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Help Confused College Student With Lease

Discussion in 'Dealers & Pricing' started by DiscoTeen, Mar 31, 2010.

  1. DiscoTeen

    DiscoTeen New Member

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    Hi. I test drove a Prius today and fell in love with the car. I currently drive a luxury gas guzzler and can neither afford the repairs or gas. My parents, out of the kindness of their hearts, have decided to lease me a new vehicle and I'll sell my guzzler locally. I went to the Toyota dealership in Bellevue, WA and test-drove the Prius 2010 II package. The II package is definitely more than enough car for me.

    The dealer is advertising the standard national lease rate:
    -$1995 down, $199/mo

    Break Down of $1995:
    $1146 down payment, $199 first mo payment, $650 acquisition fee

    Lease-end purchase option $16128 and adjusted capitalized cost $22255 ($145 off MSRP). Money Factor .00075 (from my research, Prius II supposed to retain 75% of value if that's the money factor!?!?! -- wow)

    Anyways, I realize this is an extremely good deal to begin with. After reading on this forum (and doing my own research -- like any educated buyer SHOULD), I'm wondering if I can do better (or if anyone has -- and can tell me what they paid). I doubt the money factor can be negotiated but I'm wondering if dealerships have the option and ARE negotiating on capitalized cost (amount off MSRP), acquisition fee, and/or residual. Can I negotiate on the money factor? Is there anything else I'm missing I can negotiate on? I need your help guys!

    I would love a Prius. I'm tired of my low gas mileage. Has anyone heard if these deals are running next month? The sales guy said they are STOPPING on the 5th no question but I question this... Someone PLEASE give me some guidance. Am I better off negotiating down on a higher-end model and trying to get the same deal on the package II if no one will negotiate the MSRP off the national lease?? Any advice appreciated.

    EDIT: Anyone who has leased off the national sales price have a name, dealership, etc I should contact? What about a salesman or sales manager? I do not mind purchasing anywhere in the state of Washington or Oregon.

    Apologies -- I originally posted this in the wrong section of the forum.
     
  2. DianneWhitmire

    DianneWhitmire High PRIUStess

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    First off, the money factor has 0 to do with the car's residual value after 3 years. The residual is what determines value after 3 years. The money factor is how one calculates, as best possible, what the interest rate is on their depreciation $ and residual value. A .00075 lease money factor is equal to 1.8 apr (or damn close)...

    Each car has a set residual value based on package and options package. The residuals average anywhere from 61% to 72% but it also depends on model, MSRP, selling price... so many factors. We have invoices that have a set residual amount on them for each car and we use that #. If you purchase a II at MSRP then the residual is 69% of that amount but a V at MSRP with adv. tech is a 61%. The selling pricing being lowered means a stronger residual by ratio against pricing... it's just math.

    Lastly, that is not a national lease. It's regional. Ours are similar but those in Northern CA are higher rates.

    My strong opinion is that if you qualify for the .00075 lease or even a rate that's close, why not go for it? You'll spend less on a car payment than you do in gas. And, who can sneeze at 1.8 interest rate to get the car down to a low amount to refi at lease end to keep it if you like, or swap for a plug in at that time... I wish you were closer. I'd be able to walk you thru this. Just find someone up there you trust & like to help. I want you to know I just leased a II in gray for my own son -- we're getting rid of the Solstice I bought him for his 16th birthday (don't ask!!!) and he's finally grown up and wants more economy and more room. He's a US Marine Lane Corporal stationed at Pendleton right now and although he's still close to home, that back and forth 40 miles each way was eating the gas for the kid. Solstices get rotten mileage in automatics. Our II lease payment here is $219+ tax with about 650 cash drive offs ... so I put my own son into one. That's my vote!!
    Dianne
     
  3. lsun22

    lsun22 Junior Member

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    most likely you can't neg a advertised special, but it doesn't hurt to try.

    downpayment
    monthly payment
    residual value
    mileage allowance

    try negotiating any of these points, and
    *don't be shy or feel bad about it*.

    also, at the end of your lease. the residual value is *still* negotiable. so don't think that you're necessarily set on that price.
     
