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Leasing Cars

i still don't get how this can make financial sense

only if the residual value is a lot higher than estimated? or is there something else i'm missing. Not having to pay the full sales tax amount if not keeping the lease through the end of the term?

trying to keep up here
 
wazzuFreddo said:
So I looked around on Craigslist and who are these people that want you to pay the lease transfer fee or some of their down payment back? Get outta here. :laughing
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Buyer paying lease transfer fee is normal. Think of it this way, why would they pay for your credit check?

Down payment back could just be MSDs. Which is normal to ask for it back upfront when taking over a lease.
 
stan23 said:
Buyer paying lease transfer fee is normal. Think of it this way, why would they pay for your credit check?

Down payment back could just be MSDs. Which is normal to ask for it back upfront when taking over a lease.
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Why would I do any of that though when I could go and negotiate my own lease on something brand new at probably a better price.
 
Abacinator said:
Remember the EV1?
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Of course. Remember Saturn? Those are the dealers you had to go to if you wanted to lease one.

There's one guy around here in the Bay who managed to somehow keep it away from GM and keep the thing from being crushed.
 
There's a collectable that nobody wants :laughing

Sadly, I do remember Saturn and their rubbermaid doors. My mom had one and it was an utter turd.
 
Abacinator said:
There's a collectable that nobody wants :laughing

Sadly, I do remember Saturn and their rubbermaid doors. My mom had one and it was an utter turd.
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Whaaaaaat? I thought everyone liked 10mm panel gaps!
 
JesasaurusRex said:
i still don't get how this can make financial sense

only if the residual value is a lot higher than estimated? or is there something else i'm missing. Not having to pay the full sales tax amount if not keeping the lease through the end of the term?

trying to keep up here
Click to expand...

Putting aside the tax angle, the math is pretty simple if you intend to swap cars every few years.

Simply add up the costs of each after X years:

<purchase price + taxes and fees> - <sales proceeds> = cost1

<total of up front costs + lease payments> - <equity at end if any> = cost2

For a lot of scenarios, cost2 will be lower for shorter terms.
 
stan23 said:
I have a lot of advice on this.
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I should get some advice then! My GS350 is up at the end of the year. I get my MSD's back if I turn in, or I can apply to vehicle purchase of course.

I did 45k miles, 3 year, I think residual is $35,600 or something from $49,xxx.
 
jt2 said:
Putting aside the tax angle, the math is pretty simple if you intend to swap cars every few years.

Simply add up the costs of each after X years:

<purchase price + taxes and fees> - <sales proceeds> = cost1

<total of up front costs + lease payments> - <equity at end if any> = cost2

For a lot of scenarios, cost2 will be lower for shorter terms.
Click to expand...

let's punch in some numbers just so i understand this

buying <$50,000 + $5,000 (10%)> let's say you have it for 3 years and sell it for $25,000 (50% depreciation)

Your total cost to buy after resale/trade in was $30,000

Now lease that same vehicle for 3 years and the manufacturer also gives the vehicle a 50% depreciation value your total payments will be at least $25,000 + $2,500 for tax and fees (10%)

Now stan was saying lease agreements are typically 2% higher rates than ordinary loans, so assuming a 0% loan on the first vehicle and a 2% agreement on the second, using a lease calculator i'm coming up with

total cost to lease for 36 months comes in at $29,750

guess the gamble is in the mileage limits vs service costs and if you itemize the lease gets a bit cheaper

is it safe to assume the manufacturers depreciation estimate is always on the high side though, or else they'd be taking on all the risk? Math wise real world i can't see how leasing a vehicle is cheaper than buying, short of large mechanical cost, which should still fall under the warranty periods for the lengths of times we're discussing.

Only way i see this making any sense at all is if you want lower month to month payments and always seeing yourself having a payment by getting a new car every year or two.

Did i miss something?
 
Last edited:
You've got the gist of it.

In your comparison, it is pretty close to a wash. Residual numbers are part art, part science. (see www.alg.com).

Where it can start to diverge is when manufacturers set the residual higher than the numbers might otherwise dictate to move inventory.
 
wazzuFreddo said:
Why would I do any of that though when I could go and negotiate my own lease on something brand new at probably a better price.
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Because the likelihood of someone taking over a lease is looking for a better price and shorter term than what you can get from the dealer.
 
Just sent out my offer the on the 530i I wanted with all the packages I was looking for (MSport, driver assistance, premium).

I used a method on a BMW forum to calculate the approximate invoice to aim for an offer of invoice + $500 to $1000 for the cap cost.

Edmunds forum says the July money factor set by BMWFS is .00151 so that's what I offered, I'm already assuming they will not want to go that low.

I guess we'll see what they counter with.
 
jt2 said:
You've got the gist of it.

In your comparison, it is pretty close to a wash. Residual numbers are part art, part science. (see www.alg.com).

Where it can start to diverge is when manufacturers set the residual higher than the numbers might otherwise dictate to move inventory.
Click to expand...

where does one come across advertised residual values? manufacturers websites?
 
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