New JL lease question

[Danimalnutz]

I am new to this forum and new to jeep ownership. I have been watching like a hawk and negotiating with the best advice on here. I have landed on a great deal at 6% with tread lightly. My question i am now looking at pulling the trigger but leasing vs owning. Its been beat up in this forum so i'm not looking for economic impact but merely a low payment for me now is invaluable. Below are the numbers quoted. With a RV that high is it possible to have flat or positive equity at the end? Let me know what you guys think. Thanks in advance.

JL Rubicon
MSRP- $45,700
Negotiated Price- $42,958
MF for 39mo / 12k -.001900
RV- 73%
Taxes in PA -6%

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[Specter491]

Just to give a data point for comparison this is the lease deal I got end of March:

Sport S 4 Door
Auto transmission
Alpine audio
7" infotainment screen
Black Hard top
Convenience package
39 months, 15k miles

I gave $0 down, sign and drive.
I pay $385/month
MF of about 0.001963

Don't have more details, they didn't want to tell me the actual sale price. I feel that I got a good deal

 

[ChaseW]

A question I frequently get...with no one good answer.

Leasing companies have more data than anyone on setting Residuals, and more often than not, they set values conservatively to maintain the equity in their lease portfolio. Looking at Lease residuals on a new car is often one of the best ways to anticipate depreciation, even if you do not end up leasing.

Ask your dealer if the Lease is a Closed-End Lease...it probably is, most are these days. If the Lease is Open-End...then you are responsible for any negative equity at the end of the Lease. If it's Closed-End, the Residual is a fixed value, supported by the Leasing Company, therefore you are not responsible for any negative equity.

The dealer likely has US Bank, Ally, and FCA/Chrysler Financial in their leasing portfolio, so make sure you know which one and make sure if it's closed/open end. If indeed it's Closed-End, you are not responsible for any negative equity at the end of the lease, that burden is taken on solely by the leasing company, since they are the ones that set the residual. You, nor the dealer, is on the hook for negative equity, as long as you keep the lease for the duration of the lease. If you trade the car early, then you are subject to the open market just as if you own the car outright or finance it with standard lending.

Leasing is (usually) designed for the Lessee to walk away at the end, and for the dealer to easily sell a new car, and take one on Off Lease for a second opportunity to sell the car. It's a way of preserving a strong pre-owned supply pipeline to the dealer.

My take on purchasing vs. leasing is that it's on a case-by-case basis, and everyone's scenario is different. Leasing on a car with a stupid high residual, like the Wrangler, offers a really low payment compared to financing because of the value retention, but doesn't put you in a position of equity. If the Residuals were set at 65% or so, you'd build equity in the car quickly, but the monthly payment would go up dramatically, in which case it doesn't necessarily make sense to Lease vs. Finance.

I'm in North Carolina, where leases are only taxed at 3% on the Monthly Payment, as opposed to the entire purchase price, so even taking a higher interest rate (money factor), I would save around 73% in tax (based on your quote above), thus offsetting the higher interest. I like having a new car frequently, and find that a leasing is the best way for me, as it maintains a lower payment, and since I don't care about owning a car long term, there is minimal value for me in choosing financing versus leasing. I am leasing my new JLUR because the payment is dramatically lower than standard financing, even with excellent financing rates.

Leasing is a comfortable and sensible way to have a lower payment, especially when money factors are low and residuals are high. It allows consumers to step into more car and keep a lower payment. The .00190 factor converts to an interest rate of 4.56%, which is higher than Tier 1 Rates with most lenders, but if their is Sales Tax savings in PA, it may offset and result in a lower effective rate.

2015 JK Unlimited Rubicons are transaction at auction with 45k miles for $32,000, just off the mark of your 73% residual ($33,361), so I can comfortably tell you that you won't have equity, however, if you go to maturity/full-term on the lease, you are not responsible.

Hope all of that helps, happy to answer any additional questions you have!

 

[Danimalnutz]

A question I frequently get...with no one good answer.

Leasing companies have more data than anyone on setting Residuals, and more often than not, they set values conservatively to maintain the equity in their lease portfolio. Looking at Lease residuals on a new car is often one of the best ways to anticipate depreciation, even if you do not end up leasing.

Ask your dealer if the Lease is a Closed-End Lease...it probably is, most are these days. If the Lease is Open-End...then you are responsible for any negative equity at the end of the Lease. If it's Closed-End, the Residual is a fixed value, supported by the Leasing Company, therefore you are not responsible for any negative equity.

The dealer likely has US Bank, Ally, and FCA/Chrysler Financial in their leasing portfolio, so make sure you know which one and make sure if it's closed/open end. If indeed it's Closed-End, you are not responsible for any negative equity at the end of the lease, that burden is taken on solely by the leasing company, since they are the ones that set the residual. You, nor the dealer, is on the hook for negative equity, as long as you keep the lease for the duration of the lease. If you trade the car early, then you are subject to the open market just as if you own the car outright or finance it with standard lending.

