- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
About to lease a car...any tips before I pul the trigger?
Posted on 5/26/14 at 7:28 pm
Posted on 5/26/14 at 7:28 pm
Backstory:
We've got about every mile we can out of the wife's car but its gotten to the point where it's not safe for her to drive anymore. She's got 2 years left in her master's program before she starts working and contributing to household income. We need something to hold her over between now and when she can start work.
Basically, my thought process for going with a lease over a used car is this:
1) She drives about 5 miles a day total so she won't put many miles on it, which would keep us well under the 12,000/ year mileage penalty
2) 3 year lease gives us about a year between her finishing school and the lease term ending, which means we have options for our next car.
3) The residual value of the car would be still be great at the end of the lease term, considering the amount of driving she will (or won't) be doing. This leaves the option of buying the car after the lease.
The lease we are looking at is for a Mazda 3:
Requirements and Restrictions:
Down Payment: $1,840
Security Deposit: $0
Lease Cash: $0
Annual Mileage: 12,000
Lease is based on the 2014 Mazda3 Sedan i Sport with automatic transmission. MSRP as equipped is $20,290. $500 Dealer contribution is required for the $170 monthly payment. $2,010 is due at signing. Tax, tags and insurance are extra. Must finance through Mazda Capital Services.
The payment works out to $170/month.
I've never leased a car and I'm not sure how the whole process works. Do I just go into the dealership with the lease deal and say this is what I'm paying or is there room for negotiation? I feel like $170 a month is reasonable but if I can pay less then why wouldn't I?
We've got about every mile we can out of the wife's car but its gotten to the point where it's not safe for her to drive anymore. She's got 2 years left in her master's program before she starts working and contributing to household income. We need something to hold her over between now and when she can start work.
Basically, my thought process for going with a lease over a used car is this:
1) She drives about 5 miles a day total so she won't put many miles on it, which would keep us well under the 12,000/ year mileage penalty
2) 3 year lease gives us about a year between her finishing school and the lease term ending, which means we have options for our next car.
3) The residual value of the car would be still be great at the end of the lease term, considering the amount of driving she will (or won't) be doing. This leaves the option of buying the car after the lease.
The lease we are looking at is for a Mazda 3:
Requirements and Restrictions:
Down Payment: $1,840
Security Deposit: $0
Lease Cash: $0
Annual Mileage: 12,000
Lease is based on the 2014 Mazda3 Sedan i Sport with automatic transmission. MSRP as equipped is $20,290. $500 Dealer contribution is required for the $170 monthly payment. $2,010 is due at signing. Tax, tags and insurance are extra. Must finance through Mazda Capital Services.
The payment works out to $170/month.
I've never leased a car and I'm not sure how the whole process works. Do I just go into the dealership with the lease deal and say this is what I'm paying or is there room for negotiation? I feel like $170 a month is reasonable but if I can pay less then why wouldn't I?
9
Posted on 5/26/14 at 7:36 pm to iAmBatman
quote:
She drives about 5 miles a day total
Get her a bicycle.
Posted on 5/26/14 at 7:41 pm to lnomm34
If only it were that easy. She has books and stuff she has to bring to class. Plus the fact that driving a bicycle on Baton Rouge streets significantly lowers your life expectancy, I think the extra cost is worth it.
Posted on 5/26/14 at 7:46 pm to iAmBatman
It is a mistake to lease.
Can't explain it all, just know I have family who is over finance managers for many dealerships when he is on property.
Good luck with whatever choice you make.
Can't explain it all, just know I have family who is over finance managers for many dealerships when he is on property.
Good luck with whatever choice you make.
Posted on 5/26/14 at 7:54 pm to GeeOH
It's not my ideal situation but taken at face value, it seems like a reasonable option.
$170/month for 3 years doesn't seem to be out of line and factoring in dealership fees and other misc stuff, the total cost for the lease term is a little over 9K.
