My local dealer here in KY gave me the quote.

Yeah, that's what I figured. These lease terms I got ($1000 down, $360 monthly payment, and $19722 buyout) add up to a total of around $34500 for the car, which is right at around MSRP for it. Sure if you were to go the buying route I'd get the car for $31xxx but financing that amount over 3 years would have to ad at least approximately $3k to the total, bringing the total back to $34000. The lease allows me the flexibility of lower monthly payments up front, and if I don't want to keep the car, I can just give it back.

Any advice on the above would be appreciated. I'm not sure what my cap cost is, but I'll find out what it is tomorrow. What bearing would the cap cost have on the above deal?

 

yeah, I would find out what the cap cost is, and also what's in the $1,000 drive off (certainly Title, License, and Reg. But Acq fee? Security Deposit? first month payment)?

I say the lease/buyout is a better deal because:

Scenario A (Finance).
Let's say you got the car for 31,000. Tax (@ 6%), Title, license, Reg, would bring it up to $33,325. Minus a 1,000 down payment, you are financing $32,325 for 36 months @ 4.9%. That's $967.35 per month. Total payment at the end: 35,824.60

Scenario B (Lease/buyout).
$1,000 drive off, $366 for the remaing 35 months (12,810 total). Lease buyout @ 20,905 (19,722 *1.06).
Total payment at the end: 34,715.

You are still positive $1,100. Even if they both came out to be around the same amount, I think the lease/buyout deal is better because:
1.) If you don't like it, you can simply turn the car back to the dealer @ lease end.
2.) $366 sounds a whole lot better than $967 per month. (Even if you can afford the 967 a month, you can save the 600 difference per month and let it earn interest. At 5% yeild for 36 months, that's $1,000 in earnings that you could use @ buyout).

 

Your calculations are greatly appreciated wing819 - I too thought that the lease/buyout was not only more flexible but also more economical, but was actually afraid I was missing some kind of loophole.

Yes the $1000 down includes the first month's payment, and "all other fees" according to the dealer. Basically, I he said that all I need to do is come in and pay $1000 and not a dime more and everything would be covered. EVERYTHING. From then on it would be the 35 payments of $360.

Yes, I'll find out what the cap cost is. How would the cap cost affect anything though, when the above variables (down payment, monthly payment, buyout price) are already set? Nonetheless I shall report back. and I thank you greatly for you insight - no one wants to spend their hard earned money on their dream car, only to get screwed!

 

Uh, don't forget you'd still have TTL at the buyout when you register your car (at least in MA) -- MA 5% tax would be $1000. License and registration would be another $150 or so, not sure.

On the other hand, with leasing, there's a possibility of renegotiating the buyout price... Legally I don't think the financer is obligated to do that, but they might. That could be an advantage.

I suspect you're misssing something else, wing, in your comparison. I haven't figured it out yet, though.

 

vis:
Your lease payment is driven by a couple of things:
Cap cost (lower the better)
Residual value (higher the better)
Money Factor (lower the better)
Term of lease (varies depending of residual)

If you can further reduce you cap cost, you will lower:
1.) Your monthly lease payment
2.) Your initial drive off $ (since the first month payment is baked in).

Anyone care to chip in on paying Title, License, and Reg @ at lease buyout? My initial thought was you don't have to pay those, since they were already settled at the inception of the lease.

Negotitating the lease buyout price (you can do this when you lease is almost up) is a different beast. The year, color, mileage, and the used car market in 2009 are few elements you should consider when you are negotitating with Honda Financial. Here are two extreme examples:

1.) Honda decides to end all S2000 production in 2007. Further, Honda will not produce anymore Roadster in the next 10 years. (SImilar to the last generation Supra). Your residual value will probably go through the roof, making 19,722 a great buyout price.

2.) Honda decides to come out with an all new Roadster beg 2008. This thing is badass compared to the current S2000 (Similar to an Current year IS 350 and the previous IS 300). Your residual value is probably poop now. Honda knows this and it wants you to buy it out becuase if you return it, it will either sit on the used car lot or go to an auction (Honda loses $ either way). This will give you more leverage to bargain (that's if you still want to keep it).

Hope that made sense.

 

You still have some room- as I posted earlier in this thread- I paid only the first payment of $363 at signing and have 35 payments of $363. I think you still have about $650 of room in your deal. I would tell them you will sign if they make it $360/mth for 36mths with only the first payment due at signing.

There was another guy who listed his deal which was better than mine as well(proS2000 is his username). You can always ask...

Good luck and enjoy it!

 

hey chcikdr - believe me, I'm excited, but want to make sure I don't get messed around o this deal. Dealt with mortgage before and refinanced, but somehow you alwyas gotta be on your toes! I totally agree with you on the $650ish wiggle room, but I'll be honest man - I don't want to push the guys any further, because I've talked to a few different dealers, and some aren't even able to match the offer - i.e. I'm getting the feeling I'm getting close to where I'm gonnna get too "greedy" (for lack of better word) and the lose the deal, or some such. Not to mention that the guy working with me has been great and I guess he needs to make some money too right! The only think I did was get the guys to throw in some free wheel locks - "A $74 value yours free for only Free.99"

wing819: some EXCELLENT info there on negotiating the buyout price. Let's all hope the first scenario is more likely!

As far as the cap cost goes, the sales guy said that as long as the three variables (total down, monthly payment, and buyout) are locked down, then the cap cost isn't really going to matter. Nonetheless, I shall be heading over to the dealership in an hour or so, to get a print out of the least terms. Thanks for all the helpful advice, its greatly apprecaited, and if I should know anything, then let me know.

 

Can you PM me with more details?

THX

 

Hey, have you been reading my mind??????