Recommendation on leasing a Car

[majesus]

My GF wants to lease a new car.

She nor I never leased a car before, As well, I don't know much about new cars. I never bought a new car. I like my old school 85 Jetta and my motorbike. When she wants to get a motorbike, I can recommend her on that.


I told her I'd ask on RFD, since members here would know a lot more about cars and are also super helpful.
This is here criteria:
1. Car price around $20,000
2 Good resale value
3. Looking for fuel economy, so around the Compact size model
4. Auto

She was thinking about getting a Yaris. But the instrument panel is located in the middle of the dash between the driver and front passenger. Why they don't put them INFRONT of the driver? :confused:

Also she wants to know:
1.Is the down pmt, lease term and interest rate all enjoyable?
2.Is it better to have $0 down pmt or pay some money at the beginning?


Thank you very much,
Merry Christmas :)

[evolution921]

Unless she is planning to keep the car after the lease, resale value doesn't mean much.

$0 down and invest the down payment into something would be better than putting a down on the lease. If she does want to trade in the lease to another dealer (assuming the dealer will take the lease from her) for a better car in a few years, at least she won't lose out on the down payment. Have you look at the Honda Fit as well? One of Car and Drivers 10 best for 2007, very versatile car and better handling than the Yaris. If you want good resale value, the Civic or Corolla will have better resale value as they are more mainstream vehicles.

Here's something for you to read.
http://www.caranddriver.com/comparisons/10925/15000-cheap-skates.html

[Audiogenic]

4 or 5 years to lease a car is a long time, especially if you are still young and your lifestyle will inevitably change within those 4 to 5 years (marriage, house, kids).

www.leasebusters.com offers leasing opportunities with less commitment and often times with a cashback.

Just ensure you see and drive the car in broad day light to capture any dents or scratches because once you take over the lease you will be responsible for them.

Also, check to ensure the car hasn't been in any accidents and request to see a copy of ALL of the service (maintenance) records from the very beginning. You would be amazed how many people neglect to service their leased cars on a regular basis. Worse case scenario, if the trannie or engine goes due to neglect, you are on the hook for it, NOT the previous lessor (unless you sue).

[squireglig]

if you plan to lease with the intention of giving the car back, i would lease as cheap as possible, with nothing down. Something like a 3dr Hyundai Accent. The warranty is 5 years 100 000k i believe, so you should be covered for repairs.

If your lifestyle changes, you can always put an add in a paper or something for someone to take over your lease. The accent-3dr starts at around 190/month plus tax, which is real cheap, so I don't think you'll have any problems getting someone to take it (you only have to worry about the fee to change ownership, which is only a couple hundred dollars).

A friend of mine did this when his accent no longer suited his lifestyle. He got it to someone else within a month of putting it up for takeover.

[googoo]

"Unless she is planning to keep the car after the lease, resale value doesn't mean much."

HUH?

I was looking at the Civic LX or the Hyundai Elantra , the Elantra was about $1600 LESS than the Civic yet the payment was $30 more ..... WHY? residual value.

#'s are only estimates, it's been nearly 4 years.

Brent

[Pete_Coach]

Consumer leasing (vs corporate leasing) is a method OEM's have put together to allow the average person to have a much better car for far less money per month than purchasing.
For instance, you can lease a 2007 BMW 325i now for $399 per month (with obligitory down payment etc) but if you wanted to buy and went to the bank to borrow the $42K for 48 months your payments would be around $8 to 900 per month.
Look at leasing as a long term rental. Advantages are that you have a new car, probably no maintenance payments for 4 years, everything is under warranty but, you have nothng at the end (unless you decide to lease again from the same manufacturer, they will give you something to keep you). This is a pretty good way to go for someone that likes new things and is not mechanically inclined, as you will always drive something new and the onus for repairs will always be on the dealer.
On the other hand, if you wish to own the car and it's issues and, do not want to make car payments forever, buy it.
In a nutshell, that is what it boils down to. More than 70% of new vehicles today are leased.

[BobW]

.
For instance, you can lease a 2007 BMW 325i now for $399 per month (with obligitory down payment etc) but if you wanted to buy and went to the bank to borrow the $42K for 48 months your payments would be around $8 to 900 per month.

In a nutshell, that is what it boils down to. More than 70% of new vehicles today are leased.

Couple of thoughts here:

1) The down payment... people somehow forget that they poured this money in and just look at the monthly payment, but yet, they compare the monthly price to a loan for the full MSRP.... If you are going to lease, look closely at all the other payments and fee's associated with the lease and factor them in.

2) 70%???? You got anything to back that claim up, that seems way high.

[Pete_Coach]

2) 70%???? You got anything to back that claim up, that seems way high.

Actually, my daughter in law is a business manager at a large Nissan dealership and my Son is the service manager for a Kia dealership. Both have told me this from their own experience as well as their trade magazines and company stats.
You are correct about the down payment but, the down payment affects both a purchase and a lease. Same goes for the "other" fees.

