A Simple new car lease formula?
A Simple new car lease formula?
Have had a lifetime of buying 2 year-old cars and driving them until theyhe are a clunker and t I just give away to family.
That has allowed me to now afford to lease and drive a new car every 2-3 years. without the hassle of selling or trading in where I never have well or get anything near "trade in value".
(Disclaimer..... I don't recommend leasing for best overall value)
Now,
When researching leasing, many sources give you formulas with gross cap cost,money factor, cap cost reduction, residual value etc. etc. which can get very complicated; (and almost impossible to calculate with the first numbers the dealers float you. )
However I've come to the conclusion that there's a simple formula that seems to work for me;
If I can get the monthly payment to 1 % of the MRSP on any given vehicle (assuming a 3 year term at 10,000 mile; AT ZERO DOWN and zero closing costs (excluding tag, tax) then it's a doable deal
It takes a lot of work to get these but they are out there. I've seen better deals on forums but I think they are rarely obtainable.
Any money they want as a down payment destroys this formula.
I used a broker last time. (Am in Florida; I get cars in the $40K range). Might have a go at it on my own soon.
Any other tips or suggestions?
That has allowed me to now afford to lease and drive a new car every 2-3 years. without the hassle of selling or trading in where I never have well or get anything near "trade in value".
(Disclaimer..... I don't recommend leasing for best overall value)
Now,
When researching leasing, many sources give you formulas with gross cap cost,money factor, cap cost reduction, residual value etc. etc. which can get very complicated; (and almost impossible to calculate with the first numbers the dealers float you. )
However I've come to the conclusion that there's a simple formula that seems to work for me;
If I can get the monthly payment to 1 % of the MRSP on any given vehicle (assuming a 3 year term at 10,000 mile; AT ZERO DOWN and zero closing costs (excluding tag, tax) then it's a doable deal
It takes a lot of work to get these but they are out there. I've seen better deals on forums but I think they are rarely obtainable.
Any money they want as a down payment destroys this formula.
I used a broker last time. (Am in Florida; I get cars in the $40K range). Might have a go at it on my own soon.
Any other tips or suggestions?
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Re: A Simple new car lease formula?
IMHO keep purchasing used cars with cash and don't lease, keep it simple. Good luck.capgain22 wrote: ↑Sat May 19, 2018 12:28 pm Have had a lifetime of buying 2 year-old cars and driving them until theyhe are a clunker and t I just give away to family.
That has allowed me to now afford to lease and drive a new car every 2-3 years. without the hassle of selling or trading in where I never have well or get anything near "trade in value".
(Disclaimer..... I don't recommend leasing for best overall value)
Now,
When researching leasing, many sources give you formulas with gross cap cost,money factor, cap cost reduction, residual value etc. etc. which can get very complicated; (and almost impossible to calculate with the first numbers the dealers float you. )
However I've come to the conclusion that there's a simple formula that seems to work for me;
If I can get the monthly payment to 1 % of the MRSP on any given vehicle (assuming a 3 year term at 10,000 mile; AT ZERO DOWN and zero closing costs (excluding tag, tax) then it's a doable deal
It takes a lot of work to get these but they are out there. I've seen better deals on forums but I think they are rarely obtainable.
Any money they want as a down payment destroys this formula.
I used a broker last time. (Am in Florida; I get cars in the $40K range). Might have a go at it on my own soon.
Any other tips or suggestions?
Kevin
Re: A Simple new car lease formula?
OP has discovered the "1% rule"kmwilson343 wrote: ↑Mon Jun 11, 2018 9:37 amIMHO keep purchasing used cars with cash and don't lease, keep it simple. Good luck.capgain22 wrote: ↑Sat May 19, 2018 12:28 pm Have had a lifetime of buying 2 year-old cars and driving them until theyhe are a clunker and t I just give away to family.
That has allowed me to now afford to lease and drive a new car every 2-3 years. without the hassle of selling or trading in where I never have well or get anything near "trade in value".
(Disclaimer..... I don't recommend leasing for best overall value)
Now,
When researching leasing, many sources give you formulas with gross cap cost,money factor, cap cost reduction, residual value etc. etc. which can get very complicated; (and almost impossible to calculate with the first numbers the dealers float you. )
However I've come to the conclusion that there's a simple formula that seems to work for me;
If I can get the monthly payment to 1 % of the MRSP on any given vehicle (assuming a 3 year term at 10,000 mile; AT ZERO DOWN and zero closing costs (excluding tag, tax) then it's a doable deal
It takes a lot of work to get these but they are out there. I've seen better deals on forums but I think they are rarely obtainable.
Any money they want as a down payment destroys this formula.
I used a broker last time. (Am in Florida; I get cars in the $40K range). Might have a go at it on my own soon.
Any other tips or suggestions?
