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Discussion Starter · #1 ·
Any of you guys/gals out there leasing a 2000 Wrangler? I haven't signed no papers yet on my vechile, and while talking with the saleman today when he asks if I had ever considered leasing. He explained it to me, but I'm not sure If I get what he said. From what I understand, the lease runs for 3 years, you select how many miles you "expect" to put on it per year along with how much you want to put down. Your then told the amount you could buy for after 3 years. Then, after three years you could 1) turn the vechile in for a new one or 2) keep the vechile and pay if off. So does this mean I am financing 1/2 of the vechile for 3 years, then If I decide to keep it I will finance the other remaining part? Then if I decide to turn it in on a new one, I just turn it in and loose all the money I just spent putting into this vechile or would some of it carry over to the new vechile? I like the idea of getting a new one after 3 years, maybethen I would love to have one and turn this one in, or maybe change my mind and decide to Jeep it (I wouldn't have this option if I financed it to buy). So what are most of you doing with your vechiles? Can someone explain to me how the leasing works and if it's right for me. I will in no way make this TJ a rock climber, but I do plan to go offroad (reason for the Dana 44 package deal). I have also decided to just order one, since I couldn't locate a color/option/interior combination that I really wanted. So I guess a good two month wait is in order, but that just gives me more time to save up for some bolt ons b/f the payments start. Thanks

Chad
80 CJ7 For sale
84 CJ7
00" Wrangler soon to be ordered

 

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What you are basically doing is renting a jeep for three year , If you lease a $20,000 jeep
First, there will be no negotiating on the price.
After three years at $400 a month the to buy price will be about $19,000
if any damage is done to vehicle you pay that too. now $19,800
if the milages is over the contract amount you pay per mile now $21,000

so after paying $ 3600 in notes you must pay $21,000 for a jeep worth $15,000

leases are rackets to get people to pay what they can afford per month instead of affording the vehicle. if leases are so good how come the BBB has so many rules against them.

brownbagg
 
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Discussion Starter · #3 ·
Brownbagg is on the money.

Here's some more:

Basically, you're renting the car from the dealership for the period specified in your lease contract. You only pay for the DEPRECIATION of the vehicle during the life of the lease. The amount left over at the end of the contract is called a residual. This amount IS negotiable! The dealership will try to make you pay for "more" mileage to lower the residual value (cars with more miles are worth less), but you can negotiate to lower the residual. Even if they lower the residual $1000.00, if you re-fi the car at the end of the lease, it won't make much diff.

Make sure to get a closed end lease, and no more than 36 months...

Leasing is good for someone in 2 situations:

1. Salespeople can usually write off the interest on the lease. (Interest is a per month charge, based on the actual payment).

2. Someone that doesn't drive a lot, but wants more car than they can afford, and plans to turn it in every 2 or 3 years.

It's ok to lease, but it will take you 2 or 3 years extra to pay off the vehicle, and you are lining the pockets of the dealership. If you can't afford to buy the 6cyl with a hardtop and D44 option, then lease. If you plan on keeping the car forever, you get to play early, and pay later with a lease... /wwwthreads_images/icons/crazy.gif

Good luck.. just remember, the salesperson is your friend /wwwthreads_images/icons/crazy.gif, their manager is your enemy... /wwwthreads_images/icons/wink.gif Never take their first 3 or 4 offers... the salesperson will tell you they can't go back with a lower offer. This is usually a lie./wwwthreads_images/icons/blush.gif

http://www.obsessiveoffroad.com
If you don't stand for something, you'll fall for anything...
 

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Leasing is not a racket or a scam. Only people who do not understand it will tell you that. First of all leasing is not for everyone. It may be perfect for me (I lease), and on the same note it may not work out for you. Your theory of paying for only half of the cost for the 3 years is basically right. You will probably pay close to $100.00 less a month on a lease. You can negotiate the price up front for a lease, which comes off the 3 years payments making your payments less. The garunteed value at the end of the lease stays the same no matter how much is taken off the price. If you drive a lot of miles per year you may not want to lease. However, you can alot up to 33,000 miles a year if you want to pay the extra amount per month. then at the end of the lease you will be credited back the money on the miles you do not use. If you finance the Jeep and then try to sell it or trade it in three years you will have paid more because your payments will be higher on regular financing. So if you lease payment is 300/month for 36 months you will have paid $10,800. If you finance it at 400/month you will have paid $14,400. Thats 3600 more in the 3 years. Not only that if you try to trade it in you will probably have negative equity. So now you will have to pay the negative equity on top of the 3600 extra you spent. Now you will have to come up with a down payment for your next vehicle. Lets see 3600 plus 2000 negative equity (if you are lucky)and down payment of lets say 1500. Thats 7100 more you will pay to finance a vehicle that you will NEVER own. If you lease you turn vehicle in and come up with first payment and tax and drive away. You don't have to worry about negative equity, thats the lease company's problem. Now if yoy plan to keep the vehicl for a long time DO NOT LEASE, it is not designed to keep it under a lease. A lease is a way to drive a new vehicle with very little money out of pocket, with a lower payment. I hope this helps.
By the way ask your salesperson how many people at his dealership (that work there) lease. You will be suprised to know that the majority of sales people lease their cars.
I work at a Jeep dealership and we have 8 salespeople out of 14 right now leasing Grand Cherokees.