Leasing is (usually) designed for the Lessee to walk away at the end, and for the dealer to easily sell a new car, and take one on Off Lease for a second opportunity to sell the car. It's a way of preserving a strong pre-owned supply pipeline to the dealer.

My take on purchasing vs. leasing is that it's on a case-by-case basis, and everyone's scenario is different. Leasing on a car with a stupid high residual, like the Wrangler, offers a really low payment compared to financing because of the value retention, but doesn't put you in a position of equity. If the Residuals were set at 65% or so, you'd build equity in the car quickly, but the monthly payment would go up dramatically, in which case it doesn't necessarily make sense to Lease vs. Finance.

I'm in North Carolina, where leases are only taxed at 3% on the Monthly Payment, as opposed to the entire purchase price, so even taking a higher interest rate (money factor), I would save around 73% in tax (based on your quote above), thus offsetting the higher interest. I like having a new car frequently, and find that a leasing is the best way for me, as it maintains a lower payment, and since I don't care about owning a car long term, there is minimal value for me in choosing financing versus leasing. I am leasing my new JLUR because the payment is dramatically lower than standard financing, even with excellent financing rates.

Leasing is a comfortable and sensible way to have a lower payment, especially when money factors are low and residuals are high. It allows consumers to step into more car and keep a lower payment. The .00190 factor converts to an interest rate of 4.56%, which is higher than Tier 1 Rates with most lenders, but if their is Sales Tax savings in PA, it may offset and result in a lower effective rate.

2015 JK Unlimited Rubicons are transaction at auction with 45k miles for $32,000, just off the mark of your 73% residual ($33,361), so I can comfortably tell you that you won't have equity, however, if you go to maturity/full-term on the lease, you are not responsible.

Hope all of that helps, happy to answer any additional questions you have!

Thank you chase. That was a very informative answer. I know it’s the age old question but exactly what I was looking for.

 

[Mojito Mojo]

Thank you chase. That was a very informative answer. I know it’s the age old question but exactly what I was looking for.

I think leasing would be fine if you want to keep your vehicle stock, but what happens if you want to mod it? Either turn those extra parts in with the vehicle at lease end or have them removed and turn the vehicle back to stock, which is another cost to you!

 

[ChaseW]

Thank you chase. That was a very informative answer. I know it’s the age old question but exactly what I was looking for.

No problem!

I think leasing would be fine if you want to keep your vehicle stock, but what happens if you want to mod it? Either turn those extra parts in with the vehicle at lease end or have them removed and turn the vehicle back to stock, which is another cost to you!

This a variable that is highly debated, but ultimately it follows the discretion of the dealer and the leasing company. The Wrangler is in it's own category when it comes to aftermarket support, modifications, etc, as so many people modify them to some degree, even dealers themselves. Most dealers will probably consider many Wrangler mods as added value on trade, so I personally wouldn't worry about returning the vehicle to stock when you turn it in, as long as the mods are well executed and well installed.

The bigger issue when turning in a lease is the wear and tear on the vehicle. Your dealer should offer you with an Excess Wear and Tear product from their finance department, which I would definitely recommend if you are off-roading (assuming the product cover If you take off-road). The assumption among Leasing companies is that most people will properly care for the vehicle. If you take the Jeep and beat the shit out of it, don't care for the vehicle, etc, then you'll run into way more pushback when you go to turn it back it or trade it. Obviously you can take it back to stock and sell the mods to try and reclaim some spent dollars, but I personally think it's more trouble than it's worth, especially if you are paying for someone to take the parts back off.

My take on mods is that any time you buy them, you just assume that it's wasted dollars, regardless of how you "dispose" of your vehicle.

 

[Danimalnutz]

I am new to this forum and new to jeep ownership. I have been watching like a hawk and negotiating with the best advice on here. I have landed on a great deal at 6% with tread lightly. My question i am now looking at pulling the trigger but leasing vs owning. Its been beat up in this forum so i'm not looking for economic impact but merely a low payment for me now is invaluable. Below are the numbers quoted. With a RV that high is it possible to have flat or positive equity at the end? Let me know what you guys think. Thanks in advance.

JL Rubicon
MSRP- $45,700
Negotiated Price- $42,958
MF for 39mo / 12k -.001900
RV- 73%
Taxes in PA -6%

I actually wrote this wrong the MSRP $48,320 Would that make much of a difference?

 

[ChaseW]

Yes, your payment will go down. By exactly how much I am not sure since I am not sure exactly how PA calculates Tax, but it will be a pretty decent difference.

