G70 Lease Comparisons and Discussion (USA)

[Electrode]

I don't think the explanation is quite correct. While there are some market/financing influence, the money factor is chosen more for strategic reasons in regards to the best way to get people to lease. Many times the RV is inflated as a way to subsidize the lease or the MF is extremely low, this is done to get people a lower payment or just appear that they are with such a low MF. Many times lease cash is also used as an enticement. In general there is no correlation between the movement of RV and the movement of MF.

There is no principal when it comes to leasing. You pay a rent charge based on the depreciation amount and residual amount. If you would want to purchase the car at the end of the lease then you would pay the residual amount.

Who actually owns the car at the end of the lease? I understand how lease cash can reduce the dollar amount of depreciation, but how do they inflate the residual value and who eats this loss at the end? I thought the RV was set.
I thought I had some idea of how leasing worked, but will have to research it further.

 

[TurtleBoy]

And for the 3.3T RWD we got the same numbers. LOL at Edmunds I ask exactly after you and got the answer just behind you with the same numbers for both 3.3T AWD and RWD which BTW didn't change compared to January.

I saw that last night and had to laugh, we are on the same page.

 

[TurtleBoy]

Who actually owns the car at the end of the lease? I understand how lease cash can reduce the dollar amount of depreciation, but how do they inflate the residual value and who eats this loss at the end? I thought the RV was set.
I thought I had some idea of how leasing worked, but will have to research it further.

The finance company always owns the car, you are basically renting from them. The lease cash reduces the cap cost for the car. You will often see at the end of a model year the lease cash is greatly increased to reduce inventory. It is better for them to get rid of the vehicle at a low/no profit then have old ones around the lot.

There is no loss, they generally account for that in the profit margin. We are going to put banks aside since they are rarely involved in the leasing we are discussing since it is done by the financial arm of the manufacture. There are a number of ways they can account for things but usually when you lease the financial services department/company of the manufacture buys the car from the dealer. They own the car and then you pay to use it by paying a rent charge for the depreciation and the residual value.

The RV is just a number they make up using many factors, future value, sales goals, profit consideration, etc. There are no hard and fast rules for setting the RV or the money factor. They aren't in the business to lose money so they set the numbers in order to make a profit, whether that be by charges during a lease or value of the vehicle as a buyout/CPO after the lease.

There are a bunch of articles out there on leasing and how payments are calculated, here are a couple to check out.

https://cars.usnews.com/cars-trucks/how-does-leasing-a-car-work

Calculate Your Own Car Lease Payment | Edmunds

 

[Electrode]

OH; I see. The manufacturer or it's subsidiary owns the car throughout. That gives them leeway to artificially set the residual to whatever they want. I thought the residual really WAS the residual value or at least, the best guess. Thanks for the info!

 

[COToad]

And for the 3.3T RWD we got the same numbers. LOL at Edmunds I ask exactly after you and got the answer just behind you with the same numbers for both 3.3T AWD and RWD which BTW didn't change compared to January.

I suppose I can just ask on Edmunds myself next time and post, LOL. Thanks for both answering. I assume that the conquest cash is still available too.

 

[danygenesis]

I suppose I can just ask on Edmunds myself next time and post, LOL. Thanks for both answering. I assume that the conquest cash is still available too.

Yes, $1000 for conquest or loyalty are still available.

 

[HyperM3]

There is no loss, they generally account for that in the profit margin.

Not necessarily true. BMWs are inflated so much on the RV that they are not worth buying out when the leases are up. Dealerships are miserable that they have to buy a certain percent of them from BMWFS because they just sit on the lot with inflated prices or they send them to auction to take the hit. A few years ago, Maserati basically gave away Giblis on leases. Well, there are 300 of them sitting in the parking lot of Manheim auction in NJ because they arent worth crap. Just saying, when the RV is low, you have a better chance of being able to trade or sell your car better.

 

[COToad]

Not necessarily true. BMWs are inflated so much on the RV that they are not worth buying out when the leases are up. Dealerships are miserable that they have to buy a certain percent of them from BMWFS because they just sit on the lot with inflated prices or they send them to auction to take the hit. A few years ago, Maserati basically gave away Giblis on leases. Well, there are 300 of them sitting in the parking lot of Manheim auction in NJ because they arent worth crap. Just saying, when the RV is low, you have a better chance of being able to trade or sell your car better.

Dealerships do not have to buy them at full residual, the dealership I worked for made lots of money selling off lease CPO vehicles.

 

[HyperM3]

Dealerships do not have to buy them at full residual, the dealership I worked for made lots of money selling off lease CPO vehicles.

They still have to buy them higher than what they are actually worth. Either way, Im interested to see what the actual resale values will be of these G70s in a few years will be. I havent really researched, but I dont see G80 or G90's making it to any "worst depreciation" lists.

 

[COToad]

They still have to buy them higher than what they are actually worth. Either way, Im interested to see what the actual resale values will be of these G70s in a few years will be. I havent really researched, but I dont see G80 or G90's making it to any "worst depreciation" lists.

Then they put a CPO on it for very little and mark it up. In the end, it is mostly about keeping the car coming back in for service anyway, that's where a dealership makes most of its money. A car with 3-4 yr/36-50k warranty and maintenance, all paid by the manufacturer, then returns to the dealership for most of its maintenance and warranty service as a CPO as well for for another couple of years.

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[OMG70]

Surfing through the pages on this thread seems like a daunting task, so could someone give me an idea on what a good lease deal is for a 3.3t Sport would be?

