Hello all,

I went into my local dealership today and looked into leasing a base model maxima. They talked to me about the different mileage packages (12,000 and 15,000) and different things like that.

I am wondering what your guys opinions are on leasing, as well as what I should look out for and consider before leasing. I will most likely buy the car at the end of the three year lease. I've never leased before and really wanted to consider this before hand because the monthly payments were very appealing with my situation currently.

What they drew up for numbers was an out the door price on the car at 33,000 thats including title and taxes all fees. Do you guys think this is a good deal or should I try talking them down to around an out of the door price closer to 30,000? With the new 2017 models coming out. etc

Also any other helpful information about leasing and things like that would be greatly appreciated. Thank you!

 

After having leased 10 cars in the past 10 years, here is my opinion:

Add up all monthly payments, tax, and fees - paid up front or over time - and see if it makes sense to you.

My Maxima Platinum came out to be about $17000 over 3 years (including up-front Georgia tax/TAVT of $2800, which is a retarded 'rich tax').
A comparable Audi A6 was $29000.

All of the calculators and metrics and other stuff is helpful, but it clouds the overall picture.

 

If you're leasing or financing or buying out right, the first step is get a total out of the door price, everything else will fall into place. To put this into perspective, I paid 33,600 out the door including them paying $800+ in current payments for an SV. With the current promotions out there, you can get a much much MUCH better price than that.

 

I just checked the incentives, currently there's a $2,000 cash allowance.
An MSRP of $32,510 - $2,000 = $30,512...sounds like their "awesome deal" is sticker along with the incentive that Nissan offers.

 

if you're going to buy the car...then finance it from the get go. don't buy out a leased car. it will cost you less (interest and time) to do that.

lease if you like to have new cars every 2 to 3 years.
lease if you know that you drive a certain number of miles a year and will not exceed that number.
lease if you don't want to mod your car.

 

Forgot to touch up on that...never lease and then buy if you plan to buy from the start...just finance jr

 

go to truecar.com and see what pricing you get.

 

It is ALWAYS cheaper to own (financing) than rent (leasing).

There are only a few reasons to lease:
(1) if you have a business, lease payments can be tax deductible expenses;
(2) if you know you will change car again by the end of the lease term, then leasing make the process easier but it will cost you more money;
(3) if you really need to feed your desire to drive a car that you are not normally able to afford, then a lease will provide a better cash flow for you because monthly payment is lower. But don't forget, the trade off for paying less every month with a lease is that you will be required to find a new car by the end of the current lease term, so it is a never ending cycle. So you will never be free of car payments with this practice.

You will hear some people who claim to have a great lease deal where they come out ahead compared to they otherwise would if they had financed. Those people are never accounting/finance driven number guys. Just remember, renting is never cheaper than owning. There are many ways the dealer/manufacturer make money off of you on a lease, they just shift the numbers around to entice you: (1) they can lower the monthly payment by charging you a couple thousand dollars in your initial payment; (2) they can lower the the initial payment by increasing the residual value, but they must further limit your mileage allowance; (3) each lease also comes with a mandatory vehicle return fee which is as high as a $1K+ with some of the European brands (Nissan's fee is about $500 to $600); (4) and you have to return the vehicle in certain acceptable condition, so you need to perform certain repairs prior to returning the car (like replacing cracked wind shield, replacing worn tires or fixing dent and scratches that are moderate in size) or else you will pay penalty charges.

