You’ve had your eye on that Lexus coupe for months, but you’re not sure if a luxury car lease is the right move. The following leasing tips can save you money.
Research popular auto leasing sites such as www.leaseguide.com and www.leasecompare.com. You’ll find a lot of good information and competitive rates.
Remember, many high-end manufacturers offer low rate/high residual leases that can be considered indirect rebates, dramatically lowering the cost of driving the vehicle.
Certain tax situations also make leasing attractive. For example, if you’re a small business owner, you could buy the vehicle, then lease it to your business. There are also fewer maintenance worries if your lease term coincides with the manufacturer’s warranty, since major repairs are covered.
Negotiate the lease exactly the same way you’d negotiate a purchase. Shoot for the lowest possible sale price for the car. The dealer is still selling the car. If you can buy it for $20k, you should be able to lease it for $20k (which becomes the net capitalized cost). The cost per mile over the lease term may also be negotiable.
For most companies, the residual and money factor are set by the leasing company (like GMAC). For all intents and purposes, a lease is a lot like a balloon loan with the initial value being the net capital cost, the residual value (calculated based off MSRP for GMAC leases) being the balloon payment, and the money factor being the interest rate for the loan.
If you lease, payments will be lower than buying, but the initial down payment can be steep. If you purchase with that same down payment, the vehicle belongs to you and the bank. Remember, you’ll never own a leased vehicle without putting forth the funds to buying it at the end of the lease.
It all boils down to your individual situation and vehicle trading cycle.