JL Lease pricing/California preferred.

[maxmk8]

So what happens when you put a lot of money down on a loan and you total the vehicle the next week?

You get the kbb+sales tax. So you’re usually ok unless you paid over sticker.
For a lease you lose all of the down.

Sponsored

 

[maxmk8]

Dealer in FL says they will do invoice price for a custom order 2-door Rubicon, turns out to $45,317. So before 7% tax they're saying the lease will be $643/mo with $0 down @ 39 months (10k miles/yr). Every $1k I put down chops off about $25/mo. Does this sound fair?

That’s close to what I’m paying for a 80k msrp m3. Terrible deal for a barely depreciating vehicle. I would recommend to go 1% of msrp per month with 0down rule

 

[ThirtyOne]

You get the kbb+sales tax. So you’re usually ok unless you paid over sticker.
For a lease you lose all of the down.

Insurance will pay the exact same amount on a lease as on a loan.

 

[maxmk8]

Insurance will pay the exact same amount on a lease as on a loan.

Except your down payment which matters more for a lease than for a "own"

 

[ThirtyOne]

Except your down payment which matters more for a lease than for a "own"

You are wrong. WRONG. Insurance companies pay the market value of the car.

This is the kind of misinformation that gets spewed about leases all the time.

The reality is that a totaled leased car is often under water. Why? Because (a) most cars lose 20% of their value almost immediately and 50% within 3 years (b) leased cars pay down principal much slower than purchased car and and (c) to "pay off" a lease you have to pay the full payments, where for a car you just pay the principal and (d) everyone just assumes that if you are leasing a car you got a shitty deal because you are an idiot.

Good news on a lease is you have gap insurance to make you whole. But here is where the whole "Never put a down payment on a lease" thing comes in - If you had not put the money down and you owed even more on the lease, the gap insurance would cover you and you would walk away and that down payment money would still be in your pocket. So in that scenario you would have been better off not putting anything down. Because Gap insurance.

Now, the case of a purchase is slightly different. If you are underwater, then you are basically screwed. Because you will get a check from the bank for less than you owe. And if you have equity because you were "financially responsible" then good for you. You get your money back - or at least some of it. You are still out of pocket the difference between the market value of the car and what you paid for it (and your insurance deductible). Also you pay sales tax on a purchase and in most states you only pay sales tax on the leased portion of the vehicle.

So for some reason these doomsday scenarios are always bad for the lease, but never considered bad on the purchase. And putting money down on a lease not only lowers your payment but also reduces the interest you pay (more so generally than it does on a loan) which is supposed to be a good thing.

And none of this really applies to Jeeps that much because they hold their value well and sell/lease for 5%-7% below invoice anyway. So chances are you are getting most of your money back in either case.

But for some reason the extremely unlikely scenario that you would total your car in the first 6 months of ownership (the average person over 20 gets in a car accident once every 12 years) has created the conventional wisdom that you should never, under any circumstances put money down on a lease. And this conventional wisdom has become so warped because people don't understand leases that apparently they believe the insurance companies will refuse to give you full market value for your wrecked car just because they hate people that lease.

This is mostly because it is complicated and involves a lot of math and people just want quick rules of thumb that are wrong.

I feel better now.

 

[nypharm]

Yea had a friend total a BMW m3 convertible few years back. Got back 6k, due to car being worth more than he owed bank and with gap insurance.

Never put anything down on lease. I roll taxes in as well. Only thing upfront can be inspection fees.

 

[SleepEatJeepRepeat]

So what happens when you put a lot of money down on a loan and you total the vehicle the next week?

When you buy you get replacement cost, when you lease they cover the lease payments. I assure you big down payment on a lease are not wise.

 

[Happycoop]

I'm not sure if you've just never been through it personally, but I can assure you that (in general) putting money down on a lease is a no-no. As others have mentioned, when a leased vehicle is a total loss, you're not getting any piece of that check back personally...it's all going to the bank that owns the vehicle. Gap insurance makes the bank whole...not you.

Hopefully folks on Jeep forums are buying for 5-7% under MSRP, so that if they do experience a total loss the market value of the vehicle means they will in fact be made whole (I've had more than one instance where I bought right and got back everything I paid, plus the taxes I paid).

I'm confused by your statement "to "pay off" a lease you have to pay the full payments, where for a car you just pay the principal" ... whether leasing or financing, your payments are comprised of principal plus interest. Show me the bank that gives you a loan for a vehicle based on principal only and I'll finance through them from now on!

You assume someone financing is underwater (which for many vehicle owners is a valid assumption). Luckily, Jeeps maintain their value extremely well. Again, if folks are buying smart (i.e., well under invoice) there is no reason they cannot be financing and either at a break-even state or potentially even have some positive equity early on. Granted, this is a case-by-case scenario.