Let me give you a real life example. I needed a minivan when my second kid was born. My in laws were living with us at that time to help with the kids. So with 2 children and 4 adults, my family needed a minivan. However, I knew that in 3 years, my in law wouldn't be living with us anymore as my kids will be in kindergarten and pre-school. So the thought process was that we would get rid of the minivan and back to a sedan in three years. Given the situation, leasing made sense for us because we didn't want to worry about the trouble of reselling the minivan in 3 years or take a big loss when trading it in. We decided to get a lease on a Nissan Quest SL and monthly payments were $400/month for 39 months, which was way lower than what we would have to pay monthly on a 36 month financing arrangement which would be around $700/month. In other words, cash flow on a lease was better for us. HOWEVER, the lower monthly payments come with a cost......(1) I HAD to replace the windshield with a 3 inch crack before returning the minivan, even with a wind shield protection policy with my insurance, the deductible was $120 dollars. Otherwise the penalty was $550; (2) I HAD to replace all four tires which costed $800; (3) The return fee was $595. So all in all I paid extra $1500 just for returning a car. Granted, one could argue the wind shield and tires would need to be replaced even if I owned and kept the car, but the difference was I didn't get a "Choice" to decide when to do it. I reckoned the crack on the wind shield was something I could live with if it was my own car. The tires probably could last another 6 months before it became unsafe. But with a lease, I didn't have those choices. The whole point of leasing is to have a better cash flow, but then you are forced to spent upward of $1K 36 months from now is sort of tough on some people if they didn't think ahead. Imagine if someone also drove over the limited mileage, then there would be additional penalty on that. If the person didn't save up money to cover those added costs, the only option at that point is to roll all those fees and penalty into a new lease or new purchase or buy out the leased vehicle based on the high residual value (probably higher than the cost of a similar used car in the same condition). And worse, this will continue to snow ball if the person didn't learn the lesson. I have seen this unfortunate situation from couple of the people I know.

So remember, the dealer/manufacturer are out there to make money, so the leasing deal is not to help you save money. It is to entice you to get something you normally wouldn't be able to afford due to cash flow restriction. As in any kind of renting/leasing arrangement, it will cost the consumer more money to rent/lease than to own. Anyone who tells you that leasing is a "better" deal, is either uneducated about finance or they are trying to trick you. It is not a better deal, it is just another option to fit a car in to your budget.

 

Thanks for sharing the detailed information 16Max

 

The last post was getting long, so let me address the second question in this separate post. I'm no expert in car buying strategy, but in my experience (negotiated 7 cars over the last 14 years) it is easier to negotiate based on +/- invoice price than to negotiate based on out the door price (OTD). Each city and state has different sale tax rate. So negotiating on OTD price is not exactly apple to apple between different quotes you get from different dealers. In the Bay Area Silicon Valley where I'm at, sale tax varies from 8.5% to 10% between San Francisco to Gilroy to San Ramon. On a $30K+ car, the 1.5% difference on sale tax swings the OTD price by $450 or more. Especially now everyone is getting information from the internet, it is hard to compare information if someone tells you what he paid OTD in the east coast while another person tells you his OTD from the west coast. Plus, each car comes with slightly different optional accessory equipment, so the price naturally is going to be off by a few hundred dollars even comparing two cars in the same trim level but with different accessories. Comparing how much +/- invoice is more helpful to see how good a deal is.

Nowadays, you can get invoice price info of any new vehicle online (Truecar.com), as a result the dealers are very open in sharing with you what the invoice price is. Just get competing quotes to see which dealer is willing to give you a price that is most under invoice. Trust me, they are all willing to go under invoice because they get manufacturer kick back for each vehicle they sell. I don't know how much a % it is, but even if the kick back is just 1-2%, we are talking about several hundred dollars in profit for the dealer at invoice price. I know what you are thinking, if the lowest quote based on invoice is from a dealer who is in a city with higher sale tax rate, then you may end up paying more at the end. But I'm sure you can do a quick research on the sale tax rate on each city, calculate the final price yourself and see what works out the best for you.

FYI, I paid $850 under invoice for my SR on Memorial Day weekend. I think it is a pretty good price. And the only profit generating fee the dealer charged me outside of Tax and Title and License was a $80 documentation fee which is pretty standard among dealerships in the Bay Area. Also, the longer the car sits on the lot, the more motivated the dealer is willing to move the car off the lot. Most if not all dealers finance their inventory through banks' Floorplan Inventory Loan. Each day a VIN is on the dealer's inventory list, the dealer is paying interest on them. So if you see a car that is covered in dust in the back lot, you know that is the car the dealer is willing to make a deal on. There is no exact science on this unless you work in the office of the dealership, you just kind of have to feel how much the dealer thinks of the demand on a certain vehicle.

