OT: Car lease

[LegendRider]

A friend of my wife's has asked that I help her negotiate a lease for a Lincoln MKX (a~ $50k crossover). She is bound and determined to have that vehicle so I need advice on how to get her the very best deal possible. It's important to note that she puts very few miles on a car. Her current 2002 Mazda has 56,000 miles - seriously!

The salesman quoted her $5k down and $558 per month for 39 months with 10,500 miles allowed per year. I know nothing about the car price assumed, interest rate or other fees.

Thanks in advance for any advice or tips on where to read up on the process.

[Ken Robb]

try an internet search for deals on that car. Does she belong to COSTCO,AAA, USAA? They all have new car purchase and lease programs.
If none of those work call each local Lincoln dealer, ask for the lease manager, tell him/her exactly what she wants and when she will begin the lease. Say that you are getting a few quotes because you want the best deal.

She should know what her credit score is because that will have a big effect on what she pays.

One problem with leasing a Lincoln may be that they have bad resale values so the depreciation factor is higher than for a very popular car like an Accord.

[EDS]

A friend of my wife's has asked that I help her negotiate a lease for a Lincoln MKX (a~ $50k crossover). She is bound and determined to have that vehicle so I need advice on how to get her the very best deal possible. It's important to note that she puts very few miles on a car. Her current 2002 Mazda has 56,000 miles - seriously!

The salesman quoted her $5k down and $558 per month for 39 months with 10,500 miles allowed per year. I know nothing about the car price assumed, interest rate or other fees.

Thanks in advance for any advice or tips on where to read up on the process.

Why would she want a new car if she only has 56k on her current car? Seems like a lot of scratch for that vehicle, which is ugly to boot.

[tch]

...could fit a large book. But the deal you cite sounds awful expensive to me for that car.
Try some internet sources, like Cars.com or CarMax to get a little perspective.

[aramis]

One problem with leasing a Lincoln may be that they have bad resale values so the depreciation factor is higher than for a very popular car like an Accord.

Yeah I'd be curious what the residual value of the vehicle is after the lease. On something like a 50k lincoln crossover, they lose tons of value over 2 years so that should be reflected in how much you are making payments on.

With a car like a civic, they may calculate the value of a 18k car in 2 years to be 13k or something like that, so you will only be making payments on 5k of lost value. On that lincoln I can see a 50k car being only worth 25-30k after 2 years so you are paying off 20,000+ which is kind of crazy. Best bet is probably to negotiate the actual price of the car as low as possible and try to get as good a rate as possible. I really couldn't think of much of a worse car to lease than a cadillac or a lincoln unless you negotiate a great price or the residual value the dealer sets is really high.

So really you need to find out what the actual price of the car is, what the residual is and find out any fees and interest rate to really make a good decision.

So I was bored I found an old ad that listed the MKX lease special as $389 a month + 3640 down for a 2 year MKX lease so that's "only" 13,000 over 2 years (plus tax on the lease amount, plus any fees, lease return costs,etc) and I'd rather do that than try to sell a 2 year old MKX so if she wants one and only for a couple years it doesn't seem that bad.

5k down + 558 a month is about 22 grand + taxes + fees and that sounds terrible for 3 years with that car.

[LegendRider]

You'll get no argument from me that her desire to lease a Lincoln is a colossal waste of money...

[1centaur]

Ken Robb had the best advice. We can talk lease theory all day long, but ultimately it will come down to what the competition offers, so set up the competition.

The super low miles thing is a curve ball because it's unclear how much the true re-sale value (which the negotiated residual value may or may not approximate) is helped by 5k miles a year rather than 7.5k or 10k. You want clear value from that and the dealer mind set may not want to give it to you. What customer is looking for a low miles off-lease Lincoln at a higher price than all the other off-lease Lincolns? Only the dealers know.

One piece of advice in all lease threads: know how to translate "money factor" before you walk in the door. The finance guy might not tell you an APR, he might just talk money factor. Google it, write it down, bring a calculator.

