odessamama

What is the right resedual percentage for a 24 mo. lease with 15K anual miles? Is there a difference between leasing 2005 vs. 2004 RX8?

The dealer we telling me that it's better to get 2005 car if you want to lease, and 2004 if you want to buy. All because of the resedual value.

MI_FamilyMan

There's no reason why the dealer shouldn't be able to give you a pretty good estimate of what the respective residuals are. Tell him if he wants to sell a car, he better produce some numbers for you. My residual is around $16K for a 3-yr. lease. I would expect the 2-yr to be probably 18 or 19K.

salituro64

After the new model year comes out, it is always better to lease the newer vehicle. This is because the older (in this case 2004) is now considered a year old and has already begun to depreciate. If you are buying, the deal will be much better on the 2004. This is because the dealer looses more money the longer he holds on to it. With the new models out they want to cut their loses and get rid of the left overs. I hope that helps.

scottmhr1

I wouldn't pay too much attention to the residual value. It is one people look at and say hey, mine is really high. More important is what you can purchase the car for at the end of the lease, sounds similar but can vary quite a bit. I quickly looked at the mazda leases and thought they sucked. Hey if you love this car and are going to take care of it, buy it, if not, you will probably get screwed on a lease.

salituro64

You can also look at a balloon payment loan to lower your initial payments and then refinance the balloon after two or three years.

odessamama

Basically, I want to lease RX8 for 24mo with 15K a year. I want my payments to be around $300. The dealer comes up with rediculous drive off of about $9K. I was thinking if I could find a 2004 model that would be priced about $24K after all discounts and incentives, with resedual about 18K, I would only have to finance about $6-7K. Paying around $300 for 24 months comes to about that, so I figure the downpayment should be around $0. Does it make sense or am i totally off?

czr

iTrader: (3)

Way off. You aren't financing the car at all so you won't have any equity into it. It's what other members said; depreciation. Do some research on the web. Here is a starter: http://autos.msn.com/advice/article....22023&src=News

fredw1

A few key points here:
1. You probably know that what you are paying for in a lease is the difference between the car's price (the capitalized cost for a lease; they cannot call it a selling price since you are not buying, but it is really the same thing) and the residual.

2. Residuals are not negotiable. They are preset using a standardized guide used by most of the leasing companies and banks. Even if a lessor doesn't follow this guide, the residual is preset.

3. As a result, there are only four ways to lower the lease payment:
-Negotiate a lower cap cost
-Pay more up front (not usually a good idea with a lease)
-Lease for a longer term
-Negotiate a lower money factor (analogous to an interest rate)

Looking at these four options:
Lower cap cost: For any given car, you want to negotiate the lowest price you can, even if it's a lease. When comparing an '04, with an '05, you need to consider both cap cost and residual. Right now, '04s seem to be selling at $3-5K lower than '05s, so the cap cost for an '04 at your dealership should be lower. However, the residual will also be lower. If the residual is also $3-5K lower, then the lease payments will be the same. If you even thought you might like to buy the car at the end of the lease, then you might want to go for the '04 since the residual will be lower.

Pay more up front: this is called capitalized cost reduction. It often includes rebates and will include "money down". While this will reduce the monthly payments, most people will say this is not a good idea. Take the money you would have put down, keep it in the bank, and use a little bit of it each month to make up the difference in the monthly payment. Sure, you are paying a bit more interest, but for a few thousand dollars over two years, it is not significant. The argument for no down payment is that if something happens to the car, or you decide to get out of the lease, that money is essentially gone. It's better to pay this money as you go.

Lease for a longer term: In general, short leases have higher payments because of the rapid depreciation that occurs once the car leaves the lot. There is a steeper drop in the residual over two years, and this becomes less steep over 3 and 4 years. As a result, 3- and 4-year leases will usually have lower payments.

Negotiate a lower money factor: Difference lessors have different rates, so one dealer may offer a lower rate than another. Some dealers will pad the money factor so they can get a portion of your interest payments. This is legal, and many people will never bother to ask what the rate is. Dealers will often make it look like you are getting a good deal, by offering a lower cap cost, but then they make up the difference in a higher money factor (sometimes as high as twice the bank's rate).

Try leasecompare.com. There, you can find residuals and competitive money factors. You can even arrange the lease online and then pick up the car at a local dealer.

ironmedic

im completely out of the lease game cuz its a pain. i highly recommend u do your homework completely before you get into this. i am stuck in this situation with my car and i can get myself out of it but will take time plus a deployment!
you are probably better off just financing an 04 model. they are not much different from an 05 model except for the key and a couple extra colors. due to my stupidity on my own lease, i am getting rid of my car and moving on to something else.

