Leasing Help

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ThirtyOne

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I had to go back and revise my answer on the down payment question. Something was nagging at me and I went back and worked it through and realized I had missed the boat. I will do a detailed post at some point with real examples.

Edit again. I still don't think I got it right which should tell you how shaky the conventional wisdom is. I think it is actually that they think you will pay money down and lose your equity if the car is totaled when the down payment doesn't change the financials that much anyway. Or that you could have gotten more back through gap insurance if your car was totaled. The conventional wisdomists sure do spend a lot of time thinking about the extremely unlikely scenario that your car will be totaled in the middle of your lease.

I will do a detailed post on this because it is pretty fascinating how this very boundary case has become the prevailing wisdom on the subject.

Anyhow, for some reason paying money down, increasing equity, reducing interest, gaining a tax benefit on a trade, reducing your monthly payment, and just basically doing all the things you are supposed to do on a loan are somehow bad because the conventional wisdom people suddenly realized that a car is a terrible investment. But only if you total your car on a lease. Go figure.





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ThirtyOne

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Good info!

Also, just to mention -- PenFed has a balloon payment option which I have used on past vehicles that retain value (i.e., Porsche GT cars). Could make sense here as well. You end up with a lower lease-like payment, maintain equity in the vehicle, and at the end of the term (i.e., 36 months), can pay the balloon in full or refinance it. Money is cheap, take advantage. Also, can be beneficial in certain states with weird lease tax rules.
By the way I looked into this. The Wrangler is not eligible because they don't offer this product on SUVs.
 

iki4life

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My dealership is giving me a Money Factor of about 0.00196
This comes to about 4.7% interest rate.
Does anyone know where I can find a cheaper Money Factor from? Or do I have to go thru the dealership MF for a lease?
Located in PA.
 
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My dealership is giving me a Money Factor of about 0.00196
This comes to about 4.7% interest rate.
Does anyone know where I can find a cheaper Money Factor from? Or do I have to go thru the dealership MF for a lease?
Located in PA.
According to this link: https://forums.edmunds.com/discussion/48521/jeep/wrangler/2018-jeep-wrangler-lease-deals-and-prices

The money factor your dealer is quoting you is not out of line. Currently standard money factors are somewhere between .00190 and .00230.

The banks that do leases are Ally Bank and US Bank. Ally has a list of dealers they work with on their website. Neither one works direct to consumer.

And yes dealers do make money on financing so there may be some room for negotiation but I it seems like right now a money factor below .0020 on a Wrangler is not bad. Wrangler leases make up for their high residuals with high money factors. It has always been that way.
 

iki4life

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According to this link: https://forums.edmunds.com/discussion/48521/jeep/wrangler/2018-jeep-wrangler-lease-deals-and-prices

The money factor your dealer is quoting you is not out of line. Currently standard money factors are somewhere between .00190 and .00230.

The banks that do leases are Ally Bank and US Bank. Ally has a list of dealers they work with on their website. Neither one works direct to consumer.

And yes dealers do make money on financing so there may be some room for negotiation but I it seems like right now a money factor below .0020 on a Wrangler is not bad. Wrangler leases make up for their high residuals with high money factors. It has always been that way.
Thanks buddy, your leasing analysis thus for have been of good help...Do you have an idea what the Residual would be for a JL Sahara? My plan is to lease for 39months/15k miles. My dealer used 2017 Sahara's residual to reference an approximate monthly payment. They used 66% RV at 39m/15k miles.
 
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Thanks buddy, your leasing analysis thus for have been of good help...Do you have an idea what the Residual would be for a JL Sahara? My plan is to lease for 39months/15k miles. My dealer used 2017 Sahara's residual to reference an approximate monthly payment. They used 66% RV at 39m/15k miles.
I don't have a basis for that. You can ask on the Edmunds thread. My gut is that residual is high for those months/mileage. Sahara at 12,000 miles is usually listed as 65%. I would have expected 62% - 63% for this. That will make your payment lower so that is good for you. But it means a little less equity at the end of the lease. I would run it through a lease calculator and see.

I haven't shopped prices yet this year but my gut is that is a pretty fair lease deal. If anyone has better information please chime in.
 

