$1200/mo lease payment for 60 mos

[truckyourself]

Lets say for simplicity he's got a $60K truck with a $30K residual (and he, being also me, in a similar situation)

3 year lease he's got a ~1% APR equivalent.
Take your would-be trade-in, down payment, and any other bonus cash that comes your way and instead of socking it into the truck to lower the bill, put it anywhere that nets better than 1%.
For example short term CDs right now for 5%+, or paying down other debt, etc.

3 year mark you've got a no-lose situation.
If your needs have changed, market changed, demand for your truck has plummeted, you can bail out and start clean you cannot be upside down at all, and you started with near $0 down.
If everything is awesome and you want to keep it, yes you buy it out and sure you could do 36 months, 60, whatever makes sense.

Anyone else hopeful that interest rates are much lower in 2027 than they are now? Even though used car loan is more than a new car loan, remember we're balancing it out against 1% APR on the first half. If interest rates are nearly the same and I get 6% on the used portion of the loan at the end, its balanced out by paying 3.5% average.

If you plan on keeping a vehicle for 8+ years, this isn't a bad way to do it IF the numbers work out in your specific scenario

^^ This guy gets it!!
Yeah, I mean to me nothing else makes sense, but to each his own.
I don't like the alternatives - such as:
- Buy someone else's used truck in cash, not knowing how they took care of it, prob for more than my residual will be, almost definitely more miles on it than I'll have in 3 yrs.
- Finance a new truck for 7 years - still a higher payment and interest than I have now, pay all the tax now, etc
- Buy my truck lease in cash in 3 years - why do that when I can finance it for 5% through my credit union, maybe less, make 9% average on an index fund or something.

I didn't want to miss out on the last year of the Hemi V8 !!

 

[Gren71]

Happy for the guy with the new truck.

I could NEVER do 10k/year limit. Im 5 months or so in and at 7,200

 

[WXman]

This is not a political statement, it’s just a fact. So what happened is that when blue party purposefully killed the economy, suddenly there were TONS of people sitting in $399/month leases on very expensive pickup trucks and cars and those leases were about to come to the end of contract. So the people driving them had gobs of positive equity all of a sudden because the car market got turned upside down due to no new vehicles being produced and shipped. So, long story short the banks all got screwed.

So today banks are making sure they do not get screwed, and they’re doing leases with either very low residual values or very high “money factor” (interest rate) or in some cases both. That’s why you can’t afford to lease anymore. In most cases I’m seeing, regular financing results in a lower monthly payment than leasing, which is just ridiculous. But that’s what’s going on….the banks just don’t want this administration to cause them to get screwed again, so they’re protecting themselves.

In the next two years I look for leasing rates and payments to go back to normal again.

 

[truckyourself]

This is not a political statement, it’s just a fact. So what happened is that when blue party purposefully killed the economy, suddenly there were TONS of people sitting in $399/month leases on very expensive pickup trucks and cars and those leases were about to come to the end of contract. So the people driving them had gobs of positive equity all of a sudden because the car market got turned upside down due to no new vehicles being produced and shipped. So, long story short the banks all got screwed.

So today banks are making sure they do not get screwed, and they’re doing leases with either very low residual values or very high “money factor” (interest rate) or in some cases both. That’s why you can’t afford to lease anymore. In most cases I’m seeing, regular financing results in a lower monthly payment than leasing, which is just ridiculous. But that’s what’s going on….the banks just don’t want this administration to cause them to get screwed again, so they’re protecting themselves.

In the next two years I look for leasing rates and payments to go back to normal again.

You're not wrong, but there are some exceptions depending on manufacturer incentives. The RAM I just leased I got a money factor equiv to 1.3% APR. Residual is 53% of MSRP after 42 months. If residual is high, great you get lower lease payment, if it's low, that's great if you plan to buy vehicle after lease.
For me it's a win win, just got mine a week ago.