DO YOUR HOMEWORK!!! that is my big recommendation!

MI_FamilyMan

It is my belief that leasing is only appropriate given the proper situation. I guess I don't want to start another lease vs. finance flame-war, but a few things are obvious... if you go over the miles, leasing is not for you. But I have to say that for some vehicles (typically not the ones that are in highest demands), they offer such incredible lease payments that it is hard to ignore. It gets to the point where I wonder how anyone makes money offering that kind of payment.

Outlaws eXtreme

24 months, 15k a year, for 300 a month... wow that would be great. Must be putting like 9k-10k down or something, with about $.40-$.45 cents per mile over.

Outlaws eXtreme

fredw1's post is one of the more informative post I've read on this forum, we should make that a sticky

budebaker

I second Ironmedic. There are lease deals out there that are worthwhile, especially lease programs from a manufacturer (Audi A4 comes to mind right now). Leasing is also good if you can write it off as a business expense, but I made a mistake in leasing my RX-8. If you know for sure that you really only want to keep this car for term of the lease, no longer, no less, then it still might be worth it, but leases are not very flexible.

Mazdax605

I got a 24 month lease at $300 a month on a base 6 speed including all taxes(sales tax of 5% in MA,and a local Excise tax we have in MA that is $30 a month of the payment.$45 of the payment is tax,so you can see I got a pretty good deal.This is on a 12k per year lease,so it is less than what you want.This deal was back in August of 04,so I am guessing you could do as well or better now with the left over 04 selling pretty cheap.I received $4250 in lease incentives at the time,but the Money Factor was/is high.Good luck.

Moc247

Wow - that's a great lease deal.

vsomaya

I got a 24 month 15k lease for 353/month with about 4k down - I think my residual was right at about 18-19.

ironmedic

wow u guys have great deals compared to mine, im not even gonna get into my lease. my lease is so bad that even other car dealerships told me im f**ked.

rodrigo67

It all depends on how you are going to use this car. If this is your main mode of transportation, or if you drive lots of miles, you might want to consider a purchase.

I leased my 8 because it was the 3rd car in the family and is basically my weekend driver. I put 2500 miles on it in 5 months, so miles wasn't a big thing. It looks good, does what I want it to and is costing much less then purchase. At the end if I want to walk away, it really was worth what I paid for the few months.

I leased an 04 with 6mt, touring, appearance, and spoiler back in sept of 04. This is about the time mazda was pushing to get the 04 off the lots. The cars final cost after mazda rebates was 24,8xx with 1500 down I financed my lease for 22 and change for 30 months at 30,000 miles. The residual at the end of this lease is 19,000, so if I decide I don't want it, I drove an 8 for 2.5 years, it only cost me a few grand, and it's not like I need this car. Monthly payments are a joke... :D

You have to decide what works for you.

dwill9578

i got mine for 24 months- 15,000milesa year, a little over 2g's down with just under 23 for my residual, with 40 cents over @just over 300 hundred/month,from what i read i seemed to do aight

dwill9578

fredw1 if the residual isn't negoitable how is it mine is much higher than most on this thread? I got it in writing so I know they didn't screw me-that was one of the major selling points to me, just checked my paper work to duble check closer to 22, then 23. I was under the impression that the higher the better.

fredw1

Residuals are usually pre-set by the lessor, and most use the ALG. Maybe this dealership is using a different guide, or they are padding the residual. This is legal, but most dealers don't do it, since somebody eats the cost somewhere. The whole value of the car has to be accounted for by someone. If a car was $30K, with a residual of $15K which is padded to $20K, you pay for $10K in your lease payments, and the car needs to sell for $20K at the end for the lessor the break even (I use this term loosely, since there is obviously a profit here). The problem for the dealer is that the car is really only worth $15K at the end, so someone loses $5K. Padding by small amounts, however, could result in no loss to the dealer when compared to profit from interest (what is your money factor?).

When I was shopping, none of six dealers I visited varied more than a few dollars on the residual (but money factors and their idea of "invoice" varied--some had advertising fees built in). Padding is good if you don't plan to buy the car at the end, but bad if you do, since the loss becomes yours.

dwill9578

i gotcha, I guess thats good cause I don't plan to buy at the end--- I think.

fredw1

I should add that residual can be padded because, in some cases, the car is selling at closer to MSRP than invoice. The profit the dealer makes above invoice offsets what they (or the leasing company) lose on the inflated residual. The amount you owe for your portion of the car is the same whether the cars sells at an MSRP of $33K with a residual of $20K or whether the car sells at invoice of $30K and a residual of $17K.