Lease questions

[esanger]

Hi everyone,
I am considering leasing my new G37 versus purchasing. I can lease the new Journey with Nav and Premium for $375 per month with $1k down +tax (for 15k miles per year) versus purchase for $34,533. However, I have never leased before. So, if you guys can provide any insights on other lease items you think I should be aware of as a new potential lease person? I appreciate any thoughts or experience you can provide in helping me make this decision.

[sniper27]

first off, what are your reasons for leasing v buying? is it for lower monthly payments or flexibility of getting out of the car at the end of the term?

assuming monthly payment is not the issue, you should first negotiate a lease based on the selling price (just as you would on a purchase) rather than going in and negotiate the monthly payment. This way, you know for sure if you are getting a good deal or not. After you negotiate the selling price (cap cost), minus any cap reductions (down pmt), you can figure out your monthly payment if you know the residual value, money factor (rate). Your dealer will tell you this if you ask.

Here are the formulas you will need:

Lease rate (before tax) = Depreciation fee + finance charge

Depreciation fee = (net cap cost - residual value)/lease term
Finance fee = (net cap cost + residual value) x money factor
Money factor = APR/2400
Residual value is a % of the MSRP.

So for example, MSRP for G37 journey with premium and nav = $39,325
Cap cost (i'll use the same as your purchase price in this example) = $34,533
Cap reduction = $1000
Net cap cost = $33,533

I'll pretend your APR is 2.9% and residual value is 50% (average is around this, but could be higher) and your lease term is 36 months

Residual value = $19,662.20. Money factor = 0.0012

Plug in all your variables and this gives you a lease rate of $449.13 + tax.

Now you need to figure out what your payments would be if you purchased it at that price. That depends on your rate, down pmt, etc...and decide for yourself if lease or purchase is better for you? Do you plan to buy the car at the end of lease? Generally, you end up paying more in the end if you do that as opposed to purchasing from the beginning. Leasing gives the opportunity for someone to get more car for less money up front. So for someone with access to less cash, leasing is allows them to buy more car. On the other spectrum, leasing gives people with access to lots of money who doesn't mind spending more at the end of the day and be able to drive a new car every few years. It also has more tax benefits if you are able to use your lease as a tax deduction.

[esanger]

Basically it is a few things. I typically don't keep cars more than 4 years anyway. The Altima I drive now, I have averaged about 1000 miles a month and that is driving it ALOT (family trips and such). I have owned the Altima for 28 months and put $29k miles on it. The payment is the second issue. If I buy the car for $34,533, I can finance it at 3.9% for 6 years for $530 a month. The lease deal I negotiated is $1000 cash out of pocket and $375 a month. My insurer says my current rates will not change (though I am not sure how much extra the gap insurance is going to cost me). The $375 per month is for 15k miles per year and just to be safe (is possible) I would purchase a few thousand miles at lease inception (though I don't know what IFS charges to buy miles up front.

It sounds like a good deal to lease and given that I do not plan on modding this car other than tinting the windows), modifications is not an issue. I am very meticulous about my vehicles, and garage my car every night so I expect my wear and tear would be minimal.

[sniper27]

If you typically get a new car every 4 years anyways, I say go for it. The lease sounds like a pretty good deal, especially if you are getting 15k miles/year. I got gap coverage for like $80/year. Just don't buy the gap insurance though your dealer. They charge like $800. lol

[esanger]

Spoke with my insurance rep and she said the gap was like $40 a year..I asked the dealer for the lease worksheet so I understand everything that is going into the deal. I might do it just because it's a heck of a deal. Though the car does not have the wood accents (which I really wanted). I think I am going to have to go without the wood accents, there is not a car on the entire east coast with the color/interior color combo and packages I want and the dealer won't install it..

[sniper27]

i wanted the wood accents also, but wanted white with graphite interior more. There was only 1 white with graphite interior in the state of California at the time with the options I wanted. So aluminum it was.