Just read a car mag that interviewed a dealer who said it's a myth that negotiating a cash price and then switching to leasing will save you money.

The places they can make margin off you: starting price, ending price, rate of interest, definition of wear and tear. These days you can get real close to starting and ending price through online searches (dealer margins have compressed in the Internet age), and APR will be pretty low if we're talking good credit but get it on paper. Definition of wear and tear may not be negotiable and will look like dealer discretion on paper. Cost for excess miles might be negotiable.

But, start with competition and get the start, end and APR on paper to compare how they got their payments. In the end, you might save very little vs. a naive buyer, but you'll know you weren't taken to the cleaners.

[Ken Robb]

The other curveball in the proposed lease is the 39 month term. The lessee will have to pay for a fourth year's registration but only get the "benefit" of 3 months.

[dave thompson]

Another factor is that Lincoln is trying to re-brand itself as the 'Lincoln Motorcar Company' in an attempt to regain its long-lost luster from the days of the real Continental and Zephyr, when Lincolns were not merely a rebadged Crown Vic. Increased pricing in all phases of its retail operations is one way they are doing this, including leases.

The residual value of of this 'new' Lincoln remain to be seen, they've not been very successful in previous attempts to re-jigger themselves. Cadillac on the other hand, well it was a hard road for them but I think they have succeeded quite well. Definitely no longer a stogy old-folks car.

[cmbicycles]

Fleecing a car is a losing proposition any way you slice it. Add to the fleecing that you are choosing a Lincoln x-over and it just gets worse. Have you or your wife voiced, the (correctly timed) opinion that she is wasting her money... before you go wasting your time trying to imagine ways to save money on a money losing venture.

If she is really desirous to throw away money, she could just as easily use your advice to buy some nice stuff on the forum classifieds and free some forumites to purchase more stuff... then once they use it a while and decide to sell it again, I might be able to reap some benefit. :banana:

[markie]

That thing is atrociously ugly.

If you go to the website the configurator shows a $40K base and a lease of $379 a month with $4300 down...

I would call other Lincoln dealers and try and negotiate a better deal.

(Actually I would find a used 5-series BMW or even X5, but that is just me)

[sjbraun]

I take it this woman is an adult? She should be making her own decisions.

I can't imagine how you can be right in this situation.

Perhaps you'd be better off explaining that you're not the right person to assist her. BY your own admission, you know little about leasing.

I'd decline if I were you.

[Ralph]

Even with it's extra built in costs....leasing can be a good deal for some....in certain situations. But you have to negoiate every detail, and make sure lease deal is based on low purchase price. This lease doesn't sound so good.

I'm usually a cash buyer of vehicles (and Ford X plan buyer)....but am currently leasing a vehicle, and will buy it out of the lease at lease end. It will be worth more than I can buy it for, may or may not immediately sell it....and the money I didn't spend has made more money for me invested than the car will cost to buy at lease end.
I made this deal when market was a lot lower. Won't lease a vehicle again until next recession....when I will have a good opportunity cost. I only lease when I have something else much better to do with the money.

I don't think the person mentioned above understands what she is doing.

[crownjewelwl]

If it is already on the dealer floor they want to move it...particularly at the end of the month to make their quota

Shoot for a bigger dealer that is part of a chain...particularly public like autonation...the have a lot of pressure to make numbers

Go in guns blazing at the end of the month...sound serious an bid them aggressively...they may balk a first but they usually call back

[Willy]

Be real carefully - a lease for a private party is not a good deal. Its set up for companies that can write the payments off. The kicker in the deal is not the original down payment or the monthly payments but the cost when you turn in the car at the end of the lease. The way I have seen it, when you turn in the car, you have to pay the difference of the value of the car and what they put into the deal as depreciation.

[KF9YR]

Does your wife's friend have a business? or an accountant?

If she's buying/leasing a 50k car she probably has an accountant to ask for advice on whether buying or leasing is a better financial decision.

