AnandTech Lease Gurus Wanted: Help Me.

[Josh]

Looking at a Jeep Wrangler 4 Door to lease for 36 months. I got the following quote from a local dealership, need your advice and input. Obviously, it's too high, in my opinion.

MSRP - $28,045
Customer Discount - $1,046
Taxes, Fees, Registration etc makes Total Price: $29,489

Monthly payment with $1000 down:
$433.58 (36 months)
$420.67 (39 months)

Money factor: .00212 from Hahn Leasing
Residual: ~ 53% ($15,985)

This is the first quote he gave me through e-mail. How far do you think my negotiation room is here? The total purchase price needs to come down, the money factor needs to come down and residual needs to go up.

Any advice welcome as to how to approach this/fair #s to throw at him. I want the monthly payments to be at around $325.

 

[krunchykrome]

you could buy a new jeep for that monthly payment

 

[Sid59]

you could buy a new jeep for that monthly payment

indeed. That's high payments for a lease that's not a luxury car.

 

[Eli]

WTF? That seems outrageous.

When would leasing EVER be worth it? Can someone explain the numbers?

Paying a monthly payment for something that is not and never will be yours just seems stupid?

 

[A5]

WTF? That seems outrageous.

When would leasing EVER be worth it? Can someone explain the numbers?

Paying a monthly payment for something that is not and never will be yours just seems stupid?

I think some leases aren't that outrageous. This one seems like a real ripoff.

 

[vi edit]

When would leasing EVER be worth it? Can someone explain the numbers?

There have been Prius lease deals for $199 a month for 36 months, with around $1500 due at signing. So for $240 a month that's pretty cheap for a $22,000'ish vehicle.

 

[vi edit]

Paying a monthly payment for something that is not and never will be yours just seems stupid?

Oh, have you ever rented an apartment?

 

[Sid59]

WTF? That seems outrageous.

When would leasing EVER be worth it? Can someone explain the numbers?

Paying a monthly payment for something that is not and never will be yours just seems stupid?

Worth it if .. tons of disposable cash or people who like to be poor while driving new cars every 3 years.

 

[airdata]

When would leasing EVER be worth it? Can someone explain the numbers?

I guess it would depend on how much money you had to spend on a car.

For example. I bought my 2007 Accord a couple of years ago for around 15k w\ 30k miles.

If I went today and got a 3 year lease on a 2011 accord, my payoff at the end of the 3 years would probably be around 14-15k, whereas a dealer would probably be asking for more.

or you can get something else after the lease is up.

There have been Prius lease deals for $199 a month for 36 months, with around $1500 due at signing. So for $240 a month that's pretty cheap for a $22,000'ish vehicle.

They were doing $269/mo w\ 0 down for a 2011 Prius II. But from my experience, call ahead and make sure they have a prius II in stock.

The place I went had a Prius IV which from the comparison chart isn't much of a difference, but it's several thousands more. Instead of $269 they ended up around $550/mo at which point it was time to leave.

 

[Josh]

I think some leases aren't that outrageous. This one seems like a real ripoff.

I'm communicating with this guy through e-mail. I told him to get the money factor down, the purchase price down and the residual % up, I'm looking to pay around $300/month for 36 months with 12k miles/year.

He's hardballing saying that's not possible blah blah but said "These things got the best resale value in the market over ANY 4x4 vehicle period. You are guaranteed to make all your money back in 3 years plus some if you trade it or sell it on your own if you bought it."

Uhh if it has a high resale value shouldn't the residual % be higher?

What are your guys' thoughts on what I SHOULD be paying per month to lease this vehicle?

Thanks.

 

[KentState]

WTF? That seems outrageous.

When would leasing EVER be worth it? Can someone explain the numbers?

Paying a monthly payment for something that is not and never will be yours just seems stupid?

A lease is worth it when the total of payments over 3 years is less than the depreciation of the car in that 3 year period.