Good Luck
NL

 

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Redjeep is wrong you cannot negotiate the residual. It is part of the contract.
Again another person who does not understand leasing "so it must be bad". Also, the dealership is only paid for the price of the vehicle, they do not make any money from the lease itself. The motivation in getting you to lease is that in 3 years you will be ready for a new vehicle and you will not be upside down because you will not have a trade. Hopefully you will return back to them to get a new car. If you are upside down you will be taken out of the market until you can pay the car off, usually 5 years. The dealership actually makes more money if you finance it with them verses leasing. Also, Gap insurance is included with a lease. Lets say you owe 20,000 on a car worth 15,000 and it gets totaled. The insurance co. will only pay 15,000 torwards the loan, you have to come up with the rest. Gap insurance pays the difference or that gap, so you will not have to pay it yourself.
NL

 
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Discussion Starter · #6 ·
So leasing to buy sort of defeats the entire purpose? I like the idea of
financing less, driving it three years or so, paying less of payments, then
after three years choosing to pay it off (I assume refinance the remaining
amount owed) or opting to get a new one. So if I plan to at the moment keep
the vechile for a very long time, I should just finance all my money and pay
that way? If I could come out in the end cheaper or break even (with financing
all the money to own) with a lease I'd like to do that, and it would really
help to get payments cheaper if possible. Would leasing just be a total waste
of money? Or could I possible get out cheaper that way? Say I lease for 3
years, tell them 12k miles per year (it may be more), then at three years tell
them I keep it and finance the balance. I would have to set it up for 60
months to pay either way (I can't pay but some much a month). I know paying in
cash is the better option, but I can't do that. I just got to figure out what's
better for me.

Chad
80 CJ7 For sale
84 CJ7
00' soon to be ordered








 
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Discussion Starter · #7 ·
When you lease the residual is set by the finance (leasing) company.
It is a percentage of the MSRP that the finance co. predicts will be the
market value of the vehicle at the end of the lease. It is not
negotiable but a vehicle that is known for holding its value well is a
little cheaper to lease due to its higher residual value. Say that the residual is 50%, and the term is 3 years then you buy half
the vehicle over 3 years.
Leasing is good if you trade in very frequently, want more vehicle
than you can afford, use it primarily for business (and deduct it), OR
are trying to buy your way out of a negative equity situation on your
trade-in. You must be A or B credit to lease also.
When you lease the finance charge is not called interest it is called a money factor. To compare it to rate you apprx. double it. Sometimes
manufacturers offer a lower money factor as encentive.
Leasing really only benefits a small percentage of consumers. The
best way to buy a vehicle is to arrange financing through your own credit
union as they will beat any banks rate. This also gives you a bit of negotiating power and will help you figure what you can afford.
Just don't tell my boss that I gave all our secrets away LOL

Gibby (Sales and Leasing for several years)

ps. if anyone offers a non closed-end lease, run screaming from that
place.


~Someone's got to keep the
bastards on their toes~
-HST
 

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In almost every situation that I've leased/bought.....I've found the difference in TOTAL cash out is very little. The only thing with a lease is that at the lease's end you have a very expensive used vehicle.......but if you wanted to buy the same vehicle you'ld have a large down payment and a much higher per month outlay......you're just compressing the payments into a 3-5 year duration. With a lease.....you put very little down......decrease the cash outlay for the first 3 years.....and load a larger dollar # into the a$$ end of the purchase. This assumes that you want to eventually own THAT vehicle and it makes the difference very little in total outlay.
Now if you're trading a vehicle in on a lease (not to be confused with turning in a lease vehicle and then leasing a new one)......that's when you can get screwed in some circumstances because now the dealer/salesperson gets to play a little shell game......where's the value of the trade reflected??....how much is the actual reduction?.....blablabla.