  4. DianneWhitmire

    DianneWhitmire High PRIUStess

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    NOTE: TOYOTA does NOT negotiate residual at end of lease.
    That's bad information.
    Other banks might, but Toyota will tell you to pound sand and drop the car off. :cool:

    Other LEASING banks also have: higher lease rates, higher inception fees and almost every other bank has a disposition or drop-off fee.
     
  5. pri2b

    pri2b Junior Member

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    I don't understand the acquisition fee. i have a lease on an '09 in California and there's no acquisition fee in my down payment.

    You should negotiate the monthly payment and bring that lower, keeping your money down at purchase, the same.
     
  6. DianneWhitmire

    DianneWhitmire High PRIUStess

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    It's just their way of asking for the bank fee to be paid up front, ie a cap reduction that's untaxed, to get to a 199 + tax payment instead of a 219 payment.
     
  7. bisco

    bisco cookie crumbler

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    i vote for dianne! that is one of the most intelligent explanations of leasing i have ever heard. unless she's working for the dealership you're talking to, i think she's giving you the straight poop. however, that doesn't mean you shouldn't get another quote or two from other dealers, just to keep them honest!;)
     
  8. DianneWhitmire

    DianneWhitmire High PRIUStess

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    I'm in Southern CA ... and they are in WA so we're far from one another...
     
  9. macmaster05

    macmaster05 Senor Member

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    I just graduated from college and I would not lease. Leasing is almost never a good option unless you're filthy rich. I have friends who lease cars and they never know what to do when their lease is up - they end up wasting/losing more money. You will be at a loss of $$ by the end of your lifetime if you keep re-leasing.

    Buy a car and use it until the day it dies.

    I think you can make better deals on purchased cars anyway.
     
  10. Patrick Wong

    Patrick Wong DIY Enthusiast

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    ...or you must (for whatever reason) drive a more expensive car than you can afford to purchase outright.

    Sometimes luxury brands will offer a discounted lease, under the concept that the brand will not be devalued as much by a discounted lease vs. a big rebate on the purchase price. In that case it may be more financially advantageous to lease, you have to run the #s to see.
     
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  11. DianneWhitmire

    DianneWhitmire High PRIUStess

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    disagreement

    I disagree .. it depends on terms and rates, and also residuals.
    Filthy rich folks write checks for cars.
    Folks who wish to become filty rich and don't have a talent for show biz or music or thievery will do the math and do what makes the best sense. Do the math and then do what you wish.

    Buying an older "paid for" car that sucks the gas can cost you MORE... in fuel costs and repairs and tires etc ... than leasing a Prius for 3 years and then buying it outright. You just have to determine who you wanna pay the extra cash to - the gas station and mechanics or to TFS? You lay out a bunch of cash a month for gas or repairs and that goes towards NOTHING other than Arco or Chevron and a mechanic and parts etc. And, you don't have any idea what might go wrong next. It's infinity.

    At least, in the student's eyes, there's a finite dollar figure (219 a month) and he's working towards an end that's also fixed (residual 16416) and then he can do a loan to keep the car. I'd rather pay interest on a 16K loan in 3 years than a 23K loan right now. Especially when my first 3 years was at 1.8 so you cannot just decide that NO lease is better. That's irresponsible advice.

     
  12. macmaster05

    macmaster05 Senor Member

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    Re: disagreement

    LOL. Irresponsible advice? Read my post again. I thought I said "ALMOST a never good idea." Take it easy alright?

    It's no wonder you're fleet director. You're good.
     
  13. DianneWhitmire

    DianneWhitmire High PRIUStess

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    Re: disagreement

    There are too many people I come into contact with who fear leasing ... and for the wrong reasons. Folks are often under the impression that it's for the wealthy or those who flip cars every 3 years ... and that's frustrating for certain circumstances when a lease is more sensible than a buy. He was looking for good advice and guidance.
    Had lease rates been "normal" and not promotional, ie. .00255 that they were vs the .00075 that they are right now, I'd have advised a buy, because in that case, the rates were too high to support a lease being smart UNLESS a car change in 3 years was expected or needed. Or, a cheaper car payment for the next 3 years was sought after.

