Money Factor

G’s Guide To Auto Leasing

Published by G

This guide is meant to show you through the auto leasing process. I put this together based on my past experiences with leasing. Some experiences were good, others were less than perfect. Overall, I learned a lot about the leasing process and I think these recommendations will have a positive impact on your leasing experience. If I missed anything or if you disagree with some of my steps, please feel free to leave a comment.

Finding the Car
 I usually start my research by visiting Edmunds.com and CarsDirect.com to get model/trim/options/pricing information about the car I intend to lease. You need to know exactly what you want because each option can change the price dramatically. CarsDirect.com does a better job letting you pick the correct combination of options for a specific trim.

Get Your Credit Score. Knowing your credit score is important because it qualifies you for the lowest money factors. Typically, I let my dealer know that my credit score is “XYZ” and I am looking for car “ABC”. Telling the dealer your credit score informs the dealer in advance that you are prepared to make a deal and you aren’t wasting their time negotiating. Since you don’t want your credit run multiple times from dealer-to-dealer, finding out ahead of time will keep your credit score from getting hit with too many inquiries (personal inquiries do not hurt your credit). Typically, I don’t even deal with dealers that request to run your credit before working with you or to get a test drive. You let them run your credit ONLY when the negotiation is complete and you are ready to begin paperwork. If you credit is less than perfect, leasing is not for you because you cannnot qualify for the lowest rates. In some cases, you won’t even qualify at all. Lease loans usually have stricter approval guidelines than purchasing loans. 

You can use the following credit services to check your credit scores:

In my experience, most dealers I have worked with have used Experian or TransUnion credit scores. However, I recommend checking all three if you haven’t done so in a few years.

Locating a Dealer. Once you are set on the car, you have a couple of options. You can go to the manufacturer’s web site to search for all local dealers or use third-party quote systems like TrueCar.com or Edmunds.com to find local dealers. I personally prefer using TrueCar.com because it provides excellent data which is crucial when negotiating your lease.

Email or  Call Dealers, Do Not Visit Dealerships unless you are just doing a test drive. Ideally, you want to email (since the process will then be in writing) your dealer to locate the car with the colors/options you want, let them know the term you want (months and miles per year), then ask for the following:

  1. MRSP (to make sure it doesn’t have ‘extras’ on it).
  2. Sale Price (start with invoice, or $500 below invoice and go from there)
  3. Money Factor
  4. Residual Value
  5. Acquisition/Bank Fee
  6. Dealer Doc Fee
  7. Other Fees (such as DMV, tire, etc…)
  8. Is there a disposition? Gap coverage? (these are important things to know!)
  9. Taxes (depending on which state you live in, find out if you have to pay those up front and/or if you need to pay for the entire car or just the depreciation)

Once you have those numbers, you can calculate your own payments to see if there are any discrepancies between your numbers and theirs.  If you have never used my RWG Lease Calculator, you may want to read up on my “How To” post.

If the payments are still higher than you like, ask for the option to make “multiple security deposits” or MSDs. You basically pay security deposits to lower the Money Factor. This will lower the interest paid on your lease but increase your up-front costs. The good news is that you will get that money back at lease-end. If the numbers are still not to your satisfaction, try having the dealer thrown in some free oil changes to help you offset the costs. Now remember, if you trade-in or sell your car before your lease is up, you will LOSE your MSDs! If you put MSDs down, you better make sure you wait until your lease term ends.

Only work with dealers that are up front with you. A pleasant leasing experience is worth something, believe me. It will make you feel better bringing the car in for service and you won’t feel angry driving around in your car because you feel you got ripped off.

Avoid “All-In-One” Quotes. By those I mean “$1999 down, $399/month” type of quotes…the ones the dealers love to quote you. You want to avoid those because it’s easy to start losing track of what you’re actually paying for since everything is bundled and nothing is itemized. If this seems like nit-picking, it is, but you must realize that for every $100 paid in bogus charges, you are doing so with interest (and maybe even tax) if you roll it into your lease payments. Experienced lessees can take the “All-In-One” approach if they have already pre-calculated their payments and know what to expect.

The Numbers look Good, Now What? If you haven’t gone in for a test drive, go ahead and schedule a visit to your dealer. You will probably want to visit the person you’ve been dealing with via email, that way, he or she will already know you and won’t go into the “sales-mode”, thus making your test drive more enjoyable.

