car lease question. yay or nay? (calling The Financial Lounge!)

[dieselraver]

So i had a car lease question.

we're looking to lease an Odyssey EX-L for 15k/36 months with a trade in of our Outback 2.5i Premium (6mt, cold weather package, sun roof)

the outback is a 2010 with about 39,XXX miles on it.

we're talking a true sign and drive including the payoff for my current (negative equity) and tax, the Out the door price is 461 a month includes tax and all fees. nothing due at signing.

what does TCL think of this aggressive negotiation?

would you bite?

without the trade in it would be $366/month. 0 due at signing.

i have a good idea of how to negotiate a lease and i think that this is the most aggressive number I will get with my current trade in.

thoughts?

opinions?

[Bixmen]

Keep paying off outback, until out of negative equity would by my worthless suggestion.

[Saintor]

The payment on the van is very good for an EX-L. Are you ready to accept that they will make 3600$ over your back on the Subaru alone?

[dieselraver]

Keep paying off outback, until out of negative equity would by my worthless suggestion.

i was thinking that, but that will decrease our monthly payments by $100.00 i think if i wait till next month and we pay down the principle and the dealers are getting more desperate to get rid of their inventory it will drive the price down by another $30-$40 I don't know...

the outback payoff is 196XX.XX they are offering $17000.00 (above wholesale)

it would take 4 months to come to their number at which time it will be a new year and the offer may go down still.

if i get the odyssey now it will put me in the optimal upgrade/lease time, (can turn it in early and get another 2-4 months before lease end) and renegotiate the lease number to $366 again

[dieselraver]

The payment on the van is very good for an EX-L. Are you ready to accept that they will make 3600$ over your back on the Subaru alone?

yeah. honestly the 6MT is coveted, but no subie lover has 20k lying around to take it at below KBB. honestly i wanted to break even on the subaru but its not looking like an easy task

[mike02467]

Well, weymouth hondas sign and drive is just under $400 a month for an ex-l with 15k miles a year.... the same dealer I leased my civic from. http://www.weymouthhonda.com/lease

[dieselraver]

Well, weymouth hondas sign and drive is just under $400 a month for an ex-l with 15k miles a year.... the same dealer I leased my civic from. http://www.weymouthhonda.com/lease

good man. appreciate that, but if you take that number they offer ($338 x NYS tax 8.875%) its pretty much my $366 number

ninja edit - whoa baby, mine is for 15,000 miles a year (thats 2 basis points difference in residual value)

[Brendan@bwalkauto]

What's the selling price of the van vs MSRP, and what's the money factor?

Those are the two things the dealer controls. Profit margin in the selling price, and the markup in the money factor. If you're getting a nice discount, and the money factor is close to buy rate, then it's a good deal.

Finally, if you're happy with the trade in value, then good. I'd personally sell it yourself.

[mikes96GTI]

All a lease is, is you paying the calculated value of what the car will be worth, in your case, three years. You can haggle price on a lease car, just as if you are buying it. The lower the price you pay, the smaller the gap, the less the payment. Honda (like all manufacturers) calculate the value by lease end. Money factor too, which is like an interest rate. Sometimes they win, sometimes they loose. BMW will lose $4k on my 328 when I give it back, but I will be money up on my lease on the Mini and will be able to sell it out of its lease before I give it back and make a profit. I sold my 335d and made a grand after 6 months. HOWEVER, this is rarely the case, and if you are asking such questions, it likely won't be the case for you, and you will have to carry the lease full term. You can keep an eye on your payoff and the actual value of the car as your time with it progresses, but generally speaking, once you sign, its yours for the term.

Should you lease? Thats only a question YOU can answer. If you can't live with the guidelines then by all means, don't. This means miles, wear and tear, etc. If you drive a lot, and aren't careful with your cars, you could be in for a bill upon turn in. Leasing looks attractive, until you have to turn it in for most people. Windshield cracks, tires, door dings, scratches, dents, all have a dollar figure attached to them upon turn in. Its not uncommon to have a $2K bill when turning in a BMW for tires and dents, etc. We once had a guy with a 550i that was 55K miles OVER on his lease on a trashed car. .20 cents per mile, you do the math. Some car makers are worse then others. VW figured out, if you nickle and dime people, they will never lease another car from you. They were easy. BMW nickels and dimes, since people always have to have a BMW. If they lease another, they will waive a lot of the charges to get you into a new one.

