Is it ever wise to lease? Paging Dentist not really (1 Viewer)

[E-Z Glider]

I like to look at lease prices regardless of where I am in my current lease, I'm always looking to see which cars are offering the best leases. I basically have no choice but an SUV for our next car, which I'm kinda okay with, but if I was an empty nester or younger with no kids and had money - Jaguar F Type has amazing deals for a James Bond kinda car. You can grab one with good negotiating for like $550 a month - that's a $70k sick coupe or convertible.

I get to pick my own leased vehicle (within reason) through my work. What makes some cars "better" to lease than others and where do you look to see who is offering the best leases? Any other examples of sweet rides that currently have "good leases"?

 

[boots11234]

So earlier someonone said ‘never put money down’. What if the lease deal say 2k down. Do you just tell them ‘no, I won’t put any down’. Do they then try to roll that $$ into higher monthly payments?

 

[RUSF18]

So earlier someonone said ‘never put money down’. What if the lease deal say 2k down. Do you just tell them ‘no, I won’t put any down’. Do they then try to roll that $$ into higher monthly payments?

Think the point is not to pay attention to the "lease deal". Negotiate the price of the car. From there, the "lease deal" is set because the residual value and money factors used are standard for the car. Then it becomes simple math. You're paying for the depreciation of the car over the lease term (your negotiated price - residual value) and the cost of financing (the money factor x 2400 is the equivalent to an interest rate). 

If you want to put $2K down, take it off the negotiated price and then the lease payments should be re-calculated from there. 

 

[CletiusMaximus]

So earlier someonone said ‘never put money down’. What if the lease deal say 2k down. Do you just tell them ‘no, I won’t put any down’. Do they then try to roll that $$ into higher monthly payments?

You can always negotiate around whatever down - payment the advertised lease deal specifies.  As for the "never put money down" line, as far as I know, there are two reasons for this, both of which have some merit but neither of which is particularly compelling.

1. Any money you pay up front is giving the financing company the benefit of the time value of that money. If your lease has an effective interest rate of 1-2%, as is often the case, you're probably better off investing that money yourself rather than effectively pre-paying a very low interest loan.  Of course, this is somewhat theoretical and probably has very little real world value, given the small amounts at stake.

2. Up-front money is technically at risk in a lease if the car is totaled or stolen in the early months of the lease.  The way leases are written up, you are responsible for the full payments even if the car is lost or stolen. For the most part, you're covered by insurance. The problem lies in the fact that the value of the car has significantly depreciated the day you drive it off the lot, but that significant depreciation is amortized in equal monthly amounts in a lease, so at the beginning of the lease the replacement (insurance) value of the car is less than what is reflected in the remaining payments you owe.  I know I'm not stating this very clearly, but suffice it to say this risk can be covered by "gap insurance" (which they will try to sell you).  Alternatively, you can do what most people do and just accept the very small risk that you total your car or it gets stolen during the first 12 months or so of the lease term.

Also, I think when you are comparing lease deals, its helps to find a baseline such as no money down, just for purposes of comparing apples to apples.

When I did my last lease - for my wife - I had an old car I wanted to trade in.  It had some major engine issues and I was not comfortable selling it privately, and just didn't want that hassle.  I negotiated a decent value and then had the amount applied as an upfront payment on the lease. It was only a few thousand, so was fine as a down payment.  For me (and my wife), its nice from a psychological perspective to have that much lower payment each month going forward. They would have paid me in cash, but it wasn't enough money to make a difference so I just took it in the form of lower payments.

 

[NeverEnough]

If you keep cars forever, buy. If you drive a lot, buy.

I've leased a few cars & currently leasing one. I wanted a cheap daily driver to keep my other cars out of the elements & I did not want another car that I felt like modding or working on. If anyone wants to tell me that driving a new car while not having to worry about fixing, modding or even changing the oil for 3 years is dumb I will just LOL at you. $160 a mo zero down FTW.

One of my old leases was $3k down. I would not do a lease again with thousands down. That part is a waste IMO.

 

[gianmarco]

You can always negotiate around whatever down - payment the advertised lease deal specifies.  As for the "never put money down" line, as far as I know, there are two reasons for this, both of which have some merit but neither of which is particularly compelling.

1. Any money you pay up front is giving the financing company the benefit of the time value of that money. If your lease has an effective interest rate of 1-2%, as is often the case, you're probably better off investing that money yourself rather than effectively pre-paying a very low interest loan.  Of course, this is somewhat theoretical and probably has very little real world value, given the small amounts at stake.

2. Up-front money is technically at risk in a lease if the car is totaled or stolen in the early months of the lease.  The way leases are written up, you are responsible for the full payments even if the car is lost or stolen. For the most part, you're covered by insurance. The problem lies in the fact that the value of the car has significantly depreciated the day you drive it off the lot, but that significant depreciation is amortized in equal monthly amounts in a lease, so at the beginning of the lease the replacement (insurance) value of the car is less than what is reflected in the remaining payments you owe.  I know I'm not stating this very clearly, but suffice it to say this risk can be covered by "gap insurance" (which they will try to sell you).  Alternatively, you can do what most people do and just accept the very small risk that you total your car or it gets stolen during the first 12 months or so of the lease term.

Also, I think when you are comparing lease deals, its helps to find a baseline such as no money down, just for purposes of comparing apples to apples.

When I did my last lease - for my wife - I had an old car I wanted to trade in.  It had some major engine issues and I was not comfortable selling it privately, and just didn't want that hassle.  I negotiated a decent value and then had the amount applied as an upfront payment on the lease. It was only a few thousand, so was fine as a down payment.  For me (and my wife), its nice from a psychological perspective to have that much lower payment each month going forward. They would have paid me in cash, but it wasn't enough money to make a difference so I just took it in the form of lower payments.

Those are both correct.  However, I'd argue #2 is compelling.  While a small chance, it's throwing money away if it happens.  Whatever money "down" you put (as a % of how many months into the lease you are) is lost for good.

To keep math simple, let's assume you put $3000 down.  It's a 30 month lease.  You are lowering your monthly payment by $100 (plus any interest you're saving).  If you total your car in the 1st month, you've lost $3000.  If you total it 10 months into the lease, you've lost $2000.  Anything other than totaling it in the last month is lost money.

Sure, a remote chance of that happening, but why bother when you can simply ask them to not put money down and they will say ok unless you have poor credit?  Put another way, there is ZERO benefit of putting money down on a lease and > ZERO risk of losing money by doing so.  As you pointed out, with interest rates being so low, the money you are saving on interest payments you can more than make up elsewhere.  Some high yield savings accounts will earn more money than what you save by putting down money and lowering your payments. 

It's simply a matter of letting them know.