Leasing Help!!!

[JW's Jeep]

Hello, Im new to the group...I am trying to decide if leasing a Wrangler is a good option. Can anyone share their experience about what that looks like at the end. Are you upside down? They are trying to tell me I would have positive equity????

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[skyglass]

I just leased a JLU Rubicon last week. Residuals and cost of capital (I.e. money factor) for Wranglers are typically higher than other vehicles, but given they are in such high demand, should have no problem selling it at the end of the lease if I decide not to buy it outright (as opposed to just turning it in). I’ve leased/bought many cars, but this is my first Wrangler so didn’t want to commit to a purchase without first knowing how I would like it - leasing it gives me some flexibility without having to worry about being “upside down” on equity vs loan balance. Hope that gives you some perspective. Happy to answer additional questions.

 

[JW's Jeep]

I just leased a JLU Rubicon last week. Residuals and cost of capital (I.e. money factor) for Wranglers are typically higher than other vehicles, but given they are in such high demand, should have no problem selling it at the end of the lease if I decide not to buy it outright (as opposed to just turning it in). I’ve leased/bought many cars, but this is my first Wrangler so didn’t want to commit to a purchase without first knowing how I would like it - leasing it gives me some flexibility without having to worry about being “upside down” on equity vs loan balance. Hope that gives you some perspective. Happy to answer additional questions.

 

[JW's Jeep]

That's exactly where I am, this would be my first Wrangler. I think I will love it but not 100% sure. So you are under the impression that at the end of a lease there would not be negative equity, if you just want to trade it in? I'm so close to signing on the line!!! Thank you so much for your input!!

 

[JLUR_]

That's exactly where I am, this would be my first Wrangler. I think I will love it but not 100% sure. So you are under the impression that at the end of a lease there would not be negative equity, if you just want to trade it in? I'm so close to signing on the line!!! Thank you so much for your input!!

There will not be any equity at the end of the lease, positive or negative. You just turn it in an walk away assuming you didn't damage the vehicle or lose any parts like keys or floor mats, etc.

That being said you can choose to buy out the vehicle at the end of the lease for the agreed upon residual value. This is where you can get equity. The Wrangler is typically worth a little more at the end of the lease than the agreed upon residual value so it makes sense to purchase it before the end of the lease. Other vehicles can sometime be worth less than the residual and unless you really liked the vehicle it doesn't make sense to buy it out. There are other factors here like disposition fee but I won't get into it here.

Purchasing at the end of a lease is worse for you as a buyer because often times the effective interest rate (Money Factor * 2400) is much higher than a purchase interest rate. Currently the Wrangler MF is about .00203 to .00293 which equates to 4.87% to 7.03%. Most banks will offer you well below this for 48 to 72 month terms. Leasing makes sense in a lot of cases and I'm an advocate for it. It's great if you're just looking for a lower payment, want to try out new vehicles, want to get something a little out of your typical reach, etc. Just don't go in expecting to purchase at the end because it will cost you more over the whole term.

 

[MAPC]

Leasing has another benefit depending on which state you live in: in most states, you pay sales tax on the lease payment NOT the entire purchase price. So, in CA, for example, you are paying sales tax on the difference between purchase price and the residual. Since Wranglers have very high residuals (a good thing!) the benefit is significant.

Example: $50,000 Wrangler. Residual (depending on model and term) could be 70%. You would pay sales tax on $15,000 rather than $50,000. Using CA as an example again, that savings would be as much as $3300!

NOTE: in CA you don't get trade in tax credits as you do in some states which is what makes leasing that much more advantageous.

 

[BWWJL]

Leasing a wrangler is fairly cost effective due to high RV (even though MF is high), but RV dropped a lot in Sept and I’m not sure about oct. I had planned on lease but with RV drop I decided to buy instead.

My suggestion: lease a 19 as RV should be higher
- if you plan on buying after lease ends, probably better to just buy now to avoid high MF and lease fees ... plus, if u buy with financing at the 3 yr turn in you are effectively taking out a 7-8 year call loan.

