Update to financing options?

[JTK44]

Just found this:

Sit back and laugh: Note the down payment!

Brings back memories from the '60's: "Whatever he's smoking I'll have some!"

See: https://www.thoroughbredford.com/offerdetails-Symphony-Kansas-City-Missouri-2021-Ford-Mache-454314

Sponsored

 

[First Edition]

Just found this:

Sit back and laugh: Note the down payment!

Brings back memories from the '60's: "Whatever he's smoking I'll have some!"

See: https://www.thoroughbredford.com/offerdetails-Symphony-Kansas-City-Missouri-2021-Ford-Mache-454314

36 mo Lease

Offer Expires 1/4/2021
Example Stock # - Model # - MSRP: $56,200 - Lease Starting Price: $56,200. Lease for $818 a month for 36 months with $5,620 Down. Lease payment shown assumes that the vehicle will be driven 7,500 miles per year. Must qualify to finance through Ford Credit with approved credit.


JTK44s predictions have come true. If anything, he was too optimistic. Ha.

 

[imstriker]

Wow, the lease pricing on the new Audi Sportback does look pretty impressive. Seems worth at least taking a test drive. Getting a $72,000 car for less money then my Mach E order is worth the time. I like the towing ability too. Just not sure it is worth that range loss.

 

[OttawaGuy]

7500miles per year?! Is that standard in the US for a lease?!

At that monthly lease price, you guys should be buying instead!

 

[JTK44]

7500miles per year?! Is that standard in the US for a lease?!

At that monthly lease price, you guys should be buying instead!

Yes: That lease payment plus the down payment should be the monthly payment, and maybe even less, if you financed the car! It is a totally absurd monthly payment!

In the US lease range from 7,500 to 15,000 miles per year or 12,000 to 24,000 km per year

 

[OttawaGuy]

Ok, I'm mostly used to seeing 20 or 24k km lease here in Canada. But wow 7500 miles that down and that monthly price C-RA-ZY

 

[hybrid2bev]

In the US lease range from 7,500 to 15,000 miles per year or 12,000 to 24,000 km per year

In the US leases actually range from 7,500 to 19,500 miles per year or about 12,000 to 31,300 km per year. With 15,000 being the standard amount.

 

[JTK44]

In the US leases actually range from 7,500 to 19,500 miles per year or about 12,000 to 31,300 km per year. With 15,000 being the standard amount.

Well actually no:

It is basic in leasing not to have a lease that goes beyond the manufacturers warranty period.

With most warranties ending at 36,000 miles/3 years whichever comes first, a 15,000 mile per year lease puts you beyond the warranty.

So in fact most leases are for 3 years, 12,000 miles or less.

The reason for this is quite simple: if at 40,000 miles there is a costly repair, not covered by the warranty, the cost will come out of your pocket. If you owned the car that cost would be amortized over the period you own the car. With a lease you will only get the benefit for 5,000 miles.

Another way to think bout it is consider renting a house for three years and you are required to maintain it. Your monthly rental is $1,000 per month. In the 30 month in the dead of winter your boiler breaks and must be replaced at a cost of $5,000. You have no choice and must replace the boiler. In six months you move out and the landlord has not only your rent but a new boiler at no cost to him!

Additionally, with 3 years 36,000 miles, tires brakes etc. in most cases do not have to be replaced and the tires will usually have enough tread wear at lease end. When you go to 15,000 miles per year, tires, brakes and other wear and tear items must be replaced.

When it comes to luxury cars, which tend to be driven less, even though the warranty is usually 48,000 miles/4 years which ever comes first, the most common lease is 36 or 39 months, 10.5 miles per year. Some luxury manufacturers are now starting to offer leases with 5K per year.

 

[hybrid2bev]

Well actually no:

It is basic in leasing not to have a lease that goes beyond the manufacturers warranty period.

With most warranties ending at 36,000 miles/3 years whichever comes first, a 15,000 mile per year lease puts you beyond the warranty.

So in fact most leases are for 3 years, 12,000 miles or less.

Not going to argue, it's just a fact. The standard mileage for a RCL is 15,000 miles. Anything lower or higher is an adjustment to the standard.