Kevin
anyone interested in leasing should spend a considerable amount of time over on the leasehackr.com forums.
Re: A Simple new car lease formula?
Sounds like a good deal if you can get it. Am I correct in thinking that it severely limits the brand, model and trim levels that you can find at 1%? I just looked at a couple of cars that I might be interested in, and I doubt I could get anywhere near 1% per month with no down payment. Whenever I see an advertisement for a lease deal, the down payment is always in fine print and adds more than $100 a month to the bottom line.capgain22 wrote: ↑Sat May 19, 2018 12:28 pmNow,
When researching leasing, many sources give you formulas with gross cap cost,money factor, cap cost reduction, residual value etc. etc. which can get very complicated; (and almost impossible to calculate with the first numbers the dealers float you. )
However I've come to the conclusion that there's a simple formula that seems to work for me;
If I can get the monthly payment to 1 % of the MRSP on any given vehicle (assuming a 3 year term at 10,000 mile; AT ZERO DOWN and zero closing costs (excluding tag, tax) then it's a doable deal
It takes a lot of work to get these but they are out there. I've seen better deals on forums but I think they are rarely obtainable.
Any money they want as a down payment destroys this formula.
"The course of history shows that as the government grows, liberty decreases." Thomas Jefferson
- tennisplyr
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Re: A Simple new car lease formula?
Been leasing since '95.....sometimes life isn't about money.
“Those who move forward with a happy spirit will find that things always work out.” -Retired 13 years 😀
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Re: A Simple new car lease formula?
"Every time I see an adult on a bicycle, I no longer despair for the future of the human race." H.G. Wells
Re: A Simple new car lease formula?
Yes, you are correct. If you can get a car for 1% of the MSRP, it usually is a steal. Tough to find but they are out there. Everyone in my immediate family usually ends up paying less than 1% of the MSRP when they lease because I was in the business.capgain22 wrote: ↑Sat May 19, 2018 12:28 pm Have had a lifetime of buying 2 year-old cars and driving them until theyhe are a clunker and t I just give away to family.
That has allowed me to now afford to lease and drive a new car every 2-3 years. without the hassle of selling or trading in where I never have well or get anything near "trade in value".
(Disclaimer..... I don't recommend leasing for best overall value)
Now,
When researching leasing, many sources give you formulas with gross cap cost,money factor, cap cost reduction, residual value etc. etc. which can get very complicated; (and almost impossible to calculate with the first numbers the dealers float you. )
However I've come to the conclusion that there's a simple formula that seems to work for me;
If I can get the monthly payment to 1 % of the MRSP on any given vehicle (assuming a 3 year term at 10,000 mile; AT ZERO DOWN and zero closing costs (excluding tag, tax) then it's a doable deal
It takes a lot of work to get these but they are out there. I've seen better deals on forums but I think they are rarely obtainable.
Any money they want as a down payment destroys this formula.
I used a broker last time. (Am in Florida; I get cars in the $40K range). Might have a go at it on my own soon.
Any other tips or suggestions?
Wife paying .8%
Father .65%
Mother .95%
Sister 1.3% (she rushed and didn’t wait for me to help)
I don’t lease I only buy 5-6 year old cars because it’s the best bang for the buck
Re: A Simple new car lease formula?
The best lease deals are probably the vehicles with the highest residual value. I would guess Lexus for this reason. Also, everyone seems to want an SUV nowadays so those tend to have higher residual values. I still think leasing rarely makes sense unless you can write it off.
Re: A Simple new car lease formula?
Not necessarily. High residual usually goes accompanied by a high money factor (interest on lease)Alexa9 wrote: ↑Mon Jun 11, 2018 9:38 pm The best lease deals are probably the vehicles with the highest residual value. I would guess Lexus for this reason. Also, everyone seems to want an SUV nowadays so those tend to have higher residual values. I still think leasing rarely makes sense unless you can write it off.
Low residual usually is accompanied by a low money factor and lender/manufacturer rebates
Re: A Simple new car lease formula?
Not necessarily. High residual usually goes accompanied by a high money factor (interest on lease)Alexa9 wrote: ↑Mon Jun 11, 2018 9:38 pm The best lease deals are probably the vehicles with the highest residual value. I would guess Lexus for this reason. Also, everyone seems to want an SUV nowadays so those tend to have higher residual values. I still think leasing rarely makes sense unless you can write it off.
Low residual usually is accompanied by a low money factor and lender/manufacturer rebates
Re: A Simple new car lease formula?
BMW’s lease great. Currently leasing a 3-series and opted for European Delivery (7% off MSRP), picked up from the BMW Welt (factory) in Munich.