Spend time at Edmunds to really understand leasing and buy the Leasematic app ($2) to run numbers.
https://forums.edmunds.com/discussion/48521/jeep/wrangler/2018-jeep-wrangler-lease-deals-and-prices

 

[BWWJL]

Leasing has another benefit depending on which state you live in: in most states, you pay sales tax on the lease payment NOT the entire purchase price. So, in CA, for example, you are paying sales tax on the difference between purchase price and the residual. Since Wranglers have very high residuals (a good thing!) the benefit is significant.

Example: $50,000 Wrangler. Residual (depending on model and term) could be 70%. You would pay sales tax on $15,000 rather than $50,000. Using CA as an example again, that savings would be as much as $3300!

NOTE: in CA you don't get trade in tax credits as you do in some states which is what makes leasing that much more advantageous.

I definitely agree with above if you are flipping your cars every 3 years if you are buy/hold, this is less important.

 

[MAPC]

I definitely agree with above if you are flipping your cars every 3 years if you are buy/hold, this is less important.

Exactly

 

[MAPC]

Leasing a wrangler is fairly cost effective due to high RV (even though MF is high), but RV dropped a lot in Sept and I’m not sure about oct. I had planned on lease but with RV drop I decided to buy instead.

My suggestion: lease a 19 as RV should be higher
- if you plan on buying after lease ends, probably better to just buy now to avoid high MF and lease fees ... plus, if u buy with financing at the 3 yr turn in you are effectively taking out a 7-8 year call loan.

Spend time at Edmunds to really understand leasing and buy the Leasematic app ($2) to run numbers.
https://forums.edmunds.com/discussion/48521/jeep/wrangler/2018-jeep-wrangler-lease-deals-and-prices

The RV drop in Sept is due to end of MY for 2018's. 2019 RV's should pop back up around Nov 1.

 

[cjaama]

There will not be any equity at the end of the lease, positive or negative. You just turn it in an walk away assuming you didn't damage the vehicle or lose any parts like keys or floor mats, etc.

That being said you can choose to buy out the vehicle at the end of the lease for the agreed upon residual value. This is where you can get equity. The Wrangler is typically worth a little more at the end of the lease than the agreed upon residual value so it makes sense to purchase it before the end of the lease. Other vehicles can sometime be worth less than the residual and unless you really liked the vehicle it doesn't make sense to buy it out. There are other factors here like disposition fee but I won't get into it here.

When the lease was up on my wife's Outback, we didn't want to buy it out and there was about $1,500 excess damage plus a disposition fee. The RV was less than the actual value. Carmax bought it from Subaru and cut us a check for the $2k difference. So, equity. Essentially a $4k swing from potentially owing about $2k to making $2k.

 

[calin]

hi there,

I just started a thread about leasing, and than I saw this, I'll post the question I had in here as well. Could you please help? Best

I have some questions about leasing;
1) those great discounts below invoice (up to 8%) are those available for leasing?
2) anyone has the residual values matrix? 36, 42, 48 months for 10k, 12k, 15k miles
3) what is the money factor these days (I have excelent credit, over 800)
4) if I lease from a certain dealer (let's say MD) can I service and return the lease where I live (CT)
5) what are some of the dealer taxes? I seen different names conveyance (~$300), dealer fee (500)
6) any other things that I should now about leasing a Wrangler?

 

[JeepinJason33]

Leasing sucks if you lose your job. Speaking from experience... Especially if you need to get rid of it in the first couple of years. With today's economy I would be hesitant to lease anything. Now I put enough down to ensure I could dump it to Carmax for wholesale if I had to in a pinch.

 

[TheRaven]

Leasing sucks if you lose your job. Speaking from experience... Especially if you need to get rid of it in the first couple of years. With today's economy I would be hesitant to lease anything. Now I put enough down to ensure I could dump it to Carmax for wholesale if I had to in a pinch.

There's little difference. If you are making payments on a traditional loan, you are likely paying $500-600 a month, if you are leasing, you are paying $300-400 a month. In either scenario, if you lose your job, you'll need to get rid of the payment, so you'll take the car to a dealer or Carmax/Carvana and sell it. You're actually better off in the lease scenario because you're paying less on a shorter term and when that term is up you just turn in the car. In the first year you'll be upside down in either scenario...but the difference will be smaller in the lease scenario.

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