MikeMaj82

There's an ad in the paper today, advertising a lease on a 2005 RX-8. Maybe it's because I don't know everything about leasing, but these are the numbers they list: ~$3500 down, $129/month x 24months @ 2.69%apr = $3096, and a final balloon payment of ~$16000. Now, 3500+3096+16000 = $22596. I know I didn't factor in the apr, but that has nothing to do with the cost of the car, so why can't I just buy a new RX-8 at that price?

Mike

MP3Guy

That's a good question, perhaps one of the dealers who lurk here can answer that.

But the deal is on Mazda's website as some sort of promotion- summer approaches and it's time to start getting the lead out!!!

conedodger

Leases usually don't have balloon payments. This sounds like something else. Are U sure that it doesn't say something like residual value of $16k? That, coincidentally enough is approximately what my residual is on my RX-8 after a $274 30 month lease-allowing 15K/year w/ $1500 out of pocket. I don’t know the answer to your specific question other than to say there might be more to the deal then what is printed in the paper.

Sigma

Depending on what model they're advertising that rate for you can buy one at that price. Chances are they're advertising the cheapest one on the lot to make it seem like a great deal to get people on the lots. And the cheapest one -- an ATX Base model -- you can pick up for right around that same price.

Now, if that's a GT model they're advertising that's a great, and slightly unbelievable, deal.

Even though the numbers do come pretty close to panning out for a base ATX model, I'm actually somewhat inclined to just believe it's a misprint of some sort. You can't even lease a 3i for $129/month. Hell you can't even lease a Kia for that.

MikeMaj82

it's for a base 6-speed, MSRP is around $27000, here's the ad, it is a balloon payment.

RotaryManiac

I have the same option. The reason why you can buy the car for about 16k after the lease ends, with your total amount of around 22k (including the lease and final purchase option) is because of depreciation. When you are done with the lease, the car has lost value. The car may cost 27k brand new, and you may pay 6000-7000 dollars on your whole lease so 27000 - 7000 is 20000. The reason you have the option to purchase the car for 16000 is because of depreciation. 20000 - 16000 = 4000. The car lost 4000 in value in 2 years = 2000 a year, which is not bad. This is why you cannot buy the car brand new for 22k, but can buy it after your lease for a total of 22k (including lease).

Sigma

That doesn't make any sense.

If that's the way it worked everyone would lease. You could lease the car, pay your payments for 3 years, then refinance the balance at the end and end up paying several thousand dollars less than if you had just financed it from the start. You'd be dodging the depreciation expense of that car. That'd be great, but that doesn't happen.

Your final payment on a lease has nothing to do with what the car is worth at the end but rather what you still owe on it. The final payment on this particular deal is what you'd owe after buying it for $22,500 and paying down $7,500 on it over the course of two years. It has nothing to do with what it's worth at the end. The MSRP might be $27K but that's not what you're paying. You're paying roughly invoice minus rebates -- the same deal you could get if you bought it outright.

Fact is that this lease special offers no real savings over buying it outright. You can buy that exact same car at that dealer for $22,500 if you wanted. The monthly payment looks like a great deal because it's incredibly low -- but if you factor in that big downpayment over the course of 2 years it's not as great. It's really not good if you end up keeping your car because your remaining balance is so high after 2 years because you weren't paying much those first 2 years. To buy that car in the same 5 years, you'd have to pay ~$510/month the remaining three years to buy it.

The benefit is, of course, that you can just get rid of it in 2 years. Which isn't shabby at all.

Sigma

Then that's right. THere's nothing unusual about it.

MSRP is $27,200, you can buy one for $25,000 if you wanted. There's $2500 in rebates on it, bringing the total to $22,500 if you wanted to outright buy it. The same price as the lease.

If you pressed them enough you could talk them down to $24,800 on the car, then subtract the $2500 in rebates, and outright buy the car for $22,300.

The lease would be slightly cheaper because it should have TTL already figured into it.

MazdaRich

Okay well I'm a little confused about this deal. It appears that you can only get the $2 grand in rebates if you choose the lease. Does that make the deal more worthwhile since it brings the price of the car down? Even if you plan to buy the car at the end, you can save money by getting those rebates up front.

I'm just speculating on the deal--I'm not sure how interest rates figure in. If someone who understands the math can figure it out, let us know.

nijelSC

I'm negotiating a deal like this one now. Here is the thread I started.
https://www.rx8club.com/purchasing-financing-insurance-56/about-mazda-lease-deal-63277/

How can you buy the car for the lease price. There is no $2000 in rebates for purchasing.

conedodger

I still don't know if this is an actual lease. The balloon payment language tells me that U own the car and will have to pay the $16K-most likely through finanancing-at the end of the term. I looked at the ad the MikeMaj82 posted and I didn't see lease mentioned anywhere, although the whole page wasn't shown.

The RX-8

Can you please post a picture of the entire page, and what newspaper/page is this ad located?

Sigma

Are you certain? It's very odd to offer such significant savings with a lease and not a purchase. And just because it's not listed on MazdaUSA or a dealer won't mention it to you doesn't mean the rebate doesn't exist. It could be what is called "Dealer Cash" which is a rebate directly to the dealers that they often won't tell consumers about so they can pocket the money. It's pretty common this time in the model year when it's a little too early to announce big rebates.