I will need to follow my own advice next time as it would have saved me some money on my current vehicle. I'll do things differently next time.

If leasing is better for her situation I would contact Costco/USAA/CarMax/etc as recommended above to get competitive offers.

Of course this is a no-win situation for you but I'm sure every married man has had to help out one of his wife's friends with one task or another. I have a computer programming degree and can't begin to recall how many of my ex-wife's friends needed computer help while we were married.

[Ken Robb]

Be real carefully - a lease for a private party is not a good deal. Its set up for companies that can write the payments off. The kicker in the deal is not the original down payment or the monthly payments but the cost when you turn in the car at the end of the lease. The way I have seen it, when you turn in the car, you have to pay the difference of the value of the car and what they put into the deal as depreciation.

This may have been true back when there was a choice between an open-end lease where the lessee was responsible for the value(residual) of the car at the end of the lease or a closed-end lease where the residual is written into the contract and not the responsibility of the lessee. I have not seen any offers of open-end leases in California for many years.

When the lease is up the lessee is responsible for any extra wear and tear. Some people who didn't read and understand their leases failed to take care of their leased vehicles or tried to turn them in with bald tires, etc. and were surprised to be charged to bring the car up to the condition spelled out in the lease.

Over many years I have considered leasing every time I got a new car but only did it twice. I leased an Audi and I leased a BMW. Both times they were essentially subsidized leases. These are fairly frequently offered by manufacturers who want to move more cars but don't want to lower the resale value of their brand by advertising sale prices on new ones. They use very low money factors and capitalization (car value) costs to come up with attractive lease deals. Both times I went for leases when I totaled the up-front money, the total payments, and the residual value they were almost exactly the same as if I had paid cash for the car. On my Audi I made a profit trading the car in on a new Toyota. The Toyota was heavily discounted and the dealer allowed more for my Audi than my residual. Later I leased a BMW, loved it and bought it after 3 years for less than I would have paid for a new Accord. I drove that car four more years and sold it to a friend for $13,000.

These were the only times leasing made sense for me because I hated borrowing money/having payments on depreciating assets and the leasing company or department was just another profit center in the deal that I would have had to pay for.

Some very savvy individuals choose leasing because they are astute investors and can make more income on their cash than the money factor in the lease.

You have to run the numbers of lease vs. buy on every deal to decide which way makes the most financial sense.

[soulspinner]

Leasing works for some but if you are only driving 4-5 thou a year its a poor choice. Of course buying a luxury car insures if she buys it it will depreciate after two years severely and she will have no miles on it. A
Lincoln only adds to the problem with poor retained value. She should try to find a pristine off lease example and buy it. Try to talk her out of that dinosaur...................

[dgauthier]

It all comes down to dollars/mile. Your wife's friend will have a long way to go to find "the best deal" as the lease terms you describe work out to an exorbitant $1.60/mile based on her 11 year old Mazda's mileage. This is in lease payments alone(!), without even considering insurance, fuel, etc.

She would end up around $1/mile if she bought the Lincoln rather than leased, paid it off, and drove it for another 11 years.

[jlyon]

A lease Money factor is really just the interest rate if you multiply it times 24 (MF=.0017 is really 4.1% interest)

The residual value is based on the MRSP of the car not what you actually buy it for so the residual does not go down if you get $4,000 or $8,000 off sticker price.

I think leasing a Lincoln is smart rather than buying because at least you have them on the hook for the minimum value at the end of a lease if you bought it and it really goes out of style like Lincoln's have done on the past you could loose more when you trade it in.

The think I like least about leases here in Texas is that you have to pay the full amount of sales tax up front and then it is owned by the leaseingf company so you do not get any trade in credit at the end like you would if you owned a car and that could come out to another $80 a month if you finance the sales tax cost.