This is from Options, but it's identical to RCL:

 

[JTK44]

Not going to argue, it's just a fact. The standard mileage for a RCL is 15,000 miles. Anything lower or higher is an adjustment to the standard.

This is from Options, but it's identical to RCL:

You work in the auto industry:

With regard to leasing these are two of the most basic things when leasing: I call them leasing 101:

• Put as much as possible into the lease, including sales tax and acquisition fee. Unless there is substantial reduction in the MF, never put anything down, aka, "cap cost reduction" in order to lower the monthly payments
• Never take a lease beyond the manufacturer's warranty

Regardless of the chart above, do you not agree?

 

[hybrid2bev]

You work in the auto industry:

With regard to leasing these are two of the most basic things when leasing: I call them leasing 101:

• Put as much as possible into the lease, including sales tax and acquisition fee. Unless there is substantial reduction in the MF, never put anything down, aka, "cap cost reduction" in order to lower the monthly payments
• Never take a lease beyond the manufacturer's warranty

Regardless of the chart above, do you not agree?

Everyone's situation is different so I try not to generalize into hard and fast rules, if possible.

As far as putting money down it depends, but obviously less out of pocket is better in most cases for most people.

I've personally put money down and/or had trade equity applied towards the lease to lower the monthly payments. I've done leases where I only paid the first payment and state fees. I've also done 'sign and drive' leases with no money out of pocket at all. It really depends on what works for you and your situation, there are pluses and minuses for each scenario. I've never had any issues either way.

As far as mileage, people's needs are different and that's why the contract flexibility and extended warranties are available.

I've personally done 12k miles, 15k miles and 18,500 miles depending on my needs at the time. Yes, on some leases I was out of warranty for a period of time, but realistically I considered it a small risk returning a vehicle with less than 55k miles. I've personally never had a substantial vehicle problem until after my vehicles had 100k miles or more.

Many major components are covered by the powertrain and electric vehicle components warranty which is longer than the 3 year/36,000 mile bumper to bumper warranty. But again, extended warranties are available if you need more miles and desire to have additional coverage.

Warranty information is available for download:

https://owner.ford.com/tools/accoun...html?year=2021&make=Ford&model=Mustang Mach-E

 

[JTK44]

Everyone's situation is different so I try not to generalize into hard and fast rules, if possible.

As far as putting money down it depends, but obviously less out of pocket is better in most cases for most people.

Of course: In the event your car is either totaled or stolen, all money put down is gone "puff" into the ether never to be seen again as your insurance company is only obligated to pay the remaining lease payments plus the residual.

Here is an example to illustrate: I am using NY State where the tax is on the sum of the monthly payments plus any security deposit. This is the way 44 out of 50 states tax leases.

MSRP: 50,000, 36 months, residual 60%, interest (3%) tax rate 8%, $1,951 acquisition fee $750: Monthly payment with tax is $732.

Car is either stolen or totaled in accident after one year: Your out of pocket expense is 12 payments of $732, $8,784. Your insurance pays of balance of lease, 24 payments of $732, $17,568 plus residual of $30,000, total $47,568.

Now same facts except to lower the monthly payments you decided to pay the tax and acquisition fee up front plus put $10,000 down. Your monthly payments are now $365.

Car is either stolen or totaled after one year: Your out of pocket is:

• 12 monthly payments of $365, $4,380
• Sales tax of $1,951
• Acquisition fee of $750
• Down payment of $10,000

Total out of pocket: $17,081 vs. $8,874: difference to you an additional $8,207

Insurance company's cost: 24 months @$365, $8,760 + residual of $30,000, total $38,760.

Bottom line: you pay $8,874 more and the insurance company $8,808 less

You lose: Insurance company wins

I've personally put money down and/or had trade equity applied towards the lease to lower the monthly payments. I've done leases where I only paid the first payment and state fees. I've also done 'sign and drive' leases with no money out of pocket at all. It really depends on what works for you and your situation, there are pluses and minuses for each scenario. I've never had any issues either way.

Sorry I must disagree: I can think of no circumstance where putting down makes financial sense.

The fact that you have not had "issues either way" only means that to date you have been lucky.

As the example above clearly illustrates, the lessee (buyer) is most protected by a sign and drive lease, with only the first months payment due at lease inception.