 

[dlakeman]

I've never leased a vehicle. I've never understood why so I'm getting educated on this thread.
On December 28, 2023 I saw an ad on the local TV station that a dealer in Las Vegas was discounting RAM 1500's. I had a 2022 RAM 2500 Big Horn. I looked on the dealer's website and found a 2024 RAM 2500 Laramie Night Edition I liked. Almost all the options. Sticker was $96,400. I called the sales manager and asked if he was discounting the 2500's. He said how about $14,500 off sticker price. Say what! I asked about dealer add-on's. He said the paint and seat protectant, etc. (Which is nothing but dealer profit.) I said don't want it. I'm coming with cash. Sales manager said he'd take another $1000 off the price. I've got the truck. I'll be driving it for a long time!

 

[millerbjm]

This is not a political statement, it’s just a fact. So what happened is that when blue party purposefully killed the economy, suddenly there were TONS of people sitting in $399/month leases on very expensive pickup trucks and cars and those leases were about to come to the end of contract. So the people driving them had gobs of positive equity all of a sudden because the car market got turned upside down due to no new vehicles being produced and shipped. So, long story short the banks all got screwed.

So today banks are making sure they do not get screwed, and they’re doing leases with either very low residual values or very high “money factor” (interest rate) or in some cases both. That’s why you can’t afford to lease anymore. In most cases I’m seeing, regular financing results in a lower monthly payment than leasing, which is just ridiculous. But that’s what’s going on….the banks just don’t want this administration to cause them to get screwed again, so they’re protecting themselves.

In the next two years I look for leasing rates and payments to go back to normal again.

This is basically the definition of a political statement . I follow the automotive sector closely as a fleet manager and saw the global disruption of the supply chain and hit the auto industry especially hard given the global nature of parts supply chains. This wasn't caused by domestic policy at the federal level, manufactures simply couldn't get needed parts and couldn't safely operate plants at full capacity and supply of new vehicles fell. The banks didn't get screwed as they already now what their lease residuals are and they plan for changes in the economy - sure they got screwed by the pandemic like everyone else but not because of auto leases. Besides I was one of those people with a great lease and lots of equity and I just flipped one lease in late 2021 and another in early 2023 for new leases post-pandemic and well into Democratic control and got better cars at lower rates. The reason lease rates and lending rates are higher now is a need to control inflation that is a direct result of the U.S. economy recovering much faster and stronger from the pandemic that virtually all other world economies. People have lots of cash and are willing to spend it and that drove a hot economy and rising prices so the fed is doing it's job and increasing borrowing costs to slow growth. The fed already announced they expect to lower rates as many as 3 times this year as inflation slows and rates will drop. Supply is already rebounding in the auto sector and as rates drop there will be lots of good deals to be hard as dealers try to unload all their inventory.

 

[WXman]

This wasn't caused by domestic policy at the federal level, manufactures simply couldn't get needed parts and couldn't safely operate plants at full capacity and supply of new vehicles fell.

..........because domestic policy intentionally made it happen. When you tell people they can't go to work, it tends to disrupt supply chains.

We had pandemics before. Heck, in 1968/69 there was a pandemic that killed over 1 million people. Did the government tell people they weren't allowed to work? Absolutely not. In fact, they didn't even tell people they couldn't play. The Woodstock festival was one of the largest gatherings of people the country had seen. There was ONE difference from 2020 on and one difference only. Domestic policy.

You basically just said the same thing I was saying, except you ignored the root cause of it all. But, I digress....

I'm out of this thread so that moderators don't get hacked off at me, I was simply pointing out WHY leasing went to hell in a handbasket. I've leased a LOT of trucks in the past.

 

[RAL]

This is basically the definition of a political statement . I follow the automotive sector closely as a fleet manager and saw the global disruption of the supply chain and hit the auto industry especially hard given the global nature of parts supply chains. This wasn't caused by domestic policy at the federal level, manufactures simply couldn't get needed parts and couldn't safely operate plants at full capacity and supply of new vehicles fell. The banks didn't get screwed as they already now what their lease residuals are and they plan for changes in the economy - sure they got screwed by the pandemic like everyone else but not because of auto leases. Besides I was one of those people with a great lease and lots of equity and I just flipped one lease in late 2021 and another in early 2023 for new leases post-pandemic and well into Democratic control and got better cars at lower rates. The reason lease rates and lending rates are higher now is a need to control inflation that is a direct result of the U.S. economy recovering much faster and stronger from the pandemic that virtually all other world economies. People have lots of cash and are willing to spend it and that drove a hot economy and rising prices so the fed is doing it's job and increasing borrowing costs to slow growth. The fed already announced they expect to lower rates as many as 3 times this year as inflation slows and rates will drop. Supply is already rebounding in the auto sector and as rates drop there will be lots of good deals to be hard as dealers try to unload all their inventory.