All that being said, if there's any insider info you'd like to share to keep me from getting screwed, then I'm all ears.
I just don't want to go into this situation blind, considering I've never leased a car before.
$170/month for 3 years doesn't seem to be out of line and factoring in dealership fees and other misc stuff, the total cost for the lease term is a little over 9K.
All that being said, if there's any insider info you'd like to share to keep me from getting screwed, then I'm all ears.
I just don't want to go into this situation blind, considering I've never leased a car before.
Posted on 5/26/14 at 8:10 pm to iAmBatman
Why not just buy a $9k car and at the end of 3 yrs, you actually own something that you will probably be able to drive a good bit longer. I'd imagine you can get a safe and reliable car for $9k
Posted on 5/26/14 at 8:16 pm to guttata
quote:
Why not just buy a $9k car and at the end of 3 yrs, you actually own something that you will probably be able to drive a good bit longer. I'd imagine you can get a safe and reliable car for $9k
Was coming to say this. Dont lease man
Posted on 5/26/14 at 8:21 pm to guttata
Because being that I'm the only one working, our income situation isn't ideal. I paid off my car a few months ago so the $170/month is pretty much a wash. I don't want to blow our savings on a used car that may turn out to be a money pit. Leasing will keep our monthly expenses at the same level while leaving cash in savings for emergencies.
Posted on 5/26/14 at 8:24 pm to iAmBatman
The Mazda3 is a nice choice. They are built in Yamaguchi Province in Japan. The question I would ask myself is "Where will I be on the vehicle at the end of 36 months?" Equivalent 2011 and 2012 Mazda3s with < 45k miles are worth $13,500 to $14,500 right now. There's no reason to think your vehicle in three years will depreciate differently.
Leases only work if a person can deduct the cost (or part of the cost) of the lease for business purposes. The leasing agency ALWAYS structures a lease to protect themselves and for them (not you) to win at lease termination. Buy the vehicle and (maybe?) trade it in when she finishes, you'll have equity in it versus the lease. After the lease you'll only have cancelled checks and possibly additional costs for excess wear and tear.
A lease for the average Jane or Joe is a loser.
Leases only work if a person can deduct the cost (or part of the cost) of the lease for business purposes. The leasing agency ALWAYS structures a lease to protect themselves and for them (not you) to win at lease termination. Buy the vehicle and (maybe?) trade it in when she finishes, you'll have equity in it versus the lease. After the lease you'll only have cancelled checks and possibly additional costs for excess wear and tear.
A lease for the average Jane or Joe is a loser.
Posted on 5/26/14 at 8:31 pm to iAmBatman
Its your money bro. I think you are looking for people to agree with you. Unfortunately you wont find much of that here. A lease is never financially smart. And if she is really putting that little in mileage why would you want to be the one to deprecate the vehicle?
Honesty, go find a 05-07 accord or something and she will be fine. Those things are bulletproof.
Hell, add roadside assist to your insurance if you really are concerned for safety
Honesty, go find a 05-07 accord or something and she will be fine. Those things are bulletproof.
Hell, add roadside assist to your insurance if you really are concerned for safety
Posted on 5/26/14 at 8:44 pm to Mr.Perfect
Just trying to lay out my line of reasoning but if I'm wrong in my assumptions then I'm open to change. Like I said, I've never leased a car so I'm just trying to gather as much info as I can so I don't go in blind.
As far as getting that 06 accord, I really don't want to drain our savings to buy a car with over 100K miles. If I come out a little behind because I lease instead of buy then I'm OK with that because I'm not putting myself into a situation where our savings is gone.
If for some hypothetical reason I lose my job or get hurt or whatever and we buy that car, then we're in a tight spot with no cash to hold us over. I figure with the lease, we still have the cash reserve to hold us over until I'm able to work again.
As far as getting that 06 accord, I really don't want to drain our savings to buy a car with over 100K miles. If I come out a little behind because I lease instead of buy then I'm OK with that because I'm not putting myself into a situation where our savings is gone.