[Ken Robb]

A lease Money factor is really just the interest rate if you multiply it times 24 (MF=.0017 is really 4.1% interest)




The think I like least about leases here in Texas is that you have to pay the full amount of sales tax up front and then it is owned by the leaseingf company so you do not get any trade in credit at the end like you would if you owned a car and that could come out to another $80 a month if you finance the sales tax cost.

Wow, that's a nasty surprise. One of the pluses of leasing in CA. is that you only pay sales tax on the monthly lease amount. Since sales tax is 7.75% to 9% depending on where one lives in the state a lessee's sales tax would add $4500 to the "drive-off" cash required. EEEEEK!!:eek:

[sg8357]

Listen to Ken, subsidized leases can be a great deal, you just need to find an unpopular enough car.
Learn how to calculate lease payments yourself, it is always good to run the numbers vs. what the dealer claims the selling price is.
I'm shocked to find that the sales manager often doesn't know how much he is charging for the car. :)

The idea of a "down payment" on a lease is silly, you might as well just make
a lump sum payment and skip the monthly payment.
Leasing is second only to the lootery as a way of exploiting people with poor math skills.

[Andrewlcox]

Perhaps you'd be better off explaining that you're not the right person to assist her. BY your own admission, you know little about leasing.

I'd decline if I were you.

+1 Walk away and don't help her dig her own hole. If she wants a pile of receipts after 39 months with no property (an ugly car btw) to show for it, let her do it on her own.

[Ralph]

Wow, that's a nasty surprise. One of the pluses of leasing in CA. is that you only pay sales tax on the monthly lease amount. Since sales tax is 7.75% to 9% depending on where one lives in the state a lessee's sales tax would add $4500 to the "drive-off" cash required. EEEEEK!!:eek:

Same for Florida. Our sales tax is 6.5% of monthy lease amount.

A lease on a Lincoln could work, if that's where Ford is putting money (IE subsidizing), if you got a more base model (still W/B well equipped), and if you negotiated the price down to around invoice minus rebates, and any other incentives.

My wife is leasing a Ford Edge Limited model with most options, which cost about the same as a base Lincoln MKX. Considering what we put up front, and what the monthy lease amount is, and it's costing about $400/month. If Ford had been subsidizing MKX's at the time, and if could have leased for same, would have done that.

My wife likes a new car about every 3-4 years. (I don't mind driving an older car). Any way I can drive a $40,000 or so car for about $400/month, whether leasing, paying cash and suffering depreciation and opportunity cost, it's all the same to me. I think everything you drive costs roughly the same.....if you trade often. And my wife likes new vehicles. She also takes her Limited Edge to the Lincoln dealership for service. A much nicer (and same price) place than a local Ford dealership.

BTW....we also have a 14 year old Honda Accord that still drives well. And I'm OK with my new Honda CRV which hauls my bikes fork mount. It's just the wife who is wasteful about cars.....and she is thrifty about everything else. So what do you do? LOL

I think you can lease a Lincoln OK....if based on X plan pricing minus rebates. or if you can't do that, pick the lease Ford is subsidizing at the moment, and do that around invoice pricing minus rebates. It's doable. You just can't base it on $50,000 window pricing on a MKX with a $40,000 base price. You get killed.

[slidey]

Wow! Someone actually "wants" that pile on wheels :eek:

Oh well - beauty, eyes, beholder, and all that I suppose!

[Ralph]

Wow! Someone actually "wants" that pile on wheels :eek:

Oh well - beauty, eyes, beholder, and all that I suppose!

Just because a Lincoln MKX is basically a fancied up Ford Edge, and (IMHO) mostly a woman's car.....I wouldn't assume it can't be leased well. The real market kinda adjusts to disparities in depreciation rates. If you understand how leasing works, you know that companies do compete. Like Ray says above, you just have to look at where companies are putting their subsidies.