Anything is negotiable.......just because it's a lease doesn't mean that you have to have the lease written at MSRP. You've just got to hold out on the salesperson......they'll eventually hack some $ off the package. Just keep in mind the little signature caption at the bottom of this post./wwwthreads_images/icons/smile.gif
GeeAea

Figures don't lie ....... but liars sure do figure.
 
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Discussion Starter · #10 ·
Marky - Yes, you give Chrysler/whoever more $, but they are basically gambling that they will be able to sell the car for more than the residual... if you don't buy it.

GeeAea is right.. you pay in the beginning or the end. It all works out. If you lease a car for 36 months, then pay for it for 36 months, that's 6 years of payments. That's a LONG time to pay for a car... and it will cost more in the long run. But, you financed a car for 72 months, effectively lowering your monthly payments, freeing up $$$$$ to do other things in that 72 month period. That is called time/opportunity cost. What is more important to you: today's fun, or the promise of fun in 60 months when the vehicle is paid off? /wwwthreads_images/icons/wink.gif

Ummm, we negotiated the residual instead of the sticker of our latest car. I guess it's 6 -- 1/2 dozen another. The overall goal was to lower the monthly payments.

Leasing afforded us a vehicle we could not otherwise buy. We eventually refi'd through our credit union (btw: they offered leasing TOO!) and won't pay much more than if we bought outright at the beginning, BUT our initial payments were much lower, and the initial out of pocket was zero... Of course, some 18 year old gang banger from the San Fernando Valley with no insurance hit us so hard that it devalued our car to the point that we're about 3k upside down on it... Anyone want it? /wwwthreads_images/icons/frown.gif

Nice side note: We traded our 1991 Acura Integra. The day after we got our new car, the clutch went out on the Integra, and the dealership had to replace it! /wwwthreads_images/icons/smile.gif... Gave one to the gipper!/wwwthreads_images/icons/wink.gif

http://www.obsessiveoffroad.com
If you don't stand for something, you'll fall for anything...
 
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Discussion Starter · #11 ·
Geeaea wrote "Anything is negotiable.......just because it's a lease doesn't mean
that you have to have the lease
written at MSRP. You've just got to hold out on the
salesperson......they'll eventually hack some $
off the package. Just keep in mind the little signature caption
at the bottom of this post.
GeeAea"

The lease does not have to be written at MSRP but the residual is
set based on MSRP (on a closed-end lease). The only way to change
the Resid is to change the number of miles allowed or try a different
lease co that may have a different resid. Charming quote, btw
Gibby

~Someone's got to keep the
bastards on their toes~
-HST
 
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Discussion Starter · #12 ·
Hey if you dont wanna lease and still have a low payment I have a 97 with the dana 44 package, 4.0, hardtop, with only 22,000 miles. Selling it for 14,900. Its like a new one. Give me a yell if you are interested.
Steve

 

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Some things to keep in mind.

You can negotiate the overall price of the vehicle when buying. When we looked into buying the TJ, we did a LOT of research. We found all the option codes and what the dealership pays for the jeep and each additive. We also found the MSRP on each, so we knew how much the dealership would make on the jeep. We had a list, complete with dealer option codes, and handed it to the dealer. I also had both prices listed. I told them we weren't willing to pay full price but knew they had to make money on the sale, so somewhere in the middle we'd reach an agreement. They were stunned we found out so much information (at a few bookstores believe it or not) and were so organized. We ended up getting hosed in the end, but that's another story and too lengthy to go into here.

If you scratch or dent the TJ, or otherwise return the jeep in other than original condition, you'll pay for it. There is an "acceptable" amount of wear and tear, but guess who gets to determine "acceptable". Basically you'll pay to either have the repairs done or pay for the additional depreciation on the vehicle. Same thing with tears on the seats, cigarette burns, or stains.

Same thing with tires. Our Trooper was bought used and was a prior leased vehicle. The tires from the dealership suck, and always wear out fast. The ones on the TJ were half worn at 15K when we put the BFG's on. If you turn in a vehcile with worn out tires on it, you'll pay for new ones or take a hit there as well.

Yes, if you buy the vehicle at the end of the lease they forego a lot. Having a strong background in math and sciences, I did a little comparison. What I learned was both are basically the same cash outlay, just over different time periods. If, for some reason, you can't buy the vehicle at the end of the lease though, you're hung out to dry.

We bought our '95 Trooper as a "leased vehicle" turn in. It had a few scratches but otherwise was in great shape. It originally booked for $35K, we bought it for $20K and added the 6/100K warranty to it. It's been a great vehicle. This was also a gamble though, but after checking the service record we decided on it. You might consider a TJ that's already been leased, you might find a decent one at a nice price. Just a thought.



