How do I negotiate lease and know if dealer's offer is a good deal?

[Dejola]

I am in the market to lease a 2007 Lexus RX400h. As configured on the
Lexus website the car has an MSRP of $49,866. That includes the base
MSRP of $42,580, the delivery, processing, and handling fee ofr $715,
and the selected package of $6,571.

This will be a 24 month lease with 30,000 miles a year built-in. In
other words I put 30K a year on the car. I know that will cost me more
than the usual allowed miles of 15,000. I also know that a 24 month
lease is not the most economical, but that is what my employer wants.

I'm hoping that among those Lexus owners/drivers out there in this
group there will be one or more who have this leasing thing down pat
and can advise me what would be a reasonable amount to pay monthly. I
expect to pay $5,000 as the drive-off or up front amount. So, can any
kind smart soul inform me what monthly amount I should hold out for as
I consider as many as four dealer proposals?

Thanks very, very much.

[Elmo P. Shagnasty]

Post by Dejola
I'm hoping that among those Lexus owners/drivers out there in this
group there will be one or more who have this leasing thing down pat
and can advise me what would be a reasonable amount to pay monthly.

You, sir, will be ripped off no matter what you do.

You should NOT be doing this. You have at least 6 months of research to
do in how the finance world works, with the leasing addendum at the end.

This sounds harsh, but you need it. You need to be slapped into
reality. You are asking how to fly a 747 by posting a single note on
the Usenet. You will crash and burn, and no amount of info from here,
in this format, will help you.

Some things to consider:

* You are not buying a car, you are buying a car AND you are buying
money. Those are two completely independent transactions. You need not
buy the money from or via the same guy you buy the car from. In fact,
if you do you WILL be ripped off.

* A lease is nothing more than a finance contract with a balloon
payment. There's no magic. It isn't rocket surgery.

* The dealership doesn't lease you the car. The dealership SELLS the
car and takes the money. They can sell the car to YOU, or they can sell
the car to a finance company who will lease it back to you.

* If the salesman brings the buyer and the leasing company together, the
salesman makes a commission. See my first point above. This commission
is unrelated to the commission he makes for selling the car. Not only
does he now have every incentive to make this deal as profitable as he
can for himself and his dealership, he now has every incentive to make
it as profitable as he can to the leasing company. He also has the
*ability* to do it because you're not paying attention, you're
emotionally involved and not treating it like a business deal, and he
owns all the cards.

* Anyone--ANYONE--who focuses on the monthly payment WILL be ripped off.
The salesman owns all the cards, and he can manipulate that and squeeze
you for ten bucks here and thirty bucks there until you have paid off
his boat AND his trip to Hawaii.

* The salesman does this for a living, several times a day. You do it
once every few years at best. Yes, he owns all the cards. And the more
you ask him to do for you, the better his hand gets--until the best you
can do is walk away without signing your name, because that's the ONLY
way you won't be ripped off big time.


How do you avoid being ripped off?

* Ask for the out the door price of the car. Period. Not a monthly
payment. He is selling the car. Get that to be as low as you can.

* Buy the money from someone who sells money for a living, not from
someone who sells cars for a living. It's real simple. This is valid
whether you're financing to own the car at the end, or whether you're
financing to turn the car in at the end as the balloon payment.

* When you buy the money, buy it like you'd buy anything else--you want
it as cheap as you can get it. Don't talk monthly payment. Talk
interest rates. For leases, talk lease factors--but do the research on
what that means.

* Don't lease a car if you're going to drive it 30K miles/year,
especially not a Lexus. You're far, far better off buying it and simply
selling it whenever you're finished with it.


I could go on and on with both lists, but I know I'm talking to a brick
wall here.

[St. John Smythe]

Elmo P. Shagnasty wrote:
<experienced info about leasing>

Elmo, when you're right, you're right. If the OP has an employer that
has a stake in this, he should be able to buy from fleet sales rather
than retail. Second choice would be the car buying service at his
credit union. Third choice would be to negotiate his own (cash) deal,
which should come in at less than invoice.

Then, for purposes of getting the money, I always liked to find a lender
with sufficient imagination to write a balloon note, which would keep
the payments in the same ballpark as lease payments, but I'd be in the
driver's seat and would have zero worry about difficulties when turning
the car in. It takes a few moments with graph paper (or these days, a
spreadsheet), but you can draw the depreciation curve and structure the
note to keep your balance owed pretty well tracking the current value of
the car, which is a Good Thing. That way, you're just paying for
depreciation and interest, and are not using your vehicle as a savings
account.