Got a Trade-In? If you do, negotiate it after the new car and keep it separately. I usually use this as a “deal-breaker” if the offer isn’t good enough (to see if they will bump out the trade value to make a sale). If you don’t like the offer, remember you can always get it appraised elsewhere or sell it on your own. You can get a good idea as to how much your trade is worth to a dealer by going to Edmunds.com and appraising your car at “GOOD/AVERAGE” condition to get a more “realistic” idea of the value of your car. If you are still financing your car and the offer is lower than the balance of your loan, you will have to pay the difference. If its more than your loan, the dealer will either give you the option to apply it to your new car or cut you a check (I generally prefer the check). If you are trading in a lease, the process is similar.  The only difference is that you need to find out what your “PAYOFF” is from your bank and see how close the dealer’s offer comes to it. If your leased vehicle is a popular model, has low miles and is in great condition, you could get some money back.

What Should I Pay Up Front/At Signing? I normally advise people to pay the 1st Month Payment, Acquisition/Bank fee, DMV fee, Doc fee and Tire Tax (Some states will ask for the sales tax to be paid upfront instead of monthly). Sometimes you may be assessed other fees, so double check and make sure they aren’t bogus. Try not to put any money towards cap cost reduction, after all, this is a lease. In the event of an total loss accident or theft, you could lose a significant part of all the money you have put down (or all of it).

Beware of the Finance Guy/Gal. The Finance Guy/Gal is the dealer’s last ditch effort to sell you stuff you may or may not need. Seriously, do you really need anything more than the standard bumper-to-bumper warranty on a lease? You don’t need Lo-Jack on a lease, specially since most leases have GAP coverage.

Make sure you READ the papers BEFORE you sign. You got time, after all you negotiated online before you showed up to the dealership, so READ, make sure the numbers are correct and ask questions. Once you sign, the deal is binding by those terms.

June 2008 Lease Rates for 08 Lexus ES and GS

Published by G

2008 Lexus ES350 Sedan
24 Month – Residual 58% of MSRP – .00085 Base Rate
36 Month – Residual 52% of MSRP – .00085 Base Rate
48 Month – Residual 43% of MSRP – .00125 Base Rate
60 Month – Residual 34% of MSRP – .00225 Base Rate

2008 Lexus ES350 Ultra-Luxury Sedan
24 Month – Residual 56% of MSRP – .00085 Base Rate
36 Month – Residual 50% of MSRP – .00085 Base Rate
48 Month – Residual 41% of MSRP – .00125 Base Rate
60 Month – Residual 32% of MSRP – .00225 Base Rate

2008 Lexus GS350 Sedan
24 Month – Residual 53% of MSRP – .00105 Base Rate
36 Month – Residual 47% of MSRP – .00105 Base Rate
48 Month – Residual 39% of MSRP – .00105 Base Rate
60 Month – Residual 32% of MSRP – .00225 Base Rate

2008 Lexus GS350 AWD Sedan
24 Month – Residual 52% of MSRP – .00105 Base Rate
36 Month – Residual 46% of MSRP – .00105 Base Rate
48 Month – Residual 38% of MSRP – .00105 Base Rate
60 Month – Residual 31% of MSRP – .00225 Base Rate

* Residuals posted are for 15K miles/year. Add 2% to Residual for 12k mi/yr and 3% for 10k mi/yr on all terms
** Rates provided by Tarry Shebesta from Leasecompare.com

My Take: The ES and GS are current enjoying lower MFs. That also is partly because they aren’t as popular as the IS. Residual values are terrible for the GS though, I think that care is in need of a redesign. No worries though, Lexus will be rolling out the LF (which happens to be the car on the banner of RIDE with G) in the near future. Expect it to be VERY expensive.