JEEPN
'81 CJ-8 Scrambled!
GM151/SM465/NP205 twinstick/7" Lift/33" TSL's/REP 8000/RS9000's/IHC Scout II D44's F&R 4.10's & Lockrights
 
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Discussion Starter · #14 ·
We need people to lease these new vehicles so I can go out and buy a nice 2-3 year old vehicle without taking the hit on depreciation.

But to be helpful, if you lease at $300/month (I have no idea what your payments will be, so I will make up these numbers), you spend $3600/year, or $10,800 over 3 years. At the end of the lease, you owe, lets say resid. is $14,000. That is probably about the blue book. So, you paid $10,800,and owe $14,000, on a $14,000 vehicle. Hmmm. That SUCKS!!!

Why not buy a 3 year old Jeep for $14,000 and finance for 5 years. After three years you have paid (for the same $300) down $10,800 and probably owe about $5000-$6000, on a $6000-$8000 Jeep (the 97 would be 6 years old at the point). Sounds like a better investment, one where the dealer isn't eating your lunch.

And don't forget that there is a clause in the lease about wear and tear on the vehicle. The dealer gets to determine if there is excessive wear on the thing and what it wants to charge you for it. So a big scratch, or a dinged fender can really cost you in a charge if you turn it in.

My humble opinion is a lease is for idiots and people who simply want a new car every three years AND can afford to not be hassled with the ownership issues (they would rather take the hits and turn it in). If you can't afford it, don't buy it. Buy what you can afford and save money so you can afford to buy what you want. I am not saying you can't afford that Jeep, I have no idea, I am just saying that the lease will cost you more in the long run. I would get a 5 year from the credit union (if you are not a member of one, check them out and find one, see if they will get you a better deal upon joining) and forget about the lease.

I bought a 3 year old Ranger extended cab with 4L motor with 22,000 miles for about $800 below blue book, got a 5 year loan from a credit union, never had a probelm, sold it 2 years later with 59K miles for $900 more than I owed on it. I was pretty happy with that deal, but it took me about 3 months of looking to find exactly what I wanted for the price I wanted to pay.

I will get off my soapbox. Good luck, it does sound like a nice ride.

--Jim


 
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Discussion Starter · #15 ·
I'm going back to talk to both salesman tommorow and compare what they say. Here's what I want to do/can do. I can put about $300-$350 a month for car payments. I was planning to put about $5k down (2000 Wrangler MSRP=$24,4000 , one dealer was giving it to me at $22149.00 $250 over invoice = $22,399. Plus tax $671.97 tags $55 = $23,125,97). Okay, here was the game plan. Let me see what you all think of this (I'm a 21 year old first time new car buyer, so if this sounds crazy or stupid please forgive me). I'f I understand correct leasing involves first off financing 1/2 the vechiles value for the first three years. I was planning on putting a down payment down to reflect getting my payemts to where I want them. I then understand I am told the amount after three years that I will have to pay to buy the vehchile and keep it (and I understand this is not negoable). Keep in mind I plan to keep the vechile permanetly, but I'm looking for lower payments now at my age with collge and all. Ok, regardless of leasing or financing of any type, it will take me 5 years to pay it of like most people. But, I want the payments lower, so, then I can put extra $$$ with it every month if I'm able to (working side jobs when possible when the works there for extra $$$). Does this defeat the whol;e purpose? Say I got a lease on a 2000 Wrangler, with $300 payments or less a month, then say over other month I'm able to play $400 payments, does this help pay off the vechile quicker? Therefore making my payoff at 3 years less? I was going to also considering financing for 72 months to get payments down, then paying as much as I could every month (but still have that lower payment to fall back on if need be). If I'm also understanding correctly, with the financing it for longer, and paying off quicker, I come out good? Is this correct? Or any Im going about it all wrong? I like the idea of paying for half the vechile for 3 years (with the option of a new one after 3 years, also if I DID by chance decide to choose a new one say a 2003 model, I therefore loose all money I have put into this 2000 model? or would some carry over?)then, finance the other half for the other 3 years (keeping in mind I first off tell them I'm going to drive it at the less mileage as possible to get payments down for me right off). It's going to take me 4-6 years regardless to pay off a $23k vechile with college and only working when I'm able. It seems to me that leasing and financing is about the same, and you end up paying the same, but with leasing, you get the option of a new one after 3 years (and if you tear it up on the trail/street you're gonna pay out your a$$ if you decide to trade it in, but if I decide to keep it, they will not look over it and not charge me any kind of wear and tear fee's)then you just finance the other half of the vechile? It seems like it's all the same to me. I'm just looking at my choices. If I finance $18k (with my $5k downpayment), I'm looking at $350 payments at 72 months with Chrysler (with 11.5%) from the Chrysler place that's giving me the best deal so far (60 months at 10.5 = $386.89 also). We were discussing the lease also and I seem to remember him quoted payments well lower that $300. I plan to put more on it every month if I can, but I need to figure out how to do it and not pay almost double for the vechile. Should I check into a credit union (I remember someone saying something about that? I'm not a memeber of one however.)I'd like to if possible as little of a down payment as possible, get my monthly bills as low as possible (with intend to buy), then pay what I can per month (and have that lower price to fall on if I need to). I'm just a 21 year old college guy who likes to offroad and wants to be able to afford a 2000 Wrangler Sport without getting ripped off by the salesman and the banks. I'll also post the invoice to see if anyone things I'm getting ripped off (and if so how do I talk the salesman down?). I appreicate any help.

