Hercules

It's going to vary country to country, so what are they for the US?

LeaseCompare has excellent rates but since this is my first car, they are not friendly to me being a first time buyer, with no prior auto credit though... great credit overall.

I'm going to aim for around 6% lease rates with my dealer, but we'll see... LeaseCompare is getting me 4.72% off the bat.

8_wannabe

Just curious... If leasecompare is offering 4.72% then why would you be shooting for 6% at the dealer? If I were you, take the 4.72% to the dealer and try to negotiate 4 - 4.5%. Make 'em compete for your business. Dont' worry about no prior auto credit as long as you have documented income and nothing bad in your credit history.

Hercules

Do you think they'd bend that low?

That's my only concern, because I know LeaseCompare won't approve me (I talked with them already) because of no auto credit... my credit overall is great and I have no expenses (like a mortgage) since I live at home.

Being that I'm hearing things like 9.1% for Canada, I don't see how the dealer would stoop down to 4ish%. If it is the case though, I'm happy to barter down there :0

8_wannabe

Strangely, living at home probably counts against you since you're not building a credit history or rent payment history. But at least your monthly expenses are low.

Here's what I would do, and I'm not against stretching the truth just a little. Go to Mazda and tell them LeaseCompare is offering 4.72%. That part is true, just don't mention they're not offering it to you! Tell them you'd rather deal direct with Mazda or dealership on the lease just to keep it simple but you still want a competitive rate. Focus on talking them down, not up. Don't be afraid to ask for lower than 4.7%; the worst they can do is say No and at least you've got them talking.

The truth is, dealerships make a killing on leases so they have lots of room to offer you good lease terms. They'll still come out better than on a purchase. Take a look at http://www.leasetips.com/leasing_scams.htm for the top 10 leasing scams; all the ways dealers pack more profit into a lease. Read and study before you go in to negotiate. Leases are inherently one of the worst financial decisions you can make, but heck if it's the only way to get the car you want then you gotta do it. And good luck!

Hercules

Hehe, I work at a Wall Street firm that was ranked the best in its sector, and all my bosses are telling me NEVER to buy, and always to lease (unless I intend on keeping the car for a long time), because I'm putting money into a depreciating asset.

I'll take their word for it :p

red_base 95

I work as a risk analyst in the financial industry. I build models and strategies that determine who qualifies and for how much.

I can tell you that most financial institutions will take into account your residency status (i.e. live with parents, rent, own a home). Typically living at home will count against you. But if there are other trade lines (credit cards, student loans,) the length of time those have been open can help you. Very likely, if you have fewer than 5 trade lines, you could be considered a "thin file". That just means very little credit history. If you're in this situation, just be sure you keep it clean, i.e. no late payments.

Wannabe is correct - dealers make a killing on leases, so there is room to haggle. I would take a printout of the leasecompare page showing the 4.7%. At the very least, you'll get them working a bit for you. Be very careful about how they pad their pockets though. Read through the info wannabe linked - pretty good stuff.

Good luck.

Hercules

I have a FICO score of 701 from Equifax.com, and I printed it out as well just to ensure I don't get them saying my credit is poor or anything..

I'm only 22 though, and working on building my credit... but for now, I'm okay with this score for any leases, right? LeaseCompare is the exception as they want prior auto credit for their leases, but as far as I'm reading I can get dealer financing easily.

8_wannabe

Well, granted I'm not knowledgeable enough to structure an IPO but I can do basic bookkeeping. You're right; in a purchase you put money into a depreciating asset but once paid for you own the asset. Then, you can drive for free or sell or trade your equity in a valuable asset. In a lease, you have no ownership. At the end, you have zero assets to show for your years of investment. Do the math yourself. Compare the lower monthly lease payment resulting in zero net worth (don't forget to add in initiation/termination fees plus excess mileage and wear & tear you'll probably be charged.) Compare vs higher monthly payments on a purchase, but subtract from that the net worth of your car once you own it. I think invariably you will come out with greater net worth in a purchase.

No slight intended, but I suspect the Wall St analysts are more accustomed to assessing the short term (i.e., quarterly cash flow) aspects of a deal vs long-term (i.e., five years from now where will you be). This problem is endemic to the world of corporate high finance and they may carry this tendency over to personal finance. Just my humble opinion. You don't get ahead in personal finance by putting your money into an asset owned by someone else. Just like buying a home: You don't get ahead by renting, but your landlord sure does!

Hercules

I suppose.... but really I'm just willing to pay for the convienience of no maintenence over the course of the lease, and stuff like that... i know it's more in the long run, but for me it's easier to budget in $500 a month than $700 a month for financing. At least at this point in time

I hope you guys are right about there being a lot of room to maneuver the interest downwards

Midnight Flyer

I guess a lot depends on how you plan to use the car and for how long.

