2014 Corvette Lease
#41
Melting Slicks
Yes, if you drive high miles/year. But on a Corvette a 12000 mile/year deal would most likely satisfy anyone here, unless you are a salesman and use a vette in your daily grind. One thing I forget to mention above is the State sales tax, or excise tax, on a lease deal is always calculated on the MSRP. And, here's the real pisser, you have to pay tax on the incentives too! So. here in Michigan on my latest lease I got $4250 in incentives off the deal, but had to pay 6% sales tax on that amount...and it's upfront coupled with the first month's payment...the gubment will always get their unfair share.
If you got an incentive which lowered the payment the tax would then be lowered as well, at least in California.
#42
Melting Slicks
Not true. Some states, such as AZ, WI and various other only tax the monthly payment. In other cases its the actual sales price less any trade credit applied.
#43
In New York, sales tax is due on incentives regardless if it is a lease, financed, or cash. Yep, pay sales tax on dollars you never spent!
Yes, if you drive high miles/year. But on a Corvette a 12000 mile/year deal would most likely satisfy anyone here, unless you are a salesman and use a vette in your daily grind. One thing I forget to mention above is the State sales tax, or excise tax, on a lease deal is always calculated on the MSRP. And, here's the real pisser, you have to pay tax on the incentives too! So. here in Michigan on my latest lease I got $4250 in incentives off the deal, but had to pay 6% sales tax on that amount...and it's upfront coupled with the first month's payment...the gubment will always get their unfair share.
#44
I don't ignore it, but that's something most people should be aware of. That if you get into a lease contract, you should have an idea of what kind of mileage you do on an annual basis. And if you take out let's say a 36 month lease, that you plan on staying in it for 36 months. If you can get out earlier and want to without losing your shirt ....great.
#45
Race Director
If you BOUGHT the car outright, then you are clean to do that.
If you FINANCED the car, baring putting down some crazy sum (Like 50% down which would NOT be very smart), the car will be expensive to trade but car dealers CAN (and will) make it happen....just roll all that negative equity into the new car loan....
Leasing allows one to hold on to more of THEIR money to do other things with. And you can get out of a lease early, but it costs MONEY to do it, no different than getting out of a financed car early....you owe more than the car is worth.
In the end, if you plan on keeping a car for many years (or you put a lot of miles on it), buying the car makes more sense. If you are getting a toy (which a Corvette is to many), leasing makes sense (you have a warranty the whole time, payments are lower, etc). BOTH options have plusses and minuses, it is up to YOU to decide which works.
Jimmy
Last edited by jimmyb; 12-04-2013 at 12:35 PM.
#46
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oh yes, that is also taxed, but not up front like the incentives, like the other poster said, it's a tax on money you never spent. Costco does it too...buy a cellphone with a rebate on it, and you still pay tax on the rebate....some jackwipe politician started this nonsense and it pisses me off!
#48
Banned Scam/Spammer
You are correct. You have the flexibility to in many cases sell the car for far less than what is owed any time you so desire.
#49
What you say doesn't really make any sense. There's nothing wrong with putting 50% down when purchasing a car. Yeah, there's a good chance you can make more with investments than the ~2% it should cost you to finance the car, but putting more money down is the safer option. Additionally, you absolutely don't need to put down 50% to avoid having negative equity -- that's ridiculous. If that happened, generally speaking it would mean the car depreciated by 50% immediately after you bought it, which doesn't happen (baring some very unusual scenarios perhaps).
#50
Melting Slicks
#51
This is not necessarily true. You can often negotiate the capitalized cost on a lease deal. You may also be able to negotiate the money factor (interest rate), security deposit, acquisition fee, etc. About the only thing you can't negotiate is the residual value for the model/term/miles.
#52
Former Vendor
Thread Starter
Well,
Here it is... We did a comparison on a 2014 1LT, base car, using fees in NC. MSRP: $51,995.00
36 months, first payment down
12,000 miles - $798.81/month for S tier (top tier)
12,000 miles - $1,033.47/month for C tier (lowes prime rate)
So, all payments include all fees.
For comparison purposes here is the same car for 72 months for 1.99% to 7.99%
1.99% - $805.06
5.99% - $906.04
7.99% - $959.34
and 36 months 5,000 miles/year Super Low mileage Lease...