 

i'm only partially agreeing to what you typed out..
- the stipulations of the contract (lease deal) is written out in plain english as to what is due at the end of the lease, what your responsibility on repairs, terms if you go over mileage. this is YOUR responsibility as an owner to be 100% clear on what it will cost when you return the car and if you return the car in less than stellar condition. so when it's time to return the car back you know without an doubt what you will owe. if you felt that the extra that they charged you at the end was like a scam or a rip off...then it's on you to not know the terms of the deal.

- leasing works for someone that wants a new car every 3 years. hands down without an doubt you know that you'll want that shiny new car in 3 years and know that you won't drive over X mileage (mileage agreed upon when signing lease) then leasing is for you. why? you don't have to deal with selling the car, you don't have to worry about trade in....if you traded in your car or sold your car privately you would still be deducted for the broken windshield. you save yourself on tax since on a finance deal you're taxed the full value of the car and on a lease you're taxed based on the payments you make/made (tax laws vary by state). you will save more time and money on a lease if you're 110% certain that you will want a new car in 3 years (or whatever the lease terms are).

 

your kick back reference is commonly referred to as hold back and there's also manufacture incentives if a dealer sells a certain volume of vehicles where if you're the last 5 cars that they need to get this incentive they will take a small loss on your deal so they can get the bigger manufacturer payout.

 

I don't disagree at all. I wasn't saying the return fee, penalty or cost of repair are scams to rip people off, but those are not what most people who lease a car for the first time worry about when signing the the papers. And those things are all in the fine print, not bold and highlighted on the top of the brochure. That's why I said people should think ahead considering the back loading costs. And let's be clear, the plain English says you are responsible for the cost of maintaining the car, the dollar amount of the repair are not determined until your leased vehicle is inspected prior to the end of the lease. No one, especially not the salesperson, tells you how much a wind shield replacement or tire replacement cost will be unless you look it up ahead of time. If you happen to be leasing a sport car with 19" or 20" wheels and tires, the tire replacement costs itself can easily be over $1k. Make sure those are in your budget and don't let it surprise you at the end. And when it is time to return the vehicle, you don't have the option to say "I don't have the cash right now, let's not fix the wind shield until 6 months later when I get a raise from work".

And I agree too, sales tax on a full vehicle price when purchasing versus tax on monthly payment when leasing could add up to be big difference. That should also be part of the equation when comparing. And you are right, if having another new car in 3 years time is what you are pretty sure of and or you can take tax deduction benefits through the lease, then leasing is going to be advantageous.

 

One point that doesn't come up until after the fact is insurance, As having worked in the Insurance industry for 20+ years, what people are usually not told by the Sales person (and if told, they don't pay attention) is that most lease agreements require that you carry 100K/300k on Bodily injury and 50k on property damage. Ive seen countless people get into a lease, then when they call in to add the vehicle to the policy and there policy jumps up tremendously (because 99.9% of those people carried the bare minimum), they go ballistic (like its our fault they got into the lease). With the increase in insurance and the monthly lease payment, it would have been cheaper for them to finance the vehicle. Anyway just wanted to throw that in the ring...Good Luck

 

... except, there is an old saying in finance:

"buy an appreciable asset.

lease a depreciable asset."

 

My dealer got this.

That's why I got a great deal on March 31 (or thereabouts).

Also getting two cars in four months from the same dealer helped me.

 

Keep in mind, they will let you know the residual value of the car at the time of leasing. The residual is the price(estimated value of car) you will be able to buy the car for at the end of the lease. You can of course buy it out sooner, you will have to pay the remaining payments and add the residual. So as mentioned in previous posts, be sure to add up all your monthly payments and any money you put down and add the residual(+tax) to determine what your total cost would be.

The benefits of leasing, is that you get a new car every 3 years, and your car is covered under bumper to bumper warranty for the duration of the lease.

