luxury1

If you plan on leasing an $80,000 car for 36 months and have $20,000 available for a down payment is it:

A. Better to put all $20,000 down to keep the cost of the car lower?

OR

B. Put as little down as possible and keep the rest in a bank account earning interest while deducting equal portions of the $20,000 over the 36 month timeframe ($20,000 / 36 = 555.55 per month) to add to your monthly payment?

gvr4wd

Generally, the lowest down possible. You'd lose the down payment if the car gets stolen/lost/totalled.

rominl

iTrader: (4)

if you lease, you should put least amount of down if possible

kingofire

This is something not many think about when you lease! My Bro-in-law leased and put a lot down and when I asked him about this exact issue, he nearly ****** in his pants and tried to get his down payment back. Yeah, we know how that went!!!!

Listen to GVR4WD!

Luxofreak

Lease = Rent

Why would you put money down on something you don't own? This was talked about here before, lease has its tax advantages, even more so if you own a business. Lease is an option also if you pretend to keep the car for just one year. It's tricky though, do your homework. When you lease, the car is an asset for the dealership or the company that services the paper. It's a constant liability to you.

Purchase = Ownership

If you buy it, put money down so your payments are low. Unless you know some investment that can give you returns that are higher than your interest rate on the car deal, put as much money down as you can. If you have the cash, pay it in full. I have no car payments and it's a wonderful feeling.

luxury1

Leasing for me makes more sense because I turn over my cars quickly.

Cars I Bought:
In 1998 I bought my first car our of college (Accord) then got sick of it. 2000 BMW 3 Series then got sick of it. 2002 5 series then sick of it. 2004 E class sick of it but kept it the longest. 2006 the LS. I bought all of them but when you turn them over so quickly you don't make out. (By the way, all of these cars were paid for).

I was smart on my Porsche however and leased it. When the lease is up I am going to lease another car.

You are right, it is more money to lease but that is not my concern. I really like a fresh car every couple of years and don't mind payments.

Nospinzone

I'm not an expert (heck I'm not even an apprentice), but I've read a guy on another board who is very knowledgeable about leases. He always recommends that a person put as many multiple security deposits as possible (I think 9 is the limit, but can vary by state). He says never put any money down.

luxury1

Is that because you can get the security deposit back if something happens to the car and cannot if you put the money down?

rominl

iTrader: (4)

the multiple deposits is on lexus. up to 9 deposits, and it drives down the money factor with every deposit. that's why it helps

and yes you get back the deposit at the end of lease

topgun04

Each security deposit reduce the money factor by 0.0001 (about 0.24% in interest rate term). I did the 9 deposit thing for an 02 SC and 02LS and they both reduce the monthly lease payment by about 110 (including tax, in California, sales tax apply to the lease payment). Both cars ware capped at 63K or so. If you lease a more expensive LS (e.g LS460L with mojo options), the saving should be better. Lexus provide the gap insurance and if you have an accidence, you just hand them the insurance check (subject to the deductible Lexus demand you carry) and call it a day (and shop for your next car). Having a big down payment, you run the risk of getting only part of the payment back if the insurance check is not enough to cover the remaining value of the lease.

rominl

iTrader: (4)

yup, we put down 9 deposits for our sc430 as well and lowered the payments by around 100 bucks too. the 02 sc and ls were about the same price, with the ls460l (for example) being 20k plus more, i also think the saving will be a tad more

i didn't know about the gap insurance part though, thanks for the info!

luxury1

How much is a security deposit typically?

rominl

iTrader: (4)

are you talking about the deposits for the multiple deposit plan or in general? if it's the general one, i think it varies from institute to institute. when we leased our sc430 we didn't have to put down anything

if it's the multiple deposit plan, each deposit is one monthly payment

topgun04

"if it's the multiple deposit plan, each deposit is one monthly payment"

It is a little bit more complicated. I think they first calculated your monthly payment without the security deposit (so they use the cap cost that you negotiated, the residual etc. for your lease term to calculate the payment). Then after they have that monthly lease payment number, they round up the monthly payment to the next 50 dollars increment. And then multiple it to the number of security deposit you want to do..e.g. if your original lease payment is 535 and you want to do 8 deposit, the total money you need to put down is 550x8=4400. In my case for the 02 SC and LS, we put down about 7500+ but the saving on the monthly payment working out to about 14% annual return on the 7500 we put down. It works out better than most guaranteed return that one can get in stock market or otherwise. In both cases, I terminated the lease earlier and got all my money back. I am currently leasing a G35 and Infiniti allows 9 multiple deposits as well..