June 2008 Lease Rates for 08 Mazda CX-9

Published by G

2008 Mazda CX-9 Sport 2WD
24 Month – Residual 58% of MSRP – .00032 Base Rate
36 Month – Residual 47% of MSRP – .00077 Base Rate
48 Month – Residual 38% of MSRP – .00137 Base Rate

2008 Mazda CX-9 Touring 2WD
24 Month – Residual 58% of MSRP – .00032 Base Rate
36 Month – Residual 47% of MSRP – .00077 Base Rate
48 Month – Residual 38% of MSRP – .00137 Base Rate

2008 Mazda CX-9 Grand Touring 2WD
24 Month – Residual 58% of MSRP – .00032 Base Rate
36 Month – Residual 47% of MSRP – .00077 Base Rate
48 Month – Residual 38% of MSRP – .00137 Base Rate

2008 Mazda CX-9 Sport AWD
24 Month – Residual 60% of MSRP – .00032 Base Rate
36 Month – Residual 49% of MSRP – .00077 Base Rate
48 Month – Residual 40% of MSRP – .00137 Base Rate

2008 Mazda CX-9 Touring AWD
24 Month – Residual 60% of MSRP – .00032 Base Rate
36 Month – Residual 49% of MSRP – .00077 Base Rate
48 Month – Residual 40% of MSRP – .00137 Base Rate

2008 Mazda CX-9 Grand Touring AWD
24 Month – Residual 60% of MSRP – .00032 Base Rate
36 Month – Residual 49% of MSRP – .00077 Base Rate
48 Month – Residual 40% of MSRP – .00137 Base Rate

* Residuals posted are for 15K miles/year. Add 2% to Residual for 12k mi/yr and 3% for 10k mi/yr on all terms
** Rates provided by Tarry Shebesta from Leasecompare.com

My Take: The two Mazda CXs have enjoyed fairly low money factors since May, so hopefully some of you jumped on them between May and June. I’m pretty sure the residuals will take a hit in July…as to the MF staying or lowering, that’s anyone’s guess. One thing about lease rates is that I can comment on them as they are, but it’s very hard to know what the manufacturers are planning for the up coming months. I can guess, but not even dealers know next month’s numbers until they are released.

June 2008 Lease Rate for 08 Nissan Rogue

Published by G

2008 Nissan Rogue S 2WD
24 Month – Residual 69% of MSRP – .00240 Base Rate
36 Month – Residual 57% of MSRP – .00240 Base Rate
48 Month – Residual 46% of MSRP – .00260 Base Rate
60 Month – Residual 39% of MSRP – .00260 Base Rate

2008 Nissan Rogue SL 2WD
24 Month – Residual 66% of MSRP – .00240 Base Rate
36 Month – Residual 55% of MSRP – .00240 Base Rate
48 Month – Residual 44% of MSRP – .00260 Base Rate
60 Month – Residual 37% of MSRP – .00260 Base Rate

2008 Nissan Rogue S 4WD
24 Month – Residual 72% of MSRP – .00240 Base Rate
36 Month – Residual 59% of MSRP – .00240 Base Rate
48 Month – Residual 48% of MSRP – .00260 Base Rate
60 Month – Residual 40% of MSRP – .00260 Base Rate

2008 Nissan Rogue SL 4WD
24 Month – Residual 68% of MSRP – .00240 Base Rate
36 Month – Residual 56% of MSRP – .00240 Base Rate
48 Month – Residual 45% of MSRP – .00260 Base Rate
60 Month – Residual 38% of MSRP – .00260 Base Rate

* Residuals posted are for 15K miles/year. Add 2% to Residual for 12k mi/yr and 3% for 10k mi/yr on all terms
** Rates provided by Tarry Shebesta from Leasecompare.com

My Take: No lease support here. Maybe July will be a better month. Personally, I think the Rogue isn’t a very attractive mini-crossover. The Infiniti EX is it’s “better looking” and more expensive cousin, worth the upgrade if you can afford to.

June 2008 Lease Rate for 08 VW Touareg

Published by G

Volkswagen Touareg V6 4WD
24 Month – Residual 58% of MSRP – .00024 Base Rate
36 Month – Residual 49% of MSRP – .00024 Base Rate
48 Month – Residual 41% of MSRP – .00076 Base Rate

Volkswagen Touareg V8 4WD
24 Month – Residual 54% of MSRP – .00024 Base Rate
36 Month – Residual 45% of MSRP – .00024 Base Rate
48 Month – Residual 37% of MSRP – .00076 Base Rate

Volkswagen Touareg V10 TDI 4WD
24 Month – Residual 58% of MSRP – .00163 Base Rate
36 Month – Residual 49% of MSRP – .00163 Base Rate
48 Month – Residual 41% of MSRP – .00193 Base Rate

* Residuals posted are for 15K miles/year. Add 2% to Residual for 12k mi/yr and 3% for 10k mi/yr on all terms
** Rates provided by Tarry Shebesta from Leasecompare.com

My Take: Three years ago, it used to hurt every time you had to gas up a Touareg …with today’s gas prices, I think it pretty much kills family budgets, ruins vacation plans and makes grown men cry. So what is the consolidation price? Ultra-low MF for those looking to lease one of this gas-thirsty urban family haulers. Doesn’t seem to help all that much since the residual values are terrible.