S tier: $687.88
C tier: $933.71
Please remember these are calculated at MSRP for a base car, including all our fees and NC taxes... There are a million and one possibilities. Lease rates are Ally buy rates. Ultimately Ally will determine the tier you qualify for. Also, purchase rates are as an example. You may fall anywhere in between...
Here it is... We did a comparison on a 2014 1LT, base car, using fees in NC. MSRP: $51,995.00
36 months, first payment down
12,000 miles - $798.81/month for S tier (top tier)
12,000 miles - $1,033.47/month for C tier (lowes prime rate)
So, all payments include all fees.
For comparison purposes here is the same car for 72 months for 1.99% to 7.99%
1.99% - $805.06
5.99% - $906.04
7.99% - $959.34
and 36 months 5,000 miles/year Super Low mileage Lease...
S tier: $687.88
C tier: $933.71
Please remember these are calculated at MSRP for a base car, including all our fees and NC taxes... There are a million and one possibilities. Lease rates are Ally buy rates. Ultimately Ally will determine the tier you qualify for. Also, purchase rates are as an example. You may fall anywhere in between...
#53
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Location: Westlake Village, Ca
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Well,
Here it is... We did a comparison on a 2014 1LT, base car, using fees in NC. MSRP: $51,995.00
36 months, first payment down
12,000 miles - $798.81/month for S tier (top tier)
12,000 miles - $1,033.47/month for C tier (lowes prime rate)
So, all payments include all fees.
For comparison purposes here is the same car for 72 months for 1.99% to 7.99%
1.99% - $805.06
5.99% - $906.04
7.99% - $959.34
and 36 months 5,000 miles/year Super Low mileage Lease...
S tier: $687.88
C tier: $933.71
Please remember these are calculated at MSRP for a base car, including all our fees and NC taxes... There are a million and one possibilities. Lease rates are Ally buy rates. Ultimately Ally will determine the tier you qualify for. Also, purchase rates are as an example. You may fall anywhere in between...
Here it is... We did a comparison on a 2014 1LT, base car, using fees in NC. MSRP: $51,995.00
36 months, first payment down
12,000 miles - $798.81/month for S tier (top tier)
12,000 miles - $1,033.47/month for C tier (lowes prime rate)
So, all payments include all fees.
For comparison purposes here is the same car for 72 months for 1.99% to 7.99%
1.99% - $805.06
5.99% - $906.04
7.99% - $959.34
and 36 months 5,000 miles/year Super Low mileage Lease...
S tier: $687.88
C tier: $933.71
Please remember these are calculated at MSRP for a base car, including all our fees and NC taxes... There are a million and one possibilities. Lease rates are Ally buy rates. Ultimately Ally will determine the tier you qualify for. Also, purchase rates are as an example. You may fall anywhere in between...
Thanks for your time
#54
Tech Contributor
Member Since: Aug 1999
Location: Should this thoughtful, valuable contribution meet with no acknowledgement or 'thanks' this post----
Posts: 16,382
Received 399 Likes
on
257 Posts
This is not necessarily true. You can often negotiate the capitalized cost on a lease deal. You may also be able to negotiate the money factor (interest rate), security deposit, acquisition fee, etc. About the only thing you can't negotiate is the residual value for the model/term/miles.
#55
Advanced
Well,
Here it is... We did a comparison on a 2014 1LT, base car, using fees in NC. MSRP: $51,995.00
36 months, first payment down
12,000 miles - $798.81/month for S tier (top tier)
12,000 miles - $1,033.47/month for C tier (lowes prime rate)
......
and 36 months 5,000 miles/year Super Low mileage Lease...
S tier: $687.88
C tier: $933.71
Here it is... We did a comparison on a 2014 1LT, base car, using fees in NC. MSRP: $51,995.00
36 months, first payment down
12,000 miles - $798.81/month for S tier (top tier)
12,000 miles - $1,033.47/month for C tier (lowes prime rate)
......
and 36 months 5,000 miles/year Super Low mileage Lease...
S tier: $687.88
C tier: $933.71
I find it interesting that there's only a $110/mo difference in the lease payment to drop from 12K miles/yr down to 5K/mi yr...you're only allowed 42% of the miles, yet the payment drops by only 14%. Obviously there won't be a linear relationship between the two, but I would think that a car with only 15K miles at lease turn in would have significantly higher value than one with 36K miles after three years and hence a greater delta in the monthly payment amount.
