hedgecore

I've purchaced(financed) 3 cars to date, and am comfortable with knowing a good deal, but leases are new to me...thanks to everyone here for helping me understand just how these work.

A few questions though:

1) Residual value: This is easily calculated by using .59(59%) of the MSRP of the vehicle and it's options. Correct?
*In my case, $33685(6spd + GT + Nav) * .59 = $19,874.15
Is this right? Help me out if i'm missing something...

2) Lease Payment: I'm essentially paying the car's residual over the term and the interest. I've been quoted invoice from most dealers...from poking around this forum, it seems like that's not out of the norm.
*In my case, the interest is ($29,256.00(6spd + GT + Nav invoice-$2000 MAC cash back) + $19,874.15(Residual from above)) *0.00122 = $59.94
Is this right? Help me out if i'm missing something...

3) Down payment: Do i need to pay this? Can i negotiate this?

4) Lease buyout: Ok, so now i've leased the car, i'm at the end of term, i have my buyout option for the car's residual cost. What options do i have to pay the remaining ~$19k? Does MAC finance me? Do i have to find a used car loan through a bank? It seems like these interest rates will be high and negate any finance savings that i've taken advantage of through the inital MAC promotion...no?

5)Trade in: I have a trade in. Is it advantageous for me to have this involved at all with the lease, or should i just get a check from carmax?


This lease smells pretty good to me, but the buyout is creeping me out a little...if i plan on owning the car, would i be better offjust financing up front and skipping the lease?


***Sorry this is a bit scattered, i'm actually "Working"***

dwynne

1) The residual value may vary slightly. During the model year Mazda may change prices on the cars - so the MSRP on the window sticker of the one you pick may be higher or lower than the "current" MSRP. The 59% is based on the MSRP of the car YOU get.

2) The payment has 2 parts - the depreciation fee and the finance fee. Depreciation fee is figured:

Depreciation Fee = ( Net Cap Cost – Residual ) ÷ Term

Finance fee is:

Finance Fee = ( Net Cap Cost + Residual ) × Money Factor

(yes, you pay finance on the net cap AND the residual added together, looks strange, works out OK).

More info is here:

http://www.leaseguide.com/lease08.htm

Rather than figure it yourself there are a number of lease calculators online you can use. I even have one (LeaseIt!) in my Palm pilot/phone - so I can sit in the finance guy's office and run the numbers

3) No down payment is required, but you pay more per month. "With approved credit" you can do anything from a sign and drive lease to putting a whopping amount down. Keep in mind that you have to pay your negotiated price (less rebates) and then $475 lease acq fee, any dealer or doc fees, and local tax, tags, title fees, and maybe sales tax (varies by state). You either have to pay these extras up front or roll them into the lease. The more you roll, the less you pay at signing and the higher your payment.

4) An off lease car is just another used car to most banks. You can secure a loan from your bank or credit union and CapitalOne offers lease buyout loans Capital One rates . I am sure MAC and/or your dealer can also provide a loan to buy out at end of lease. Often if the lease banks are motivated to keep you from returning the car, they can offer you a below market rate finance deal if you buy it out.

5) I always advise against putting any serious money into a lease deal. If the car is stolen or totalled the insurance will pay off the lease bank and (possibly) give you nothing. So if you sunk $5k of your own money into the deal as a cap cost reduction then you would be out the $5k if something happened. In most states tax is due either on the residual or the payment, so there is no tax advantage to a trade in toward a lease. Sell your car private party or to CarMax and pocket the profit, if any.


Run the numbers and see what you get. I have no idea of your tax rate and I don't know what loan rate MAC is doing to give up the $1k in finance money.

But lets just play with it a bit. Say price is $31,256 (with no rebates). For me tax would be 7% + $80 this amount and we will ignore tags and dealer fees. So to buy with nothing down I need a loan of ($31,256 * 1.07) + $80 = $33,523.92. At Capital One right now this would be:

5.29% rate, $637.10 per month for 60 months = $38,226.09 total of payments.

Say MAC offers you 6.49% (just making up a number), you get $1k off (but still pay tax on it) so now I need to borrow $32,593.92. This would be

6.49% rate, $637.58/mo for 60 = $38,255.09 total of payments.

So in this case (with my made up MAC rate) it is about the same either way. You would have to apply for a MAC loan and see what rate they gave you for the REAL compare.