Residual Value in almost all leases is a percentage of the MSRP. If you negotiate a price less than MSRP, then you have essentially reduced the amount required to complete the lease, since the "spread" between the Purchase Price (also referred to to as CAP Cost) and Residual has been reduced.

 

[Firemedicsparky]

I actually wrote this wrong the MSRP $48,320 Would that make much of a difference?

Going off of your numbers posted I can guarantee this is not an FCA Lease. The current RV on the JLUR is 68% on a 36/12k with the standard MF of .00193. That RV is the current Sport. This could be an ALLY lease but then again the MF would be higher even for a Tier 1 Credit Score. With the current info you have posted your monthly payment should come in at $366.42, FCA Lease would wave the Acquisition Fee of $595 so your Drive off would be around $683.36, assuming you don't Cap Cost the probable dealer fee/Doc fee estimated at $299, First month payment of $366.42 and Sales Tax of $17.94 due up front.......If I was you I would immediately return to the dealer, hand them a check for $683.36 , sign the paperwork and speed away with the keys.....and pay your $366.42 every month for the next 39 months...And rest assured that nobody has gotten a better deal than you on a 2018 Jeep Wrangler JL Unlimited Rubicon!

 

[Danimalnutz]

Going off of your numbers posted I can guarantee this is not an FCA Lease. The current RV on the JLUR is 68% on a 36/12k with the standard MF of .00193. That RV is the current Sport. This could be an ALLY lease but then again the MF would be higher even for a Tier 1 Credit Score. With the current info you have posted your monthly payment should come in at $366.42, FCA Lease would wave the Acquisition Fee of $595 so your Drive off would be around $683.36, assuming you don't Cap Cost the probable dealer fee/Doc fee estimated at $299, First month payment of $366.42 and Sales Tax of $17.94 due up front.......If I was you I would immediately return to the dealer, hand them a check for $683.36 , sign the paperwork and speed away with the keys.....and pay your $366.42 every month for the next 39 months...And rest assured that nobody has gotten a better deal than you on a 2018 Jeep Wrangler JL Unlimited Rubicon!

I called the dealer today it is actually a deal with affinity FCU that is getting aggressive with jeep deals. They are willing to give that higher residual value and keep the lower MF. I was also wrong and forgot to add the 3% lease tax into the payment but still think it I s a killer deal. The only thing I am trying to figure out is since I negotiated a great deal on the sale price (by stalking this forum haha), am I killing myself with a possible buyout in 3yrs with such a high RV?

 

[Justi220]

I am leasing a jeep wrangler sport s JL model fully loaded
MSRP $43435
1. Technology pkg
2. Safety pkg
3. Cold weather pkg
4. Tube steps
5. Upgraded wheels
6. All weather mopar floor mat
7. Custom pref pkg 24S

My leasing final numbers
Money Factor = .00207
Residual 73%
Month month
330$ per month
10k miles year
3000$ tax and fees
I live in NY And zip 11428

I do have good credit..after checking with finance credit union they told me that thr will be 40$ for monthly payment making my monthly payment to 370$.....can you guys please advice me if this is and good deal or not....thank you much appreciated

 

[aug0211]

I called the dealer today it is actually a deal with affinity FCU that is getting aggressive with jeep deals. They are willing to give that higher residual value and keep the lower MF. I was also wrong and forgot to add the 3% lease tax into the payment but still think it I s a killer deal. The only thing I am trying to figure out is since I negotiated a great deal on the sale price (by stalking this forum haha), am I killing myself with a possible buyout in 3yrs with such a high RV?

Go buy that Jeep. That is a stellar deal from a quick review.

 

[aug0211]

I am leasing a jeep wrangler sport s JL model fully loaded
MSRP $43435
1. Technology pkg
2. Safety pkg
3. Cold weather pkg
4. Tube steps
5. Upgraded wheels
6. All weather mopar floor mat
7. Custom pref pkg 24S

My leasing final numbers
Money Factor = .00207
Residual 73%
Month month
330$ per month
10k miles year
3000$ tax and fees
I live in NY And zip 11428

I do have good credit..after checking with finance credit union they told me that thr will be 40$ for monthly payment making my monthly payment to 370$.....can you guys please advice me if this is and good deal or not....thank you much appreciated

That money factor is too high - you mentioned that you have good credit. Are you getting tier 1 rates or tier 2? Is this through a credit union or Chrysler Capital?

 

[Justi220]

That money factor is too high - you mentioned that you have good credit. Are you getting tier 1 rates or tier 2? Is this through a credit union or Chrysler Capital?

i think he told me i am like i tier 2.....also i got the lease end buy option price $32050

 

[Justi220]

i think he told me i am like i tier 2.....also i got the lease end buy option price $32050

i am going through credit union and they told me that they give the best rates....is that true?

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