Car Leasing Noobie Seeking Any and All Input

[TrvlBug]

Again, thank you all for your input. I finally found some info on the current lease incentives available in my area and they are good as far as I can tell: MF = 3.96% (sorry, can't wrap my head around the mf numbers and must convert to interest rate!), lease cash $3K, residual 50%. These incentives expire 2/2 so I hope our salesperson gets his allocation real soon and either has or can find a car that meets our needs. Unfortunately, the 'what others in your area paid' by JD Powers, tells us there is little to no room for price negotiation.

There are only 2 cars within 500 miles that meet our needs/wants and they are both in the SoCal fire zone...my guess is that these cars don't even exist at the dealerships anymore.

Qs Laptop, thank you so much for taking the time to provide me with your tips. My car, a 2 year old high end EV is due to be traded in in the next year or 2 and your tips will be utilized! It appears that high end EV's are a dime a dozen!!! Unfortunately, we did not lease this car and the depreciation is in the toilet. We will definitely lease its replacement.

 

[TrvlBug]

... ...

3 - PM me when your lease is up … I love buying gently used 3 year old cars coming off of leases for 50% less than new! And option that baby up! Options depreciate faster than cars. You NEED a heads up display. You really do. And I would like one on my next car. Sure, it will only cost you an extra $9/mo … but I will get it nearly free! Woohoo!

All kidding aside, enjoy your new car!

. Yes, the HUD is a must. My car has one and it's great. DH's will also have one; after all, it's only $500! Actually, the reason we are upgrading DH's 2017 which he loves, is to get the 360* camera. And in order to get that option, you have to buy a top trim level. We live in an area where the powers that be have decided that if they make really tight parking spaces, people will buy smaller cars .

 

[lakerunner]

Sorry for this thread creep question: What happens if the person leasing the car passes away? Is the spouse on the hook for remainder of the lease?

When my FIL passed away, the car was turned back in to the dealership. no living spouse, but his estate was not responsible.

 

[KarenF]

We have always bought our cars, but recently leased a BMW EV. My husband was able to get the features he wanted and we don't have to worry about battery life, battery improvements, etc. At the end of our lease we will either turn it in or sell it and pay off the lease, whichever is better at that time. We did get the ding and dent add-on so basically we just have to worry about tires and brakes. We went through the dealer, not a broker, and did not get a fantastic deal, but did get a good deal that we were happy with. The website tracks our miles for us.

 

[TrvlBug]

We have always bought our cars, but recently leased a BMW EV. My husband was able to get the features he wanted and we don't have to worry about battery life, battery improvements, etc. At the end of our lease we will either turn it in or sell it and pay off the lease, whichever is better at that time. We did get the ding and dent add-on so basically we just have to worry about tires and brakes. We went through the dealer, not a broker, and did not get a fantastic deal, but did get a good deal that we were happy with. The website tracks our miles for us.

Which one did you get? I have the 2023 iX drive 50. Love it. Unfortunately I bought at the height of the chip shortage and before they discovered the leasing loophole so paid full price and paid cash. The depreciation stings, but I love the car...except the software is a bit wonky at times.

 

[piccolopat]

We leased twice, once because it was a new brand to us and once for our first SUV. In both cases, lease payments were relatively low and those plus buyout at the end wasn't any more than if we outright bought at the start. Leasing allowed us to keep our cash growing for those 3 years and peace of mind in case we didn't end up liking the cars and would just turn them in. We planned on buying them as long as they worked out and ultimately did that for both. Now going on 12 and 14 years old, it's been great having no payments for all these years. We'll likely replace one or both in the next year or two and will consider the same lease strategy.

 

[OldShooter]

From what I've read, this would be the case if both names were on the lease, therefore, the recommendation to put the lease in the primary driver's name only. I will be checking the contract to see what it says about this.

When someone dies, their liabilities do not disappear. They become liabilities of the estate. Think of the unpaid electric bill, the unpaid credit card balance(s), etc. I would be looking in the lease for a clause that describes what happens if the lessee wants to terminate the lease early. The executor will have the option of following this procedure or (very unlikely) continuing to pay the lease according to its terms until it ends. IANAL, though.

