coolsaber

Depends on the structure of the deal. Assuming we are talking about an NX here (vehicle price changes the equation), if the selling price and MF are both high, a true DP is maybe worth it. HOWEVER, if your mF is low, you are basically taking a risk with a true down payment as per the whole stolen/totaled scenario (GAP does not cover it last I checked in the case of True DP).

Now for the sake of being honest, you have to run the deal through each structure with and without your DP and see how it totals out. I have seen deals where putting a $1000 into a lease, resulted in a $100 decrease in total cost, Saved money for sure, but was the return really worth it with the risk of loosing it?

ross7777

Good info. I think some people just don’t want a large monthly payment.

So what happens when you total a leased car?

gulshan

Same as what happens when you total your own car. You deal with your insurance who will assess and pay your some fair market value so you can buy another car. (they dont care you leased it, own it..). That value may not be enough for you to buy a new one. This is where GAP insurance kicks in if you have it and pays for the difference. While this drama is going on your lease clock keeps ticking and you need to make your payments like nothing happened. When your lease ends you have to return it. imho leasing makes sense only in two cases. You can get a tax break if you have your own biz and lease as a business use car. Second case you cannot afford to buy new..(but most dont admit this and say they would prefer to just pay the depreciation on a depreciating asset and invest the rest of the money in some unicorn hedge fund with a some high rate of return.. :-))

ross7777

Hopefully the insurance company along with the gap coverage would pay for the remainder of the lease value.

coolsaber

GAP is required(included by default also) by alot of companies for this exact purpose. However, due note MSDs would be covered while a True DP would not (since the DP would be a cap cost reduction rather then a MF reduction)

localhostg

Lexus NX with comfort package MSRP:$41208
Got $38114 OTD with $1750 Lexus rebate at Texas. Not sure how this deal is.

claarn

Keep in mind that there are a few reasons as to why you need to lease…
1. Increase cash flow
2. Get out from under your up-side-down trade
3. Tax / business reasons
4. Like to flip out of cars into something new every few years

The biggest reason is cash flow. So when you put a downpayment (small or large) you are already defeating the purpose of a lease.
Remember, this is a lease, and you are NOT building any kind of equity therefore you need to mitigate your risk on depreciation because when you make a downpayment, yes you will
1. Lower your monthly payment
2. Save on interest

By making a down payment, you are only helping the finance company (and insurance co too) to mitigate their risk on you driving THEIR vehicle. Total the car in the first month of driving it off the lot and say goodbye to the downpayment. GAP does not care about what you already paid against the note (most lease contracts already include GAP, therefore why they push for a substantial DP).

Let’s look at two leasing scenarios with the same constants ( 36mth/12k , 60% residual , .00100 , 7% tax , 0 MSD’s & 1150 in fees ) and the typical ~10% downpayment.

SCENARIO 01 - No DP
MSRP: 43933
Salesprice (cap cost): 40000
DP: 0
Monthly payment: 500

SCENARIO 02 - $4000 DP
MSRP: 43933
Salesprice: 40000
DP: -4000
Monthly payment: 376

So what are you really saving (outside of the lower monthly payment) ?
500 (-) 376 (=) 124
124 (x) 36 (=) 4464
4464 (-) 4000 (=) 464 in TOTAL SAVINGS by giving the finance company a $4000 downpayment

Why not keep that $4000 in the bank and...
1. skim the 124$ out of it every month to technically ‘reduce your monthly payment’ on your own
2. reduce your risk of the loss of DP
3. have cash readily available for a ‘rainy day’.
4. invest it to earn more than the 464$ ‘loss’ you took by making a good decision on not giving your 4k to the finance co

If we flip the tables to purchase/financing a vehicle, you don’t always need to make a downpayment. While I don’t recommend making at least some kind of downpayment (at least 10%) I know it may not be feasible for everyone. The best way to evaluate if & how much of a downpayment needs to be made, look at two things..
1. Run your ideal term / interest rate / sales price / etc and pull the amortization schedule while noting the payoff on month 36, then;
2. Compute the 3yr lease RV
Compare the two and see if the 36mth RV is 'substantially' lower than your amortized schedule payoff. By looking at it this way, you are making sure that you are not going to be up-side-down in the vehicle in that given time.

When it comes down to it, absolutely NO DOWNPAYMENT on a lease & a 10%+ DP on a purchase.

Just my .02

claarn

@localhostg I estimate your deal is VERY GOOD (depending on interest rate if financing) ! If this is their first figure that they threw you, I would definitely go back for a little more of that action or maybe get them to throw in some free accessories...
MSRP: 41208
Discount (15%): -618
Salesprice: 35027
Fees: 800
7% tax: 2451
OTD: 38278 (close enough to your otd)

wallaceb

Just got this offer from a dealer. Ouch, 36 and 15 for $742 with zero down. Serouisly?

claarn

About an 8% discount. Not the best. Should be able to shave off another $70 per month (5%) hopefully

ross7777

Did they give you a residual value?

gulshan

That is typical when quote is asked via email/phone. When you ready to actually do the lease and haggle at the dealership you get the real deal/numbers. Print the quote and edit/overwrite with numbers that you think are fair based on research on existing MF/residuals/rebates (use edmunds forums to get those numbers). Then just go to any dealership and show them your offer. If they don't match or get you a good deal go to next dealer. You need to get a fair/good deal and the dealership needs to make a decent profit to stay in biz. You have nothing to lose..People who dont get good deals are typically scared to haggle at the dealership for fear of being ridiculed and pressured on buying/leasing at whatever price quoted by dealer. Good luck

claarn

And MF too... that’s probably the culprit

coolsaber

While that might be true, imho/e if they cant negotiate via email, dont think walking in will do any better. Most dealerships just seize the opportunity to gather user data for their mail servers.

As the saying goes, either you can or you cant. If you cant, changing venues wont magically make you change your ability.

wallaceb

Supposed to be .00030 and a residual of 52 for 36/15.

My calculator gets a much lower number. And, $699 in dealer fees is outrageous. Needless to say, I'm going to keep shopping.