What’s a good option? Buy or Lease a gift?

[nk215]

Hi guys, give me some advice.
I would like to get my father in law a new Lexus 350ES as a gift. He’s 72 with not too great eye sight so I strongly discourage him from driving however he always wanted a new Lexus so that’s what he’s going to get.

My question is: what’s good way to go about it. A new Lexus 350ES is $38K, I can buy it out right or lease it for 3 years. Each year, he’ll prob put in around <3 thousand miles at the most on it.

If I lease, after 3 years, I have nothing to show for my $15K. It would be a shame to let the car sits in the garage for most of the lease.

If I buy, then when he’s done with the car, I have no need for it. It should be a very low mileage used car. I can’t imagine he’ll be able to drive 3+ years from now. I didn’t think about the lease option until someone I know mentioned it.

What’s your input?

 

[smackababy]

I believe the leases take into account the deprecation of the car over that 3 year period. There is a good chance that if you bought it outright, in 3 years, you'd only be able to sell it and lose that $15k anyway. You'd also be left with the hassle of selling the car rather than simply taking the hit and dropping it off. That is also assuming you wouldn't be doing anything with the rest of that $38k you'd be spending on the car.

Some downsides of the lease are if something happens to your father in law before that 3 years, it might be hard to get out of the lease, but if you just outright paid it, they might work with you (meaning you won't get anything back from them). In that situation, you could sell it early and not take as large a hit.

 

[nk215]

I just get a quote back from a Lexus dealer.

Lexus 350ES,
MSRP: $38,730
Price: $36,913

36 month;10K miles/year
Monthly payment: $460.3
Residual: $24012.6
Money Factor: 0.00105 (APR 2.52%)
$350 fee if I do not buy or lease another car at the end

This came from their Fleet Manager.

Thanks

 

[smackababy]

If you're absolutely dead set on getting rid of the car after 3 years, a lease with a maintenance program is likely the least amount of hassle.

Auto trade has a 2011 ES 350 Premium for around $23,5. So, you're looking at like a $12k hit if the price was equal to the 2014 model.

 

[boomerang]

Lease it, but see what the terms are on a prepaid lease.

 

[iamwiz82]

Lease it, but see what the terms are on a prepaid lease.

in the event of an accident you will have thrown away most of your money in a prepaid lease, as a heads up.

A $36k car will be worth $30k after a month or two, buy you will have put down $16,500. When insurance gives the leasing company the $30k you will have zero to show from it. Putting any money down on a lease is not wise.

That being said, the lease that they offered is not great at all. You should shoot for 1% of MSRP as your monthly lease payment, as a rule of thumb. The ES has a $1000 rebate, I believe. Edmunds forum says that the current MF is .00055, not .00105, so they may be marking it up too.

Does the final price includes taxes and such? Some states require taxes upfront on a lease.

 

[boomerang]

in the event of an accident you will have thrown away most of your money in a prepaid lease, as a heads up.

A $36k car will be worth $30k after a month or two, buy you will have put down $16,500. When insurance gives the leasing company the $30k you will have zero to show from it. Putting any money down on a lease is not wise.

That being said, the lease that they offered is not great at all. You should shoot for 1% of MSRP as your monthly lease payment, as a rule of thumb. The ES has a $1000 rebate, I believe. Edmunds forum says that the current MF is .00055, not .00105, so they may be marking it up too.

Does the final price includes taxes and such? Some states require taxes upfront on a lease.

I'm thinking you're in the car biz. Are you? If so, I'd like to pick your brain a bit sometime. Neighbor.

I was in the car biz myself but most certainly not in sales.

 

[nk215]

I believe the monthly payment has everything in it.

I'll need to do some more research.

Thanks

in the event of an accident you will have thrown away most of your money in a prepaid lease, as a heads up.

A $36k car will be worth $30k after a month or two, buy you will have put down $16,500. When insurance gives the leasing company the $30k you will have zero to show from it. Putting any money down on a lease is not wise.

That being said, the lease that they offered is not great at all. You should shoot for 1% of MSRP as your monthly lease payment, as a rule of thumb. The ES has a $1000 rebate, I believe. Edmunds forum says that the current MF is .00055, not .00105, so they may be marking it up too.

Does the final price includes taxes and such? Some states require taxes upfront on a lease.

 

[iamwiz82]

I'm thinking you're in the car biz. Are you? If so, I'd like to pick your brain a bit sometime. Neighbor.

I was in the car biz myself but most certainly not in sales.

Not in the business, but i have spent much time researching leases and such and have acquired way, way too many cars. I used to be in the auto industry but I jumped ship some time ago.

 

[nk215]

Just an update. I decided to buy rather than lease using Lexus finance option (0.9% for 36 months). I rather pay cash by my brothers in-law recommendation especially our bank saving account pays 0.8% interest.

I added a few more options more suitable for an elderly which makes the total cost increase to ~$44k. With $7550 down, monthly payment comes out to be $1000/month for 36 months. my 3 brothers in-law will help with some part of it.