Post purchase price details here (US $ only)

[nellie1289]

Wrong. You borrow $43750 when you walk off with a car.. Happy to post a loan amortization file proving this. You are walking off with a 43750 asset. Not a 18250 asset. Leases amortize just like a loan. You will owe less on the car (residual) on a lease at amortizing at 1.68%(.0007x2400) than a purchase amortizing at 1.90%(genesis current loan rate) on 43750 at every point throughout the lease and at the end of 36 months. This is a mathematical finance fact.

On edit. Your payment would be higher on a 72 month purchase at 1.9% I assume you would make the same payment on a purchase the first 36 months as the lease. Which would obviously never be the case. But is for illustrative purposes

For anyone interested here is how this example lease amortizes at 1.68% using turtle boys example lease. There is minor rounding in the payment as I assume he used the money factor as rounded (it has more decimals I’m guessing. ) See..... You are borrowing 43,750 at 1.68%. Not 18250.

 

[TurtleBoy]

Wrong. You borrow $43750 when you walk off with a car.. Happy to post a loan amortization file proving this. You are walking off with a 43750 asset. Not a 18250 asset. Leases amortize just like a loan. You will owe less on the car (residual) on a lease at amortizing at 1.68%(.0007x2400) than a purchase amortizing at 1.90%(genesis current loan rate) on 43750 at every point throughout the lease and at the end of 36 months. This is a mathematical finance fact.

I don't know how many times I need to say this but you don't seem to understand the meaning of effective interest rate. The amortization tables do not apply in this instance since we are not comparing purchasing and leasing as noted in the example.

What we are looking at is how much was paid in rent charges for the lease. In the example it was 1,745.28 and we use the depreciation amount to calculate the effective interest rate since that is effectively what was borrowed. Maybe if you look at it from purchasing the vehicle at the end of the lease it will help you understand. If you purchase a vehicle at the end of the lease, the total cost to you would be:

1. The amount you paid during the lease
2. The residual value

In the example the price was 43,750 so:

1. 19,995
2. 25,500

That would be a total cost to you on the day you buyout your lease of 45,495. That means for the three years it cost you 1,745 for that 18,250 since you still have the 25,500 to pay or finance again.

Hopefully you understand that but if not just let me know.

 

[nellie1289]

I don't know how many times I need to say this but you don't seem to understand the meaning of effective interest rate. The amortization tables do not apply in this instance since we are not comparing purchasing and leasing as noted in the example.

What we are looking at is how much was paid in rent charges for the lease. In the example it was 1,745.28 and we use the depreciation amount to calculate the effective interest rate since that is effectively what was borrowed. Maybe if you look at it from purchasing the vehicle at the end of the lease it will help you understand. If you purchase a vehicle at the end of the lease, the total cost to you would be:

1. The amount you paid during the lease
2. The residual value

In the example the price was 43,750 so:

1. 19,995
2. 25,500

That would be a total cost to you on the day you buyout your lease of 45,495. That means for the three years it cost you 1,745 for that 18,250 since you still have the 25,500 to pay or finance again.

Hopefully you understand that but if not just let me know.

You can’t look at it this way the interest is always higher in the first years of any loan. Including purchase or lease . In either case you have to keep paying the car down from 25500 whether lease or purchase and the total interest comes down bringing down your effective interest rate till the final amount is paid off as the loan amortizes. Just look at the amortization table.

FACT: People- When you lease a car you are borrowing $43,750. You have an option to jump off at 3 years or find a new loan or pay it off in cash. But the fact is you are paying 1.68% for the first 3 years instead of the 1.9% on a purchase loan. Don’t let anyone ever kid you that you are only borrowing $18,250. You have borrowed $43,750. You are driving a $43,750 G70. Not a $18,250 G70. You will owe more on the car on a three year lease at 1.68% because your payment is lower than a 1.90% purchase loan. But the amount you are borrowing is $43,750. I like to lease because it gives me an option at 3 years and a lower rate for the first three years.

 

[TurtleBoy]

LOL Never mind. At this point you must just be trolling for an argument and I'm not going to fall into it. I'm sure people can see the math and what it means.

 

[nellie1289]

LOL Never mind. At this point you must just be trolling for an argument and I'm not going to fall into it. I'm sure people can see the math and what it means.

Just trying to make sure you aren’t spreading fake news about how you are only borrowing $18,250.

 

[nellie1289]

Just trying to make sure you aren’t spreading fake news about how you are only borrowing $18,250.

Here is the loan amortization using turtleboys exact numbers. The rate is 1.691% when you lease this car in his provided example. (2400 x .0007) decimal rounding cutoff in the money factor I assume he provides. You are borrowing $43,750 not $18,250. His mythical effective interest rate is fake news. Don’t believe it. Here is all the evidence you need.

 

[pulsar]

You guys are killing me..... my head is spinning with facts and figures. Whenever I get ready to pull the trigger later in the year, which one of you is coming to Texas to be my personal lease vs a cash buy expert at the dealer based on Genesis figures at that time?

