barry_s

Lexus is currently promoting a 3 year lease deal that appears attractive to me. An RX350 with a MSRP of $43,933 (premium plus pkg., no nav) is being offered for $429/month + an initial outlay of $3,529 (which includes the 1st months payment). The purchase option after 36 months is $25,920.

Assuming a conservative 5% interest on my money in the bank and exercising the purchase option, my "quick & dirty calculation" is that this is equivalent to buying this car for about $39,400 (or $4,500 below MSRP). Obviously income taxes affect the final financial calculation but this sounds like a pretty good deal especially if further dealer discounts are available.

rxdriver

Sounds like you're doing a lot of math to figure out how much the car is really costing you.
You might find this page helpful... it explains how lease payments are calculated.

http://www.edmunds.com/advice/leasin...5/article.html

barry_s

Thanks for posting the helpful link. Doing the calculations for the lease on that website leads to the following conclusions:

Lexus is using a low 0.5% (.0002) for the money factor based on the MSRP of the vehicle. When I use my money factor of 5% (.0021), the initial payment, monthly payments and residual value are equivalent to an initial purchase for $39,700.

mwike

I did the same calc. Looks like a good deal to me.

truelove00

I got mine with navigation .....
here's my lease deal.....
I got it in Cerritos Lexus in LA

downpay is $2500
Monthly pay is $523 (after tax)
it's a 36 months deal.... with 15000 Mi/yr

The total that I would pay is $21328

jfarber

To me I see :

$3,529 + (35 months X $429) $15,015 + $25,920 = $44,464 plus any interest on the loan.

That seems like a horrible deal to me.

mwike

Discount that payment stream & see what you get. 26k three years from now isn't worth 26k today.

rxdriver

That's what I thought at first, too. But those payments include the interest as well as sales tax. Based on that Edmunds link above describing what's in a lease payment, this actually is a good deal.

zgar

Here's the deal I signed on 5/19 for an RX350 AWD (PP +Nav)

MSRP : $46,583
Selling Price : $41,262
Lease Term : 36mos, 12k/yr
Residual : 59%, $27,484
Money Factor : .00155
Due at lease signing : $1450 (1st month, etc)
Monthly Payment : $490 / 530 (with 8.25 CA tax)

I availed of the Multiple Security Deposit (MSD) Program to lower the Money Factor :
9 Mos into MSD : $4500
New Money Factor : .00065 (deduct .0001 / month)
New Monthly Payment : $427.41 / $462.67 (with 8.25 CA tax)

Total due at signing : 1450 + 4500 = 5950

By putting 4500, which is fully refundable at end of lease, I was able to save a total of $2400 in lease payment.

Trexus

That's a good deal. What dealer did you get your RX 350 from?

barry_s

I am heading to a Lexus dealer today (in MD) to get my first lease quote on the same car. Do I understand correctly that your dealer discounted the $46,583 MSRP to $41,262 before calculating the lease at those favorable money factors?

zgar

Barry_s - Yes, I negotiated the selling price and the original money factor. The deduction is fixed at .0001 / month you put into MSD.

Trexus - I got it from the Pleasanton dealer, via their Internet sales guy.

======================================================================

jfarber

Unless you like having a new car every few years a lease is always a win for the dealer. Not to insult anybody, but you are fooling yourself if you think that a lease will save you money. A lease is just a never ending car payment.

jfarber

I haven't ever had a lease before, so I don't know what you mean when you say that the payment includes interest? You are paying interest on something you don't own? Anyway you look at it you are paying over $46,000 for the RX if you by it at the end of the lease. If you don't buy it you rented the car for 3 years and over $15,000.

mwike

Not insulting me. Literally showing your misunderstading of the time value of money, maybe.

I'd much rather pay the 44,464 you originally quoted over the payment stream quoted than paying 43k up front for a purchase. This is assuming you could buy this car that lists for 43,933 for 43,000. And remember when you purchase you have to pay the 500 doc fees that you don't have on the lease.

In most cases the lease to purchase is not the best method of buying. However, when certain lease specials are on, the lease to purchase can be advantageous. Again, assuming you put some value to the time value of money.