    People shouldn't fear leasing as long as they understand it.. and are working with someone who's patient and will explain WHY a lease, in their case, is a good idea. I have sat in front of folks and seen them do stupid things for years. I try and stop the madness but at times, folks will walk to the beat of their own drummer and do their own thing, right or wrong... you can lead a horse to water...
    Anyway, I apologize. I was thinking about my own son and if he was seeking advice ... what would I want him to hear if I wasn't around. I'd want him to have clarity and hear HOW to figure out if a deal is a good one. Learn the math and equation so he will always be able to determine a good idea from a bad one. I won't be around forever...

    Dianne


     
  14. Ophbalance

    Ophbalance Member

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    I'm just curious, but... is there every an advantage to leasing if you put on double to triple the average miles on a car? Personally, I put 30k a year on my car since moving to NC. At the rate I"m going, my 05 will have 200k miles on it around the 5th year of my ownership.
     
  15. DianneWhitmire

    DianneWhitmire High PRIUStess

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    The allure to leasing is the low payment. And, the low rates too. You can go up to 20K miles a year on that subvented rate (to 60K total, 3 years total) at a cost of approx $60 more per month due to the residual dropping considerably .. you bring back a 36K mile car in 3 years, it's got great value. A 60K mile car in 3 years is borderline "certifiable" as far as a used car goes and there's way more road time for service and damage to be done... decreasing its value a bunch after 3 years.
    But, you're still getting the great rate! If you can keep it to 20K a year, it's a decent lease nonetheless.

    Looks like you drive a lot like I do! My 2007 has 111K on it... and it's going strong! never had a bit o' trouble other than HIDs needing replacement at about 90K miles. That was no cost though.

     
  16. Patrick Wong

    Patrick Wong DIY Enthusiast

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    I found an auto lease vs. buy calculator on the web, and tried to enter the OP's transaction as I understood it. I am assuming a three-year lease term, and an alternative of buying the car under a three-year loan at an interest rate of 6.4%.
    Lease vs Buy Calculator - Compare Car Leasing and Buying

    See the attachment for details. Here's the summary: If you wanted to buy the car, you'd have 36 monthly payments of $700, compared to lease payments of $199. Of course, after 36 months you will own the car, while with the lease alternative you have to either buy the car for $16K (probably financing that with a used-car loan) or sign another lease.
     

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  17. richard schumacher

    richard schumacher shortbus driver

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    Do the 'rents a favor. Ask them to pay for a two or three year old Civic instead.
     
  18. DianneWhitmire

    DianneWhitmire High PRIUStess

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    :boxing:


     
  19. SageBrush

    SageBrush Senior Member

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    If a private person is buying a car based on ability to make monthly payments, ANY new car, leased or not, is a bad financial decision. Follow Richard's advice. In *general*, leases are abused by car dealers to get people into cars that are not affordable for those people.

    Another problem with leases is that it is harder to keep focus on the actual car cost. How many people considering a lease realize that they should be negotiating down the car's cost, and not pay msrp, or dealer add-ons ?

    If the above is not enough, always remember the risk of getting fees smacked on at the end of lease for damage or excess miles or whatever else is in the small print of the lease contract.

    A lightly used car of two or three years old has already had the initial steep depreciation hit paid for by somebody else (maybe a lessee ;-) , has a long trouble free life likely ahead of it, saves ~ 30% in cost, and allows flexibility to change cars in the future without paying through the nose. A 3 y/o Prius could be a fantastic purchase. It is what I would do, if my car didn't still have 15 years of life in it :)
     
  20. 2k1Toaster

    2k1Toaster Brand New Prius Batteries

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    6.4% seems really, really, high.

    I just got a used car loan on a 2006 for 36 months @ 1.89%