Now if we looked at the lease and roll in the local tax and acq fee on top of the $29,256 we get $29,811 net cap cost since we get to take of $2k now. We plug that in with your residual and we get $474.65 a month for 24 months plus tax = $507.88 or $12,189.12 total.

Now at lease end the car will cost us $19,874.14 plus 7% tax so we need a loan for $21,265.33 . Using TODAY's lease buy out rate from Capital One (in 24 months it could be lower or higher) you get:

6.39% rate, $650.70 per month for 36 months = $23,425.09 total of payments.

If you add $23,425.09 to our lease total $12,189.12 you get $35,614.21 for the total cost to lease then buy the car.

If you compare that to the FINANCE cost as listed above you see you will come out ahead to lease then buy in this case.

You also have the option to just walk away after 24 months if you no longer like/need/enjoy the car.

You have to check the number for yourself (I could have made a mistake) and find out the MAC and loan rate. If your credit union is doing 4.29% on new cars you have to figure out how that changes things.

Dennis

hedgecore

Much thanks D...i'm feeling a bit better about all of this.

I made an excel spreadsheet to compare a lease/finance...i should expand it to include the finance costs of the buyout option to get a better feel for what a "good deal" is.

Mazda was offering some really aggressive APR's awhile back...what happened to those? i have 15k to trade in...oh well.

dwynne

Generally they do cheap rate OR cash but not both. So unless it was REALLY cheap it might not work out. On the 04 left overs they put rebates tied to MAC and then finally just told the dealers "here, you sell them".

Very few of the cash VS cheap rate deals is it better to take the cheap rate - normally the cash (but a nice low rate from Capital One or your credit union) is a better way to go - but you ALWAYS check if they give you the choice.

At turn in time, you may explore with your (or any) Mazda dealer the option of turning in your car and buying it back. MAC will often offer them at a discount to the turn in dealer - for sure if current market value is less than your residual. They may not negotiate with YOU but turning it in then buying it back could save you money even after the dealer makes a profit.

Folks do this on BMWFS leases all the time, turn them in, the dealer gets a discount, then they CPO the cars, and sell them back to the lessee. Often the discount can cover the CPO cost and dealer profit - but you end up with a car with up to 100k of warranty.

No reason you could not do this with the 8 at a Mazda dealer too - buy it back as a CPO car.

Dennis

NAVILESRX8

iTrader: (1)

I don't get what's the benfit of "ordering" a car. You can't get any special combination of options, no special paint, or anything else, so why waste the time it takes to get built?

Jedi54

iTrader: (7)

I'll take this one:

Generally there is no real 'advantage' to order, as you said; no special paint, color combos, etc.

On ocassion though, it is necessary.

I was in the market for an '05 Black, GT, Nav, appearnace pkg, rotary accents, with black / red leather. Called MNAO and there were only 3 available in the state of CA. I called the dealerships and the one with the fewest miles already had about 100 on the odometer. The horror of what was done to it during test drives went through my mind.

So, I unfortunately ended up having to order one from Mazda.

Yes, waiting for it is a HORRIBLE experience. (lots of second guessing as to whether I'd be happier in another color) but once it finally does arrive, I am confident that the 3 month wait shall be worth it.

Besides, I might luck out and there might actually be some cash incentives on it by the time it gets here.

NAVILESRX8

iTrader: (1)

ahhh.....I guess I am nowhere near as picky...hahah

I wanted an RX8 so bad I just picked from what they had on the lot.....I got kinda lucky...I originally set out to get a Blue base model 6 speed.....I wound up with a sport package, but in black....Black looks amazing, but I really liked the Blue...I have learned to love my black baby...also I got it with 8 miles....

dwynne

Keep in mind that a lot of the stuff can be added. The Nav not so easy, but stuff like the appearance pack or rotary accents or wing can be added about as cheap (maybe cheaper?) than if they come on the car from the factory. Not the same for the interior color - which would be a lot of money to swap out.

It IS a ton easier to pick one off the dealer lot and make them deal on it. If they have a bunch sitting and have to order one special then I think you will be paying more. Of course, having to take the "wrong" car might be worse and you are willing to pay for the "right" one - to each his/her own

I put about 500 miles on a new loaner 8 in the last week - and I drove it like I would drive my own. Hopefully when someone goes to buy it they will not worry about abuse.

Dennis