I was just in a dealership in SoCal and got a quote in the $420 range for a 42K car. 2 year. no idea what VPP is, but this was for a $2k DRIVE OFF. That's the equivalent of like $500 DOWN i think. So he might have been in the ballpark for a $1500 DOWN, meaning something closer to a $3k DRIVE OFF (or total out of pocket). Is it possible there is just some terminology mix up here?

 

Must not include taxes, absolutely no way, unless you have a trade-in.

 

sorry for the confusion.

I included taxes in the drive off, but not the payment. Just get's confusing when taxes are included in the payment given everyone has a different tax rates.

 

Not lying dude, i got 1000 rebate for claiming to have owned a infiniti before, top tier credit, 1500 down so about 3000 drive off including 1st month, taxes, tag and title. The car was 46,***. Buyout is 31,*** or something like that.

 

Override... if your dealer will ship it to cali, he's already sold another one... to me!

very sweet deal!

 

Infiniti of coconut creek - largest infiniti dealer in the world.

 

So for 39mo of use you pay $22,231 and have a $31,000+ payoff for a total of $53,231+ assuming you can right a check for the 31K. If not you finance the 31K at some rate and you end up around 55K or so.

Or you could buy and the picture looks like this:

Lets assume you can negotiate a price of 43K and you qualify for the 2.99 financing.

43K w/ 3k down for a 40k loan @ 2.99 for 60mo = $718.00 a month and a total paid of $43,100 + 3K down = $46,100

But you have saved and put 10K down so now the picture looks like this:

43k w/ 10k down for a 33k loan @ 2.99 for 60mo = $593 a month and a total paid $35,570 + 10K down = $45,570

You have paid 10K more for the car to lease it....interesting.

Now assume you can truly negotiate the cost of the car to invoice, or near it, and you are looking at 38 - 40K starting point, Then run the numbers, WOW.

That is why I do not buy unless I can get the price I want and put a big down payment. I have instant equity, a low payment, and a low total cost of vehicle.

And the way to get the big down payment? Buy not lease, because you have equity in the asset to apply to the next purchase.

But I guess that is just not the American way anymore. It's all instant gratification

 

Correct me if i'm wrong, but I think the residule is based on sticker, or MSRP, but the payments are based on what you actually paid for the car. So if it's stickered at 42k, but you negotiated down to 39k, your paying tax and your money factor is applied to your 39k, but the residule percentage is based on the 42k. In the end, the lease will cost you less. Sames goes for financing. Never look at the payments. Always start with the sale price. People who shop the monthly payments, usually always end up paying more in the end.

 

You will never come out ahead with a lease. The point of the lease is to structure a payment plan to allow people who would not normally be able to afford a car, to afford the car.

The best price is the lowest price financed @ 0% interest. The next best is lowest possible interest rate.

Lease seems like a good deal because your payment is low but all you are doing it paying the depreciation and an increased %.

I just did the math for you and it does not lie.

Leasing is a tool the dealers have for selling more units to people who would normally not be able to afford it....PERIOD.

 

Two things i would point out after having done the calc myself.

1. Subsidized leases typically have ridiculously high residuals. Go try to sell the car at that price after the lease time period, almost gurantee you can't. Sort of the lease comapnies way of making sure you are in the lease for the term. (cause it's basically to put you underwater till the term expires). In the financial world, assuring you won't end the contract early with a buyout actually has some value in itself.

2. You are assuming you buy the lease. I have never bought my lease at lease end. (b/c i want a different car and b/c of 1). So... If i keep buying a new car every 2-3 years, i'm paying tax on the whole care instead of the depreciated amount only. (assuming i don't live in IL or TX). In CA @ 8.25% it can add up. with a G37 having a 72-73% residual in 2 years. I only pay tax on the 28% i use rather than on the whole car. About 3K in taxes you never get back if you sell the car.

Leasing does make sense if you usually do subsidized deals, and you turn you cars every 2 years.... 3 years + is probably a losing proposition for leasing though unless you get an very attractive lease deal.

But if you are a buy and keep it kind of person, I 100% agree, leasing is just silly.

