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      01-02-2012, 10:47 PM   #1
Watwood
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Lease Question

I haven't spent much time messing with leases so don't make too much fun. I have a lease set up for my sister at $250/month for 36 months, which comes out to $9000 total invested. She can put $6000 down, so that's $3000 left over. Am I correct in calculating her new payment as being ($9000-6000)/36 months, or is there some voo doo calculation? Also, this price includes tax/title/bs fees.

Why is she putting $6000 down you say? B/c that's what she got out of her last car that was recently totaled, I don't know how good she is with money, so I'd rather it be used as a down payment instead of sitting in an account until she see's a 50% off sale at Anthropology then poof.

Thanks

Last edited by Watwood; 01-02-2012 at 11:10 PM.
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      01-02-2012, 11:16 PM   #2
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Watwood,

Why a lease? Have you or her leased before? The basic idea of a lease is less out of pocket and a lower payment. Chunking $6k down on a lease is a no no. I'd rather see you use that money to buy mileage instead of the standard 10K or 12K miles a year. Without detail info. it's hard to say more.

By the way, if you are using the $6000 as a down payment, make sure it is applied to the cap cost.
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      01-02-2012, 11:52 PM   #3
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Google lease calculator...I believe the best one is leaseguide.com. Leases are best with minimal cash out of pocket. You don't want to put that much into a depreciating value that you're not gonna own after the lease period. If she wants to lease, max I would go is $1500 for a down and calculate the monthly from there. Put the rest of the money in an account and supplement the monthly payment with it as needed
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      01-03-2012, 12:48 AM   #4
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Quote:
Originally Posted by toplessrydr View Post
Watwood,

Why a lease? Have you or her leased before? The basic idea of a lease is less out of pocket and a lower payment. Chunking $6k down on a lease is a no no. I'd rather see you use that money to buy mileage instead of the standard 10K or 12K miles a year. Without detail info. it's hard to say more.

By the way, if you are using the $6000 as a down payment, make sure it is applied to the cap cost.
Short answer is no. I'm taking a crash course in it, and on that note I broke one of my cardinal sins, blurted out questions before googling... LOL

So, after my past hour of a crash course I've come up with theses numbers.

MSRP: $19,383 (Known)

Net Cap Cost with $0 down: $18,164 (Known)

Sales Tax 7.75% (Known)

Term: 36 Months (Known)

Monthly Payment: $239 (Known)

Residual Value: $10,638.65 (Assumed at 55% of original value, I'll ask this tomorrow via email)

Interest Rate: 1.065% (Calculated using assumed residual value, but I'll ask for Money Factor tomorrow)

Using these values, which are close, her payment would drop to $56.60/month putting that $6k down using bankrate's calculator.

One thing I don't understand are the taxes. I've seen the usage tax on the internet calculators which is calculated off the difference between net cap cost and residual value, which is significantly reduced if $6k is dropped as a down payment. I'm assuming taxes will be paid on that $6k as well?

Why a lease. She decided she needs to live 1000 miles from our family (who has paid for anything of significant value she's had in the past) to learn to live on her own. She just totaled her car that was paid for, doesn't earn a decent income, has zero skill set with vehicle maintenance, so I'm trying to find her something cheap, reliable, and less of a headache on my parents. Leasing seemed logical. In order for her to not be financially sodomized once she walks in a dealership I'm trying to help her out with negotiating a price.

She doesn't need extra miles, 12k a year for 3 years is good enough.
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      01-03-2012, 11:06 AM   #5
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Taxes are paid on the depreciated amount. Any payment you make against the car is taxed so yes the $6k is taxed. And naturally you do not paid tax on the residual amount. You will need to ask the dealer what the residual value is and the money factor. Remember that she still needs to maintain the car and any damages deemed excess will be charged to her at the end of the lease. Some lease will cover an $X amount of wear and tear. The last time I leased my S2000 I think Honda Finance covered up to $1500 in damages at the end of the lease. Hopefully you figured out how she is going to paid for gas, insurance, living expenses now that she is so far away.

