Higher drive-off vs. higher monthly payment

[BillyM]

From quotes I'm getting, the total lease cost of drive-off + monthly payments is less with more money you put down upfront. This suggests the cheapest lease is to pay everything upfront and have zero monthly payment. You also save in California because the state only taxes the monthly payment (I think). Any downside to doing this to minimize total lease cost? I'm looking at 24 months.

 

[lion]

That's a rather interesting idea (wouldn't work in NY because of taxes). But what if you crash the car?

 

[apvbguy]

From quotes I'm getting, the total lease cost of drive-off + monthly payments is less with more money you put down upfront. This suggests the cheapest lease is to pay everything upfront and have zero monthly payment. You also save in California because the state only taxes the monthly payment (I think). Any downside to doing this to minimize total lease cost? I'm looking at 24 months.

you could do easily do that but I don't believe that you'd see any savings, I made that offer to my dealer and after doing the math there was no savings, so the question is, is that 8K better in your bank or in NMAC's?

 

[apvbguy]

That's a rather interesting idea (wouldn't work in NY because of taxes). But what if you crash the car?

insurance

 

[lion]

Not that simple. I believe that a down payment for a lease is called a cap cost reduction, which has its own set of rules. The way I understood it (when I researched this last year, when leasing my Prius), it meant you would lose the down payment if you totaled your car within the first few months, even if you have GAP. I'm no expert, hopefully others can chime in.

Like I said, it's an interesting idea, would love to see the pros/cons myself.

 

[jelloslug]

You should always put as little down as possible. In the event of a total loss you will have a very hard time recoving all the money.

 

[BillyM]

Doesn't your auto insurance cover that?

 

[Foible]

My lease total for two years comes to just under 4500 bucks. The lowest amount I could have paid at signing was about a grand but I went with 2k instead with 106 a month car payments. I don't know if they would have taken the whole amount up front but they would have taken 3k if I wanted. There was no difference in the total I'd pay over the lease life, just the way I could pay it.

 

[jelloslug]

Doesn't your auto insurance cover that?

Nope. You insurance covers the value of the car. You lease payments don't go toward principle and interest like they do in a standard car loan.

 

[planet4ever]

You also save in California because the state only taxes the monthly payment (I think).

That can't be right. I'm pretty sure they also tax the down payment.

I'm looking at 24 months.

I trust you know that you lose the $2500 state rebate if you lease for less than 36 months.

Ray