For comparison on my car -
MSRP $49.7k
36 month,15k residual value was 59%
Money factor was 0.00081 – money factor (includes multiple security deposits)
$499.99 – monthly payment includes 9% PA sales tax
For comparison on my car -
MSRP $49.7k
36 month,15k residual value was 59%
Money factor was 0.00081 – money factor (includes multiple security deposits)
$499.99 – monthly payment includes 9% PA sales tax
Re: A Simple new car lease formula?
Do you mind mentioning what brand and model vehicles those are? And you are calculating the monthly percent based on MSRP, correct? A lot of vehicles typically sell quite a bit below MSRP, especially if there are rebates and incentives available. So, the actual monthly percent would be higher if you compare it to a "good" purchase price (not the absolute lowest, perhaps, but what a decent shopper could get).pennylane wrote: ↑Mon Jun 11, 2018 9:30 pm Yes, you are correct. If you can get a car for 1% of the MSRP, it usually is a steal. Tough to find but they are out there. Everyone in my immediate family usually ends up paying less than 1% of the MSRP when they lease because I was in the business.
Wife paying .8%
Father .65%
Mother .95%
Sister 1.3% (she rushed and didn’t wait for me to help)
"The course of history shows that as the government grows, liberty decreases." Thomas Jefferson
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Re: A Simple new car lease formula?
The "rule" takes that into accountdeanbrew wrote: ↑Tue Jun 12, 2018 8:28 am
Do you mind mentioning what brand and model vehicles those are? And you are calculating the monthly percent based on MSRP, correct? A lot of vehicles typically sell quite a bit below MSRP, especially if there are rebates and incentives available. So, the actual monthly percent would be higher if you compare it to a "good" purchase price (not the absolute lowest, perhaps, but what a decent shopper could get).
"Every time I see an adult on a bicycle, I no longer despair for the future of the human race." H.G. Wells
Re: A Simple new car lease formula?
wife: Hondadeanbrew wrote: ↑Tue Jun 12, 2018 8:28 amDo you mind mentioning what brand and model vehicles those are? And you are calculating the monthly percent based on MSRP, correct? A lot of vehicles typically sell quite a bit below MSRP, especially if there are rebates and incentives available. So, the actual monthly percent would be higher if you compare it to a "good" purchase price (not the absolute lowest, perhaps, but what a decent shopper could get).pennylane wrote: ↑Mon Jun 11, 2018 9:30 pm Yes, you are correct. If you can get a car for 1% of the MSRP, it usually is a steal. Tough to find but they are out there. Everyone in my immediate family usually ends up paying less than 1% of the MSRP when they lease because I was in the business.
Wife paying .8%
Father .65%
Mother .95%
Sister 1.3% (she rushed and didn’t wait for me to help)
Father: Mercedes
Mother: BMW
Sister: Honda
Honestly, forget calculating anything. It is completely irrelevant, you're going to not only frustrate the dealer but you're going to get caught up in numbers that you don't have to. There is no need for you to know what the residual is unless you're planning on buying that car at the end of the lease. You also don't need to know what the money factor is either because its not negotiable (unless you put down security deposits which may or may not be available, this is depending on the bank)
You want a good deal? Pick a car, trim and MSRP... get quotes from your local dealers asking them to give you a quote with X miles and NO MONEY OUT OF POCKET, EVEN INCEPTIONS ROLLED IN.
only money you will be paying is your first month.
you knowing the MF or residual will not affect your monthly payment because this is not something you can change or challenge them on. Also, sometimes it doesn't pay to go to the cheapest dealer because if you're going to be servicing with a dealer, you want to most likely buy from them because they will be able to offer you pick up and drop off services when you need maintenance and maybe better servicing deals.
Re: A Simple new car lease formula?
I consider a really great deal to be not just 1%, but sticker price divided by 120 as the monthly payment plus taxes for any car with no down payment but multiple security deposits allowed to bring down the money factor. That translates to what I call .83% rule rather than 1%. This is for a general lease for 36 months with 12k miles per year.
Derived this figure based on the Leasehackr website that considers any lease to be a great deal based on a so called "10 year rule" which is where 10 years or more worth of payments would equal the sticker price of a car. So 10 years is 120 months basically so (1/120) that comes to this. Have seen some great deals there posted such as a Infiniti QX60 SUV worth over $60k for somewhere in the low 400s per month.
I think the key to getting such deals is to email multiple dealers and work everything out ahead of time rather than walking randomly into dealers.
Derived this figure based on the Leasehackr website that considers any lease to be a great deal based on a so called "10 year rule" which is where 10 years or more worth of payments would equal the sticker price of a car. So 10 years is 120 months basically so (1/120) that comes to this. Have seen some great deals there posted such as a Infiniti QX60 SUV worth over $60k for somewhere in the low 400s per month.
I think the key to getting such deals is to email multiple dealers and work everything out ahead of time rather than walking randomly into dealers.