Good luck
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      01-03-2012, 11:26 AM   #6
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I will say this slowly... Do....Not....Put...Money....Down...On...A...Lease. ..
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      01-03-2012, 11:56 AM   #7
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Quote:
Originally Posted by toplessrydr View Post
Taxes are paid on the depreciated amount. Any payment you make against the car is taxed so yes the $6k is taxed. And naturally you do not paid tax on the residual amount. You will need to ask the dealer what the residual value is and the money factor. Remember that she still needs to maintain the car and any damages deemed excess will be charged to her at the end of the lease. Some lease will cover an $X amount of wear and tear. The last time I leased my S2000 I think Honda Finance covered up to $1500 in damages at the end of the lease. Hopefully you figured out how she is going to paid for gas, insurance, living expenses now that she is so far away.

Good luck
LOL, appreciate the insight. I like your last sentence. If it was left up to me she would have figured it out long ago, but tis hard for my parents to wean her off the financial tit.
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      01-03-2012, 11:57 AM   #8
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Learn everything about leasing before you commit or you will get screwed. It's lot more complicated than financing a car and there are many twist and turns that dealer or leasing company uses to their advantage to stick it to you if they find out you are a noob.

Here is a good place to start : http://www.leaseguide.com/lease01.htm

Also personally, I would NOT lease if :

1. It can not be a total business write off (You need to use it as a business vehicle and write off all costs associated with using a leased vehicle including maintenance, gas, etc.)

2. I was required to put up a down payment (Cap reduction) . If anything happens to your leased car, all that money is gone. It is not refunded by the lease company or covered by your insurance company.


Good luck
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      01-03-2012, 12:28 PM   #9
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Originally Posted by Tondtar View Post
2. I was required to put up a down payment (Cap reduction) . If anything happens to your leased car, all that money is gone. It is not refunded by the lease company or covered by your insurance company.
That's the answer I was looking for. Thanks Tondtar.
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      01-03-2012, 01:03 PM   #10
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Quote:
Originally Posted by Watwood View Post
That's the answer I was looking for. Thanks Tondtar.
Anytime ...Glad to be of help.
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      01-03-2012, 03:53 PM   #11
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Lease with minimal drive off

take the 6k and put it in an account under YOUR name

and set up automatic monthly payments

Tell your sister she needs to deposit $60/month into this account.

This is another option
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      01-04-2012, 01:08 AM   #12
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Persian54....I like your idea.

Watwood.....on the same note as Tondtar. With a lease, most lease company include what is called a GAP insurance coverage which covers for any negative equity if the vehicle is totaled during the lease. The bank will not knock on your door asking for the balance between what the car is worth and what you owe them. Make sure you ask this question.
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      01-07-2012, 11:06 PM   #13
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All of my energy was a waste as my parents just wired her $19,000 after she found her "dream" used car, didn't have time to go to the bank and get a big girl loan, and apparently is yet to be cut a check from her insurance company. So, she called Mommy and Daddy stating "This entire process of purchasing a new car is sooo difficult, too stressful, I just wish this could be over with". Supposedly she will give them the insurance check and pay my Father in monthly installments, but I see this fading out in the future, or at least having 3+ payment hiccups annually. I asked them why they didn't just wire her $500 to give the dealership so they would hold it until next week and she could have time to secure a loan, not to mention dealerships offer mother fucking financing. My parents said they didn't realize they could do that (Pops always paid cash for our vehicles growing up). And to that I replied:



Not that y'all care, but there is a significant difference in the financial treatment between the two of us and I fear between between my parents naivety / ignorance and her selfish lifestyle all 3 of them will burn through my parents' nest egg. The irony here of course being from the day I was born my Father has always stressed to me we were broke, had to save every penny, the importance of fiscal responsibility, and how much life costs (he was very hard working blue collar that provided a sufficient life for our family and hoarded cash like no one I've ever known). My parents took care of around 20% of my bills through college and post college, 0%. They can't get this one off the tit though. Amazing.

It's like a modern day version of the Parable of the Lost Son, except the lost son has some mammaries and a split tale, and lives 1200 miles away. She ain't dead, you know this, you pay her phone bill.

But, on the bright side, I now have the knowledge to negotiate my way into a great lease if the need ever arises.

Last edited by Watwood; 01-07-2012 at 11:35 PM.
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      01-07-2012, 11:18 PM   #14
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lol, partially why i hope i never have a daughter
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