 

Please see my response to your other message

You seem fixated on buying the car outright and I completely agree that if you intend buying the car at the end of a lease then you probably shouldn't be leasing. Do you intend owning your G37 forever? If you intend selling or trading it in in say 3 years then the real cost of ownership is price paid (including any interest) - price sold divided by number of months owned.

Let me take your finance example to try and make the point. I complete agree that if someone offered me 0% finance and I was intending to buy the car I would always take it over buying cash, so even though I had the cash I would still finance.

If I use your logic I could say that finance "is a tool the dealers have for selling more units to people who would normally not be able to afford" to buy the car cash.
Do you have a credit card? You could say credit cards are for people who can’t afford to buy things and you would be right, many people (who don’t understand) get in to trouble with them, but others get the cash back and protection a credit card gives and never pay a penny in interest.

Wrong, you can come out ahead with a lease and some of the reasons are

1) The finance company may over estimates the residual value of the car (With a lease they are taking on the risk not you)
2) Tax benefits - In 48 of the 50 states the tax is on the lease payment not the total cost of the car.
3) Options can be expensive on cars and like houses some of them don’t really add value to a car they just make them more desirable. With leasing the finance companies are not that sophisticated and typically the residual is based on the total cost of the car (some are now getting smart and capping but that is rare).

Please before dismissing leasing understand it. I don’t mind if you never lease but don’t make broad statements about leasing when you don’t understand leasing.

The residual value of the car is based on the MSRP but the lease payment is based on the difference between price paid and Residual value, so it has everything to do with the invoice or negotiated price.

Let me just give you one example for point 3 above:

You may pay $2.2K for a Nav system and after 2 years your car with Nav may only be worth a few hundred more than one without. With leasing they will assume that the Nav will be worth the residual % that is applied to the whole car. So a real example:

A 2 year lease on a G37S has a residual of 74%, The Nav has an MSRP of $2,200 so residual value is $1,628 and the depreciation is therefore $572 (or $24/month). Now because the lease is calculated on the price paid and you negotiated invoice+500 you would end up paying $19.49/month or $468 over the term.

A car is never (or very rarely) an investment, one thing a lease does do is make very transparent what it costs to drive your chosen car. When you buy you really don’t know what the car is effectively costing/month until you sell it and take price paid – price sold / length of ownership. I recently did the calculations for someone with a minivan who had just done exactly that. They sold their minivan after 6 years and their effective cost/month was actually more than a 3 year lease so they could have leased two minivans and had the advantage of never driving something over 3 years old. Also I didn’t even factor in some the out of warranty cost they had during their ownership period that they wouldn’t have had with a lease.

Again many people get taken to the cleaners with lease deals but if you know what you are talking about you don’t have to be one of them..

 

bdlhome,

Yes I have credit cards, and the balance is.....yup ZERO. If you can not pay off the card every month then you are living beyond you means.

Yes, there are many factors to a lease, but it originate as a corporate tool and leaked into the consumer market.

I agree that there may be time that you want to lease, but these are, or should be, informed decisions, not just leasing because it is the only way to drive a 40K car.

Leasing is a structure that by it's nature is offering options. Options are offered not free of service but for a fee.

You can read example after example on this forum of people leasing and when you add up lease payments and residual the car cost 50-55 thousand should they execute on the buy-out.

If they do not, then they have paid 15-22 thousand over 2-3 years to just drive a car, and pay penalties if there are any.

If you accept that you will have car payments indefinitely, and want to ensure this to be the case, then yes by all means lease.

Let's all agree however that turning cars over every 2 to 3 years is a money pit and unless you are independently wealthy, is not a wise move.

It would be interesting to know how many of the people leasing these cars Rent vs. are Buying there houses. I see a lot of apartments in the pictures of these people.....and that speaks volumes.

 

Don't jump the gun. Given the current status of our economy, many financial advisors and economists advise people to rent because it is a safer as opposed to buying. There are plenty of good reasons to rent rather than buy.

 

You are falling onto the TRAP. when they have you looking at the particulars like this they own you.

Look at TCO (Total Cost of Ownership) and your lease will be more dollars spent every time. This from my buddies who push leasing everyday all day.

 

yeah, the 300K of equity in my home and the ability to use it for financing was really stupid of me.....

Sheesh.