 

Well I am so so glad you guys were able to fill me in on this lease information..

It really makes me think I should maybe finance the car especially the insurance aspect as well as I am in my early twenties so insurance is already higher for me right now. I really appreciate all this information guys.

 

What physical assets (not including financing assets like stock equity and commodities - gas/gold/grains..etc) are appreciable? Real Estate is really the only one. Since everything else is depreciable, why doesn't everyone lease their refrigerator, the china set, the folding table?

Leasing makes sense when there are other economic factors that make it worthwhile. Going back to the points in previous posts, if you can take tax deduction through your business, or you know you want to change cars every so often and not want to bother with selling your car privately, then by all means check out the leases and learn about all the details behind a deal. However, unfortunately, a significant portion of the people who lease cars because they WANT a car that they can't really afford at the present time. In that situation, leasing doesn't really make financial sense.

The automotive industry has gotten a lot better in recent years by not praying on customers. In the past though, some sales people had tried to persuade me to lease more expensive cars that I didn't want or couldn't afford. They would tell me that it didn't matter if the overall price was higher than I was willing to pay because the monthly payments would be lower than financing. And in 3 years I would likely make more money and I could decide then whether to simply return it (then what? without a car to commute going forward?), or buy the leased car off (which is almost always a bad deal), or lease another even nicer car. Not that it was a scam or anything, but they essentially tried to sell me a higher-end car by providing unsound and shortsighted financial advice, not unlike the mortgage industry prior to 2008.

Sorry I keep beating the dead horse here. But I'm in the finance field and I have seen many people who have the wrong mindset about leasing. Many like to think that leasing is a "better" deal than financing simply because the monthly payments are lower. All I'm trying to clarify for them is that monthly payment is only one very small part of the equation.

 

Unless you bought the car paid full in cash (check) the bank will also want you to carry full coverage. Some require you to buy gap insurance.

So you're right...you need to fully cover the lease vehicle..but this is the same on a finance deal also.

 

You seem a bit jaded about leasing. Like you had a bad experience and now want to push people away from it. I too am in finance...and now I'm working more on the automotive retailing side so I know both sides that you're talking about.

There's really nothing wrong with leasing a nicer car...one that a person probably can't afford if he/she had to finance it. The car is fully warrantied, some cars have free maintenance, some offer road side assistance, etc etc. There is an value to that. I don't get the tax write off point you keep hitting...not everyone runs a business. What's wrong with just making a lease payment? You cant write off financed payments either...yes theres technically a way to depreciate the car if you run a business on a financed deal but im not getting into accounting right now. The lease value is paying for the car's depreciation plus fees, taxes, and interest that you would be paying for a finance deal.

If you're going to a car dealership looking for some sound financial advice...you're definitely doing it wrong. Their goal is to sell the car...you..the consumer need to determine if you should do it...you and the lender/bank/leasing company.

In closing...there's nothing wrong with leasing as long as you know what you're getting into. If the dealer is hiding terms and conditions of the deal then that's illegal..they are required to present the customer with all the terms and disclosures. Personally I like to lease German cars. Out of warranty they are pretty expensive on repairs so I like to get the benefits of driving a nicer German car and not have to worry about something breaking down. Service loaners are a nice plus too.

 

I apologize if I came across as pushing people away from doing leases. By itself leasing is not an evil thing. I did it once as mentioned before and I had a decent experience, but that's was after a long financial consideration before I made the decision. I just wanted to warn people like the original poster who are younger about all the back end costs, which to most may seem unexpected when the time comes. For example, the cracked windshield thing that I kept talking about was something that I specifically added to be covered under my insurance policy and it helped save me several hundred dollars. I got the specific coverage only after my agent gave me a warning. I thought passing warning like this forward would serve xUNIxPanther well.