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Keeping this going for us lease guys. Thank you thirtyone
 

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I just want to say thank thirtyone, tons of good info. As someone who is considering leasing a JL later this year(and never leased) this is invaluable.
 

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I'm getting the feeling with the sticker shock some buyers may consider leasing for the first time.

This is NOT a "Is leasing good or bad?" thread. Please don't post opinions on that here.

This is a thread to explain some of the mechanics and quirks of leasing.

I can answer some questions like:

- Why is the lease payment less on a 4-door sport and than a 2-door sport?
- Why does it sometimes make sense to add options to your Wrangler to get the payment lower?
- How do I compare a lease deal to a loan deal?
- Is it possible to get a lower payment from a loan than a lease?
- Should I put money down on my lease?
- What is a good money factor for my Wrangler?
- The residual values are too low! Can I negotiate them?
- The residual values are too high! Should that scare me?
- My friend doesn't lease but he gets a new Wrangler every 18 months and his payments go down every time! How is that possible?!

Disclaimer: I am not a car financing professional. I am just old and have a lot of experience in car leasing and purchasing as a consumer. I have never leased a Wrangler though I did put a lease deal together a couple of years ago that I walked away from. Others may have more experience and they can weigh in. That would be great! I am hoping to learn something too before I make my final decision.
How much should I put down on a lease Rubicon Jl I have heard different opinions please give yours MSRP 56k
 

BaldEagle

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It's ok. I think this is why people are afraid of leasing. It is complicated and they are always told they are a bad person if they do it. But if you begin to understand it you can make better choices.

I am a sourcing director at an insurance company and we lease millions of dollars of equipment a year. Do you think our CFO is an idiot? No! He knows what he is doing and we lease where it makes sense because we understand how it works and what the trade offs are and we are disciplined about it.
How much do I put down on s leese
 
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How much should I put down on a lease Rubicon Jl I have heard different opinions please give yours MSRP 56k
It depends on your personal situation and what your priorities are. There are some interest savings but they are relatively small. It does lower your payment significantly. It is mostly a pre-pay. It has more impact if you have average credit and you are getting quoted a higher money factor.

Here is when I would put money down on a lease:

- You have the money now or a trade
- You want a lower payment
- You don't have other high interest debt

For every $3,600 down (on a 36 month lease) you take about $100 off the payment. You can get a lease calculator (I use Leasematic on my iPhone) to play around with the numbers and see what makes sense. Depending on your residual there are limits to how much you can put down. The benefits are pretty linear but then you are tying up more cash. At some point if you are putting enough down you may be better off with a loan at a lower interest rate.

So I wouldn't put $10,000 or more down. But I don't see anything wrong with putting $3,000 - $5,000 down to get your payment lower and save $300-$400 in the process.

If you are looking at putting down something like $2,000 I am not sure I would. You save about $50/month and maybe $200 over 3 years. I might rather have $2,000 in my pocket. Also if you have credit card debt the money would definitely be better spent there.

Full disclosure some people don't like this scenario because if you total your Jeep and the market value has dropped then you will be out some money. Of course that is true with a loan as well.

If you want to PM me your specifics I can give your more specific advice.
 

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Good info!

Also, just to mention -- PenFed has a balloon payment option which I have used on past vehicles that retain value (i.e., Porsche GT cars). Could make sense here as well. You end up with a lower lease-like payment, maintain equity in the vehicle, and at the end of the term (i.e., 36 months), can pay the balloon in full or refinance it. Money is cheap, take advantage. Also, can be beneficial in certain states with weird lease tax rules.
SUVs and Trucks don't qualify . Already Tried it
 

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Do you guys bring up the fact that you're leasing prior to negotiating the price of the vehicle? Or is that a huge no-no?
 
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Do you guys bring up the fact that you're leasing prior to negotiating the price of the vehicle? Or is that a huge no-no?
I bring it up. It shouldn't make much difference on a Wrangler. But on other cars the incentives are different for leasing so they have to know.

The important thing is to start with the purchase price before anything else. Then negotiate the financing and trade. if they want to start talking about lease payment before agreeing on a selling price i politely tell them we need to establish a selling price first.

And that's not a knock on the salesman. That's how you sell a lease. But i think it's better to establish the price first.
 

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