AnandTech Lease Gurus Wanted: Help Me.

[Bignate603]

I'm not sure I've ever want to lease a Jeep. Either I'd use it like a jeep and it would get minor cosmetic damage that I'd have to pay through the nose to repair (small rock chips, minor scratches to stuff on the undercarriage) or I wouldn't use it like a jeep and then there would be no point to pay for a smaller vehicle that gets lousy gas mileage.

There doesn't seem to be much point to it.

 

[bryanW1995]

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

Brief synopsis from my email to Josh:

Dealer is only making about $700. Residual is set by the bank, not the dealer. Residual SHOULD be much higher, but when I worked out a retail 75 month payment for comparison it was nearly identical to the 39 month lease. There's just no good incentive on Wrangler now b/c ALG grossly undervalues them and Chrysler has zero need to push them with incentives (much greater demand than supply). Basically, with $1000 down he's stuck paying $400+ a month no matter how he slices/dices it, though with the vagaries of leasing it's possible that he can get a bit closer to $400 than he currently is if he grinds on the dealer hard enough. However, a lot of dealers throw out their best price up front on an internet deal and literally have nowhere to go, and especially on a very desirable unit like a wrangler $700 profit is a very small amount.

I didn't think of this earlier, but they could be marking up the lease factor and making another $500-$1500, so there could be a bit more negotiation room than I originally thought. But even with that you'd still only be creeping down to right around $400, and that's probably a best case scenario.

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.

I AM another jeep dealer (albeit in texas). If they were raking him over the coals I would have offered him a 380 payment delivered, and it's just not there. Again, the only potential I see is with that particular bank (we don't use them here in TX) there might be a lower buy rate available than what the dealer is showing him, and he possibly might be able to grind another couple hundred bucks discount. However, as a lease buyer josh is clearly most concerned about his payment, and the amount of effort to snag another couple hundred bucks off might or might not be worth it to him since that's only going to be a few bucks/month. He wants something more like $300, and that's just not there for this vehicle.

 

[bryanW1995]

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.

Saturn leases must be killing GMAC, US bank, wells fargo, etc on their returns. Jeep is a completely different situation, however. When chrysler was in the darkdest days of the runup to the BK, and nobody knew what was going to happen, the one bright spot was the jeep franchise. It is literally one of the top brands/icons in the world. If Fiat decided tomorrow to just dump chrysler corp and they completely liquidated the whole company (extremely unlikely but still at least theoretically possible) there would still be standalone jeep dealers all across the country b/c ford, gm, toyota, etc would start an extremely aggressive bidding war for the jeep franchise. The leasing companies just lump all chrysler corp vehicles into one basket right now without regard to actual likely payouts b/c they are still very skittish after all the losses they've made on most domestic lines (not just chrysler). You'll see them get similarly skittish with manufacturers that are stronger in car lines (japanese, many european, koreans) if gas prices plummet down to $1.50 or so gallon for an extended period of time b/c they'll start to take huge losses on those highly inflated residuals on those lines then as well.

 

[HeXen]

i leased once, will never again. Also never lease to buy, those are golden rules for anyone with half a brain to live by.

 

[bryanW1995]

That's funny, I did a 3 year lease on my first one, then went to a 5 year the 2nd time around. And I live in Texas, driving 15-18 k miles per year when those leases were originated. Lease-to-buy can work in some instances, especially if you're stuck paying taxes regardless and the lease factor is significantly lower than the equivalent interest rate would be on a purchase. Biggest difference is that in leasing it's much easier for the dealer to hide profit items, so you need to have at least a basic understanding of the principles.

 

[RU482]

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?

that's only when you are trying to buy a used one

 

[hydroponik]

This lease deal sounds terrible. On a $46k Infiniti G37xs coupe, I was offered $410/mo for 36 months (not including taxes).

I would never pay $400+ a month for a jeep on a lease. I'm sure the residuals are terrible, you're better off financing...

