Any of you lucky ones with a 700OT in hands, decided going the lease route? I know this is more for Land Rovers and BMWs, but curious to know what residual value are you seeing in your lease contracts. Anybody firmly against the lease option? Why? School me.
700OT Lease x Finance
- Thread starter MRego
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Lexus is unlikely to run any good lease deals since the LX is so new so I doubt it makes sense financially. UNLESS its for your business of course.
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- #3
Well, they do offer the option, but I am not sure it is (or not) a good deal financially speaking. I always tend to finance/buy and only leased once about 10 years ago for my wife then VW Touareg. We end up buying in the end of the 3-year term and the residual value was not bad and in line with the market. I tend to think it is a way of securing an option to purchase the car 3 years in the future for a (potential) good value - hopefully better than the market. You also avoid the unknows of how the PO treated the car since new. On the flip side, paying the monthly payment for 3 years and not seeing it going to a principal/equity bothers me.
But it does go to equity. The lease payment is made up of depreciation and rent. Depreciation is the difference between the sale price and the residual and rent is basically interest on the prinicpal portion. You can determine the implied interest rate in excel very easily with just the rate function using sale price, residual, term and payment.
You are paying down the principal to the residual with each payment. Now if you think the car will be worth less than the residual at the end of the term, it is probably worth leasing and buying another (or the same) car at that time and at market rates.
You are paying down the principal to the residual with each payment. Now if you think the car will be worth less than the residual at the end of the term, it is probably worth leasing and buying another (or the same) car at that time and at market rates.
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- #5
I see. I think the big issue/difference there is that in the end of the lease term you still have to finance the residual and probably with a higher interest rate. I am curious to know the residuals people are getting for the 700. A quick google search returned a predicted residual of around 61%.
When doing a lease and buying it at lease end, you end up paying a bit more than just financing it from the get go. The LX probably will have a terrible money factor and you pay tax for the whole MSRP upfront on a lease in Texas. In other states, they tax you based off your monthly but not here.
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- #8
What you mean with terrible money factor?
Damn. That's nuts on the tax. Do you have to pay tax again if you buy at lease term?
This explains it pretty well:
I’ve never leased in Texas before but I would assume if you’re the original lessee and bought it at lease end, you could prove/show you’ve paid the taxes already.