Car leasing info..???

Robocop

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Ok I have a decision to make here and need some advice from others who may have done a vehicle lease in the past.

I have looked at new vehicles and had decided on a new Frontier 4x4 for about 24k. I plan to keep my Tacoma as it is paid for and really a great truck. I had originally wanted an Infiniti G35 coupe however at 36k it was possible however not really practical as it would greatly change my lifestyle.

So having almost finished my Frontier deal I learned that the new Infinity G35 could be had for roughly the same payment however it was with a lease only. The dealer made it sound real slick stating it was a closed end lease and can be had for no money down. He spoke of residual values and other terms and I actually considered it for a moment however like all else I must research this first....I know nothing of lease terms nor the fancy words used to explain them. The dealer stated the cost of the vehicle is negotiable even on a lease and that 15k yearly on mileage was standard however miles could be added up front to 20k or even 25k yearly if need be. No money down could be done and that buy back was an option at the end or simply turn the vehicle in and walk away after 24 months or even 36 months if I choose that time limit.

So has anyone here had good experience with a lease and especially a lease on an Infiniti or other luxury car? Some co-workers have tried to help me however most say it depends on my situation with the majority warning me against a lease.

I drive about 55 miles daily to and from work and have the occasional trips to the store on my days off. I have no other bills with the exception of my house payment and utilities and maybe a few credit cards that could be paid off anytime if need be. I keep them active mostly with a few hundred dollars each in order to keep my credit score high. I have no kids and live alone with an income of about 45k yearly. I plan on keeping my Tacoma for a spare vehicle and have to now decide if I should buy the Frontier as that is easily obtainable or should I go for a much more costly vehicle on a lease with the above described terms.

I like the Frontier however that G35 just hooked me with that test drive....man what an incredible car that is....any help on this would be appreciated.
 

bruddamoke

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Feb 21, 2006
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Aiea, Hawaii
Leases are generally considered for short term (less than 5 years) periods. The reason is that with a lease, your payment is calculated based on the expected value you will use. The vehicle starts with a certain value, say $36K. If you take a 3-year lease, the leasing company will determine what the residual value would be at the end of the term, assuming certain mileages, say 10K-12K annually. Cars with higher resale value have higher residuals, all things being equal, so they might be able to look favorable in a lease situation.

If the residual value of this car is $20k, then your lease payment will be calculated based on the difference ($36k-$20k=$16k), using an interest rate factor as would a loan. Oversimplifying this example, your lease is a 3-year loan for $16K. Lease contracts normally specify "penalties" if you go over the agreed-to mileage limits (like build up 100K miles) or substantially wear out the car (beyond what is reasonable).

Have never done a lease myself because I generally keep cars more than 6 years. I also don't want to worry about how far I drive during the term. And, you can't do anything substantially different to the vehicle (like a custom soundsystem, lowering, "pimping" etc.) unless you are willing and able to return the car to the condition you originally received it. This goes back to the residual value.

This is just a start, I'm sure others will add pros/cons. BTW, the G35 is sweet, thinking about getting one myself. Currently drive a 2000 Maxima SE, right now I'm down to the G35, Mercedes C-class, or something similar. Not in a real rush though.
 

CLHC

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Dec 25, 2004
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Never leased a car but as brudddamoke mentioned above. There's also some sound advise on Edmunds.Com and KBB.Com on leasing.

Enjoy that Infiniti G35! :wave:
 

magic79

Enlightened
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Nov 7, 2005
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The Evergreen State
I leased a Mercedes C230 about 4 years ago.

There are good and bad aspects.

First...READ THE CONTRACT! It is NOT "drop off and walk away". There are fees you must pay at the end of the lease that usually amount to several hundred dollars.

If you get in with no down payment, the interest rate is going to be MUCH higher than if you put a couple thousand down because they have to make sure the payments are covering the large initial depreciation. And don't forget, in most states you still have to pay sales tax (ask your dealer)! With no down, you are rolling that into the payments too.

Odd as it sounds, the higher priced luxury cars are often a better deal because they have a higher residual. I looked at an Infinity G35 when I leased my Mercedes, and they couldn't match the MBZ deal.

Maybe the worst part is the milage. If you go over (read your contract for the exact amount) you are going to get HAMMERED at the end of the lease. I bought extra miles (15k/yr) and I kept an Excel spreadsheet each month to see if I was "on schedule". The other side of the coin is you don't want to go way under, because you're paying for those miles (unless you intend on buying it at the end of the lease).

One more consideration. You can be in big trouble if you have an accident. Even if it is perfectly repaired and paid for by insurance, it can affect your residual value. If you are totaled with that no down payment after a few months, you will likely owe much more than the car is worth (perhaps thousands). You should definitely consider "gap" insurance on a lease. Gap insurance will pay the difference between the value of the car and the amount owed if you owe more than the value.

Something that I didn't realize is that a lease is treated the same as a purchase if you decide you want to get rid of the car early. I traded mine for a Yukon 32 months into a 39 month lease. It was as smooth (or difficult!) as if I had owned it. You can also buy the car anytime you want. Like any trade, you are not going to come out smelling rosy...you'll not get top dollar. But, the further into the lease, the closer you'll get to net zero.

As an aside...I'd never lease again. Keeping track of milage, being afraid to drive it on long trips, having to keep it a specified time...while all are modifiable, I think it's easier to buy it.

Had fun with the MBZ though!
 
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