You omit huge amounts of federal deficit spending as a driver of inflation. This is why inflation continues to tick along higher than expected by the Fed, although the cause is pretty obvious to any sentient being. Oh, and to be non political, Trump did it too.

As far as the truck goes, I did what Anthony RI did and it worked out well for me. Right now, remember that your real interest rate is the rate paid to the bank less the inflation rate, so if you are financing at 3 percent or below you basically are getting free money or are being paid to borrow. 5 percent or below rate and you are still getting cheap money after 3 percent inflation.

Talking about rate cuts when inflation is still higher “than expected,“ employment appears strong, and the economy generally is OK seems very odd to me when in historical market terms rates are in a relatively normal place. There must be other reasons then but that will definitely get us too far astray on a truck forum.

 

[Pikeman_66]

This is basically the definition of a political statement . I follow the automotive sector closely as a fleet manager and saw the global disruption of the supply chain and hit the auto industry especially hard given the global nature of parts supply chains. This wasn't caused by domestic policy at the federal level, manufactures simply couldn't get needed parts and couldn't safely operate plants at full capacity and supply of new vehicles fell. The banks didn't get screwed as they already now what their lease residuals are and they plan for changes in the economy - sure they got screwed by the pandemic like everyone else but not because of auto leases. Besides I was one of those people with a great lease and lots of equity and I just flipped one lease in late 2021 and another in early 2023 for new leases post-pandemic and well into Democratic control and got better cars at lower rates. The reason lease rates and lending rates are higher now is a need to control inflation that is a direct result of the U.S. economy recovering much faster and stronger from the pandemic that virtually all other world economies. People have lots of cash and are willing to spend it and that drove a hot economy and rising prices so the fed is doing it's job and increasing borrowing costs to slow growth. The fed already announced they expect to lower rates as many as 3 times this year as inflation slows and rates will drop. Supply is already rebounding in the auto sector and as rates drop there will be lots of good deals to be hard as dealers try to unload all their inventory.

No truer words spoken; administrations had nothing to do with the finance market. if anything, the so-called tax cut that was passed during trump admin. is hurting the middle class more right now as the tax increases (which take full effect in 2025) on them is leaving less money in those households for discretionary spending while the rich and the corporations reaped permanent tax breaks from that law and along with the higher interest rates in general right now (which are still low historically) and well we all know that congress is worthless and they are the only ones that can change that, it has nothing to do with the white house. I will say though the current Biden administrations hard hand on EV bull is not going to help anything when the country's electric grid won't handle their proposed EV plan. the only type of EV that makes any sense currently is the hybrid types like ram is coming out with. on another note, I too was in same situation during pandemic. I had a 2018 Silverado that I ended up with a huge amount of equity in when it came to lease turn in. I actually traded it in to my dealer on my 21 Silverado which I got a great lease on as well and have a decent amount of equity in it now. that lease is up in May, and I sure hope my Ram makes it in time. I would also add that when leasing the better your credit score is the more power you have bargaining on money factors. the dealers know you can walk out and go anywhere with a high credit score and that another dealer will gladly jump to deal with you and gain your business. always remember the money factor is negotiable though on a lease the only exception is if it's part of a factory incentive program which those are almost always really low at that point.

 

[Darksteel165]

I still cant understand leasing. When I looked at leasing before the monthly payments were always way more then what I would pay for a loan.
I bought a new Silverado in 2018 for 42k after rebates but was so belly up in my previous used car I took out a 51k loan with 0 down for 75 months paying $704 a month
When I sold my truck to carmax after around 3.5 years I had 14.5k in cash after the remainder of the loan was paid off.
I really don't feel like I got a bad deal... With a lease I would of been expected to pay a few grand down and like 1k a month, doesn't make any sense to me.
I looked at a Ford Fusion in the past and it was $500 a month for a lease and $200 a month for a loan, the sales person said he never sees the rates like that (back in 2015).
I wonder if different regions charge way more for leases or maybe it's the whole behind the scene thing when your payment makes sense after you end your lease and trade it back in?