 

[TurtleBoy]

Just trying to make sure you aren’t spreading fake news about how you are only borrowing $18,250.

I, as others, should just ignore you but you really need to take a step back and look at what we are talking about. As shown a few times, the first three years of the lease you are reducing the price of the vehicle by 18,250. Call that amount "borrowing", "Depreciation", "Nellie's magic number", it really does not matter. What matters is that is the amount that the total price (43,750) of the vehicle is being reduced for the three years of the lease. In order to get the total price reduced by 18,250, it costs you 1,745. That is generally called "rent charge", but some call it "interest" and I guess it could also be "Nellie's nemesis". The term doesn't matter, what is important is that is the amount it will cost you to reduced the price by 18,250.

At the end of the lease you would have to either pay cash or finance the residual value. If you were financing, then the loan for the 25,500 would start with a new amortization table that has nothing to do with the lease.

As noted a few times amortization tables have absolutely nothing to do with this discussion since we are not comparing a lease to a loan. What we are doing is looking at the effective interest rate on the depreciation amount. But since you seem to love them so much maybe you can use them to help you understand. As you said, the interest portion of a loan payment is higher at the beginning of the loan and goes down over the life of the loan.

While this is not meant to be a representation of the lease discussion it may turn on the light for you. Run an amortization table for a loan of 43,750, at 1.6% for 5 years. With some rounding your payments should be 759 a month which of course represents a payment to principal as well as interest. You go along happily paying and about two years from now after you have paid approximately 18,500 in principal that "Help a CPA" grant comes through and you are able to pay off the remaining balance.

Sitting around admiring the huge pink rubber eraser that signifies your award, you decide to calculate what your interest rate was on the 18,500 that you borrowed for the two years. You fire up the old Commodore 64 and look at the amortization table for the loan and you see that you paid a total of about 1,200 dollars in interest during the two years you had the loan. Now the quest for that mystical number has your heart pumping as you recap the numbers. You ended up borrowing $18,500 for 2 years and paid 1,200 in interest, the loan was at 1.6% but what what effective interest rate did you really pay. A smile comes on your face as you open Lotus 1-2-3, knowing the amortization table will give you the insight. You plug in a few numbers and there it is, shining as if a halo is around cell A4. In order to pay $1,200 on a loan of 18,500 for two years the interest rate would have to be 6.11%. Astonished since your loan was for 1.6%, you sit back in your easy chair, ruffle the whiskers on your chin and mutter to yourself - "So that is what TurtleBoy has been trying to teach me about effective interest rates".

This time I mean it, we are beating a dead horse. Feel free to take a last comment should you feel the need.

 

[sethsquire]

Just reached out to a dealer finally - Genesis of the North Shore - with Circle certificate in hand. I told them I had a circle certificate and what should be 5k in incentives, and asked for a lease breakdown for 36/12 with RV, MF, etc. on that particular car.

I don't know if the person who responds to internet inquiries is a moron or they're just playing the usual dumb games, but I get back a message along the lines of "the Circle price is the price you pay, I hope this answers your questions."

No it doesn't answer my questions! I asked for a lease breakdown! Honestly, I hate dealing with this nonsense.

 

[TurtleBoy]

Just reached out to a dealer finally - Genesis of the North Shore - with Circle certificate in hand. I told them I had a circle certificate and what should be 5k in incentives, and asked for a lease breakdown for 36/12 with RV, MF, etc. on that particular car.

I don't know if the person who responds to internet inquiries is a moron or they're just playing the usual dumb games, but I get back a message along the lines of "the Circle price is the price you pay, I hope this answers your questions."

No it doesn't answer my questions! I asked for a lease breakdown! Honestly, I hate dealing with this nonsense.

Probably a combination of both, a moron playing games. Seems like many times the general internet queries are just answered very generally to try and start the conversation and not get pinned down to specific numbers. If you can't go into the dealership, it probably would be best to call and ask for the Genesis sales manager. Explain what you have and hopefully he/she will be able to provide you with exact numbers. Good luck and let us know how it turns out.

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[EdP]

I, as others, should just ignore you but you really need to take a step back and look at what we are talking about. As shown a few times, the first three years of the lease you are reducing the price of the vehicle by 18,250.

This time I mean it, we are beating a dead horse. Feel free to take a last comment should you feel the need.

I loaded Quattro Pro on my TI44A computer and I figured it cost me $1200 to use up $18,500 value of a $43,750 machine.
I understand that part, but what is the trade in value of a dead horse? Does it increase by beating it more?

 

[Toddasaurus]

I'm lost. I have no clue how leasing works. Haha.

This is the reason why I financed my car. That, and I'm scheduled to fully pay it off after 1 year. Hopefully I'm not screwing myself over too badly with my plan.

 

[Mcc]

You guys are killing me..... my head is spinning with facts and figures. Whenever I get ready to pull the trigger later in the year, which one of you is coming to Texas to be my personal lease vs a cash buy expert at the dealer based on Genesis figures at that time?

