sonicblue6

If mods want to merge this with "How to Calculate a Lease," so be it, but this is actually more intended to shortcut how to calculate it, and just determine if your deal is good or not. I'll put the conclusions first, and then the math at the bottom for those interested. NOTE: throughout, I will assume NO down payment! Shelling out cash doesn't make your deal better.

Basically, I spend a good bit of time over at leasecompare.com, where you can request and/or search current manufacturer lease programs. I compile a handful of manufacturers and look at their lease parameters. There's really not that much variability, so one can do some math and figure out what constitutes a great, a good and a lousy lease program. My results are simply stated as your base payment (excluding state sales/lease tax) as a % of vehicle MSRP. Note, some states have peculiar tax treatments (e.g., where you have to capitalize tax on the whole purchase price) that may influence these results, but I think this may still be helpful. OK, here goes, simply put:

* GREAT = 1.0 - 1.2%
* GOOD = 1.2 - 1.4%%
* AVERAGE = 1.4 - 1.6%
* POOR = 1.6 - 1.8%
* HORRIBLE = > 1.8%

So, quick application, you're looking at a $30K car. Best base payment you can likely hope for is $300 (1%). A decent deal would be $450 (1.5%), and something over $500 would be approaching ripoff. Following is some math stuff, tune out if you wish, or enter at your own risk....
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I use a starting point of cap cost = MSRP. Either you negotiated away capitalized fees or negotiated your price down enough to offset them. Your base payment - as a % of MSRP - can be shown to be equal to:

Base% = (1 - RF) / TERM + MF * (1 + RF)

To give you an idea, here are numbers from two widely different programs (extreme examples, to refresh MF is just equal to APR / 24):

Base1% = ( 1 - .75) / 24 + 0 * (1 + .75) = 1.0417%; short term, great residual, interest-free
Base2% = ( 1 - .30) / 48 + 0.005 * (1 + .30) = 2.1083%; long term, lousy residual, high interest

So, there's your range: 1% is pretty durn good, 2% is crappy. But, that is with no "negotiation," you're financing MSRP. So what if you can negotiate? The impact depends on the parameters, namely:

Impact% = X * (MF + 1/TERM), where X is the % by which your cap cost is less than your MSRP. Using 10% in our examples, the impact would be:

Impact1% = .10 * (0 + 1/24) = 0.4167%. Final payment1 = 1.0417 - 0.4167 = 0.625%.
Impact2% = .10 * (.005 + 1/48) = 0.2583%. Final payment2 = 2.1083 - 0.2583 = 1.850%.

So, what if you put a down payment in, and you want to EXCLUDE that, and figure out how your deal is? Do the reverse. Take your final payment % and ADD the down payment impact. For example, say I have a $400 payment on a $40K car (1%), 24 months, 0.0025 MF, but I put down 5% of MSRP. Well, the impact of that 5% was = .05 * (.0025 + 1/24) = 0.22083%. So, your payment excluding that impact is 1.22083%, still a pretty good deal. If you had put down 10% of MSRP in that program, the impact was 0.44167%, and now you're up to 1.44167%, which is just average.

If you find this confusing or unhelpful, just skip over it. For me, I found it interesting that one can quantify pretty quickly exactly what to expect to pay for a car given its MSRP, or alternatively, be able to quickly assess whether a presented offer is reasonable, great or a ripoff.

CyberPitz

That's awesome. I was wondering if I was getting ripped off with how much I'm going to be paying a month with how much the car is going to be.

23109VC

i researched leases for the 8 and was very UN-impressed with the current deals.

the Money factor sucks. that is essentially the same as an interest rate. Go look at the current MF on an S2000 and look at the MF on an RX8. the MF on the 8 is okay, but compared to what other manufaturers are offering, it's not that good.

the residual is another area where it sucks.

on a lease, you essentially are paying the amount the car depreciates from when you but it, to when you turn it in, and the bank/Mazda calculates the residual - what they think the car will be worth when you return it. you pay the depreciation plus interest on it, the money factor.

some cars you can get VERY good deals on a lease. some cars you can't.

in general, the worse a car depreciates, the less of a candidate it should be for leasing. since you arne't buying the car, you're just doing a long term rental... if a car loses too much value over the life of the lease, you pay more...

I have researched a lot of leases..and you can come up with scenarios where car A costs LESS than car B, but car B can be CHEAPER to lease b/c of the lease terms.

i have NO doubt you could lease a new S2000 for about as much or less than a BASE RX8 - because the residual and MF are better at Honda.... I would rather get an RX8... but if you HAD to lease, you would be nuts to lease an 8 over an S2k if you were motviated solely by lease terms and the desire to get a small nice handling car.

if you gotta have the 8 then you gotta have it, but i'd buy. and i'd buy used.

you would be able to get a smokin deal n oa used 05-07 and savea TON of money.

sonicblue6

Spot on, really. In my research on a CX9 for my wife, I found Mazda can run very nice money factors but their residuals are only average at best. Just for some quick comparison, following are low/median/high residuals by term:

24 months: 56 / 67 / 75
36 months: 44 / 57 / 65
48 months: 32 / 44 / 58
60 months: 27 / 36 / 45

Again, just based on my sample, but Mazda falls right about middle, maybe a touch under. BMW and Infiniti are very high, Acura is surprisingly low and high-end Mercedes suck!