If you do in fact get the rebate with the lease and not the purchase then the lease is a good deal. Provided you can make the down payment anyhow.

scottmhr1

Maybe I just over looked it but I didn't see the word lease in that ad. Sounds like a scheme they are using like a house loan that is cheap at first and then balloons up. Plus again it is the one VIN # car. be wary of this dealer.

RotaryManiac

Exactly, there is no 2000 rebate when purchasing, so why doesnt what i say make sense?

Sigma

Because you said the reason that the balloon payment was low was because of depreciation over the 2 years of ownership. It has nothing at all to do with depreciation. It's what you bought the car for minus what you paid over the course of 2 years.

MikeMaj82

ok here's most of the page. It seems to be an Assured Value Purchase Plan (AVP), whatever that is. The two asterisks in the ad indicate the following: For AVP must finance through MAC to qualified buyers; at final payment of AVP Plan, a consumer has the option to return the vehicle OR refinance final payment OR pay final payment. If returning vehicle, consumer is responsible for maintenance and excess wear and tear. 12K mi/yr all'd @ 15 cents each add'l mile.

So it seems like it might be a type of lease, but not really, kind of like the "Smartbuy" from GM.

TeamRX8

iTrader: (25)

note that was a $2000 factory rebate plus a $500 college grad rebate, if you're not a recent college graduate you won't get that $500

note also that the balloon payment statement means this is a lease/purchase, not a regular lease where you walk away at the end. You HAVE to purchase the car for the balloon, you owe that at the end of 24 months.

MikeMaj82

yea, but it says you can also refinance the balloon payment for a certain number of years to pay it off if you wish. This doesn't seem like a bad deal.

Mike

Sigma

Yeah, it's not too bad. If you're in the market for a base RX-8 and want to put that kind of money down anyhow. You've got to put $3500 plus (depending where you live) about $2000 in TTL down on the car though in order to buy it. That's a rather hefty downpayment.

As I said in a previous post, after the first 2 years of $129/month, if you wanted to refinance to remaining over 3 years, it'd be approximately $510/month after that.

Compare to approximately $400/month for 5 years if you buy it outright (with the same total $5500 down). That's assuming that you cannot get the $2,000 rebate if you finance it, although I still find it difficult to believe they are offering a $2,000 rebate for a lease and not a finance though. If you can get the same rebate it's about $360/month for 60 months.

So, the choices are:

$5500 Down and $129/m for 24 months and $510 for 36 months.

OR

$5500 Down and $400/m for 60 months ($360/m if you can get same rebate)

OR

$0 Down and $500/m for 60 months ($465/m if you can get same rebate)


They all have their virtues. And of course vary with interest. I'm just assuming the standard 4.9%

MikeMaj82

Even if I were to buy this car outright I wouldn't think about putting less than $8000 down to begin with. I've seen many people make the mistake of putting very little down, then their payments are so high they have to get rid of the car.

Mike

MazdaRich

One could argue that putting that much cash into a depreciating asset is also a very big mistake. I would tend to put as little as possible into a car--assuming your income is high enough to make the payment, especially when money is as cheap as it is today.

Mazdax605

Never put that much down on a lease.This is a lease,by the way,and it is what the industry calls a ballon type lease.The consumer has the car registered in their name like a purchase,but the payments are lower like a lease.At the end of the term you still have the OPTION to turn the car in or buy it at the ballon figure just like a lease.You can even finance the remaining ballon payment.Like any lease you are basically paying the depreciation on what you have used of the car during the term,plus intrest.The deal doesn't seem too bad aside from the down payment which is far too high on a lease.You would be better to take higher payments with little to no down payment,and take the money you would have to put down on this deal,and put it in the bank making a bit of intrest,and use it to make payments for a while.I think you can probably do better later in the model year,but who knows.I don't like the idea of that much down on a lease.I does not go towards the the final payment cost so therefore it is really just wasted money to get a more managable payment.You will never see that money again.

Sigma

The difference between $8000 down and $0 down is ~$150/month. If my finances got so bad I'd have to get rid of a car at $500/month I'd be in such dire straights that I couldn't afford $350/month any easier. Even if I did lose my job I could pay the $150/month difference for 5 years before I'd run through the money I could have put as down payment.

Yes, putting $8000 down will save you roughly $1000 over the life of a 5-year note. But put that $8000 into a mutual fund and you'll earn even more money than you could putting that $150/month savings into the account plus the interest savings. And you'll have several thousand immediately available if you ever need it too.

Not only does it make financial sense to not pay the $8000 but in case something does go wrong you have that money to pay the mortage, buy food, and pay the car note (even if it is $150 more than it could have been) rather than throwing it at the car just so you can save $150/month if times get bad.

If your finances got so bad that you couldn't afford the car payment would you rather your car payment be $150 less or would you rather have $8000 in the bank?

MikeMaj82

Well I would never lease, I just had to ask this question because my dad showed it to me and was wondering why we just couldn't buy the car for $22K. I'm just out of college, so the car payment would be the only thing I'd be paying along with my credit card bill.

Mike