I've seen may calculators on the web to estimate lease payments etc, but is there one that shows a fulll payment schedule for 36 months, so one can see the monthly effect of multiple security deposits (where each deposit drops the interest rate by 0.1% as they are made over time)

In leasing the 07 G, given that large down payments are a bad idea (due to the risk of losing it should the car ebe totalled), then perhaps refundable protected MSDs are something to consider

 

Isn't the monthly affect is just the lower payment? So, just calculate the lease with the base money factor, and then calculate it with the lowered money factor due to the MSD's. The difference in payment is immediate and from day 1. Your lease payment doesn't change over time. So, to calculate the benefit, just multiply the difference in payments times your elase term.

 

Yes, but isnt it a differrent lower payment each time you put another security deposit down? Eg First few months the pmt is $500, next 6 some months are say $490, then $480, etc, A payment schedule would show me that....

 

No, you pay all of the security payments up front. Your payment is fixed throughout the lease. (Unless Infiniti is different from every other MSD program I know about).

 

Leasing has always struck me as odd in that the concern seems to focus on the monthly amount. There is no objection to paperwork fees, origination fees, etc. All money paid directly to the lessor for no apparent reason! Security deposit for what? Doesn't a credit rating prove worthiness to enter into an agreement which so heavily favors the lessor?

 

Ahhh. I did not know that.

So let me run this by you :

Suppose the security deposit is close to $800. 10 deposits would be $8000. Each pmt reduces the rate by 0.1% so 10 payments reduces the rate by 1%. Appllied at the begiining of this lease, this would reduce the lease rate from 5.9% to 4.9%. The rate reduction lowers the cumualtive out of pocket monthly lease payment costs by $1640 over three years.

In terms of lost opportnuity costs, for $8000 to otherwise generate $1640 AFTER TAX in 3 years, it would have to be compunded at 6.42% annually (to grow to 9640) and be TAX FREE.

So isnt this a good thing? The MSDs can lower your lease rate by a full 1% (which is like having a guarateed 6.42% tax free investment with the interest applied to lower your payments), and captial money is protected and fully refundable at the end of the lease.

Am I missing something? Assuming the secuty deposits are still refundable even inf the car is totalled, what is the down side of MSDs?

 

Why are you using this figure of $1640? If we agree that a lease is not a beneficial arrangement, then a consumer can choose not to do it. It doesn't make sense to me that if $8000 cannot produce 6.42% tax free, then that 8000 is best used to lease a vehicle. my .02

 

I just ran two scenarios in my spreasheet one at 5.9% and one at 4.9%. The monthly payments are reduced hence the cost savings.

But I did have an samll error which I corrected. So the savings is just over $1328 and the effective rate is 5.2% tax free. Still, not bad.

See attached.

 

Basically, MSD's are a good thing, and if you have the money, you should do them.

Now, in deciding how good they are, I think you have some faulty assumptions. First of all, I think you can only do up to 7 MSD's, but I could be wrong. Each MSD lowers the money factor by .0001, (at least for Infiniti). You need to know money factors, not interest rates. (Basically you can convert the money factor into the effective interest rate by multiplying by 24).

So, here are some numbers, pulled out of thin air:
Lease term:36 months
Residual: 61%
Base money factor: .0021
MSRP: 43000
Purchase price (or adjusted cap cost): 42000


Residual value = residual % * MSRP
Lease charge = (Adj. Cap. Cost + Residual Value)*Money Factor
Depereciation charge = (Adj. Cap. Cost - Residual Value)/Lease Term (months)
Lease payment (without tax) = lease charge + depreciation

With these numbers:
Residual value = 26230
lease charge = 143.28
Depreciation = 438.06
Payment = 581.34
Total payments = 22186.88

Now, see what MSD'd do:
MF reduction per MSD: .0001
Number of MSD'd: 7
Total MSD reduction = .0007
Final MF = BAse MF - MSD reduction
Final MF = .0021-.0007 = .0014

Using this MF with same numbers above gives:
lease charge = 95.52
Depreciation = 438.06
Payment = 533.58
Total payments = 20361.32

So, MSD's save you 1822.56. But, you have to put down 7 * 1 monthly payment as security deposit (usually this is how it is calculated). Lets just cal it $4200 for a nice round number. Giving them $4200 for 3 years saves you $1822.56. Pretty dang good return on your money, wish I could get that all the time!

 

So its even BETTER that I had thought, as in my example, I would have assumed that 7 MSDs would drop a rate by .7%, ; its actually more!.

For example if I had used a base rate of 5.04% , then I would have assumed that 7 MSDs. drop it by .7% to 4.34%

But if it's really money factor, than it's MUCH better, ie :

Base money factor: .0021 .......x24 = 5.04%
Final MF = .0021-.0007 = .0014 ......x24 = 3.36 % !!!

or a drop of 1.68% !! ..

Where is the offiical Infinti documentation on this? Web site had very little, and my future dealer has little detail on this (and told me rate reduction =.1% !!) . I think there is something on line for dealers...maybe someone here can post the revant excerpts re:

1) max number of MSDs
2) impact of MSDs ( moeny factor or rate)
3) protection in case of the car being totalled and lease terminated.

 

infiniti has not released pricing yet on the 2007's-- t he minute they do i have a whole list of people to contact.

 

mikepro, looks like I was right after all.....10 MSDs results in a max 1% drop is the lease rate....in Canada anyway.

I just heard back from Nissan Finance:

"The initial deduction does not occur until 4 security deposits are made (reducing it by 0.25% (0.0104 money factor). After that an additional deduction of 0.25% is made for every 2 security deposits that are received, reaching a total of 10 security deposits and a 1% reduction."