[evolution921]

"Unless she is planning to keep the car after the lease, resale value doesn't mean much."

HUH?

I was looking at the Civic LX or the Hyundai Elantra , the Elantra was about $1600 LESS than the Civic yet the payment was $30 more ..... WHY? residual value.

#'s are only estimates, it's been nearly 4 years.

Brent

Resale value and residual value is NOT the same thing. If you look at Mazda, their residual value is a bit higher than a Honda or Toyota, but Honda or Toyota generally have better resale value than Mazda. Residual value is how much the manufacturer think the car is worth in 4-5 years, resale value is how much the car is actually worth in the market at that time. Sometimes a car can have a very low residual value yet the resale value on the market can be high.

[majesus]

Resale value and residual value is NOT the same thing. If you look at Mazda, their residual value is a bit higher than a Honda or Toyota, but Honda or Toyota generally have better resale value than Mazda. Residual value is how much the manufacturer think the car is worth in 4-5 years, resale value is how much the car is actually worth in the market at that time. Sometimes a car can have a very low residual value yet the resale value on the market can be high.

My GF was talking about the Residual Value as well... She is an accountant, I think she really meant the "resale value."

Thank you everyone for helping me out. We will probably look at taking over a lease, Vancouver Craigslist has a lot of people looking for someone to take over their lease.

Again thanks big time. Very useful... always :)

[googoo]

"
Resale value and residual value is NOT the same thing. If you look at Mazda, their residual value is a bit higher than a Honda or Toyota, but Honda or Toyota generally have better resale value than Mazda. Residual value is how much the manufacturer think the car is worth in 4-5 years, resale value is how much the car is actually worth in the market at that time. Sometimes a car can have a very low residual value yet the resale value on the market can be high."

Reisdual and resale are directly tied into each other on a lease. Every car manufacturer makes there residal low hoping for a return that they can sell for a higher profit.

If I were to return my car and they could find nothing wrong, AND the residual were the same as the resale value Honda wouldn't be offering a lot of leases anymore.

Brent

[tataynik]

If you are leasing a car with no intention of buying it after the end of the lease, negotiate for lower monthly payments with a higher residual value. For example:
If a car is advertised at $300/month with $0 down and $9,000 residual value. Since you will not be buying it anyway, tell them you only want to pay $275/month with $0 down. They will play around with the numbers to close the sale and will most likely okay the $275/month and bump up the residual value to $11,000.

[gman]

If you are leasing a car with no intention of buying it after the end of the lease, negotiate for lower monthly payments with a higher residual value. For example:
If a car is advertised at $300/month with $0 down and $9,000 residual value. Since you will not be buying it anyway, tell them you only want to pay $275/month with $0 down. They will play around with the numbers to close the sale and will most likely okay the $275/month and bump up the residual value to $11,000.

First, not sure how or why they would adjust the residual value. I think it is fixed by the manufacturer instead of the dealer. It is the manufacturer who takes the car back and not the dealer. The dealer can adjust the price of the car though.

Second, most people who leases does not want to buy it back. That means most people will want to adjust the residual value (if it is adjustable).

[tataynik]

First, not sure how or why they would adjust the residual value. I think it is fixed by the manufacturer instead of the dealer. It is the manufacturer who takes the car back and not the dealer. The dealer can adjust the price of the car though.

Second, most people who leases does not want to buy it back. That means most people will want to adjust the residual value (if it is adjustable).

Manufacturers do not set residual values and they do not own the vehicles. The Financing company does. The dealer sells you a car for a certain price and a finance company finances the transaction. In a lease the ownership is transferred to the finance company.
If a vehicle has a retail price of $20K and lease at 3% for 4 years, if the residual value is $10K your monthly will be $290 ($331 incl tax). If you insist that you could not afford this monthly, they can bring it down to $247 per month ($285 incl tax) by increasing the residual value by $2K to $12K. The difference being in the first scenario, you are financing $10K while in the second scenario the amount financed is on $8K over the life of the lease. For cars like Civic and Corolla, they are able to do this since a 4 year Civic can still be sold at about $14K (an off-lease 2003 Civic for example). This is where cars with higher resale value are more advantageous. This is not to say that you should negotiate based on monthly, buyers should always do their homework and have a good understanding of the selling price, residual value, finance rate and monthly payments. Make sure the monthly rates you agreed to includes everything (tax, freight, etc. etc).

[rtto5588]

is there anyway to get a 1 year lease without having to pay higher monthly payments?

I'm looking into leasing a car for a very short period of time. Don't care about buy back, resale value, and stuff. Just need a car for a year.

[hightech]

is there anyway to get a 1 year lease without having to pay higher monthly payments?

I'm looking into leasing a car for a very short period of time. Don't care about buy back, resale value, and stuff. Just need a car for a year.

Ever thought about contacting a rental company to setup a long term rental agreement or a fleet leasing service? I know some people have had success with this.