I'm finalizing a 36-mo lease on a new F-Type R 2019 convertible and wanted some opinions on whether it's a good deal.

MSRP $110k
Sale Price: $93.5k
Total drive-off inc 1st payment and fees: $8,809.09
Monthly lease payment before tax: $880
Annual miles: 7500
Residual value 50%
Credit score: 800

It's a 2019 and the 2020s are just coming out so there's incentives applied for that.

At first I felt this was a pretty fine deal, but due to the amount cash down I'm starting to have doubts. Appreciate opinions!

 

What's the breakdown of that money down? I've never paid more than first payment on signing day.

 

You are omitting the most important portion of the financial calculation which is the interest rate. You should never look at monthly payments but rather the interest you are effectively paying to consider your opportunity cost. You are putting down $8,809 which can be used in another activity such as investing. If you interest rate is 2.99% you are better off investing that money either in the public markets or some private debt/private equity funds which can consistently produce 7%-12% returns. In addition, I need some clarification, is the residual value based on the MSRP or the sale price? The numbers don't seem to add up, if your monthly is $880 that means your entire financial obligation through the lease term is $31,680 which does not bring you to the residual value of the contract.

More details would be helpful.

 

First, There's no interest rate on leases, it's a money factor, which is what the bank makes on the lease. If you want to compare it to APR, multiply MF by 2400.

Second, never put any money down on a lease. Sure you pay a little extra for financing it all, but you risk losing it all if car is in an accident and deemed a total loss. Use that money to place MSD's if posible, else invest it elsewhere.

IMO, your lease sounds okay for what it is. Generally, you want to aim at 1% of MSRP or under for it to qualify as a lease "deal." Of course, mo/mi also plays a factor.

In this case, you're paying over 40k for the lease, putting it at about 1%, which is decent. However, the miles are pretty low.

 

residual is always based on MSRP, so 55k residual for 110k car
Selling price 93.5 - residual of 55k = 38k cap. cost
total cost is about 31,680 in monthly + 8,809 drive-off = 40,489 total payments before taxes on future monthly payments. Must be a pretty low MF.

 

Thanks for the reply. It's $6k down, and the rest is fees and first payment.

 

I appreciate the feedback guys. Thanks @mikubus for the MSD suggestion and insights. I will press for that on any money down. And I appreciate your advice @Vali , like you say, I do think it's important to consider opportunity cost for sure.

I think I will continue scouting for a better deal unless I can work the money down into MSD's and higher milage allowance. It's tough to negotiate these deals because I think it's fair for the dealership to be able to make some profit, but I definitely don't want to get ripped off. So I'm trying to best understand the market, leasing deals, and get opinions so I can learn to do this right.

I will post an update with new offers once I have them. I appreciate the opinions!

 

Alternatively, look for a lease broker. They do all the work for you and you just show up and sign (some even deliver). They generally have relationships with a larger number of dealer and most times will get you the best price. You may be able to do slightly better once in a while by calling 20 different dealerships, but that’s typically not worth the effort. Check out some of the brokers in the marketplace section at leasehacker.com. Opened my eyes to what was possible and got me two great deals with pretty much no effort on my part.

 

Is it reasonable to put down no money on a $110k car? Dealers seem insistent on me putting at least $5k down. And I was told by a Jag dealership that Jag doesn't have an MSD program. Does that sound correct?

 

Can you explain this point?

My insurance has depreciation rider, that I always apply to new cars, so I assume it would pay off full value of the car. I assumed that this would include any downpayment returned to me at 100%. Is that not the case?

 

ref 90k car, 0 down.
https://forum.leasehackr.com/t/2019-...20-msrp/114043

I've never seen a "requirement" to put money down. Maybe the banks may have different programs depending on cap cost or their gap insurance requires it.

 

I have always put money down on a lease to buy the payment. As a rule every $1000. down lowers the payment by $30. per month. Jaguar has not done MSD since the days of Primus/Ford being Jaguar credit.

 

Depends on what this "depreciation rider" covers. Some insurance companies offer a car replacement rider (e.g. USAA) that pays 20% above ACV when there's a total loss. Other companies have new car replacement coverage that will pay purchase price is car is total loss'd in the first yr of ownership (effectively disregarding the depreciation). In either of these scenarios, it would likely cover most of not all the $ you put down, but only within the first year of ownership. So it depends on what your policy covers.

In most cases, insurance only cares about ACV, which is all they're obligated to pay unless extra coverage is bought. There's nothing I know of that would explicitly cover a down payment, and you can't control other people's driving.

Without those extra coverages, this is the likely outcome in most total loss cases:

100k car, 10k down, 90 financed (either loan or lease, it's still "financed")
month 13 - total loss accident occurs. Let's pretend you pay 1000/mo in payments at 0% interest or 0 MF, so 13k paid so far and bank payoff is 100-13-10 = $77k.
However, ACV of car is now 80k, as determined by local dealer CPO selling prices. Insurance will pay 80k to the bank, and the bank will pay you the excess 3k. You've just lost 7k from your down payment.

Now, let's say you put 0 down in the above scenario. Amount owed to the bank is now 87k on a car worth 80k. There's a 7k deficit. Good news is the most lease contracts include gap insurance, which will cover this deficit so you pay $0. (loans are another story though, so check if you need or have gap coverage separately).

In the unlikely even that you got a smoking deal on your lease, you may even end up with an ACV that is MORE than payoff amount (this happened to me recently). So even where you put 0 down, you may still get some money back.

 

$110k car sitting in the garage right now, no money down.

 

It's risk vs reward analysis. Also depends on the MF presented. if it's a high rate, down payment can save you money in return for taking on the risk of losing the down payment in a total loss. If it's a very low rate, you're better off putting that dp money in an investment that would generate more than that very low rate and removing the total loss risk (but taking on the investment risk, if any). You may even be better off putting 10k in a 2% CD at your bank than using it as a down payment if the MF works out to <2%APR. LOL. The question is, what numbers work for you?

 

Here's a site that can give you data that can be fairly close on payments etc.
Scroll down slightly to the "start" box, then input what data you want.
Watch out for the default (0) it can trip you up (I know).
Good luck


https://www.leaseguide.com/calc/