Lexus Lease Multiple Security Deposits
10-26-18, 05:15 AM
#1
Driver School Candidate
Thread Starter
Lexus Lease Multiple Security Deposits
Lexus allows you to make multiple refundable security deposits on their leases (up to 9 I think) to lower the payment. Looking at leasing a new 2018 RX. Are multiple security deposits a good idea? John
10-26-18, 05:52 AM
#3
Racer
10-26-18, 06:30 AM
#4
You are renting a car for X amount of time and at the end of the time you have no equity. How is that a good move, unless you can deduct part of it. Are all of the 30% shoppers able to deduct the cost or are they just "buying" more than they can afford?
10-26-18, 09:32 AM
#5
Pole Position
I don't think most people who lease care about whether they have equity or not. All they care is they have a car for half the monthly payments versus a finance and they get a new car every 2-3 years.
On the multiple deposits make sure your state allows this.
On the multiple deposits make sure your state allows this.
10-26-18, 10:05 AM
#6
Lexus Test Driver
It's an awful model because the lessor absorbs the biggest chunk of depreciation - first three years or so. Lessees are typically 1) those that could not otherwise afford to purchase the car or 2) those that could easily afford it but choose to lease because they want something new every three years and can't be bothered properly maintaining it.
10-26-18, 12:02 PM
#7
Situation 1 - lease a car:
Your monthly payments offsets your revenue. You pay less income taxes.
Situation 2 - buy a car:
Your depreciation also offsets your revenue. You pay less income tax. However:
2a. If you sell your business for a profit, the amount you depreciated is subject to capital gains tax via Depreciation Recapture. Still better than paying income tax though.
2b. If you sell your business for enough of a loss, Depreciation Recapture does not apply to you.
Please feel free to correct me.
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10-26-18, 12:10 PM
#8
Lexus Test Driver
I will confirm with my smart CPA/tax accountant, but here's my understanding on why so many people lease when they own a business and are able to lease/buy a car underneath their legal entity.
Situation 1 - lease a car:
Your monthly payments offsets your revenue. You pay less income taxes.
Situation 2 - buy a car:
Your depreciation also offsets your revenue. You pay less income tax. However:
2a. If you sell your business for a profit, the amount you depreciated is subject to capital gains tax via Depreciation Recapture. Still better than paying income tax though.
2b. If you sell your business for enough of a loss, Depreciation Recapture does not apply to you.
Please feel free to correct me.
Situation 1 - lease a car:
Your monthly payments offsets your revenue. You pay less income taxes.
Situation 2 - buy a car:
Your depreciation also offsets your revenue. You pay less income tax. However:
2a. If you sell your business for a profit, the amount you depreciated is subject to capital gains tax via Depreciation Recapture. Still better than paying income tax though.
2b. If you sell your business for enough of a loss, Depreciation Recapture does not apply to you.
Please feel free to correct me.
10-26-18, 01:41 PM
#9
I totally agree with Mike and Eric. If you have a business your can afford to lease, because part of it is tax deductible, then there are those that just want a new car very often. That leaves those that lease because they want more than they can afford. Just hope those in the last category know what they are doing.
10-26-18, 04:37 PM
#10
Buying 50K car vs. leasing 50K car
36 lease payment of $500 = $18,000 in payments and you have zero equity after 3 years of payments. Market value of the car is $32K at this point an you have an option to buy this car for $32K
36 loan payments of $850 = $30,600 in 3 years of ownership you gained $12,600 of equity (which is result of extra $350 payment per month). How is it better? At this point as an owner you probably will have to change full set of tires.
For example in California you will have to add 8% or $4K in sales tax that you will have to add to the loan amount and finance for the term of the loan.
10-26-18, 05:04 PM
#11
Lexus Test Driver
Simple calculations let me know what you think.
Buying 50K car vs. leasing 50K car
36 lease payment of $500 = $18,000 in payments and you have zero equity after 3 years of payments. Market value of the car is $32K at this point an you have an option to buy this car for $32K
36 loan payments of $850 = $30,600 in 3 years of ownership you gained $12,600 of equity (which is result of extra $350 payment per month). How is it better? At this point as an owner you probably will have to change full set of tires.
For example in California you will have to add 8% or $4K in sales tax that you will have to add to the loan amount and finance for the term of the loan.
Buying 50K car vs. leasing 50K car
36 lease payment of $500 = $18,000 in payments and you have zero equity after 3 years of payments. Market value of the car is $32K at this point an you have an option to buy this car for $32K
36 loan payments of $850 = $30,600 in 3 years of ownership you gained $12,600 of equity (which is result of extra $350 payment per month). How is it better? At this point as an owner you probably will have to change full set of tires.
For example in California you will have to add 8% or $4K in sales tax that you will have to add to the loan amount and finance for the term of the loan.
