Lease: Need advice pls...

[rickkapur]

Have never leased a car; and looking online, not sure that i understand all the pros/cons vs buying; however, the depreciation scares me; also the electronics bells/whistles are covered only for 3 years...so maybe a 3 yr lease is OK?

Getting the following Lease terms for a brand new Blue color 2015, 3.8 L Engine, RWD, Ultimate Pkg with all the bells/whistles....

$50,135 - MSRP
$45,515 - Selling Price
$2,500 - Rebate
$43,515 Net Price after rebate + TTL
3 Yr, 36K miles lease
Residual is $29,078.
$3,999 Down (Out of the door)
380 per month (incl tax)
Rate is 1.55%

Pls advice if this is an OK deal; or too high; or a good deal?

Thanks

 

[kn5owa]

Look ahead 3 yrs and be sure of the redemption terms. You can't just take a lease car and sell it, trade it in, or whatever - it goes back to a dealer - and therein lies the rub.

I leased a Ford Taurus - mainly just to familiarize myself with the lease process. When it came time to turn it in, the nearest ford dealer wanted:

1. a "processing fee" of $500

2. a "ford fee" ??? of $500

3. and I assume the $500 damage deposit would have gone bye-bye.

I went to a "country" dealer and successfully avoided all that garbage.

But, again, think ahead - there might also be a "redemption" fee in your contract

I concluded after the whole experience that leases are not for me - too much is dependent on the integrity of the dealer - or the lack thereof.

Check edmunds.com - lots of lease info there, but speaking kind of offhand, your terms look pretty good, insofar as what is stated up front.

 

[rickkapur]

Thanks

Good point.

The return inspection fees is $400.
For excess wear/tear, they offer a $700 insurance cover for upto $5K excess.

Thanks

 

[kn5owa]

Thanks

Good point.

The return inspection fees is $400.
For excess wear/tear, they offer a $700 insurance cover for upto $5K excess.

Thanks

What is a "return inspection fee" - never heard of it. A property deposit - disguised perhaps?

I have also never heard of damage insurance - but maybe things have changed since I leased. Seems high, in any case. And, you would apparently be out a total of $1100 even if the car were returned in pristine condx. And, as always with insurance, watch out for deductibles.

 

[homeofstone]

If you drive more than 15k miles a year it may be best to purchase a car by paying at least 25% down and finance for no more than 48 months. Notice I did not say new car. Pay cash or finance for only 24 months is even better. Now if you drive less than 12k miles a year then leasing may be better for you if you don't mine never having equity and always having a car payment.

 

[ksoze]

"Return inspection fees is $400" sounds strange. There is usually a disposition fee if you return the car and that should be spelled out along with everything else on the lease agreement. Read the agreement carefully and if you don't understand something, ask and then ask again. Nothing counts if it is not in writing. Leasing can give unscrupulous dealers a chance to pick you pocket, so understand how it all works.

 

[kn5owa]

"Return inspection fees is $400" sounds strange. There is usually a disposition fee if you return the car and that should be spelled out along with everything else on the lease agreement. Read the agreement carefully and if you don't understand something, ask and then ask again. Nothing counts if it is not in writing. Leasing can give unscrupulous dealers a chance to pick you pocket, so understand how it all works.

All good points - but when I tried to turn my car in at the first dealer - the guy wouldn't even look at the orig. contract - he just reeled off a list of off the cuff charges - and said take it or leave it.

This is what I meant in my post, above, that a leased car is unique in that you GOT to go to a dealer to unload the car (insofar as I know). And to me, that's the major catch in leasing - they got you where it hurts, and they know it.

But, and this is important, you can "dealer shop" at redemption time - I wound up paying nothing in redemption fees as per the orig. contract after locating an honest dealer.

 

[Alwaysforward]

I have only leased one car in my entire life and found out after the fact that you had to cover more insurance on it. That was back in the early 90's so not sure if the same holds true today or not. I have never leased another car since. I am not saying it is good or bad, just not something I ever wanted to do again. I tend to keep my cars for quite some time which is also another reason not to get into a lease (for me anyhow)...

 

[kn5owa]

I have only leased one car in my entire life and found out after the fact that you had to cover more insurance on it. That was back in the early 90's so not sure if the same holds true today or not. I have never leased another car since. I am not saying it is good or bad, just not something I ever wanted to do again. I tend to keep my cars for quite some time which is also another reason not to get into a lease (for me anyhow)...

Here's a good one about leases and insurance:

After I leased the car, I put it on my insurance policy as per usual procedure.

Two months later, at renewal time, I got a notice of rate increase because of my "New Loan".

The ins. co. had treated the lease contract as a simple loan contract and they said it had (1) a large balance and (2) was a new loan. And, therefore, it somehow degraded my credit rating. ???

The irony of the whole thing was that I leased the car to enhance my credit rating since I hadn't borrowed money in many years.

I called the state insurance board and their response was "Too bad - change insurance companies". I also discovered that insurance companies maintain a list of "reason codes" to justify rate increases. For example, keeping the car in the wrong zip code.

I, too, am not leasing anymore.

 

[Boulderado]

Ok let's cover some of the basics of leasing:

Buying vs Leasing: Unless you drive more than 18-19k miles a year or you have bad credit, lease makes more sense in most cases as you finance only the depreciation of the car plus interest vs financing the entire value of the car plus interest. Your utilization of the asset (meaning your car) is exactly the same but your monthly payments are lower. Some cars have terrible lease deals (low residuals and very high money factor) in which case I would advise against leasing but Genesis is certainly a lease friendly car.