I lease my BMW and Mini since I don't drive, and work in the industry and know the angles. Don't think "because I'm leasing I will drive less" that never works. If you do 20K a year, you will still do 20K a year. My 328 I've had for 3 years and its going back soon and has only 22K on it. I will have to put on tires and fix a rock chipped windshield though. My Mini, it has 4k miles on it, and I will sell it out of its lease.

Pluses? You get a cheap payment. You always get a new car every few years. You never have to negotiate trade in value.

[mike02467]

good man. appreciate that, but if you take that number they offer ($338 x NYS tax 8.875%) its pretty much my $366 number

ninja edit - whoa baby, mine is for 15,000 miles a year (thats 2 basis points difference in residual value)

The lease you got is better than the one I posted, I thought you had a typo in your post, but you have negative equity... that sucks. I already have $2000 positive equity on my honda after 2 years.

[mikes96GTI]

Oh and is your Subie a lease, or a purchase? Whats the payment. Just from what the numbers look like I would keep the subaru. I had a friend making a $2100 payment on his 7 series, since he traded in his last 7 that he was $20K upside down...... you have to pay the money regardless. If you OWN the subie, make extra payments and pay it down. If you roll it in, you are still paying money, and then in 3 years you have nothing. If it was just a walk in deal with no trade, sure, but that is a lot of extra to pay a month for 36 months.

[dieselraver]

What's the selling price of the van vs MSRP, and what's the money factor?

Those are the two things the dealer controls. Profit margin in the selling price, and the markup in the money factor. If you're getting a nice discount, and the money factor is close to buy rate, then it's a good deal.

Finally, if you're happy with the trade in value, then good. I'd personally sell it yourself.

the van is true market value (below MSRP/invoice) about $32000.00 i think i can negotiate it lower, absolute lowest seen below market is about $30,700.00.

van has a residual of about 54% and i believe a .00032 money factor was used

[dieselraver]

Oh and is your Subie a lease, or a purchase? Whats the payment. Just from what the numbers look like I would keep the subaru. I had a friend making a $2100 payment on his 7 series, since he traded in his last 7 that he was $20K upside down...... you have to pay the money regardless. If you OWN the subie, make extra payments and pay it down. If you roll it in, you are still paying money, and then in 3 years you have nothing. If it was just a walk in deal with no trade, sure, but that is a lot of extra to pay a month for 36 months.

subie was financed and it had negative equity rolled in from the damn GTI. (i've learned NO MORE FINANCING!) i'll just stick to leasing and purchase cars with high residual to do early turn in.

i will own the subie, but its not about "wanting a new car" the van is obviously no corvette we need the space, it will have more seats, have leather, a back up camera, and a V6 with no rowing (6MT) the payments will be lower too, the finance on the subaru is just under $500 a month, the negative equity on the Subaru rolled into the Odyssey is still only $461 a month, subaru was a $27,000 MSRP vehicle while the Odyssey is $36,000

[bbk]

Certainly sounds like the last in a series of wise decisions.

[barry2952]

I don't understand leasing. You typically have to tie up your deposit, just like a down payment, except that in a purchase that's equity.

I've learned that cars today last much, much, longer than they use to so you come out way ahead buying something good and driving the wheels off of it. I live in the rust belt and you hardly see rusted cars anymore. IMO, it pays to buy a car (appliance) you can live with for a long time. The savings allows for other toys. That has always worked for me. YMMV.

[dieselraver]

Certainly sounds like the last in a series of wise decisions.

So you think it's another mistake? I'm trying to decipher what you mean...

[sethgood]

subie was financed and it had negative equity rolled in from the damn GTI. (i've learned NO MORE FINANCING!) i'll just stick to leasing and purchase cars with high residual to do early turn in.

i will own the subie, but its not about "wanting a new car" the van is obviously no corvette we need the space, it will have more seats, have leather, a back up camera, and a V6 with no rowing (6MT) the payments will be lower too, the finance on the subaru is just under $500 a month, the negative equity on the Subaru rolled into the Odyssey is still only $461 a month, subaru was a $27,000 MSRP vehicle while the Odyssey is $36,000

These justifications all sound contrived. If this is about payment, it sounds like you can re-fi your subaru to be ~280-330/mo.

I also read someone who simply likes shopping for, negotiating, and driving new cars frequently. If this describes you, that's fine. At some point you need to embrace leasing. Go ahead, I guess.

[mike02467]

So you think it's another mistake? I'm trying to decipher what you mean...

It's a good deal on the car, but a bad idea to just stack payments like that... How much longer do you have til you pay off the Scoobaru?