June 2008 Lease Rate for 08 VW GTI

Published by G

Volkswagen GTI 4dr Hatchback
24 Month – Residual 60% of MSRP – .00085 Base Rate
36 Month – Residual 51% of MSRP – .00085 Base Rate
48 Month – Residual 43% of MSRP – .00128 Base Rate

* Residuals posted are for 15K miles/year. Add 2% to Residual for 12k mi/yr and 3% for 10k mi/yr on all terms
** Rates provided by Tarry Shebesta from Leasecompare.com

My Take: The MF for the GTI is looking pretty good right now, even for the 48mo lease. The residuals aren’t very good since the 2009 models have arrived. Expect payments around $350+tax with no money down for a well equipped model on a 36mo/12k lease and $330+tax on a 48mo/12k lease.

June 2008 Lease Rate for 08 Mini Cooper

Published by G

2008 Mini Cooper Coupe
24 Month – Residual 77% of MSRP – .00219 Base Rate
36 Month – Residual 66% of MSRP – .00219 Base Rate
48 Month – Residual 55% of MSRP – .00219 Base Rate

2008 Mini Cooper Coupe S
24 Month – Residual 73% of MSRP – .00219 Base Rate
36 Month – Residual 63% of MSRP – .00219 Base Rate
48 Month – Residual 52% of MSRP – .00219 Base Rate

2008 Mini Cooper Coupe Clubman
24 Month – Residual 74% of MSRP – .00219 Base Rate
36 Month – Residual 64% of MSRP – .00219 Base Rate
48 Month – Residual 53% of MSRP – .00219 Base Rate

2008 Mini Cooper Coupe Clubman S
24 Month – Residual 73% of MSRP – .00219 Base Rate
36 Month – Residual 62% of MSRP – .00219 Base Rate
48 Month – Residual 51% of MSRP – .00219 Base Rate

2008 Mini Cooper Convertible
24 Month – Residual 67% of MSRP – .00219 Base Rate
36 Month – Residual 58% of MSRP – .00219 Base Rate
48 Month – Residual 48% of MSRP – .00219 Base Rate

2008 Mini Cooper Convertible S
24 Month – Residual 68% of MSRP – .00219 Base Rate
36 Month – Residual 58% of MSRP – .00219 Base Rate
48 Month – Residual 48% of MSRP – .00219 Base Rate

* Residuals posted are for 15K miles/year. Add 2% to Residual for 12k mi/yr and 3% for 10k mi/yr on all terms
** Rates provided by Tarry Shebesta from Leasecompare.com

My Take: The MF for all Mini’s is pretty much the same across the board, which is a good thing. It’s probably not the lowest MF, but it isn’t as ridiculous as GMAC’s. Strong residual values make this car a very attractive lease. These cars may be priced reasonably, but when you start tacking on the options, it gets expensive very quickly.

June 2008 Lease Rate for 08 Nissan Murano

Published by G

Nissan Murano S AWD
24 Month – Residual 70% of MSRP – .00240 Base Rate
36 Month – Residual 58% of MSRP – .00240 Base Rate
48 Month – Residual 48% of MSRP – .00260 Base Rate

Nissan Murano SL AWD
24 Month – Residual 64% of MSRP – .00240 Base Rate
36 Month – Residual 54% of MSRP – .00240 Base Rate
48 Month – Residual 44% of MSRP – .00260 Base Rate

Nissan Murano LE AWD
24 Month – Residual 61% of MSRP – .00240 Base Rate
36 Month – Residual 51% of MSRP – .00240 Base Rate
48 Month – Residual 42% of MSRP – .00260 Base Rate

* Residuals posted are for 15K miles/year. Add 2% to Residual for 12k mi/yr and 3% for 10k mi/yr on all terms
** Rates provided by Tarry Shebesta from Leasecompare.com

My Take: Not the best time to lease a Murano right now due to the lack of lease support from Nissan. The residuals are fairly high, which is great, however, the money factors are pretty high too. Expect monthly payments in the $450-$550 range assuming a $35,000 price tag.