I may be looking at this all wrong, so others please chime in...
#56
Race Director
What you say doesn't really make any sense. There's nothing wrong with putting 50% down when purchasing a car. Yeah, there's a good chance you can make more with investments than the ~2% it should cost you to finance the car, but putting more money down is the safer option. Additionally, you absolutely don't need to put down 50% to avoid having negative equity -- that's ridiculous. If that happened, generally speaking it would mean the car depreciated by 50% immediately after you bought it, which doesn't happen (baring some very unusual scenarios perhaps).
What I said makes perfect sense. Putting $30K down on a $60K car is foolish. If you can't make more than 2 percent on investment, then you're not doing ANY homework. And how can putting more money down on a DEPRECIATING object be safer????
The car doesn't depreciate by 50% immediately nor does someone buy a new car and immediately trade it or sell it....what are you talking about? The average new car depreciates 20% in the first year (actually, the minute it's titled and driven off the lot), 15% per year for the next 2 years, so in 3 years, the average car is worth 50% of it's purchase price.
In the end, I would rather use someone else's cheap money to buy/lease a car and use my hard earned money to gain value. There is not a financial advisor alive that would advise you to put YOUR $30K cash down on a car rather than investing it.
Jimmy
Last edited by jimmyb; 12-05-2013 at 02:44 AM.
#57
Melting Slicks
I find it interesting that there's only a $110/mo difference in the lease payment to drop from 12K miles/yr down to 5K/mi yr...you're only allowed 42% of the miles, yet the payment drops by only 14%. Obviously there won't be a linear relationship between the two, but I would think that a car with only 15K miles at lease turn in would have significantly higher value than one with 36K miles after three years and hence a greater delta in the monthly payment amount...
#58
What I said makes perfect sense. Putting $30K down on a $60K car is foolish. If you can't make more than 2 percent on investment, then you're not doing ANY homework. And how can putting more money down on a DEPRECIATING object be safer????
The car doesn't depreciate by 50% immediately nor does someone buy a new car and immediately trade it or sell it....what are you talking about? The average new car depreciates 20% in the first year (actually, the minute it's titled and driven off the lot), 15% per year for the next 2 years, so in 3 years, the average car is worth 50% of it's purchase price.
In the end, I would rather use someone else's cheap money to buy/lease a car and use my hard earned money to gain value. There is not a financial advisor alive that would advise you to put YOUR $30K cash down on a car rather than investing it.
Jimmy
The car doesn't depreciate by 50% immediately nor does someone buy a new car and immediately trade it or sell it....what are you talking about? The average new car depreciates 20% in the first year (actually, the minute it's titled and driven off the lot), 15% per year for the next 2 years, so in 3 years, the average car is worth 50% of it's purchase price.
In the end, I would rather use someone else's cheap money to buy/lease a car and use my hard earned money to gain value. There is not a financial advisor alive that would advise you to put YOUR $30K cash down on a car rather than investing it.
Jimmy
The fact that it's a depreciating object is not particularly relevant. This same argument could be applied to a mortgage for a house. It's about the choice between reducing your liability (debt) and reducing the interest you're paying (however little it may be), or making an investment which will most likely return more than the interest you're paying on the loan, but may not. That's why I said it's safer, if not necessarily smarter.
In your original post, you seemed to be saying that it was necessary to put down approximately 50% on a car to avoid having negative equity on it. This is not the case. To take your example, let's say the car costs 60k, is worth 80% of the purchase price for the first year, and depreciates 15% per year for the next 2 years. Let's say the down payment is 20% (12k), 72 month term, 2% interest. At no point will there be negative equity:
Month | Loan Balance | Car Value
0 | 48000 | 48000
12 | 40394 | 48000
24 | 32635 | 39000
36 | 24719 | 30000
Granted, this example doesn't take into account sales tax or dealership fees that may be rolled into the loan, but you still don't need to put down 50% to avoid having negative equity (baring some crazy scenario where the car depreciates by 50% within the first year). Also, many cars do not depreciate as quickly as in this example.
I think there are scenarios where many advisors would suggest you to put more money down on a car. For example, if their client is already well into retirement, it may be advisable to buy the car outright rather than financing it and risk losing a portion of their portfolio on an investment that may or may not earn more than the loan interest over the next few years.
Last edited by 335i; 12-05-2013 at 12:18 PM.