[TM87]

I never understand the point people make about a lease "You are paying for something that isnt yours". Im sorry but if you are financing a car, you are still paying for something that isnt yours.

I would be a perfect lease candidate. Usually drive under 10k a year, take care of the carand love to change em often.

[IgorRGTI]

Too bad the Outback isn't leased.

I recently sold my leased Optima and made $200 lol.

Doing the deal through a Kia dealer my buyout was $2.2k lower then it was when I looked on my own.

[dieselraver]

These justifications all sound contrived. If this is about payment, it sounds like you can re-fi your subaru to be ~280-330/mo.

I also read someone who simply likes shopping for, negotiating, and driving new cars frequently. If this describes you, that's fine. At some point you need to embrace leasing. Go ahead, I guess.

you missed the part where we need more space

[dieselraver]

It's a good deal on the car, but a bad idea to just stack payments like that... How much longer do you have til you pay off the Scoobaru?

sorry bud had limited connection. i drove up to the dealership yesterday and got back today. we got the credit and paperwork done, now have to wait for the dealer to register the car in NYS, and we'll be good to go!

4 years :-/ it's just not worth it to keep the subaru, we need the 3rd row and the subaru is too cramped for 2 growing kids and all the stuff. the only thing the subaru has going for it is the 4wd system. other than that I don't love it nor do I desire to keep it. the Odyssey is fantastic...

on another note we test drove a 5MT honda fit sport.

all i have to say is holy cow, the dealership has this back road with twisties, ups and downs, and blind curves, they let me drive this sucker (we were basically driving in 2-3, thats how twisty it was) but damn was it amazingly spirited and peppy to boot!

some pics of the van, we hope to take delivery by next week.

is lojack for $9.00 a month extra worth it?

[Brendan@bwalkauto]

Only do lojack if your insurance savings are more per month.

If the price is in line with Edmunds and TrueCar (which are numbers that are lower than dealers like to do), and the rate is a triple 0, I say do it. Just stop rolling negative equity around after this one.

[rockhog]

I don't understand leasing. You typically have to tie up your deposit, just like a down payment, except that in a purchase that's equity.
.

besides transactional fees, which applies in both situation, the "deposit" is taken the leasing balance and lowers the monthly rate. so in the end, more or less, it evens out. (i.e., youre gonna pay X_amount to use a car, whether its through financing or leasing scheme)

the only difference here is if you've got a problem with cash flow, and cannot put up with the "deposit".

an dof course, like you say, if you INTEND to keep a car indefinitely, then yes buying is for you.

i buy only things that i really really like, and aim to keep them forever. for one reason or another, that hasnt played out to be the case, and ive kept my last 4 cars for an avg of 3 years or so. (all were purchased, btw)

[dieselraver]

So to my car dealer friends. Can this price be negotiated less?
Original lease price is $366/month OTD

Negative equity in the outback is $2600. Which brings the lease price to $461/month. Is that too much? Or about right?

Can I negotiate it less?

[SVTDanny]

subie was financed and it had negative equity rolled in from the damn GTI. (i've learned NO MORE FINANCING!)

Financing isn't your problem, being underwater is. Put more money down, take shorter loans, and stop trading cars in a year after you buy them. That's how you lose a lot of money really fast.

Stop the cycle now.... if you really want the van, don't pay the negative equity of the Outback off through the lease. Just kick in the $2-3k at the time of the van purchase and be done with it.

[Mike!]

You need a bigger vehicle, so it's good that you're getting what you need for your family. That said, you have some rose-colored glasses on about leases and "never financing a vehicle again!" Your negative equity from the GTI and then the Outback has come from not being able to keep a vehicle for four years.

What are you going to do 2.5 years from now when the Ody no longer suits you? A lease takeover isn't any more fun than selling a car with negative equity.

You asked for Financial Lounge advice, and the nuts and bolts is they would want you to pay down the Outback more and sell/trade it for a used ~2009 or even older Odyssey of a similar price to the Subaru. The root of your issues with never having equity in your cars is new vs. used, not finance vs. lease.

[ATL_Av8r]

dude is touching your wife's knobs!

[Mike!]

So to my car dealer friends. Can this price be negotiated less?
Original lease price is $366/month OTD

Negative equity in the outback is $2600. Which brings the lease price to $461/month. Is that too much? Or about right?

Can I negotiate it less?

You said a 3 year lease, right? $95/mo for a 'loan' of $2600 for 3 years is a 18.7% effective interest rate. That seems high. What's the interest work out to on the overall lease?