You might have felt better after your post, but what you did not accomplish was providing factual information to those reading it. I'm not trying to change your mind (it's obvious you feel strongly about this subject), but I don't want others to read what you wrote and take it as truth. If you want to read up on leasing, head over to leasehackr.com ... many of those folks are as passionate about leasing as we are about Jeeps. There's a ton of great information to be had!

 

[maxmk8]

You are wrong. WRONG. Insurance companies pay the market value of the car.

This is the kind of misinformation that gets spewed about leases all the time.

The reality is that a totaled leased car is often under water. Why? Because (a) most cars lose 20% of their value almost immediately and 50% within 3 years (b) leased cars pay down principal much slower than purchased car and and (c) to "pay off" a lease you have to pay the full payments, where for a car you just pay the principal and (d) everyone just assumes that if you are leasing a car you got a shitty deal because you are an idiot.

Good news on a lease is you have gap insurance to make you whole. But here is where the whole "Never put a down payment on a lease" thing comes in - If you had not put the money down and you owed even more on the lease, the gap insurance would cover you and you would walk away and that down payment money would still be in your pocket. So in that scenario you would have been better off not putting anything down. Because Gap insurance.

Now, the case of a purchase is slightly different. If you are underwater, then you are basically screwed. Because you will get a check from the bank for less than you owe. And if you have equity because you were "financially responsible" then good for you. You get your money back - or at least some of it. You are still out of pocket the difference between the market value of the car and what you paid for it (and your insurance deductible). Also you pay sales tax on a purchase and in most states you only pay sales tax on the leased portion of the vehicle.

So for some reason these doomsday scenarios are always bad for the lease, but never considered bad on the purchase. And putting money down on a lease not only lowers your payment but also reduces the interest you pay (more so generally than it does on a loan) which is supposed to be a good thing.

And none of this really applies to Jeeps that much because they hold their value well and sell/lease for 5%-7% below invoice anyway. So chances are you are getting most of your money back in either case.

But for some reason the extremely unlikely scenario that you would total your car in the first 6 months of ownership (the average person over 20 gets in a car accident once every 12 years) has created the conventional wisdom that you should never, under any circumstances put money down on a lease. And this conventional wisdom has become so warped because people don't understand leases that apparently they believe the insurance companies will refuse to give you full market value for your wrecked car just because they hate people that lease.

This is mostly because it is complicated and involves a lot of math and people just want quick rules of thumb that are wrong.

I feel better now.

So say you put 10k down and are paying $100 a month. You total the car a year after you drive off the lot, do you get your 10k back?
Vs paying $500 a month and walking away payment free. Seems to me like you’d be 5k ahead. Who gives a crap what the market value of a car is on a lease when there is gap coverage. This isn’t a buy vs lease analyzing thread.

 

[maxmk8]

Yea had a friend total a BMW m3 convertible few years back. Got back 6k, due to car being worth more than he owed bank and with gap insurance.

Never put anything down on lease. I roll taxes in as well. Only thing upfront can be inspection fees.

you don’t pay taxes on the full purchase price on a lease you only pay them on your monthly portion.

I’m confused by this “roll in taxes” comment.

 

[Awilson9172]

I know on my lease, and i need to double check again, i had taxes added to the sale price. To the amount of around 2K, so i assume i got taxed for the vehicle up front, and then pay taxes again monthly.. not sure how that works.. but it bothers me if i go and try and buy it at the end and have to pay sales tax again on the vehicle.

 

[Happycoop]

Leasing rules vary by state. In most states, tax is levied on the monthly payment; in VA/GA tax is levied upfront on the sale price; and in NY/NJ/MN tax is levied upfront on the total lease payment.

 

[nypharm]

you don’t pay taxes on the full purchase price on a lease you only pay them on your monthly portion.

I’m confused by this “roll in taxes” comment.

Instead of paying taxes on lease payment upfront, I roll it into monthly payment. With lease, paying taxes upfront is a liability if car is totaled or stolen. Only put first month, registration fees, doc fee, bank fee at max upfront All else should be included into payment. It limits cash loss if any issues arise. I'm in nys, so we pay tax only on lease payments. Other states may vary.

 

[trailchaser]

I just leased from Huntington Beach Jeep. I feel like I got a solid deal on my 2018 MOAB. Fully loaded I’m paying $550 including LA county tax on a 36 / 12K lease with $0 capital cost reduction.

How much down and what was the sales price?

 

[4X4]

I would never lease anything I would buy with cash or a loan or at least buy a used one. The fees for excess millage would be bad for me as i drive like 30k miles a year and the monthly payment with a 30k mile a year lease would be almost the same as buying one with a loan

Sponsored