 

[Pikeman_66]

I still cant understand leasing. When I looked at leasing before the monthly payments were always way more then what I would pay for a loan.
I bought a new Silverado in 2018 for 42k after rebates but was so belly up in my previous used car I took out a 51k loan with 0 down for 75 months paying $704 a month
When I sold my truck to carmax after around 3.5 years I had 14.5k in cash after the remainder of the loan was paid off.
I really don't feel like I got a bad deal... With a lease I would of been expected to pay a few grand down and like 1k a month, doesn't make any sense to me.
I looked at a Ford Fusion in the past and it was $500 a month for a lease and $200 a month for a loan, the sales person said he never sees the rates like that (back in 2015).
I wonder if different regions charge way more for leases or maybe it's the whole behind the scene thing when your payment makes sense after you end your lease and trade it back in?

that would have been a horrible lease for you at that time period and you are correct it's hard to go into a lease upside down on previous auto. I never put money down on a lease. they say it is required but it's a dealer thing they use to advertise cheaper payments, I have always said zero down otherwise you're throwing that cash away. better to leave it invested at the end of the day. now when I order a vehicle, I do have a security deposit down, but I have them apply it to taxes doc or extras. We have leased for many years 2 vehicle's too, and I can honestly say it has worked for us it's been like having 2 new ones for the price of owning one monthly for a shorter time period and they are never out of warranty.
the only thing I pay for is any extras I may get depending on the price of them. I do like ceramic coat if it's not outrageous. although the last time I wasn't impressed with what they used (gloss coat or something like that). my 2018 had cilajet on it and it was awesome trying to get that for my new ram.
But at the end of the day, you have to be comfortable with your decisions and leasing can be very confusing especially if you don't have a dealer you can trust.
a good dealer relationship is key if they don't take the time to get to know you and your level of comfort with everything involved, move on to the next one.

 

[truckyourself]

Deals and rates change by month, make, dealer, etc. Many cars don't lease well if they depreciate a lot.
In general, a lease payment should be about $100/mo less than a 6 year financed vehicle. If it's not, one of them has a way different interest rate than the other.
I've always had to put thousands more down on a finance than on a lease. And by "down" I mean cash paid to walk out the door, with leasing it's fees and first payment, etc.

Leasing you pay tax only on the depreciated amount.
Some dealers if you walk in and tell them you want to compare leasing to financing, and they want you to do one over the other, they'll make one way more appealing to get more commission or whatever.

But if you walk in and say you want to lease, just stick to that and shop around.
In 1 day I went to 4 RAM dealers in my area - the lease APR interest % equivalent (money factor x 2400) varied from 1.3% to 10.5%
Though for financing all of them said they were at about 7.9% APR

 

[Pikeman_66]

Deals and rates change by month, make, dealer, etc. Many cars don't lease well if they depreciate a lot.
In general, a lease payment should be about $100/mo less than a 6 year financed vehicle. If it's not, one of them has a way different interest rate than the other.
I've always had to put thousands more down on a finance than on a lease. And by "down" I mean cash paid to walk out the door, with leasing it's fees and first payment, etc.

Leasing you pay tax only on the depreciated amount.
Some dealers if you walk in and tell them you want to compare leasing to financing, and they want you to do one over the other, they'll make one way more appealing to get more commission or whatever.

But if you walk in and say you want to lease, just stick to that and shop around.
In 1 day I went to 4 RAM dealers in my area - the lease APR interest % equivalent (money factor x 2400) varied from 1.3% to 10.5%
Though for financing all of them said they were at about 7.9% APR

Exactly, the money factor can be a huge difference and most people do not know that conversion factor and dealers won’t volunteer to disclose that so people never really know what they are comparing to when doing a side by side comparison.