[Spax MC]

good luck with everything, the odyssey is an amazing car. i just helped my father-in-law buy 2 of them. we just bought a red ex-l in florida for 31k and a smoky topaz touring in nj for 36k if that helps any with your prices

[barry2952]

I never understand the point people make about a lease "You are paying for something that isnt yours". Im sorry but if you are financing a car, you are still paying for something that isnt yours.

Incorrect. You can easily sell a car you're financing and get a new one. It's nearly impossible to break a lease unless you want to line their pockets with your money.

As far as ownership goes, you still own the car, even if making payments. The bank has a lien on it, but you are free to dispose of it if you want to. You own nothing if you lease.

Companies lease for profit, at your expense. You are paying for depreciation and mileage up-front. That's what makes no sense.

[Oh_My_VR6]

Incorrect. You can easily sell a car you're financing and get a new one. It's nearly impossible to break a lease unless you want to line their pockets with your money.

As far as ownership goes, you still own the car, even if making payments. The bank has a lien on it, but you are free to dispose of it if you want to. You own nothing if you lease.

Companies lease for profit, at your expense. You are paying for depreciation and mileage up-front. That's what makes no sense.

Spot on.

[Mr Roo]

I agree with barry2952 about leasing and that Ive never understood why people do it over purchasing. The dealership is making out on the front end and in most cases on the back end when the car is turned in. You could almost say 3 ways becasue they will sell the turned in car. Granted I have really only known two types of people that lease. First type is the person that wants a car they truly cant afford and leasing gives them the flexablity to move into the car at a much lower monthly. The second type I know is the person that literally flips a car every 2 or 3 years and would be upside down in a payment situation and the lease gives them the flexability to get out of the car. Either way, hope everything works out for you and your family.

[barry2952]

I also don't believe that any mods to the car, reversible or not, are acceptable at turn-in time. I really don't understand mods, either, past wheels and tires, but that another whole discussion. I especially don't understand modifying a car you don't own.

My wife and I discussed this last night. Her sister is the ideal candidate for leasing. She doesn't have the money for a downstroke and doesn't want to risk out of warranty repair costs. We explained that she'd be better off owning the car, but she can't put 25%, or more, into a down payment.

I, personally, never finance for more than 6 months. That gives me time to liquidate something to pay off the balance. I could easily tap my home credit line, but that doesn't help my credit history. Lenders want to see activity, in addition to solvency.

I guess I do understand why some people lease. What I don't understand is; as good as todays cars are, why aren't people keeping them longer. I grew up in the '50s in a house where my father was in the advertising business. He felt it necessary to show his clients that he was successful, but not too successful. He bought a new car every two years. His cars did get cooler and more expensive as time went on. He had a '64 Wildcat convertible followed by a '66 225 ragtop and then a '68 Toronado followed by his black '70 Lincoln Town Car.

The only car I ever flipped was my 528e. It was so slow that it couldn't get out of its own way. I traded it after 8 months on a 533i, which I put 100,000 miles on, as I have on every subsequent vehicle. My DD '98 ML-320 has 182,000 on it. Yes, I'm paying for ongoing repairs, but nowhere near what it would cost to replace it.

I guess I did flip cars once before. I'm sure I've told this story. My banker called me in 1980, I think, offering the inventory of a Porsche repair facility that specialized in 356s. They had pulled out 10 cars into the field behind the padlocked store. I bought all 10 cars for $1,000 and flipped them to a foreign car pick and pull the next day for $2,000. There were a couple of Speedsters, mostly Coupes and a few Cabrios.

I sure thought I was smart, doubling my money in a day. Around 1990 I started kicking myself and bashing my head against the wall, and it hasn't stopped.

[dieselraver]

You need a bigger vehicle, so it's good that you're getting what you need for your family. That said, you have some rose-colored glasses on about leases and "never financing a vehicle again!" Your negative equity from the GTI and then the Outback has come from not being able to keep a vehicle for four years.

What are you going to do 2.5 years from now when the Ody no longer suits you? A lease takeover isn't any more fun than selling a car with negative equity.

You asked for Financial Lounge advice, and the nuts and bolts is they would want you to pay down the Outback more and sell/trade it for a used ~2009 or even older Odyssey of a similar price to the Subaru. The root of your issues with never having equity in your cars is new vs. used, not finance vs. lease.

I sincerely appreciate TFL's advice. I think we may pay down the negative equity and retain the $366/month the negative equity is about $2600.00