For example, 36 months x $350 = $12,600. If the car new was $25k and now work $12k, then you saved yourself some money. I know when I leased my GTO, the total of lease payments was less than the car depreciated over the 3 years and I wasn't stuck trying to sell the car at the end.

Some other advantages are major car accidents or total losses. When you own the car, you are stuck with a diminished valued car. In a lease with $0 down (which I recommend), and it's totaled 3 months in, you just loose the sum of the payments. The could be about a $1000 out of pocket. How much money is that car going to loose in value if you own it and try to sell?

 

[KentState]

I'm communicating with this guy through e-mail. I told him to get the money factor down, the purchase price down and the residual % up, I'm looking to pay around $300/month for 36 months with 12k miles/year.

He's hardballing saying that's not possible blah blah but said "These things got the best resale value in the market over ANY 4x4 vehicle period. You are guaranteed to make all your money back in 3 years plus some if you trade it or sell it on your own if you bought it."

Uhh if it has a high resale value shouldn't the residual % be higher?

What are your guys' thoughts on what I SHOULD be paying per month to lease this vehicle?

Thanks.

The problem with the car you are leasing is the residual. You want something closer to 65% at the end of 3 years. The lease on my CTS which stickered for $44k was just a little more than your 36 month and that was with $0 down.

 

[bryanW1995]

You guys crack me up with all the "leases suck" comments. I'm a dealer, and the last 2 vehicles I "purchased" before buying the dealership were leased. A lease CAN be a good deal depending upon your circumstances.

@OP: Is that a 2 door rubicon? That's the only Wrangler with 53% on 12k/year at 39 months using ALG. Give me the vin and your zip code and I'll give you net on the vehicle. US bank has .00194 money factor right now available, and they'll do longer than 39 months if you want a better payment as well.

btw: a 53% residual should be $14,863 on an MSRP of 28,045. And that obviously isn't a 2 door rubicon at that MSRP, sorry. Maybe Hahn doesn't use ALG.


re-edit: Just talked to my used car mgr. A Wrangler with that MSRP and ~ 36k miles that is 3 yrs old would bring $17-19k on trade right now. He almost attacked me when I told him it was a rhetorical question and not an actual vehicle.

 

[ElFenix]

leasing is a good deal when you're not getting more car than you could afford to buy (if you can't afford to buy it, you can't afford to lease it either)* and you're not getting tricked by the fact that the interest rate looks low when it's really 5% (which is the OP's rate) or screwed by the fact that the capitalized cost is MSRP after you haggled it down several grand.









*obviously there are some exceptions due to the fact that higher value cars can often have much better residual values and so the depreciation is the same between, say, a saturn and an entry level lux. so it'd be more accurate to say that you could lease any car with a residual % higher than the one you could afford with at most the same total depreciation, but that's just a bit much to say.

 

[Josh]

The problem with the car you are leasing is the residual. You want something closer to 65% at the end of 3 years. The lease on my CTS which stickered for $44k was just a little more than your 36 month and that was with $0 down.

Which is what's strange...shouldn't the Wrangler's residual be closer to 60-65% since it apparently holds its value the best amongst all other 4x4's?

 

[the DRIZZLE]

leasing is a good deal when you're not getting more car than you could afford to buy (if you can't afford to buy it, you can't afford to lease it either)* and you're not getting tricked by the fact that the interest rate looks low when it's really 5% (which is the OP's rate) or screwed by the fact that the capitalized cost is MSRP after you haggled it down several grand.









*obviously there are some exceptions due to the fact that higher value cars can often have much better residual values and so the depreciation is the same between, say, a saturn and an entry level lux. so it'd be more accurate to say that you could lease any car with a residual % higher than the one you could afford with at most the same total depreciation, but that's just a bit much to say.

Yeah I think the worst thing about leases is they are harder to understand for the average consumer so its easier for the dealer to screw you. In theory a lease should be about the same as buying the car and trading it in after 3 years. Obviously this is financially stupid, but if you were going to do it anyway a lease may not be any worse.