The only exception is MSD (multiple security deposits) that substantially reduces the MF.

However a MSD is not a cap cost reduction - it is a refundable security deposit.

As far as mileage, people's needs are different and that's why the contract flexibility and extended warranties are available.

I've personally done 12k miles, 15k miles and 18,500 miles depending on my needs at the time. Yes, on some leases I was out of warranty for a period of time, but realistically I considered it a small risk returning a vehicle with less than 55k miles. I've personally never had a substantial vehicle problem until after my vehicles had 100k miles or more.

Many major components are covered by the powertrain and electric vehicle components warranty which is longer than the 3 year/36,000 mile bumper to bumper warranty. But again, extended warranties are available if you need more miles and desire to have additional coverage.

What you may consider a small risk is purely personal and may be too great for someone else.

I prefer no risk. The minute you go over the warranty you are at risk.

The only protection is an extended warranty: however this adds to the cost.

There is another point: residuals and MF have a "sweet spot" - where lease prices are the "best". That sweet spot is usually 36/39 months and 10/12,000 miles per year.

I have seen the monthly payment on 10K per year 36 months to be slightly more than 48 months because the MF went up and the residuals went down enough to offset the benefit of spreading the payments over the additional 12 months. Add in the cost of tires and brakes, and the cost of the leases were pretty much the same.

 

[jhalkias]

Of course: In the event your car is either totaled or stolen, all money put down is gone "puff" into the ether never to be seen again as your insurance company is only obligated to pay the remaining lease payments plus the residual.

Here is an example to illustrate: I am using NY State where the tax is on the sum of the monthly payments plus any security deposit. This is the way 44 out of 50 states tax leases.

MSRP: 50,000, 36 months, residual 60%, interest (3%) tax rate 8%, $1,951 acquisition fee $750: Monthly payment with tax is $732.

Car is either stolen or totaled in accident after one year: Your out of pocket expense is 12 payments of $732, $8,784. Your insurance pays of balance of lease, 24 payments of $732, $17,568 plus residual of $30,000, total $47,568.

Now same facts except to lower the monthly payments you decided to pay the tax and acquisition fee up front plus put $10,000 down. Your monthly payments are now $365.

Car is either stolen or totaled after one year: Your out of pocket is:

• 12 monthly payments of $365, $4,380
• Sales tax of $1,951
• Acquisition fee of $750
• Down payment of $10,000

Total out of pocket: $17,081 vs. $8,874: difference to you an additional $8,207

Insurance company's cost: 24 months @$365, $8,760 + residual of $30,000, total $38,760.

Bottom line: you pay $8,874 more and the insurance company $8,808 less

You lose: Insurance company wins





Sorry I must disagree: I can think of no circumstance where putting down makes financial sense.

The fact that you have not had "issues either way" only means that to date you have been lucky.

As the example above clearly illustrates, the lessee (buyer) is most protected by a sign and drive lease, with only the first months payment due at lease inception.

The only exception is MSD (multiple security deposits) that substantially reduces the MF.

However a MSD is not a cap cost reduction - it is a refundable security deposit.




What you may consider a small risk is purely personal and may be too great for someone else.

I prefer no risk. The minute you go over the warranty you are at risk.

The only protection is an extended warranty: however this adds to the cost.

There is another point: residuals and MF have a "sweet spot" - where lease prices are the "best". That sweet spot is usually 36/39 months and 10/12,000 miles per year.

I have seen the monthly payment on 10K per year 36 months to be slightly more than 48 months because the MF went up and the residuals went down enough to offset the benefit of spreading the payments over the additional 12 months. Add in the cost of tires and brakes, and the cost of the leases were pretty much the same.

Don't lease the car.

 

[trutolife27]

No one person Drives the same miles owns the car the same years, has tax deductions all the same.
Some buying, leasing, ford options are better. it's up to YOU as the consumer to figure that out at the time of the purchase with your dealer. Not all manufacturer's pricing, leasing as the same. IF you can't afford it or make it work, well hope you find one you can. This is a want purchase at this price range, not a need.

That's it that's just it.

 

[macchiaz-o]

Don't lease the car.