Chad
80 CJ7 For sale
84 CJ7
00" Wrangler soon to be ordered

 

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Chad,
You'll not likely get exactly what you describe there. My 99 Sahara for example listed for @25k .......I put a grand toward it and have 62 monthly payments of $300. AFTER 62 months ($18,600) the residual is still around $11,500 - which if I could extend the existing payments with alternate financing would approx mean another 36 months (no interest factored in here). The lease is for 1000miles/month. Since we already have over 15k on it and it's less than 11 months old......we're looking at enough "excess" mileage to make the purchase of the vehicle an attactive alternative to paying for the excess mileage and handing it over. That is, turning in the vehicle and handing them (probably) $3000. With the type of mileage that my wife and I put on vehicles (around 28K a year) there is NO such thing as cheap car ownership. We try and "acquire" new and usually manage to keep them for 10 years .....acquiring and new vehicle every 5 years. The only alternative for people like us it to, as someone here suggested, buy-trade for leased vehicles where the dealer is essentially selling it for the second time around .....where most of the depreciation has slowed.....and the majority of the service life is still in the vehicle.

If you intend on keeping the vehicle until it rusts off the frame........then it doesn't matter much how you do it. If you're going to "switch horses in mid-stream"....then I'd get a 3 year lease with payments based on real world mileage expectations. As others have said, how much is the "NEW" part of this purchase important to you. You can get a 98 and save thousands.....coupled with your down payment you'll have both lower payments and faster ownership.

Gibby.......I don't quite get your drift here. I negotiated an unlimited mileage lease with a residual of $1 in the past (when I operated a small radiopharmacutical priority courier service and made much much more money).....can you help me out here?

GeeAea

Figures don't lie ....... but liars sure do figure.
 
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Discussion Starter · #17 ·
Geeaea wrote, "Gibby.......I don't quite get your drift here.
I negotiated an unlimited mileage lease with a residual of
$1 in the past (when I operated a small radiopharmacutical priority courier service and made muchmuch more money).....can you help me out here?"

Sounds like you went through a small, private lease company. Either
you wound up paying some of the resid. up front or adjusted the mileage
limit to the point that the resid was $1. Let me know if that makes sense.
Gibby

~Someone's got to keep the
bastards on their toes~
-HST
 
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Discussion Starter · #18 ·
Chad, a credit union is the way to go. You can find a much better
rate and they are more flexible about what you can finance. I financed
a '74 CJ5 with my C.U. and got a good rate. Plus it will give you more
control of the purchase. Gibby

~Someone's got to keep the
bastards on their toes~
-HST
 

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Gibby,
The only thing I had a question about was the residual. I got the impression that you asserted that the residual was a fixed cast in stone type thingie, which I could not understand since I had done something different. What I've gathered from you is that "typically" (meaning Chrysler, Ford, GMAC, and most banks) the residual is based on the assumption of a 12,000 (some are 15k) miles a year and a depriciation factor of xxyyzz. This would tend to make the residual somewhat fixed.
You are correct.......I leased fromt the dealers own private lease company.

GeeAea

Figures don't lie ....... but liars sure do figure.
 
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Discussion Starter · #20 ·
GeeAea, you are right. I am talking about large leasing companies like
fordmc, gmac, wells fargo, b of a etc. My finance department is leery
of small leasing companies and they are somewhat rare in California.
With the Ford etc leases the resid. can be lowered by committing to 20k
miles a year for example but nothing has really changed except when you pay. Your payment goes up and the resid goes down.

Gibby


~Someone's got to keep the
bastards on their toes~
-HST
 
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