A Lincoln MKX with some options (not my kind of car either) may very well have a window sticker above $50,000. But the invoice may be around $40,000 on that car, and with $2-3,000 in incentives and Ford cash, you MIGHT be able to base a lease as if the car was around $37,000 or so, and with Ford subsidizing the money factor. It could make a good lease deal. They may also subsidize the residual price, allowing you to make some money at end of lease. You just don't know until you check it out.

[palincss]

The residual value of of this 'new' Lincoln remain to be seen, they've not been very successful in previous attempts to re-jigger themselves. Cadillac on the other hand, well it was a hard road for them but I think they have succeeded quite well. Definitely no longer a stogy old-folks car.

But Cadillac didn't do it with badge engineering. And although their styling is far too "edgy" for me (literally and figuratively) there is no doubt whatsoever that it's styling -- and even if it's too much for you it doesn't make you gag the way recent Lincolns do. I mean, honestly a face like an ancient armored fish? Who thought that up?
http://i.livescience.com/images/i/000/032/261/iFF/placoderm-dunkleosteus.jpg?1350492518

[Ralph]

http://www.lincoln.com/crossovers/mkx/?searchid=65434234|2110273234|1187973928&ef_id=Ub2o3QAABQTBiXa1:20130618195704:s

This is car you're talking about. Not new....been around for years.

[SoCalSteve]

It seems to me the best deal for her is to find a lightly used one...like a 2012 with 10-15k miles and just buy it. It's already taken a big hit in depreciation, she will keep it 10 years and put very little mileage on it and after 5 years, she has no car payment...

This is what I would do...actually, I just did this with an 2012 Audi A7 I just bought...$15k off sticker...12k miles...practically new!

[1centaur]

How do you like the A7 (can you lay a bike in the back with the front wheel off)? My 2005 Acura is in its last year or two and the S6/S7 are on my list of cars but I am so used to the reliability and build quality of Acura (3 in the family over 20 years, all great) that I fear the reliability of a German car. Love the styling on Audis, and the performance, but am I being sucked in by a pretty face?

[SoCalSteve]

How do you like the A7 (can you lay a bike in the back with the front wheel off)? My 2005 Acura is in its last year or two and the S6/S7 are on my list of cars but I am so used to the reliability and build quality of Acura (3 in the family over 20 years, all great) that I fear the reliability of a German car. Love the styling on Audis, and the performance, but am I being sucked in by a pretty face?


Can lay a bike down with the front wheel on, actually. It's really long with the back seats folded down...I mean really looooong! It's a very well thought out design.

I cannot stand the quality of material used in Japanese and American vehicles. The way the sound of the doors closing, etc...yes, German vehicles can be expensive to maintain, but their quality is beyond anything else out there...and, in the end, it's like owning a Rolex, sure you pay more upfront and they have to be serviced and that can be expensive...but, you own something that you know has no planned obsolescence and if maintained, will last forever....enough said.

[559Rando]

A friend of my wife's has asked that I help her negotiate a lease for a Lincoln MKX (a~ $50k crossover).

For my money, that's a poor choice. I 2nd the suggestions to look for a lightly used pre-owned! Maybe she needs to test drive more cars.

Her current 2002 Mazda has 56,000 miles - seriously!

On the other hand, she's sort of "earned" the right to blow a lot of dough on the Lincoln.

The salesman quoted her $5k down and $558 per month for 39 months with 10,500 miles allowed per year.

Sounds like she's buying a lot of miles she doesn't need. Plus this is the salesman's offer. Time to counter with $0 down and stick with $0 down.

The local Honda dealer had a come-on price of $199/mo ($0 down) on a new Accord LX lease (I think with 12k miles/year) and $219 or $229 for the EX. The Lincoln is a little more than twice the price of the EX and, while I know it's apples to oranges, I'd just double that $229 and _tell_ the dealer I'd give 'em $460/mo, $0 down.

If she's buying/leasing a 50k car she probably has an accountant to ask for advice on whether buying or leasing is a better financial decision.

Nice read of the sub context.

Sincerely,

"Driving an '03 Acura TSX into the ground"