 

[KentState]

Which is what's strange...shouldn't the Wrangler's residual be closer to 60-65% since it apparently holds its value the best amongst all other 4x4's?

I'm not really sure. With the increase in gas prices, that could impact the ability to sell that type of vehicle in 3 years. I would however suggest leasing something like this. If gas jumps up a lot in the next 3 years, it will be nice to not be anchored to a car.

 

[Eli]

Oh, have you ever rented an apartment?

Touche.

I guess I never thought about it like that.

 

[Doppel]

WTF? That seems outrageous.

When would leasing EVER be worth it? Can someone explain the numbers?

Paying a monthly payment for something that is not and never will be yours just seems stupid?

It can be worth it at times, it depends on incentives and other factors.

I imagine residual is set by Jeep as is the money factor, OP can play with purchase price, though.

Toyota last year (and maybe this year until the quake) Prius leases were as mentioned above and residual was over 70%, which combined with a low money factor made for very low payments indeed. Those deals are completely gone now, though, money factor up residual way down per Toyota, so monthly payments also skyrocket.

 

[Josh]

I'm not really sure. With the increase in gas prices, that could impact the ability to sell that type of vehicle in 3 years. I would however suggest leasing something like this. If gas jumps up a lot in the next 3 years, it will be nice to not be anchored to a car.

Yea, but that statement was from the dealer's mouth himself and as posted earlier above by Bryan apparently it does hold its value very well.

So do I just straight up haggle until the residual is up to 60%, the money factor is down and the total purchase price is down? Because I do think its absurd to pay any more than $300 a month for a Jeep Wrangler with an MSRP of 29k

 

[KentState]

Yea, but that statement was from the dealer's mouth himself and as posted earlier above by Bryan apparently it does hold its value very well.

So do I just straight up haggle until the residual is up to 60%, the money factor is down and the total purchase price is down? Because I do think its absurd to pay any more than $300 a month for a Jeep Wrangler with an MSRP of 29k

I would suggest going to a couple other Jeep dealers if possible. You can also check out your bank or credit union to see if they offer leases.

 

[boomerang]

I don't think you're going to be able to haggle on the residual. Residual values are usually set by the leasing company and they can be a real crap shoot for them. Chrysler is on the shakiest ground of all the domestics. Any lender doing leases on anything they make has got their ass hung out in the wind and that's why you're being quoted the payments you're seeing.

My wife is driving a 2008 Aura on a 36 month lease at $270 a month. The car is due to be turned in this October. M&I is sending us letters twice a month asking if we want to purchase the car. When Saturn went away, the residuals dropped like stones. They don't want the car back - they're going to take a bath on it.

You need to get the net cap cost down. Which means you've got to get the selling price down. As was said, visit other dealers and pit them one against the other. You're not going to get the payment you desire without throwing a lot of down money into the deal though so be aware that you're probably wasting your time. How many miles do you drive in a year? That can make a tremendous difference in your payment.

Cars depreciate at an alarming rate. Why anyone would ever want to own one is beyond me. I'll gladly pay to drive one for a period of time in which it's fully covered under warranty and turn it in for a new one. I'll pay less in the long run when you factor in maintenance and repairs.

Never lease to buy. If you want to own the car, buy it up front.

 

[Doppel]

I don't think you're going to be able to haggle on the residual. Residual values are usually set by the leasing company and they can be a real crap shoot for them. Chrysler is on the shakiest ground of all the domestics. Any lender doing leases on anything they make has got their ass hung out in the wind and that's why you're being quoted the payments you're seeing.

My wife is driving a 2008 Aura on a 36 month lease at $270 a month. The car is due to be turned in this October. M&I is sending us letters twice a month asking if we want to purchase the car. When Saturn went away, the residuals dropped like stones. They don't want the car back - they're going to take a bath on it.

You need to get the net cap cost down. Which means you've got to get the selling price down. As was said, visit other dealers and pit them one against the other. You're not going to get the payment you desire without throwing a lot of down money into the deal though so be aware that you're probably wasting your time. How many miles do you drive in a year? That can make a tremendous difference in your payment.