Lease Return and Flexibility: Don't worry about the lease return fees because you would never return a leased vehicle at the end of your lease term. At any point during your lease your car has a buyout value and if this value is equal to the market value of your car you can trade-in your leased vehicle with zero loss. If the market value is greater than your payoff quote then you will actually make money off of your leased vehicle. Let's say you are leasing your Genesis for 36 months, any point during your lease you can trade in your car for another new car or you can purchase your Genesis for the payoff value.

Am I getting a good lease deal: Do your homework, you need to know the residual value, money factor, fair market value, and manufacturer incentives before walking into your lease negotiation. You can find all this online, I would especially recommend edmunds.com forums for the RV, MF, and incentives information and truecar for market value of the car. Beware, most dealers would mark up the money factor. Information is your best asset in any negotiation.

Anything else I should know: Don't put any money down. Your car lease is essentially a long-term rental agreement and if anything happens to your car (totaled or stolen) your insurance will pay the owner of the car (not you since you are renting your car from Hyundai Financial Services) and your rental agreement will end. Whatever your paid until that point is money down the drain and no refunds for you from your insurance or Hyundai...

Hope this helps, let me know if you have any questions on leasing.

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[ksoze]

Don't worry about the lease return fees because you would never return a leased vehicle at the end of your lease term. At any point during your lease your car has a buyout value and if this value is equal to the market value of your car you can trade-in your leased vehicle with zero loss. If the market value is greater than your payoff quote then you will actually make money off of your leased vehicle. Let's say you are leasing your Genesis for 36 months, any point during your lease you can trade in your car for another new car or you can purchase your Genesis for the payoff value.

This is very subjective. Odds are most will return the car at lease end - in many cases as the residual value is above then current market value or because a new model is out and usually for the same payment the new car can be had. As far as trading your car "any point during your lease", that is usually not financially sound. There will undoubtedly be a large gap between value and payoff, which you will absorb. Early on in a lease, a termination can be treacherous. The general rule: a good lease = bad end of lease purchase as the inflated residual which lowers the payment has consequences on the back end.

I have generally only had one car where the market price justified the purchase - a 1993 Acura Legend. In that case, the cars payoff was several thousands less than market, so I bought it and then sold it to a private party all in one transaction. That was the exception.

 

[baobay]

I always lease my vehicles. I usually turn the leased car in well before the lease end and only when my payoff amount is a few thousand LESS than what the car is worth. I traded in my odyssey van 16 months before the end of the lease and got about $2500 in equity which I used towards a down payment for the Gensis.

 

[Aquineas]

<snip>
I called the state insurance board and their response was "Too bad - change insurance companies". I also discovered that insurance companies maintain a list of "reason codes" to justify rate increases. For example, keeping the car in the wrong zip code.

I, too, am not leasing anymore.

Hopefully you also changed insurance companies.

 

[Boulderado]

This is very subjective. Odds are most will return the car at lease end - in many cases as the residual value is above then current market value or because a new model is out and usually for the same payment the new car can be had. As far as trading your car "any point during your lease", that is usually not financially sound. There will undoubtedly be a large gap between value and payoff, which you will absorb. Early on in a lease, a termination can be treacherous. The general rule: a good lease = bad end of lease purchase as the inflated residual which lowers the payment has consequences on the back end.

I have generally only had one car where the market price justified the purchase - a 1993 Acura Legend. In that case, the cars payoff was several thousands less than market, so I bought it and then sold it to a private party all in one transaction. That was the exception.

You are right about the subjective part but I would have to respectfully disagree about returning the car at lease end. Most manufacturers will give you incentives for returning your lease car early to lease another car from them. I had these offers with premium (Bmw) and mainstream (Kia) brands. They will at least offer to cover your remaining 3-6 payments and get you out of your lease at no cost and will give you loyalty incentives on top for your next car.

Regarding the payoff vs market value debate, all my leased cars had very close payoff and market values. A good lease is not solely dependent on your residual value, I would argue your negotiated sales price and manufacturer incentives play a bigger role. My Genesis has a 59% residual, which is definitely on the higher end of the spectrum but I negotiated $6k dealer discount and had 4k in rebates to lower my negotiated sales price significantly. Until the very end of my lease, my payoff value will be lower than the market value of the Genesis because the starting point for the payoff is $39k and the starting point for market value is much higher than $39k...

 

[ksoze]

My Genesis has a 59% residual, which is definitely on the higher end of the spectrum but I negotiated $6k dealer discount and had 4k in rebates to lower my negotiated sales price significantly. Until the very end of my lease, my payoff value will be lower than the market value of the Genesis because the starting point for the payoff is $39k and the starting point for market value is much higher than $39k...

Lowering the sales price is always helpful in any sale, but you will not effect the pre-set residual which is calculated off MSRP, not sales price. The market will also usually adjust on deep discounting down the road.

Until the very end of my lease, my payoff value will be lower than the market value of the Genesis because the starting point for the payoff is $39k and the starting point for market value is much higher than $39k...

The residual price is the end of lease purchase price - not sure I get what you mean?

 

[Boulderado]

The residual price is the end of lease purchase price - not sure I get what you mean?

Yes the residual value is based on the MSRP but the dealer discount+manufacturer incentives work like a down payment for me.

I leased my car in March and so far made two payments of $421. Because my negotiated sales price was $39,750, right now my payoff is a little under $39k whereas according to KBB my car's trade-in value is in the $40k-$41k range. This delta will decrease over the course of the lease but chances are until the last year of my lease, the payoff value will be lower than the market value for trade-in. Had I not received the dealer discount and manufacturer incentives my payoff today would be closer to the MSRP, which was a little over $49k.