So I got a quote on a G35 sedan, premiuim package, and sunroof, for 750 down, 349 a month plus tax, 15k miles a year. Seemed like a good deal to me, and I have been buying new cars every 2 years instead of leasing and I think this makes more sense to me, so I don't have to worry about neg equity and trade in values...does that seem like a good deal? How do I need to look at residual value, and sticker price in relation to a lease, I have never leased before....any help would be much appreciated, hoping to get into it this weekend :-)

 

On a lease, your payment is based on the difference between the sale price and the residual value. The residual value is determined by the banks. The sale price you negotiate with the dealership. They might try to pull an "it's a lease, it doesn't matter" rug over your eyes, but don't let them.. a lower sale price lowers your lease payments.

www.edmunds.com -- lots of good info on buying, leasing, and car pricing.

Also, make sure you have something called "gap insurance." Check with your auto insurance company, and see if they offer it. If they do, it'll probably be cheaper than getting it through the leasing bank. Gap insurance covers you if the car is totalled -- your insurance company would pay the car's value, but that usually doesn't cover how much you owe the leasing bank, gap insurance covers the remaining gap that you would owe.

 

I'm starting to get a little nervous about negotiating a lease because you have negotiated purchase price (should be near or at dealer invoice correct?), then you have residual price, should be near 58% ish on a 2 year, correct? then you have to calculate money factor, is there an easy way to do all of this on the fly, because you know when you are at the dealership you can't run all these numbers, so do you ask the salesman, what's the money factor, or do I establish my puyrchase price, subtract my residual from it, divide that by how many months I am leasing, then look at my payment and whatever that is over my payment is the money factor correct?

so for example, my net cap cost is 32478.79 assuming they sell to me at invoice, then my 58% residual is gonna be 21228, so the difference is 11,250.79 = 468.78, right? Now if my payments are going to be 349, does that mean my residual is going to be substantially higher and this is not such a good deal? He is going to get my purchase price, but he gave me a quote of invoice for the previous coupe I was looking at, so let's assume he is going to give me invoice on the car. If I am looking at this excel spreadsheet correctly, for my payment to be at 349 with this cost, my residual would be somewhere around 75% correct?

 

or in other words, what numbers do I have to get from the dealer to make sure I am getting a good deal? If I get MSRP and Residual I should be able to calculate MF, and everything else correct?

Thanks!

 

In a former life, I was the New Car manager for a very large Acura dealership.

Suffice to say, I've done a few leases...how about 5-6 / day.

When a manufacturer decides to give a lease incentive on a car, it is usually the most affordable way to drive the car for a disclosed period of time. Most consumers own their car for 4-6 years. Most would like to trade in 3-4.

In the case of the current G35 special lease, here is why you should do it:

- Finance Rate (Money factor) is lower than current outside bank financing
- Guaranteed Buy Out (Residual) is probably higher than the market price will be at the end if the lease. (New model just around the corner)
- Lease terms appear reasonable - No Sec Deposit, No large disposition fee

In short - Infiniti is offering this deal to clear out the 06s and usher in the 07s.

- - -

Here are the steps to negotiate the lease:

1. Agree on the price of the car...

Edmunds shows a dealer incentive on the G35 of $1000. Edmunds states it may be combined with the low interest financing. Does not mention lease.

I would try to negotiate for $1000, so your target is Invoice - $1000

2. Ask about the lease...

It is possible the dealer may not be able to use the $1000 + the special lease. If they tell you they can't, ask to see a copy of the program terms. All dealers will get a fax/email clearly outlining the program. It will clearly state the terms - i.e. "May not be combined with $1000 Dealer Marketing Support, etc."

So you need to know the following about the Lease...

1. Cap Cost
2. Cap Cost Reduction
3. Net Cap Cost
4. Money Factor
5. Residual
6. Pre-Paid Items
7. Term

So the Cap Cost will be the price of the car + taxes and fees. You agreed on the price above, have the dealer give you all the items that are added to the price to arrive at #1.


Cap cost reduction is money down from you.

Net cap cost is the figure used to calculate your payments.

Money Factor is the finance terms. Take the decimal # i.e. .00315 * 2400 to approximate the interest rate.

Residual is the future value as a percentage of MSRP

Pre-Paid items are fees and the first payment required by the lease company. Some leases have a security deposit that must be paid up-front. You often can roll these in...meaning they are added to the Cap Cost. I would not recommend rolling in your first payment, as you are then paying interest on a payment with interest.

Now - after much fanfare, lets calculate a Lease. It is REALLY HARD ;-)

You will have 2 equations in which the summation is your monthly payment.

Fictional Example:

MSRP: $30,000
Selling Price: $25,000
Money Factor: .00215
Cap Cost: $26,200
Cap Reduction: $0
Net Cap Cost: $26,200
Residual: 50% ($15,000)
Term: 24 months

Depreciation Formula:

((26,200) - (15,000)) / 24 = $466

Rent Charge Formula:

((26,200) + (15,000)) * .00215 = $88.58

Monthly Payment:

$466 + $88.58 = $554.58

Note the rent formula adds the depreciation and the cap cost. This is correct. The bank assumes their future committment to buy the car for the residual and charges you interest on that as well. Don't make the mistake of subtracting the residual in the rent charge calculation.

***********************LASTLY*****************

Buy enough miles on your lease! The special deal from Infiniti prays on folks returning their car with excess miles. Infiniti will charge you between $.15-$.50 / per mile over the agreement on turn-in. Usually you pay half if you add up front. The extra mileage charge is deducted from the residual. This makes sense as cars with more miles are worth less.

I can't tell you how many times consumers will exclaim they were "screwed!!" on their last lease. Why? "That mileage...blah, blah,!!"

Everyone agrees on the miles up front. Make sure you buy enough.

Sorry for the LOOOONG post.

email me if you have questions...

erictornwall@houston.rr.com