08 Ls Lease

[RFeldes]

Okay gurus, I am going to Houston next week and need to be armed to the teeth for a lease. I think the normal residual is around 43% on a 48 month lease. I am trading the 02 with 88k... 90k coming up so time to let go. Kelly says 17,995 trade for my car with the options. I ASSUME I can negotiate the sticker even on a lease. My question is..How would and in what order would you negotiate and is 52 weeks better than 60 @ 15k a year. I like to trade every five years. I can and do lease for business. The 02 is paid for and I hate to part but the 460 has my eye. I waited for the 08 to give Lexus time to iron out problems. Any help would be appreciated. I know Lexus does not advertise the Dec. to remember rates but think now is the time to make a deal on a good lease. Thanks in advance for any info.

Ralph

[SW03ES]

Okay, I can help you here.

First of all I would not lease the car for 60 months. In fact, I wouldn't lease the car for 48 months, but 48 months is the absolute max a car should be leased. Reason being when you get higher in mileage you start getting into more expensive maintenance items (tires, brakes, belts, etc) that you'll have to do to a car that isn't your property. 24 month leases are great but they're too expensive monthly, 36-39 months is the sweet spot. If you want to keep it 5 years I think you'd be better off buying, even if you can deduct the lease for business.

You absolutely can and must negotiate the price before the lease. In fact don't even tell them you're going to lease until you've agreed upon the purchase price in writing. The dealer will try and negotiate using the lease payment and they can hide profit easily that way. You want to look at the capitalized cost (the agreed upon purchase price), the money factor (multiply this by 2400 to get an approximate interest rate), and the residual. You want a high residual and a low money factor.

Now on to down payments. Resist the urge to put the trade in money from your '02 down on the lease for several reasons:

1. If you should total the car the insurance company will pay the owner, Lexus Financial (or whatever bank) and you would loose your downpayment.

2. A lower payment means a lower tax deduction for business.

You're better off putting the money in a money market account and write the payments or a portion of the payments out of that. If you must put it down, take advantage of the Lexus multiple security deposits instead.

Now as for december to remember. I actually disagree that December to Remember is the best time to lease or buy the car. They don't subsidize leases on the LS, so there won't be a special lease deal. They actually create artificial demand with all the marketing they do. In my experience you'll get a better deal in January when business is really slow.

Leasing is slightly more complicated though because residuals may be lower in January than they are now.

Check out this site:

www.leasecompare.com

Good luck! Keep us posted!

[RFeldes]

Thanks Steve. I knew you would come through. There is a GAP. What is that? I know it pays total loss and it should negate the loss. How so?

[SW03ES]

What GAP insurance protects you from is a situation where the insurance payoff after a total is less than the buyout value of the vehicle on the lease. It keeps you from having to come up with the difference. Most leasing companies require it and its built into the lease, its very inexpensive. It won't help you with a downpayment because you won't be the beneficiary on the policy.

No problem!