 

[TrvlBug]

When someone dies, their liabilities do not disappear. They become liabilities of the estate. Think of the unpaid electric bill, the unpaid credit card balance(s), etc. I would be looking in the lease for a clause that describes what happens if the lessee wants to terminate the lease early. The executor will have the option of following this procedure or (very unlikely) continuing to pay the lease according to its terms until it ends. IANAL, though.

That's what I would have thought, but perhaps it's state specific. As I stated, I will be looking for this. If DH predeceases me, I just want to turn the car in. If the liability transfers to me, it would seem to me that having both names on the lease would make things easier. I had requested a copy of the lease agreement, but couldn't get it. I warned the sales person, I/DH would be reading the lease and not just signing it!

 

[mebden]

Suze Orman Says You Should 'Never' Lease a Car“You should never lease a car,” she said. “Leasing a car is the biggest waste of money out there.”

and I'd never listen to a thing she has to say she's an idiot as far as I'm concerned

 

[pb4uski]

We had a friend whose DH died 3 weeks after starting a new 3-year lease. They had got a more upscale, in other words expensive, vehicle to make their travels more comfortable. She was stuck with the lease of a car that was a stretch for her to afford because they were both in the lease. If it had just been his name on the lease then she could have turned the car in.

 

[TrvlBug]

... ...If it had just been his name on the lease then she could have turned the car in.

Was this due to terms in the lease? Living in a non-community property state? Other? Google's AI response is very confusing in that it implies that if only one name on lease, the spouse has no obligations, but then implying this may not be the case in a community property state!!!

 

[WhenIsItTime]

Yes, we realize we are paying a premium by leasing, however, have decided to lease mainly for the convenience of just being able to give the car back in 3 years. We worked our a$$es off to be able to be in this position (not have cost as our #1 priority in making spending decisions)!

I'm going to try to convert to this approach as well. "Try" will require turning my frugal finance brain off and taking a blow-the-dough approach. Hard on a major purchase to put cost/finance down the priority list!

One other suggestion in an attempt to save a $ - see what the terms are to buy/sell the car at end of lease. I leased a Ford many years ago, because the lease terms were favorable to purchase. They allowed paying for lease up front to avoid 'money factor'. Not sure that's available anymore. However, it's in dealers best interest to have a low residual in lease term to get lessee to pay more. At end of lease I found a buyer for the vehicle willing to pay more than residual. Dealer did all the paperwork and gave me difference over residual. I paid no fee for this - likely a fee today. May provide a way to recoup some money on the back end should FMV of the vehicle stay strong.

 

[ShokWaveRider]

and I'd never listen to a thing she (Suze Orman) has to say she's an idiot as far as I'm concerned

Bold added by me for clarity. Leasing has been a win win every time for us. We are on our 8th one. We would not dream of buying a daily driver now we are retired. A toy car yes, but not a daily driver.

 

[TrvlBug]

... ...

One other suggestion in an attempt to save a $ - see what the terms are to buy/sell the car at end of lease. I leased a Ford many years ago, because the lease terms were favorable to purchase. They allowed paying for lease up front to avoid 'money factor'. Not sure that's available anymore. However, it's in dealers best interest to have a low residual in lease term to get lessee to pay more. At end of lease I found a buyer for the vehicle willing to pay more than residual. Dealer did all the paperwork and gave me difference over residual. I paid no fee for this - likely a fee today. May provide a way to recoup some money on the back end should FMV of the vehicle stay strong.

My thought also. DH's 2017 Lexus ES350 has a trade in value of 50% of original MSRP. The current Lexus lease incentives are $3K lease cash, 3.99% financing costs, and a residual of 51%, so I would definitely expect a much higher resale/trade in value than 50% at 3 years. Especially on a car that's driven only 1K miles a year , assuming no road trips. With 3.99% financing we don't plan on paying the lease up front.

I need to find out if residuals are negotiable, but suspect not.