If for some hypothetical reason I lose my job or get hurt or whatever and we buy that car, then we're in a tight spot with no cash to hold us over. I figure with the lease, we still have the cash reserve to hold us over until I'm able to work again.
Posted on 5/26/14 at 8:45 pm to iAmBatman
quote:
We've got about every mile we can out of the wife's car but its gotten to the point where it's not safe for her to drive anymore
is this your opinion or a mechanics?
Posted on 5/26/14 at 8:56 pm to Mr.Perfect
It's my opinion based on driving it and riding in it. Transmission is shot, windows don't roll down, back bumper is dented and cracked, tires need to be replaced. All in all, about 3-4K to keep this thing on the road and I don't see the point in dumping money into an asset with no chance of seeing a return.
The inspection sticker expires in a month and the registration is up for renewal. We've been talking about getting her something so now is as good a time as any.
The inspection sticker expires in a month and the registration is up for renewal. We've been talking about getting her something so now is as good a time as any.
Posted on 5/26/14 at 9:08 pm to iAmBatman
You will get every line here in why you should not lease, but very few people actually run through the details of why its a bad idea. Most of it comes from secondhand statements. I am in the minority and believe it can be very advantageous under the right circumstances and financial terms.
For your situation, leasing is possibly an okay decision. First, if she really only drives 5 miles a day, get a lower mileage lease. 12k/yr is the normal lease. They usually offer 8k/10k/12k/15k leases. All with different residuals. This could lower your payment even more.
If you lease and are significantly under mileage, the dealer "wins". You have to either buy the car for residual (hence dealer gets paid, but vehicle is "worth" more) or give a higher value asset to them with nothing to show. Of course you could use it to negotiate your next purchase, but they're still perpetuating the cycle.
Consider if you will be adding options to the vehicle spec'd in the advertised lease. This will affect the negotiations and usually the dealers get and advantage here. However, usually the residual % will stay the same, as will the "dealer contribution" and money factor. The key is negotiating the price of the vehicle just as if you were purchasing. Leasing is simply another way of financing that reduces your monthly payment (it's basically a balloon payment).
For your situation, leasing is possibly an okay decision. First, if she really only drives 5 miles a day, get a lower mileage lease. 12k/yr is the normal lease. They usually offer 8k/10k/12k/15k leases. All with different residuals. This could lower your payment even more.
If you lease and are significantly under mileage, the dealer "wins". You have to either buy the car for residual (hence dealer gets paid, but vehicle is "worth" more) or give a higher value asset to them with nothing to show. Of course you could use it to negotiate your next purchase, but they're still perpetuating the cycle.
Consider if you will be adding options to the vehicle spec'd in the advertised lease. This will affect the negotiations and usually the dealers get and advantage here. However, usually the residual % will stay the same, as will the "dealer contribution" and money factor. The key is negotiating the price of the vehicle just as if you were purchasing. Leasing is simply another way of financing that reduces your monthly payment (it's basically a balloon payment).
Posted on 5/26/14 at 9:40 pm to iAmBatman
quote:
I've never leased a car
And I wouldn't start now.
Long story short, with a lease, you owe something but you own nothing.
Buy a used vehicle for $10K, finance it for 3 years at PenFex (rates are less than 1.99 %). At the end of 3 years, you'll have a vehicle that is in your name and "equity" built in it.
Posted on 5/26/14 at 9:43 pm to LSUtigerME
quote:
First, if she really only drives 5 miles a day, get a lower mileage lease. 12k/yr is the normal lease. They usually offer 8k/10k/12k/15k leases. All with different residuals. This could lower your payment even more.
Her school is literally 2 miles from our house. We use my SUV for everything. Granted, if her car were nicer, we would probably use it more. I would say she averages 500 miles a month. I didn't realize that you could lower the mileage totals to decrease the payment and that may be an option for us.
quote:
If you lease and are significantly under mileage, the dealer "wins". You have to either buy the car for residual (hence dealer gets paid, but vehicle is "worth" more) or give a higher value asset to them with nothing to show. Of course you could use it to negotiate your next purchase, but they're still perpetuating the cycle.
