Hello,
I've been in the market to lease a 2013 Leaf (SV) and have been doing some research and also talking to a lot of dealers. Somehow the Math was just not adding up! And I think I finally figured out how the dealerships are possibly making a killing on new leases by essentially not passing on the Federal and State Rebate to the consumer.
It all has to do, in my opinion with, the Residual Value. For those of you that may be unfamiliar with this term, residual value is the value of the car at the end of your lease. It can be expressed in terms of a dollar amount or a percentage of its initial value.
Or in other words your initial down payment (not including fees etc.) plus all your monthly payments should bring you (if the car depreciates at a know rate) to the Residual Value.
Now according to cars.com the residual value after 2 years of a Nissan Leaf SV is $19,125.00
http://www.cars.com/go/alg/index.jsp?makename=Nissan&modelname=LEAF&year=2013" onclick="window.open(this.href);return false;
The invoice is price is $29,810.00. The difference is $29,810 - $19,125 = $10,685.00
Now factor in the rebates from the FED and State (CA) $7,500.00 + $2,500.00=$10,000.00 (Which the dealer does not pass on!)
Therefore the net Residual Price of the Car at the end of the lease should be $10,685.00 - $10,000.00 = $685
Obviously you pay more than that amount for the duration of your lease.
Most dealers will after much negotiation quote you a price of $2,500.00 down plus approx. @200.00 (plus tax) per month for a 24 month lease. $2,500.00 + ($24x200) = $7,300
Your total payment minus dealer cost = dealer profit.
$5,400.00 - $685 = $4,715.00
So my question is -- Does this give the dealer a potential to make approximately $5000.00 (+/- any state rebate) profit per vehicle? Obviously all these numbers can change by each deal but are dealers changing or manipulating the money factor to somehow justify the numbers? Or are they pricing the Residual value of the car well below the posted cars.com estimate.
Surely this can't be true. Someone tell me I'm wrong.
Even if my numbers are way off the point to be taken should be DO NOT fall into the trap of negotiating monthly payments and down payments for a lease. Look at Invoice cost (minus any rebates). Then demand to know what residual value and money factor they are charging you. Once you have this information you will be able to make a way more informed decision about your purchase. I suspect you will have the upper hand at that point. Happy Hunting!
RED5
Other interesting links
http://www.cars.com/go/advice/financing/calc/loanLeaseCalc.jsp" onclick="window.open(this.href);return false;
http://www.edmunds.com/car-leasing/the-residual-value-of-leasing.html" onclick="window.open(this.href);return false;
I've been in the market to lease a 2013 Leaf (SV) and have been doing some research and also talking to a lot of dealers. Somehow the Math was just not adding up! And I think I finally figured out how the dealerships are possibly making a killing on new leases by essentially not passing on the Federal and State Rebate to the consumer.
It all has to do, in my opinion with, the Residual Value. For those of you that may be unfamiliar with this term, residual value is the value of the car at the end of your lease. It can be expressed in terms of a dollar amount or a percentage of its initial value.
Or in other words your initial down payment (not including fees etc.) plus all your monthly payments should bring you (if the car depreciates at a know rate) to the Residual Value.
Now according to cars.com the residual value after 2 years of a Nissan Leaf SV is $19,125.00
http://www.cars.com/go/alg/index.jsp?makename=Nissan&modelname=LEAF&year=2013" onclick="window.open(this.href);return false;
The invoice is price is $29,810.00. The difference is $29,810 - $19,125 = $10,685.00
Now factor in the rebates from the FED and State (CA) $7,500.00 + $2,500.00=$10,000.00 (Which the dealer does not pass on!)
Therefore the net Residual Price of the Car at the end of the lease should be $10,685.00 - $10,000.00 = $685
Obviously you pay more than that amount for the duration of your lease.
Most dealers will after much negotiation quote you a price of $2,500.00 down plus approx. @200.00 (plus tax) per month for a 24 month lease. $2,500.00 + ($24x200) = $7,300
Your total payment minus dealer cost = dealer profit.
$5,400.00 - $685 = $4,715.00
So my question is -- Does this give the dealer a potential to make approximately $5000.00 (+/- any state rebate) profit per vehicle? Obviously all these numbers can change by each deal but are dealers changing or manipulating the money factor to somehow justify the numbers? Or are they pricing the Residual value of the car well below the posted cars.com estimate.
Surely this can't be true. Someone tell me I'm wrong.
Even if my numbers are way off the point to be taken should be DO NOT fall into the trap of negotiating monthly payments and down payments for a lease. Look at Invoice cost (minus any rebates). Then demand to know what residual value and money factor they are charging you. Once you have this information you will be able to make a way more informed decision about your purchase. I suspect you will have the upper hand at that point. Happy Hunting!
RED5
Other interesting links
http://www.cars.com/go/advice/financing/calc/loanLeaseCalc.jsp" onclick="window.open(this.href);return false;
http://www.edmunds.com/car-leasing/the-residual-value-of-leasing.html" onclick="window.open(this.href);return false;