I was quoted $538 + tax for a 15k mile (I think 36 months, but not sure) lease. RV was 51% and MF was "just shy of 1%" but never specified for me.
This would be in SoCal (92660 is the zip used I think). They used Circle pricing as the value of the car ($46700 or so)

We've never leased a car before, so I'm thoroughly lost on this as well as how buying the car afterwards might look

 

[TurtleBoy]

The best way to approach it is to work on the price of the car first no matter if you are going to lease or purchase. Since you have that out of the way with the circle pricing then it is just a matter of making sure they are using the correct RV, MF and lease cash if available. Many dealers try to mark up the MF to make a little extra money. One good resource to get the correct numbers is Edmunds lease rate forum.

2019 Genesis G70 Lease Deals and Prices - Page 12

I think your numbers will be MF .00006, RV 51% and $1,000 lease cash.

Once you have those numbers then it is just a matter of plugging them into a lease calculator to get the payments. You will also need the tax rate, and any other fees but the dealer should provide that to you. I like to use the calculator on Leashackers.

https://leasehackr.com/calculator

If you know you are going to buy the car afterwards then it usually is less expensive to buy it right away rather than lease and buy. If there is a huge amount of lease cash that could make a difference but for the G70 that is not the case. You price for the car after lease should be the residual value although you may be able to get them to discount it a bit when the time comes.

Hope that helps and feel free to ask anything else or provide the numbers the dealer gives you and I'm sure someone will check them over. You can also post them on Edmunds and the guys there will verify them.

 

[OMG70]

Quite a bit, thanks! That's what I was thinking too about total cost, but it may be beneficial in the short term to have a lease for business purposes. Just trying to explore all my options to make sure I have my bases covered

 

[xKingfisher]

FYI, unless it changed in the last week, circle pricing is not compatible with the Genesis leasing incentives.

If you go with the Circle Pricing, you're looking at a MF of ~.003(7.2% APR) with a credit score of >800 vs. the lease incentive MF of .00006 (0.14% APR).

When I worked the numbers with my dealer, it was actually cheaper in the end to not use the circle pricing.

 

[TurtleBoy]

FYI, unless it changed in the last week, circle pricing is not compatible with the Genesis leasing incentives.

If you go with the Circle Pricing, you're looking at a MF of ~.003(7.2% APR) with a credit score of >800 vs. the lease incentive MF of .00006 (0.14% APR).

When I worked the numbers with my dealer, it was actually cheaper in the end to not use the circle pricing.

Some other members have posted that they were able to get the incentives and Circle Pricing. It seems like it may be up to the dealer whether or not they offer the incentives.

 

[OMG70]

FYI, unless it changed in the last week, circle pricing is not compatible with the Genesis leasing incentives.

If you go with the Circle Pricing, you're looking at a MF of ~.003(7.2% APR) with a credit score of >800 vs. the lease incentive MF of .00006 (0.14% APR).

When I worked the numbers with my dealer, it was actually cheaper in the end to not use the circle pricing.

According to the dealer, that's incorrect for Circle Plan A pricing. It would be applicable to some other plans though (I think he said plan E)

Edit: By that, I mean your statement. He said the incentives would apply to the deal

 

[xKingfisher]

Hmmm, interesting. I had emailed HyundaiCircleHelp@hmausa.com and they told me explicitly that they did not support it.
I should reach out to my dealer again and see if they'd be willing to take another look!

@TurtleBoy - Do you remember which members/dealers?

 

[TurtleBoy]

Hmmm, interesting. I had emailed HyundaiCircleHelp@hmausa.com and they told me explicitly that they did not support it.
I should reach out to my dealer again and see if they'd be willing to take another look!

@TurtleBoy - Do you remember which members/dealers?

I think Hyundai Circle was confusing the Genesis Manufacturer incentives with additional Circle pricing incentives. If I remember correctly the Circle pricing website mentions other incentives may apply.

There was a couple of people who posted in your Incentive thread and I'm pretty we have seen others.

Perverse Incentives: Circle Pricing and Leasing

 

[OMG70]

I think Hyundai Circle was confusing the Genesis Manufacturer incentives with additional Circle pricing incentives. If I remember correctly the Circle pricing website mentions other incentives may apply.

There was a couple of people who posted in your Incentive thread and I'm pretty we have seen others.

Perverse Incentives: Circle Pricing and Leasing

It definitely says it on the generated certificate that other incentives may apply. Maybe it's a dealer decision?

 

[KurticusRex]

You price for the car after lease should be the residual value although you may be able to get them to discount it a bit when the time comes.

Getting a discount on the residual value is extremely difficult, if not impossible. OEM captive auto finance companies almost invariably used "closed end" lease agreements, meaning the residual is fixed and neither the dealer nor customer can negotiate the residual (whether at lease inception or lease end). I worked for Toyota/Lexus Financial for 7 years - not once did I see a lease residual value get altered. Even in the 2007/8 market crash when gas prices went through the roof, people were defaulting all over the place, and trucks and SUV values tanked. People were turning in leases on GX and LX and Sequoias and all sorts of cars that were worth WAY less market value than the lease residual.

Imagine turning in a Sequoia lease with a residual value of 35,000, but the market value is 25,000. Most customers in this sort of situation were thrilled to turn in a vehicle at lease end and not have the financial exposure of having car worth way less than would be owed after 36 months. Toyota and Lexus took huge HUGE hits (to the tune of hundreds of millions of dollars) on those selling back to dealers or at auction after lease end.

Even when customers offered to buy a lease end vehicle for less than residual but above market value, Toyota and Lexus wouldn't do it, not once.

Not saying Geneses/Hyundai Financial will work the same, but I doubt it would be any different.

That's why, just as you mentioned, negotiating the sale price/capitalized cost at the beginning is really key to getting a fair price (whether lease or purchase).