Many younger people who are not as financial savvy as you sign leases simply because they wanted a BMW now but without thinking about the long term implication. My personal humble advice is to maybe instead finance a cheaper Japanese or American car which requires lower overall long term financial burden. Someon who didn't plan to get another car in 36 months like you did will likely find out that they will be left without option but be forced into another lease for reasons discussed in previous posts. Leases are fine, nothing against it, but know that it doesn't represent a better deal per se. It is just other avenue to put yourself in a car. All depends on what you want to do for the long run.

 

When financing a vehicle, the bank requires you carry comprehensive and collision (full coverage), they can care less what Liability coverages you carry. being that most people have a car that they finance, the majority or people already carry comp/coll. When leasing, not only are you required to have comp/coll, they also require that you have liability limits of 100/300/50.

 

so you're saying that on a lease vehicle that's not the case?

on my prior leases and financed vehicles i had to carry full coverage on all of them. yes 100/300/50 IMO should be the lowest a person carry but most lenders will require at least this level.

 

Well heres another option,

I frequently look on carguys.com for used base model maximas.. I live in Iowa and I usually do a nationwide search since the number is so limited on a newer car like this.

However when I do a nationwide search I see tons and tons of them in the 22-26k range.

The question is can I print those off and bring that to my dealer and say hey I would really like one of these cars can we get that brought to this dealership and make a deal? Or will I just get pushed away and say this is not possible? Like everyone has stated I am very "green" when it comes to the whole car buying or leasing options and everything surrounding the car business.

 

All "full coverage" means is that you carry comprehensive and collision coverage along with Liability (liability is the standard coverage on all auto policies). let me give you an example;

you buy a 2016 Nissan Maxima and you currently carry lower limits of liability, lets say 25/50/25 and no comp/coll.

If you finance the Maxima, the bank will require you add comp/coll, so your policy would look something like this; liability 25/20/25 (as you had before) comp 500 coll 500.

If you lease the Maxima, the lease agreement will require that you RAISE your liability limits to 100/300/50 and add comp/ coll, so you policy will now look like this; liability 100/300/50 comp 500 coll 500.

Raising your liability limits from minimum coverage (which is what most people carry ) to what the lease agreement requires will cause a decent increase to the insurance premiums which most people don't take into consideration when calculating the overall cost of leasing a vehicle.

 

I generally like to drive Maximas. I just leased my fourth one two weeks ago. So, if you think there's any possibility you might want to stick with Nissan at the end of the lease, a lot of the back-end concerns can be set aside.

Most manufacturers, including Nissan, have lease loyalty programs. Generally, this menas that as you get near the end of your lease, the manufacturer will contact you about leasing a new car from them. They will generally cover your last couple of lease payments in exchange for you leasing another new car from them before your lease expires. It doens't have to be the same model. You could turn in a Maxima at the end of the lease and then enter into a new lease for an Altima, for example. It just has to be a new Nissan.

One of the nice features about this is they generally forgive any mileage penalty if you're over on miles (within reason) and they also generally provide a modest credit to cover damage, like scratches and such, or worn tires. They may also give you some lease cash to put toward your new lease.

Again, this is only meaningful to someone like me who usually is willing to lease the same brand over and over again, but it's something to think about. It doesn't suck getting a brand new Maxima to drive every three years.

One last point. I'm a finance guy also. The folks above who said that you should finance the car from day-one if you intend to buy it at the end of the lease are right. Definitely don't lease and then buy.

Good luck.

 

It's so sad how fast these vehicles loose their value. I bought 1 yr old maxima Sr for 22k otd, dp 2k, Fin 20k.

I'm seeing some paid upwards of 40k

 

Is new car smell worth 20K? Maybe....

 

Just picked a New 2018 maxima s for 22,300 (total 25 otd) with sticker of 34,800
wanted Wirh more options but deal was too good to pass

 

Where or how on earth did you find a "new" 18 maxima?

 

In Texas; the dealership had new owners and were renovating so weren’t allowed to sell till transfer was completed
they still have other 2018 cars . Made my buddy get a 2018rouge fully loaded SL 35k sticker for 25k otd
reliance Nissan is the dealer