To the OP: Do not just put yourself in the hands of a dealer and let him
handle an auto lease deal end to end unless you don't mind paying a
substantial premium for the convenience, such as it may be.

[Dejola]

Post by St. John Smythe
<experienced info about leasing>
Elmo, when you're right, you're right. If the OP has an employer that
has a stake in this, he should be able to buy from fleet sales rather
than retail. Second choice would be the car buying service at his
credit union. Third choice would be to negotiate his own (cash) deal,
which should come in at less than invoice.
Then, for purposes of getting the money, I always liked to find a lender
with sufficient imagination to write a balloon note, which would keep
the payments in the same ballpark as lease payments, but I'd be in the
driver's seat and would have zero worry about difficulties when turning
the car in. It takes a few moments with graph paper (or these days, a
spreadsheet), but you can draw the depreciation curve and structure the
note to keep your balance owed pretty well tracking the current value of
the car, which is a Good Thing. That way, you're just paying for
depreciation and interest, and are not using your vehicle as a savings
account.
To the OP: Do not just put yourself in the hands of a dealer and let him
handle an auto lease deal end to end unless you don't mind paying a
substantial premium for the convenience, such as it may be.
--
St. John, also been there and done that

Thank you all for your help. Especially you. Mr. Shagnasty. I
appreciate all of your comments, except maybe your last one aboit
talking to a brick wall. Not true. I have taken in your information
and, to the extent I can, will use it to my advantage. I'm just a mere
mortal trying to do the best I can. Posting my original message was
part of that process.

Thanks again. I have found all of your responses helpful.

[Elmo P. Shagnasty]

Post by St. John Smythe
Elmo, when you're right, you're right. If the OP has an employer that
has a stake in this, he should be able to buy from fleet sales rather
than retail. Second choice would be the car buying service at his
credit union. Third choice would be to negotiate his own (cash) deal,
which should come in at less than invoice.
Then, for purposes of getting the money, I always liked to find a lender
with sufficient imagination to write a balloon note, which would keep
the payments in the same ballpark as lease payments, but I'd be in the
driver's seat and would have zero worry about difficulties when turning
the car in.

I know my employer's credit union started offering such a product
several years ago.

[old man]

To add; some time ago I leased over 3 years, 30k miles/year, an MB E Class
from MB leasing.
When the car went back at 90k miles, MB tried to stiff me for $6,000 (£
equivelent) of repairs. These comprised amongst other things of a full
respray and 5 new tyres. (They were all road legal), windshield
Fortunately the Company that collected the MB from me signed it off as all
good, so I didnt pay.
Thats why, this side of the pond, if you visit an MB dealer and look at the
second hand cars, up to 4 years old, they all look like brand new.

Post by Dejola
I am in the market to lease a 2007 Lexus RX400h. As configured on the
Lexus website the car has an MSRP of $49,866. That includes the base
MSRP of $42,580, the delivery, processing, and handling fee ofr $715,
and the selected package of $6,571.
This will be a 24 month lease with 30,000 miles a year built-in. In
other words I put 30K a year on the car. I know that will cost me more
than the usual allowed miles of 15,000. I also know that a 24 month
lease is not the most economical, but that is what my employer wants.
I'm hoping that among those Lexus owners/drivers out there in this
group there will be one or more who have this leasing thing down pat
and can advise me what would be a reasonable amount to pay monthly. I
expect to pay $5,000 as the drive-off or up front amount. So, can any
kind smart soul inform me what monthly amount I should hold out for as
I consider as many as four dealer proposals?
Thanks very, very much.

[David Z]

Post by Dejola
I am in the market to lease a 2007 Lexus RX400h. As configured on the
Lexus website the car has an MSRP of $49,866. That includes the base
MSRP of $42,580, the delivery, processing, and handling fee ofr $715,
and the selected package of $6,571.
This will be a 24 month lease with 30,000 miles a year built-in. In
other words I put 30K a year on the car. I know that will cost me more
than the usual allowed miles of 15,000. I also know that a 24 month
lease is not the most economical, but that is what my employer wants.

I once had an employer offer to pay for me to lease a car. At the time,
I owned a 1997 ES and was very happy with it. The only way I could get
the "benefit" was if I leased a car.

So, I found a guy (in the phone book) that offered to buy my car and
lease it back to me. That way, my employer paid the lease payments. It
was a great deal. They bought my 1997 ES for $27,000 in 1999. I bought
the car back 3 years later for about $15,000.

What are the parameters/constraints of your employer's offer to pay for
your lease?