Let me try and make things very simple. If I am wrong, I am sure someone will point it out.
Assuming you have enough cash to purchase or can get a good lending rate from your credit union then
All that counts is your bottom line purchase price including all incentives and lease incentives
Forget about residual, interest rate, money factor, disposition cost (if there is any). In this case they make no difference.
So if you can get extra cash by leasing, just do it and buy out your lease in a month with either cash or a good loan.

Maybe over simplified but I think just simple enough.

 

[SeekingGen]

You guys are killing me..... my head is spinning with facts and figures. Whenever I get ready to pull the trigger later in the year, which one of you is coming to Texas to be my personal lease vs a cash buy expert at the dealer based on Genesis figures at that time?

See if TB is free.

 

[sethsquire]

Probably a combination of both, a moron playing games. Seems like many times the general internet queries are just answered very generally to try and start the conversation and not get pinned down to specific numbers. If you can't go into the dealership, it probably would be best to call and ask for the Genesis sales manager. Explain what you have and hopefully he/she will be able to provide you with exact numbers. Good luck and let us know how it turns out.

Naturally I'm sure that's the case. I already test drove and know I want the car, so I'm trying to avoid going into the dealership and wasting time playing the "let me talk to the manager" game. With Circle pricing it should be relatively straightforward: give me the price plus incentives and spit out a deal sheet.

Probably a good idea to just call and ask for the Genesis sales manager.

 

[Tonester]

Well it's been a whole day and look at all the great discussion here! Thank you TB and Nellie!

Sorry to say TB, but I actually think Nellie's viewpoint makes the most sense. You are driving a $44K asset (or whatever was negotiated) out the door, so whatever financing you pay (lease or purchase) should be according to that. With a 5-year 1.9% loan, you simply use the amortization table and pay down the loan over 5 years just like any other loan (home or other). And yes, the interest early on is higher than interest later; simply due to the amount "financed" at any given time as principle is paid off, but the payment of course remains the same.

For a 3-year lease, think of it as an "x"-year (5 or more) amortized loan with a balloon payment due after 3 years. Just because you have a balloon payment does not mean you don't have to pay the interest (MF for lease) in the early years. In my example earlier, I mentioned to divide the total lease interest by the 36 months and that would be your monthly interest. But that is not actually correct and I believe it is truly amortized for the entire asset value as Nellie has said and not just the lease portion. In my other post, I was only thinking about interest on the "depreciation" (Cap cost - RV) rather than the entire asset, so that was my error.

I was very much against doing a lease before and thinking that leases are for people who want to drive more car than they can afford. But with the lease cash increasing, I was forced to read up on the subject and get better educated. Thank you all for the discussion, I learned something!

 

[TurtleBoy]

Well it's been a whole day and look at all the great discussion here! Thank you TB and Nellie!

Sorry to say TB, but I actually think Nellie's viewpoint makes the most sense. You are driving a $44K asset (or whatever was negotiated) out the door, so whatever financing you pay (lease or purchase) should be according to that. With a 5-year 1.9% loan, you simply use the amortization table and pay down the loan over 5 years just like any other loan (home or other). And yes, the interest early on is higher than interest later; simply due to the amount "financed" at any given time as principle is paid off, but the payment of course remains the same.

For a 3-year lease, think of it as an "x"-year (5 or more) amortized loan with a balloon payment due after 3 years. Just because you have a balloon payment does not mean you don't have to pay the interest (MF for lease) in the early years. In my example earlier, I mentioned to divide the total lease interest by the 36 months and that would be your monthly interest. But that is not actually correct and I believe it is truly amortized for the entire asset value as Nellie has said and not just the lease portion. In my other post, I was only thinking about interest on the "depreciation" (Cap cost - RV) rather than the entire asset, so that was my error.

This is not a "makes more sense" situation. It is simply a mathematical/finance equation. Look at your explanation, it agrees with what I'm saying. You are describing paying interest on an amount that is greater than the amount being "borrowed" so it results in a higher effective interest rate at the end of the lease. If that is not clear from all of my examples I guess we will just have to leave it as is.

 

[WWIAFTM]

That lease financing discussion was riveting. Does any one know if Genesis has any annual sales events that make it worth waiting for? Also are there any incentives that a person driving an old non-competitor vehicle is eligible for?

 

[TurtleBoy]

Naturally I'm sure that's the case. I already test drove and know I want the car, so I'm trying to avoid going into the dealership and wasting time playing the "let me talk to the manager" game. With Circle pricing it should be relatively straightforward: give me the price plus incentives and spit out a deal sheet.

Probably a good idea to just call and ask for the Genesis sales manager.

Once you get the deal sheet if you need anything verified just post.

 

[TurtleBoy]

That lease financing discussion was riveting. Does any one know if Genesis has any annual sales events that make it worth waiting for? Also are there any incentives that a person driving an old non-competitor vehicle is eligible for?

No, Genesis has not yet had any special events but it is early in the company life so they may at some point. Besides lease cash, the other incentives are Loyalty, Conquest, Military and College graduate.