10-26-18, 05:38 PM
#12
oh god.. not another lease vs buy with people who don't understand finance...
anyhow.. @jpfromoh .. MSD could be a great idea if your money factor is high and math works out. I put MSD on my recent lease (~$2500). Saved about $1500 in interest in the 3-year lease period.
Do the math.. Putting MSD down on a low-interest/MF period is useless and might not even be possible (under 1% MF).
anyhow.. @jpfromoh .. MSD could be a great idea if your money factor is high and math works out. I put MSD on my recent lease (~$2500). Saved about $1500 in interest in the 3-year lease period.
Do the math.. Putting MSD down on a low-interest/MF period is useless and might not even be possible (under 1% MF).
10-26-18, 05:47 PM
#13
correct. BUT!
* only if the tires are worn.. on cars like the RX, they won't wear out in the 36k lease period.
* Sales tax on the depreciation only. On a purchase the buyer pays full tax purchase price (most states, so big loss if you sell early)
There are killer deals to be found on lease over purchase.
For people who can't gasp the concept of leasing, I tell them "it's the option to pay ~$1k extra on a car to see if you like."
My GS was a great example where leasing worked.
$52k MSRP
$41k purchase price.
At the end of lease...
Buyout price $30k
Trade-in value $24k. So hypothetically, my discount was about $17k from the purchase price.
3 years, no tires, no nothing.
I was so glad, I leased this car instead of buying.
I would've lost another $6k-$8k after 3 years, if I purchased and sold this car. (it could go the other way, but in that case, you just buy out the lease)
* only if the tires are worn.. on cars like the RX, they won't wear out in the 36k lease period.
* Sales tax on the depreciation only. On a purchase the buyer pays full tax purchase price (most states, so big loss if you sell early)
There are killer deals to be found on lease over purchase.
For people who can't gasp the concept of leasing, I tell them "it's the option to pay ~$1k extra on a car to see if you like."
My GS was a great example where leasing worked.
$52k MSRP
$41k purchase price.
At the end of lease...
Buyout price $30k
Trade-in value $24k. So hypothetically, my discount was about $17k from the purchase price.
3 years, no tires, no nothing.
I was so glad, I leased this car instead of buying.
I would've lost another $6k-$8k after 3 years, if I purchased and sold this car. (it could go the other way, but in that case, you just buy out the lease)
10-26-18, 05:56 PM
#14
Lexus Test Driver
correct. BUT!
* only if the tires are worn.. on cars like the RX, they won't wear out in the 36k lease period.
* Sales tax on the depreciation only. On a purchase the buyer pays full tax purchase price (most states, so big loss if you sell early)
There are killer deals to be found on lease over purchase.
For people who can't gasp the concept of leasing, I tell them "it's the option to pay ~$1k extra on a car to see if you like."
My GS was a great example where leasing worked.
$52k MSRP
$41k purchase price.
At the end of lease...
Buyout price $30k
Trade-in value $24k. So hypothetically, my discount was about $17k from the purchase price.
3 years, no tires, no nothing.
I was so glad, I leased this car instead of buying.
I would've lost another $6k-$8k after 3 years, if I purchased and sold this car. (it could go the other way, but in that case, you just buy out the lease)
* only if the tires are worn.. on cars like the RX, they won't wear out in the 36k lease period.
* Sales tax on the depreciation only. On a purchase the buyer pays full tax purchase price (most states, so big loss if you sell early)
There are killer deals to be found on lease over purchase.
For people who can't gasp the concept of leasing, I tell them "it's the option to pay ~$1k extra on a car to see if you like."
My GS was a great example where leasing worked.
$52k MSRP
$41k purchase price.
At the end of lease...
Buyout price $30k
Trade-in value $24k. So hypothetically, my discount was about $17k from the purchase price.
3 years, no tires, no nothing.
I was so glad, I leased this car instead of buying.
I would've lost another $6k-$8k after 3 years, if I purchased and sold this car. (it could go the other way, but in that case, you just buy out the lease)
10-26-18, 06:16 PM
#15
Youre dreaming if you think RX tires wont be worn at 30K+ miles. On purchase, you pay sales tax on full value but will later get credit on the trade value if you go that route. Hypothetical - thats the catch. Then the miles limits. No thanks. I want a car I can drive rather than watch it sit in the driveway.
driving the extra miles are okay on a lease, too. You just pay for it at the end of the day. It’s similar to a purchase, you car will be worth less with higher miles.
I am not saying lease is always better than buying. It’s not. It’s better for maybe 10% of the people out there. The best $$ saving is to keep a reliable car for 7+ years. It doesn’t matter whether you lease or purchase at the start. You can always buy out your lease (I don’t think people understand that), no one in my family or circle of friends understand.
