GINTER

I price out a GS350 AWD, with package B, which retails for around $52K. Say that Edmunds (and/or other sources) report that you can acquire this vehicle for about $48K (let's assume local dealers duke it out, and one does agree to meet that price). If I choose a lease instead of a loan (or cash), does the dealer calculate the lease from the discounted price of $48K or are there some unwritten bank laws which mandate that all leases must be based on MSRP?

(There's a follow-up question re: cap cost reduction, but I'd like to hear what's the census on the inquiry above.)

rominl

iTrader: (4)

the cap cost for lease is the negotiated price, in this case 48k as you mentioned. but the residual price is always calculated from the msrp

cap cost reduction is basically the "down payment" you put in the beginning to reduce the overall cap cost. in my case, i never put any down, never see the point of putting down payment. i just negotiate the cap cost to the price i want

hope this helps

Bushwack

You really need to understanding leasing from A - Z before you go in to the dealership. There are plenty of good sites on the net that can help you out. Don't assume you know it all as the dealership always knows a little bit more.

BurgBoxstr

In addition, make sure you understand how your state handles sales tax w/ regard to leases. In TX I think you pay sales tax on the entire capitalized cost ($48k in your example above which would be worked into your lease payment) of the vehicle. In PA you pay an extra 3% sales tax on the lease portion (capitalized cost less residual value). Each state is different so make sure you know how yours handles it going in so you're not surprised...

rominl

iTrader: (4)

i guess cali is great then, you only pay tax per payment, so effective you pay tax on cap cost - residual

Valley101

Romini, if by cali you mean California, you had better double check. I lived in CA for 30 years, and before I left there in 2004, you worked out price for the car and the tax was computed on the agreed upon total price and that amount is divided by the number of payments and the tax added to that amount each month which means you are paying tax on the total agreed upon price of the car, not just the amount of the lease. That was the reason I never leased a car while living there. I dealt with the owner of the Toyota facility and even he agreed it was not fair, but that is what the CA law required at that time. Do not take a salesman's word for it!

rominl

iTrader: (4)

i have to say i first started leasing in 2005. for sure i don't take words from sales, most of the time i do math better than they do. unless i did the calculation wrong, i recall doing the calculation on just the portion of the car i own and that number came out very close to the numbers from dealerships. if the cap cost is used instead, that's easily sales tax on 20k, which comes out to be around 1800 bucks or 50 bucks a month.

maybe some more people from ca who leases can comment more (will see if i can dig out my old math still)

jjscsix

I agree with this. I spent a long time understanding leases. Dealers do love them because so few people understand them. I won't try to act like I'm explaining it all, but I can offer a few nuggets of important advice.

If you want to put a downpayment - I won't argue with you. But before discussing a price with a downpayment, I would make them give you numbers with no money down (except one month deposit and first payment at most). That way you will become much more focused on what the car is really costing you.

Second, the money factor. Most dealers get their money factor from their "factory". Lexus sets money factors and residuals. The dealer can mark the money factor up. Find out by searching forums and asking questions what their "base rate" from the factory is. Learn to run the numbers with different money factors so you can see how much difference it makes in the payment, and negotiate for the best money factor you can.

The residual is almost always fixed and not negotiated, but again - know what it is by asking around and studying the internet.

Make sure you know how many miles you are negotiating, and what the penalty per mile is if you go over. It can add up - and Lexus is very high.

Don't get caught up in comparing monthly payments people on the internet post. They often leave out important stuff like how taxes are calculated and paid in each state, down payments, trade-in's etc. Not everybody on the internet lies or leaves out important details, but there are plenty that do (both).

rominl

iTrader: (4)

great tips by jjscsix, especially the one on getting zero down numbers and use that as a good reference

GINTER

Thanks everyone. I really appreciate your comments. I now understand that the lease can be constructed from a price after a discount. Then, whether I put money down or not, would be my choice.

I will study money factors and residuals before I actually take on the lease. I still have a few months to go on my current lease.

One thing that I'm almost certain about is the car itself. I was thinking about the M37, E350, and the 535i, but none offer what the GS350 does for the price. Yes, the look of the GS is a bit dated, but in the end I don't care about showing off, and the interior / features / ride are very important to me.

Thank you again everyone.

GINTER

In a quick follow-up, does anyone know the current money factor and the residual for the 2010 GS350 AWD? (Assuming a 36 month lease, with 12K per year.)

Bushwack

Here in Los Angeles, it's a 52% residual, MF is .0014 (for RWD, the residual is 54%). This is for 36 month/12M per year lease

mrtrance

Would you know the MF/Residual for 2010 RWD 36month/10K? Also what sort of discounts can I expect on this car this month or next month? Invoice or can I do better than invoice?

Bushwack

Residual increases a point. MF is the same. Configure your car at www.truecar.com You should be able to get the car at invoice minus 100 - 300 dollars.

FYI...don't fear calling the finance department at your local dealer for the residual and MF. Many will give you the numbers. Those dealerships that won't, well..no harm in making the call.

mrtrance

One of the dealers quoted me a 0.00120 money factor so far on a GS350 RWD.