 

[Jeff7181]

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's a convenience. If I'm going to buy a car and not pay cash, I'm going to have a monthly payment. I'm not going to keep a car for 10-15 years so I might as well "rent" the cars I drive even if it does cost a bit more in the long run when you look at how much money you spend on having a car over say, 20 years. The peace of mind is worth it to me knowing that the battery isn't on it's last legs on those sub zero days in Michigan, and not having to worry about how much tread is left on my tires, not having to replace shocks or brakes, or think about having to replace a battery pack in a hybrid etc. etc.

If I could get a 12 month lease for the same payments as a 39 month lease I'd be all over that.

 

[soulcougher73]

Yeah ive never viewed leasing in a bad light. If you are a person who wants a new vehicle every 3 years, which lets face it im sure most would, its not a bad way to go. You are always under warrenty which is nice. Payments are less then buying. And you dont have to hassle with trying to sell it. Oh and as others said your taxes are lower on a lease then buying.

Some people are comfortable knowing they will always have a car payment their whole life. And if you are then leasing i would think makes much more sense.

 

[Josh]

Yeah ive never viewed leasing in a bad light. If you are a person who wants a new vehicle every 3 years, which lets face it im sure most would, its not a bad way to go. You are always under warrenty which is nice. Payments are less then buying. And you dont have to hassle with trying to sell it. Oh and as others said your taxes are lower on a lease then buying.

Some people are comfortable knowing they will always have a car payment their whole life. And if you are then leasing i would think makes much more sense.

This is why I decided to lease. I owned my previous car (Audi A6 2004) and had so many problems with it that maintenance became a hassle and quite expensive. The reason I got rid of it is because on my last trip to the Audi mechanic the total bill was around 3 Gs if I wanted to fix it. I sold the car for 5 Gs to the dealership that I just leased my brand new 2011 Cadillac CTS AWD Luxury edition from 🙂 (a friend's dealership so price was right and I fell in love with the car).

 

[ballmode]

do you want to buy the car after lease term is up?

 

[bryanW1995]

This lease deal sounds terrible. On a $46k Infiniti G37xs coupe, I was offered $410/mo for 36 months (not including taxes).

I would never pay $400+ a month for a jeep on a lease. I'm sure the residuals are terrible, you're better off financing...

g37xs coupe is a bit different car than a jeep wrangler. absolutely no comparison for the usage/utility/driving style. If you would even consider the g37xs then it's a lot better deal obviously, but most people looking at a wrangler have goals that aren't always compatible with staying onroad 24/7.

Not sure what kind of markup a 46k infinity has, but the jeep's markup is negligible and, as mentioned, the residual is extremely low compared to the likely resale. low markup + no rebate + so-so residual = not a very good lease deal. Extremely aggressive lease terms are a classic hidden incentive on high-end cars because it doesn't devalue the brand as much as, say a $5k rebate would. For example, NMAC could bump the residual up 15 % higher than ALG and use a ridiculously low rent factor in lieu of this hypothetical $5k rebate. That works for a while, and for high end car buyers looking aggressively for lease deals like that can really pay off. However, you never seem to find them on the highly desirable cars that have an extremely high turn rate (like the wrangler).

 

[kalrith]

I recommend emailing every Jeep dealer within a few hundred miles and asking for their best lease offer on this Jeep. Then, take the lowest offer and email one of the other Jeep dealers, stating "I have this offer from Jeep dealer XYZ, can you beat it?". If they do, then repeat this process until you have the lowest offer emailed to you, and no other dealers are willing to beat it.

Print the emailed offer, take it to the dealership, and don't let them change it or add any "extras."

You can do the same process when buying a car. It takes a lot of the pressure out of car buying/leasing and usually gives you a better deal than if you just verbally haggle at the dealership. You also have something in writing, so they can't say, "Oh, you must've misunderstood the offer I told you..."