Like I said, this is not my ideal situation but given where we are, it seems to make the most sense from a financial standpoint.
quote:
Consider if you will be adding options to the vehicle spec'd in the advertised lease. This will affect the negotiations and usually the dealers get and advantage here.
I figured this was the case and the lease deal states it must be taken from dealer stock so there really isn't much I can do about that.
quote:
The key is negotiating the price of the vehicle just as if you were purchasing.
So if I were to negotiate the price to lower than what the deal is currently using then I can also lower the monthly payment? Am I understanding that correctly? Basically what you're saying is to go to the dealership and act as if I were buying the car and get the price as low as possible. Once that is done I tell them that I want that price but work it up as a lease?
Posted on 5/26/14 at 9:52 pm to iAmBatman
quote:
So if I were to negotiate the price to lower than what the deal is currently using then I can also lower the monthly payment? Am I understanding that correctly? Basically what you're saying is to go to the dealership and act as if I were buying the car and get the price as low as possible. Once that is done I tell them that I want that price but work it up as a lease?
Leasing provides a good deal for four parties - the sales person, the F & I guy, the dealership’s owner and the finance company (leasing company). It is a lousy deal for the customer. Leasing adds a layer of complexity to the deal that allows the salesman to hide or misrepresent the true purchase price.
You'll be asked early on in the process whether your plan to purchase or lease. Don't answer that question. Simply state that you are unsure at this time.
Work on the price of the vehicle first. And negotiate as if you don't need the vehicle.
What you have to be careful of is the F&I will catch on to this and try to make it up on the back end to get you back to the advertised special. Make sure you familiarize yourself with the following:
Residual?
Capitalized cost reduction?
Acquisition fee?
Disposition fee?
Money Factor?
or else you'll get lost in the whole back end of the deal process.
This post was edited on 5/26/14 at 9:54 pm
Posted on 5/26/14 at 9:52 pm to iAmBatman
quote:
So if I were to negotiate the price to lower than what the deal is currently using then I can also lower the monthly payment? Am I understanding that correctly? Basically what you're saying is to go to the dealership and act as if I were buying the car and get the price as low as possible. Once that is done I tell them that I want that price but work it up as a lease?
Yes. However, the "dealer contribution" may be removed at their discretion, and they may try to squirm on MF. Usually the advertised deals are at a reasonable price (ie. not at MSRP). You may be able to knock a little more off if you put in the work. Usually this only comes into play when negotiating outside the listed car.
I'd figure out the Residual %, money factor, and any cap cost reductions applied and go from there. This will also help determine whether leasing is actually a better deal for you. Check out the edmunds forums. They usually have a dedicated thread for each vehicle lease and will list these factors.
Posted on 5/26/14 at 10:13 pm to LSUtigerME
quote:
Check out the edmunds forums. They usually have a dedicated thread for each vehicle lease and will list these factors.
Thanks for the tip. I'm currently checking it out now to get an idea on what the numbers should look like on the items Will Cover laid out.
Thanks everyone for helping me get the ball rolling on this whole process. I'll bump the thread if I have more questions and to give a final breakdown on what we end up doing.
Posted on 5/26/14 at 10:22 pm to iAmBatman
I was in your shoes about 18 months ago. Wife's car crapped out with 10 months left in school...needed something to get her through. Ended up getting a $14k + tax 4Runner, and financed the entire thing. I sold after she was done with school for the amount I owed on the note. So basically just leased something for those 10 months.
Would have kept the 4Runner except she got a job 72 miles from our house so we went with the Jetta TDI.
Would have kept the 4Runner except she got a job 72 miles from our house so we went with the Jetta TDI.
Page 1 of 3
Popular
Back to top
Follow TigerDroppings for LSU Football News