If you plan to trade your car in after the lease then a lease is a good thing. If you plan to keep the car then it could be good or bad depending on the intrest, miles driven, etc.. In my case I came out ahead by buying my 01 Miata since I plan to keep the car for a while and I get to drive it for 4 years as a company car. Many more smiles to be had.

The old rule of leasing a depreciating asset does not always hold true. A friend of my father's lived in town and so leased a car. Then he met a girlfriend and moved in with her, out of town. In the next two years he had blown his milage allowance and had to pay through the nose because he did not want to buy the car. There are many factors to consider.

Also if you plan to lease a car, forget about mods or driving a lot as you end up paying a large penalty for doing either.

Hercules

I work in the city... take train to work every day.

I don't like to mod cars at all.

Thus, low mileage and no alterations makes Hercules a happy camper! (provided i get a good rate!!!)

:D

8_wannabe

Roger that. BTW, I never said they would drop the interest rate; all I said is it won't hurt to ask. I would guess you'd have better odds of this in a lease than a purchase but I'd sure like to hear if it works.

Also, be careful about maintenance. This is not free in a lease; you have to pay. The only thing "free" is repair of defects if you ensure the term of your lease does not exceed the term of your warranty (both in years and in miles.) Make sure you're not leasing once the warranty has expired.

Hercules

Well here's to hoping

BTW, I am aware about the maintenence, the only thing I meant was warranty coverage :0

Chadr

Numbers that I just got from my dealer were exactly the same as leasecompare (48 months 16,219 res on 33100 msrp and .0192 MF). Hopefully it will be the same for you Herc.

Hercules

Running those numbers, the price came to be $388.75 a month, tax included for Jersey.

I'm going to do a 36 or 39 month lease, so likely the numbers will be a tad off that... but hopefully close

I'm going to call my dealer and verify.. but thanks for the info! :

Hercules

BTW, you meant .00192, right? Not .0192...

That's a 46% interest rate!

Chadr

Yeah missed the extra zero.

Hercules

Scared me there

You got these from your dealer directly?

Chadr

Yup direcly from the sales manager. Now I have a 730+ credit score and a house, etc. So take all things into consideration. I don't know if those are Mazda numbers or numbers from another bank that they work with, those are just what he quoted me.

Hercules

Yea, but I'm co-signing with my father, and we *both* have over 700 score, my dad owns the house and I make enough cash for the car, so likely it should be *similar* and not too far off yours.

I just didn't want to get quoted a 9% rate or something absurd like that.

Thanks a lot btw

r0tor

iTrader: (1)

I'm also 22 so I know what your going through...

My dealer called up Mazda and they would get me a loan to buy the car with a rate of 6.5% i think from Mazda.... that was without any co-signers

They also called up some place that they deal with because of good rates and I got rejected from them by mysellf, but with my parents as a co-signer they would offer me between 3-4% (can't remember right now)... the place was MIT Bank and apparently is in New York I guess if you would want to check there.


I have the pleasure of having a bunch of money saved up to pay off my college loans (a good $25K worth :o )when they are due... but instead I think I might take advantage of the 2% rate on them and put a rediculous downpayment on my car or maybe even pay cash for it.

Goldenhue22

Personally, I'm still torn between leasing and financing. I will just work all the numbers when my car comes in. But I would have to agree that leasing is the better way to go IF you don't plan on keeping it for more than 3-5 years. The rule of thumb when it comes to financing is that you will only come out ahead if you plan to keep your car 2-3 years after it is paid off. If you finance and decide to sell it or trade it in 6 months after, you made the wrong financial decision. For people that want a new car every couple of years and don't want to tack on 150,000+ miles on a car, leasing is the way to go.

I'm going to put 10-15K as a downpayment, but because I don't know the interest or the residuals yet, I can't decide. we'll see though.

Chadr

Goldenhue - what I can tell you is that if you are going to put 10 -15k down leasing is not for you. The general rule for leasing is don't put anything or very little down since you are basically trying to not dump money into a depreciating asset. You may want to do 1000 or 2000 down to lower the monthly payment if that is your goal but never put much into a lease because you will basically just lose that money.

8_wannabe

The other thing to watch out for is mileage. Used to be you could easily get a allowance of 15K miles/year. Most leases are computed at 12K these days, even as low as 10K miles/year. Everyone I know exceeds that (here in car-loving California, that is.) At a cost $0.20 or more per mile above your allowance you can easily run up thousands of dollars in mileage fees when you turn your car in.

eccles

I found a bunch of useful information at http://www.leaseguide.com/