare.com/ and see what comes up...
Stu
Back of the napkin numbers: Say the residual is $21,000. $33,000-$21,000=$12,000. What's it cost to borrow $33,000 for two years? 5% per year? That's $3,300. Plus the $12,000 is $15,300. Subtracting your $5,000 down leaves $10,300. Divided by 24 months is $430 per month.
And the dealer ONLY wants five thousand down and two hundred a month?! Something's out of kilter: 1) My numbers are way wrong, 2) the lease is subvented, 3) the dealer made a mistake and the offer won't be on the table next time, or 4) the dealer DIDN'T make a mistake and the offer won't be on the table next time.
Run the numbers on http://leasecompare.com/ and see what comes up...
Stu
^^THAT MADE NO SENSE WHATSOEVER!!!!! Leasing and financing, two different ballparks.
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Joined: Feb 2004
Posts: 30
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From: Dallas
pbm
to help you a little more do you know what the money factor is and the residual value of the car is(remember the model year is changing in 05 factor depriciation).My intial reaction is that much cash out of pocket for a leased vehicle seems a little high . my opinion is on lease vehicles you'll never see that money again and even sitting in a bank account at 1% interest is better than throwing your money out the window . I researched here in Dallas and the have a lease program 289.00 a month with $3000 down 10,000 miles a year. it's similar to yours but I would really look at the residual and money factor if I where you and I never throw more than 3ooo grand at a lease for any car.
to help you a little more do you know what the money factor is and the residual value of the car is(remember the model year is changing in 05 factor depriciation).My intial reaction is that much cash out of pocket for a leased vehicle seems a little high . my opinion is on lease vehicles you'll never see that money again and even sitting in a bank account at 1% interest is better than throwing your money out the window . I researched here in Dallas and the have a lease program 289.00 a month with $3000 down 10,000 miles a year. it's similar to yours but I would really look at the residual and money factor if I where you and I never throw more than 3ooo grand at a lease for any car.
Joined: Jan 2003
Posts: 1,059
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From: NoVa
there's zero reason to put $5K down on a short-term, low acquisition price lease. if something should happen to the vehicle prior to lease end, that $$ is bye-bye. always shoot for the lowest upfront possible.
leasing is about reducing your exposure to risk.
don't get fixated on the payments. look at the WHOLE deal, upfront fees, cap reduction, excess mielage charges, termination fees and money factor.
which would you choose:
$5K down, $200 per month for 24 months OR
$2K down, $350 per month same 24 months.
the total cash out is similar $9,800 versus $10,400, but i'd choose the second option every time. you keep the cash in YOUR hands, as long as the money factor is subsidized and/or reasonable, and the additional $3K cap reduction is safe from possible loss with a theft or total damage claim.
good luck.
leasing is about reducing your exposure to risk.
don't get fixated on the payments. look at the WHOLE deal, upfront fees, cap reduction, excess mielage charges, termination fees and money factor.
which would you choose:
$5K down, $200 per month for 24 months OR
$2K down, $350 per month same 24 months.
the total cash out is similar $9,800 versus $10,400, but i'd choose the second option every time. you keep the cash in YOUR hands, as long as the money factor is subsidized and/or reasonable, and the additional $3K cap reduction is safe from possible loss with a theft or total damage claim.
good luck.
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Joined: Feb 2001
Posts: 1,637
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From: Denver
Yep, what Ace said. If you crash that car your 5K is gone. You will not recover that money from the insurance company. Zero (or very little) down on a lease is the way to go. Don't be fooled by low payments.
If you want to lower your payment, put the cash in the bank and use it to lower your payment each month. Do not give it to a leasing company.
If you want to lower your payment, put the cash in the bank and use it to lower your payment each month. Do not give it to a leasing company.
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Joined: Jul 2002
Posts: 7,981
Likes: 10
From: mount airy
Let me get this straight. You're worried about $10/month? Come on. It's not worth the second trip back to the dealer and waste of time for $240 stinking dollars. Now I can see what the sales people have to put up with I have a lot more respect for them.
BTW, $10K for 2 years sounds like a good/great deal IMO
BTW, $10K for 2 years sounds like a good/great deal IMO
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Joined: Apr 2002
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From: Red Bank
I agree...
Don't put the 5k down, if you crash the car the second you drive off the lot (that is if the car is totalled), it is gone...
0 down is the way to go, that way you really don't stand to lose any money if the car is totalled...
Pay higher monthly payments, just put the money in a safe place where it won't be spent on frivolous items in the interim.
Don't put the 5k down, if you crash the car the second you drive off the lot (that is if the car is totalled), it is gone...
0 down is the way to go, that way you really don't stand to lose any money if the car is totalled...
Pay higher monthly payments, just put the money in a safe place where it won't be spent on frivolous items in the interim.
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Joined: Feb 2003
Posts: 1,175
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From: North Canton
putting $5k down to borrow money to finance depreciation for 24 months is NOT the way to go.
I'm sure the APR/money factor is low. It would make more sense to hold on to/invest the $5k and make the higher monthly payment on the lease.
I'm sure the APR/money factor is low. It would make more sense to hold on to/invest the $5k and make the higher monthly payment on the lease.