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Discussion Starter · #1 ·
I've leased my last few cars without putting much down (cap cost reduction) at all, about $2000 at most, since I always knew I wanted return the car. However, for this new beast, I'm thinking that I might want to keep it. With that in mind, if I put more down, say $15000, how will that amount be applied? Say $72000 price, residual estimate (my rough guess) of $30000 after 48 months (my preferred lease term). So, the difference is $42000. Will the $15000 down be applied there, and my lease payment will be $27000 divided over 48 months, plus tax and other stuff of course.

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I don't have an answer but I'm curious...

If you can't write off the lease payments and you have $15,000 to put down and you plan on keeping the car, why in the world don't you just BUY IT and finance the balance? 48 months of lease payments will go a long way to paying off the car. Just curious as to your reasoning.

Charlie
 

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From my understanding, the residual is set as a percentage by GM regardless of your down payment. If you put more down, your monthly lease payment would just be less.
 

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As a former GM dealer, I can tell you we LOVED, LOVED, LOVED (get the idea?!) leasing. Why? You pay more. It's harder for the buyer / leasee to figure out the exact deal. So pay attention to the often quoted stats....keep the car three years or less AND don't drive over 18000 miles per year?....LEASE. Keep the car longer than 3 years, drive a lot of miles, Mod the car, etc.........BUY.
 

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Good thread, also curious here.
 

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Discussion Starter · #7 ·
I can write off the monthly payment as a tax deduction, that's why I'm leasing. Now, if I were gonna return the car, I would never put anywhere near $15K down. I understand the residual is fixed at the outset. So, I guess what I'm asking is: would I pay less in total $ if I were to down 15 and finance the rest over 48 months, OR, 15 down, 48 months of payment, and then pay the residual. I'll check with my CPA next week, but I would think that the 2 final numbers will not be THAT different.

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I have leased about 8 cars. Put down nothing to many $$$ depending on the business scenario. I usually lease from 2 to 3 years so base my experience accordingly. :roll:

From your first post you are basically prepaying the "rent + depreciation." Your correct, the monthly will decrease to the $27,000 plus the tax over the 48 months.

For business, the lease is an expense. If you buy, there is depreciation but the amount of the write-off is limited by the IRS. I think you can run the general numbers and see that with the purchase, your monthly payment is higher over the same period. A good accountant can play with the numbers. ;)

I think where you are going is that after 4 years of leasing, can you sell at the residual and make some money? I have on several cars from $3,000 to $6,000 without being greedy and selling them quickly. On a purchase there is a good chance that you would be "upside down" for many years. :cry:

The real benefit to me is that in 4 years the "old" car may get real boring and could have taken a traffic hit or two. I have been really bored just after 2 years. There could be a new body in 09 coupled with a plasma generator drive system. And you just want the old beast gone. In a lease, you walk away assuming the car is in good condition. But always check the residual -- could make some money there. :yeadog:

Again, I am generalizing as each situation can be unique. :eek:
 

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Discussion Starter · #9 ·
reproman said:
I think where you are going is that after 4 years of leasing, can you sell at the residual and make some money? I have on several cars from $3,000 to $6,000 without being greedy and selling them quickly. On a purchase there is a good chance that you would be "upside down" for many years. :cry:

The real benefit to me is that in 4 years the "old" car may get real boring and could have taken a traffic hit or two. I have been really bored just after 2 years. There could be a new body in 09 coupled with a plasma generator drive system. And you just want the old beast gone. In a lease, you walk away assuming the car is in good condition. But always check the residual -- could make some money there. :yeadog:

QUOTE]

How do you sell the car privately at the end of your lease? Do you have to pay it off first, wait for the title from the dmv, then sell? Yeah I agree with you that I may not want to keep an "old" car, and will want to get the newer model easier with a lease.
 

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Rapid Transit said:
How do you sell the car privately at the end of your lease? Do you have to pay it off first, wait for the title from the dmv, then sell? Yeah I agree with you that I may not want to keep an "old" car, and will want to get the newer model easier with a lease.
You can call at anytime and ask what the payoff is. It will be the residual plus any payments remaining.

Like selling a car that still has a lien. You can make the deal with the interested party, and then he gets the title when it clears. ;)

Or you can (depending on the leasing company), take out a new loan with the leasing company, or your bank or credit union to purchase the car. I would only do this if your lease is up and you need time to find a buyer. For example your residual is $20k and you find that the wholesale is $25k -- be worth the hastle. :yeadog:
 

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I've leased many cars over the last 30 years, usually from 3 to 5 years. At the end of the lease term, I was always able to sell the car for a profit. After I found a buyer, I notified the leasing company who would accept a check from the buyer, pay me the difference and issue title to the new owner.

I have already negotiated a purchase price for my '02 Z06. The buyer will pay me more than the residual value. My new C6 Z06 has been ordered, so as soon as it arrives, out with the old and in with the new.

As someone else replied, the advantage of leasing is little or no up front money. If you have several thousand to put down purchasing might be a better option. I write off a good portion of the lease payment, so it's an advantage to me vs. an outright purchase. Check with your accountant.

I really don't care about owning a car....I just want to drive it. I was told as a general guideline..."If it appreciates, buy it. If it depreciates, lease it."
 

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Discussion Starter · #12 ·
Thank you reproman and tailbiter!

Question for tailbiter: I'm assuming you're gonna lease the next Z06 as well. What's your estimate on the residual of the car after 3 years and after 4 years? How long do you intend to lease it? And do you expect to go under 12000 miles/year?
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The residual on my '02 is $26,010, approximately 50% of MSRP on a 4 year lease. If that holds true for the '06 I believe it will probably be between $34K and $35K for the same term. I don't have a guess what the residual would be on a 3 year lease. My annual mileage averages about 9K per year. I just turned 27K at the 3 year mark. I do plan to lease the new one, but haven't decided on a 4 or 5 year lease.
 

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Discussion Starter · #14 ·
Tailbiter said:
The residual on my '02 is $26,010, approximately 50% of MSRP on a 4 year lease. If that holds true for the '06 I believe it will probably be between $34K and $35K for the same term. I don't have a guess what the residual would be on a 3 year lease. My annual mileage averages about 9K per year. I just turned 27K at the 3 year mark. I do plan to lease the new one, but haven't decided on a 4 or 5 year lease.
Thanks! What company did you lease the Z06 with? I leased my 02 with GMAC. Are there others that you are happy with and would recommend?
 

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You're welcome. I used Chase Bank for my current Z and am very happy with them. I asked the dealer to shop around before I sign a new lease agreement to make sure I get the best deal.
 
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