As many of you are aware, Honda has a $299/mo 36/36000 lease promotion on all 2005 s2000's. This requires a capital cost reduction of $2499.

Here is the deal I cut with my local dealer.
$349/mo 36/36,000 with only first payment due at delivery

This amounts to $349*36=12,564
It has a buyout of 19,500
Total cost of car if I were to buyout would be 32,064

I normally don't like the idea of leasing, but this car is more than I can afford with todays interest rates and the cost of the car. Payments on a $32k loan for 5 years at 5.25% would be 607.55, way out of my budget.

It seems like this lease deal is an interest free loan and at the end of 3 years, I can walk away or finance the 19,500 for 5 years at a more manageable payment of $370/mo.

It also seems that 3 year old S2000's with 36k or less miles are at least valued at $19,500, so if I put on less miles, say 25,000, I'd even have a chance to turn a slight profit.

Am I thinking about this correctly??

Thanks

 

Yes!

 

Your thinking is correct.

Your calculations do ignore Time Value of Money (TVM) issues somewhat, but who cares? It sounds like this is the car for you, and you've figured out a way to afford it, so do it.

One thing you could do for future purchases is to set up a savings/investment account just for car purchases and start saving some money so that you pay with a check next time.

 

The incentive is what convinced me to get the car, and I'm very happy I did it! Not only did I cut my previous car payments in half (had Cadillac CTS at $586/mo.), but I can walk away in 3 years should I decide I want something else. And yes, part of the motivation was the high resale value of the car, which makes the $19K payoff reasonable.

GO FOR IT!!

Cheers,
Diane

 

The car is a good deal to lease. However, one important factor is missing. How many miles are you allowed. If you go over the mileage, how much are you charged per mile? If this is only a weekend car for you then mileage may not be a concern. But, if this is a primary car you may go way over the mileage and wind up owing a few grand.

Also, the lease is based on the MSRP (I believe). So, you should be able to get the car even cheaper. Lease it only at or below invoice. The selling price of the car is negotiable regardless of buying or leasing.

One final note, never think of turning a profit with a car. Just get the car if you can afford it, and if you can I know you will love it!

 

The lease special is surely 12,000 miles per year. Mileage overage is charged at .15 cents per mile.

 

This is too why I leased People who say leasing is "stupid" need to study "time value of money" and get their financial calculators out

 

deal breaker for me would be the 12,000 mile a year limit

 

I appreciate that, but thankfully not a deal breaker for me. I live 3.5 miles from where I work and we have another vehicle that acts as the "family truckster". So only commuting and weekend driving for me. I average about 9k a year in mileage.

 

The numbers look good. But what gets me is the the cap cost reduction of $2400. It is tough to put that much down of a lease.

As long as you realize that you don't get that $2400 back should the car be stolen or totaled. But that is worst case scenario. Would suck to have your car only a day and that happen.

Most people would advise to put as little as possible down on a lease because of this. The money would be better off invested in something else. But I understand the payments wouldn't be close to $350 without capcost reductions of that amount.

I would play with the numbers to find the least amount down and still a reasonable monthly payment for you. Good luck.