 

[Qs Laptop]

However, it's in dealers best interest to have a low residual in lease term to get lessee to pay more. At end of lease I found a buyer for the vehicle willing to pay more than residual.

I need to find out if residuals are negotiable, but suspect not.

Residual Value is what the vehicle will be worth at the end of the lease. This is set by the manufacturer and is expressed as a percentage of the MSRP. The greater the residual value, the lower your payments will be. While the residual value is set by the manufacturer it can be: 1.) what the manufacturer believes the depreciation will be at the end of the lease, or 2.) Artificially set high to make leasing more attractive.

The basic formula for your monthly lease payment is:

Monthly Payment = (Capitalized Cost - Residual Value) / number of months

where Capitalized Cost = MSRP minus incentives minus rebates minus down payment

If a manufacturer has a glut of inventory on a particular model they want to move, they may set the residual value high, i.e. 65% so that your resultant monthly payment is low.

 

[pb4uski]

Was this due to terms in the lease? Living in a non-community property state? Other? Google's AI response is very confusing in that it implies that if only one name on lease, the spouse has no obligations, but then implying this may not be the case in a community property state!!!

I'm not sure. I just know that his widow told me that she had to keep it since they were both on the lease but that if only he had been on the lease that she could have turned it in, I think it may have been a provision in the lease, but I'm not sure. They were not in a community property state.

 

[Koolau]

I'm not sure. I just know that his widow told me that she had to keep it since they were both on the lease but that if only he had been on the lease that she could have turned it in, I think it may have been a provision in the lease, but I'm not sure. They were not in a community property state.

Can't she pay it off and sell it or tell the dealer she's not going to pay the lease any more?

 

[pb4uski]

^^^ No. Since her name was also on the lease she could not just turn in the car and tell the leasing company that she'd not going to pay the lease anymore without trashing her credit. In order to buy it our she would need to make all the future lease payment and the buyout and she didn't have the money to be able to do that and it would have exceeded the value of the car so that would be a loser.

Her best option was to continue to make the lease payments and use the car and turn it in at the end of the lease and that is what she did. BTW, the dealer was a close personal friend of her and her husband and didn't have any suggestionr a way out for her.

 

[Koolau]

^^^ No. Since her name was also on the lease she could not just turn in the car and tell the leasing company that she'd not going to pay the lease anymore without trashing her credit. In order to buy it our she would need to make all the future lease payment and the buyout and she didn't have the money to be able to do that and it would have exceeded the value of the car so that would be a loser.

Her best option was to continue to make the lease payments and use the car and turn it in at the end of the lease and that is what she did. BTW, the dealer was a close personal friend of her and her husband and didn't have any suggestionr a way out for her.

Note to self: Do not lease in couple's name. Or, shortening that, Do not lease.

Probably not an issue for us as we usually just write a check for whatever used car we are buying. But, still... It is good to really know what you are signing.

Thanks for the update.

 

[TrvlBug]

Just received a call from the sales rep that a car with our specs (+ some that we don't want!) is in production and he'll put our name on it if we still want it...yeah!!!

It will be built in early March and arrive at the dealership late March or early April. I hope they still have the leasing incentives then.

 

[shafer9]

DH and I have decided to lease our cars going forward. In the past, we've always purchased new cars and kept them until they fell apart, then for the last 2 cars, on a 7-10 year cycle, and now have decided to lease going forward for the new technology as well as convenience.

DH is replacing his 2017 Lexus ES350 with a 2025 one. These cars, as well as all Lexus' are hard to come by and with the trim level we want to get the 360* camera, there are none to be found on the west coast in the colors acceptable to DH.

As we are total noobs to car leasing, I'm hoping to get as much input as possible to 'do it well'. I do know, having read it here that you should put the car only in the primary driver's name as well as paying $0 down if possible. Are there any coverages we should buy from the dealer such as, IIRC, they have something for $850 that covers any little dings and dents that you might be dinged for at lease end. If you total the car, will your insurance covers you 100% or do you have to buy gap insurance from the dealer?

Any and all insights are greatly appreciated. Thank you.

Why?

 

[TrvlBug]

Why?

Why what?