Cars depreciate at an alarming rate. Why anyone would ever want to own one is beyond me. I'll gladly pay to drive one for a period of time in which it's fully covered under warranty and turn it in for a new one. I'll pay less in the long run when you factor in maintenance and repairs.

Never lease to buy. If you want to own the car, buy it up front.

I also don't see him getting this vehicle for $300/month without a bunch more money down, even with a big reduction in purchase price. Overall, it almost always is still going to be more expensive to lease a vehicle each three years than buy one and sell it after 8, the math is fairly clear on that. If you are going to buy it every five, though, things do get a bit muddied. For example, in almost all states you pay taxes on only the depreciation of the lease, whereas if you buy it you pay tax on the entire amount. And you can't get that back. Combine that with an aggressively low money factor and leasing is not as bad as many parrot.

I'd be particularly nervous buying a gas guzzling car right now. It's as clear as day that there is huge volatility in the price of gas now and likely to be going forward. I'd hate to have to sell a car that gets sub 20 MPG if in a few years if I wanted to sell it and gas was up to $4.50 or $5. That's the nice thing with the lease; if gas is $5000/gallon let the brand take their bath. And if gas sinks down to $.30 gallon you can buy it. That flexibility has a cost but it can certainly be worth it!

With Chrysler it's not beyond the realm of possibility that it fails to exist as an entity three years from now, another reason why leasing could be attractive (as it was with Boomerang's Saturn--now he doesn't have to worry about selling a dead brand's car).

BTW Boomerang, when you originally signed the lease the residual was spelled out in bold--have the letters from the financer spoken about a reduction in that residual to help encourage you to buy it or are they still hoping you'll pay what was in the original terms?

 

[boomerang]

The letters say essentially nothing. They go on for a few paragraphs eluding to this and eluding to that, but the bottom line is that you have to call to find out the terms of the "special deal" they're offering.

I'm not interested anyway. Besides being a dedicated leaser (if that's a word), living in the outskirts of the motor city gives one a bit of an inside track. The news floating around is that parts availability for Saturns is going to be an enormous problem. The gist of it is, that with the economy in the tank, they couldn't find buyers for a lot of the tooling such that repair parts could be manufactured. In other words, if the car gets in a wreck, although it may be in theory economically possible to repair, the parts will not be available to do so.

I've spoken to people within GM that have told me this. It was a number of months back though and things may have changed.

 

[Jumpem]

I also don't see him getting this vehicle for $300/month without a bunch more money down, even with a big reduction in purchase price. Overall, it almost always is still going to be more expensive to lease a vehicle each three years than buy one and sell it after 8, the math is fairly clear on that. If you are going to buy it every five, though, things do get a bit muddied. For example, in almost all states you pay taxes on only the depreciation of the lease, whereas if you buy it you pay tax on the entire amount. And you can't get that back. Combine that with an aggressively low money factor and leasing is not as bad as many parrot.

I'd be particularly nervous buying a gas guzzling car right now. It's as clear as day that there is huge volatility in the price of gas now and likely to be going forward. I'd hate to have to sell a car that gets sub 20 MPG if in a few years if I wanted to sell it and gas was up to $4.50 or $5. That's the nice thing with the lease; if gas is $5000/gallon let the brand take their bath. And if gas sinks down to $.30 gallon you can buy it. That flexibility has a cost but it can certainly be worth it!

With Chrysler it's not beyond the realm of possibility that it fails to exist as an entity three years from now, another reason why leasing could be attractive (as it was with Boomerang's Saturn--now he doesn't have to worry about selling a dead brand's car).

BTW Boomerang, when you originally signed the lease the residual was spelled out in bold--have the letters from the financer spoken about a reduction in that residual to help encourage you to buy it or are they still hoping you'll pay what was in the original terms?

But it is cheaper than buying and trading in a car every three years.