gzbcl88

Hi! I'm new to leasing a car and have no idea on how to go about it. This is my first new car. I went to a dealership to check out the car and it was lovely! I didn't make any negotiations because I wanted to do some online research before sitting down with anyone. So I am emailing several dealerships about their pricing, but I want to lease first and then buy out the lease. I was quoted $449/month for 10k, 30mnths but I think for a $42,289.00 car, it's too much. I have a coworker who is paying $420/mnth for his $50,000 BMW... I asked the online salesman to email me a breakdown of the costs but he hasn't responded yet. As you all know, the ES350 2018 is selling like hot cakes. I'm located in Socal and most of the dealerships are almost out of the color schemes that I want, what should I be doing? Is his deal fair or is there room to negotiate?

bc6152

I too knew nothing about leasing so researched online. Here is a link that helped me immeasurably. There are a lot of pitfalls and things to know and avoid. Salesmen will tell you anything they think you want to hear. And sometimes NOT tell you things you SHOULD know. GOOD LUCK!

https://www.leaseguide.com/lease07/

lesz

A reason why dealers like to do lease deals is because there are many more factors in play in a lease deal than there are in a sale. Thus, the dealer can make what appears to be an attractive (to the buyer) offer on some of the obvious factors and, then, set up a potentially large profit for the dealership by including less attractive (to the buyer) terms on the more obscure factors for the deal.

Your approach of contacting 6 dealers via their internet sales departments is a sound strategy. But my suggestion would be that, instead of requesting lease offers, you break the process up into smaller parts to make it more difficult for the dealer to be able to "hide" a high profit part of the deal in with the rest of the deal.

I would suggest starting by requesting offers only for the price of buying the car. After I got such offers, I would present the best of the 6 offers to the other 5 dealers to see if they were willing to beat it. After repeating this process a few times, you should quickly be able to figure out where the floor of the market is and be able to determine which 1 or 2 dealers you would want to proceed with any further.

Only at this point, would I bring the lease into the process. That is when you should be able to look at the money factor, residual value, and mileage allowance. That is also when you would want to look at other costs, including acquisition fees, disposition fees, and other dealer charges.

By separating the negotiations for the price of the vehicle from the lease terms, it should be easier for you to be able to evaluate whether the deal is good or not.

Good luck.

gzbcl88

lesz

The residual is set by Lexus, and it should be the same regardless of what dealer you go with. That is why, with both of those offers, the residual is exactly 47% of MSRP.

With both offers, the .0001 money factor translates to .024%, which essentially means that you are paying no interest.

The difference between the two offers is related to something that they have not told you, and that is how much of a discount they are giving you off of the MSRP. Neither dealer seems to be telling you that, but that is the key number to start with, and that is why I suggested, instead of starting by asking for a lease offer, you begin the process by asking for a purchase price for the car. You could use the numbers that they have provided to figure out what the purchase price is, but it would be much more straight forward to start with getting purchase price offers from the dealers (and you will be less likely to need a bottle of aspirin next to you while you are evaluating the numbers). Like I said earlier, dealers love to make lease offers (without stating a sale price for the car) because doing so makes it much more difficult to evaluate the deal.

In order to evaluate the deals, other information would be needed, including any down payment and other fees associated with the deal.

If there is no down payment, with the first deal you would be getting a discount of somewhere between 19% and 20% from MSRP, which is pretty good for the current market. On the other hand, if there is a down payment due at lease signing, your discount from MSRP could be as low as less than 10%, which is not good at all in the current market.

With the second deal, if there is no down payment, the discount from MSRP is between 14% and 15%, which isn't especially good for the current market, and, if there is a down payment, the discount from MSRP could be as low as 4%, which is horrible for the current market.

All of this shows, I think, why you need to look at lots of things with a lease deal, and separating the negotiations for the purchase price from the lease terms can make it easier to do so.

gzbcl88

$0 down for the 1st dealer
and the 2nd dealer wants the first payment upfront as well as registration & acquisition fee.

i realized that the selling price was what I should have started negotiating with first. But according to the email, the selling price for both are almost identical. $32,222 vs $32,242

lesz

That can't be. The selling price from dealer #2 is around $1800 higher than that for dealer #1.

gzbcl88

lesz

If the 2 cars have MSRP that are very close (only a few hundred dollars apart), if the residual percentage is 47% for both deals, and if the money factor in both deals is .00001, the fact that the monthly payment in deal #2 is $50/month higher than the monthly payment in deal #1, that means that, for deal #2, you will be paying, over the course of the lease, about $1800 ($50/month x 36 months) more for deal #2 than for deal #1. Since the interest rate (for both deals) is, for practical purposes, 0%, that means that the selling price for the car in deal #2 has to be around $1800 higher than the selling price for the car in deal #1 (unless I'm misunderstanding something about the terms that you are describing).

nuraman00

Bump, @lesz? I just wanted clarification on the topic of incentives, and special ordering.

KYLexusMkr

lesz

Thanks for that information.

There are a couple of other things about which I'm curious. Do all of the production lines for the 2018 models get shut down at the same time and get converted to 2019 production, or are production capabilities for the 2018s phased out gradually over some short period of time? Also, how long does it take between the time when production of the 2018s stops and the production facilities are ready to start producing the 2019s?

Thanks.

KYLexusMkr

nuraman00

Can you send me the same answer?

Also, does that mean that someone can still place a custom order on July 25th? Or do they have to do it 1 - 2 weeks before that?

reposado2