So, I’m extremely disappointed! After negotiating what was a decent price on a new 2019 Ram Limited, I decided to go with a lease (36mo/15k miles). I couldn’t understand why the payments were so high. I’ve leased several vehicles including a 2012 F150 Platinum and most recently a 2016 Acura MDX. Well, after further digging I found that the residual value after the 36 mo lease term is a paltry 51%! Are you kidding me? And this is a lease through Chrysler too! The money factor is decent at .0124 (rate divided by 2400) and the capitalized cost (negotiated price) is great. But that kind of depreciation after 36 months? WOW... it leads to payments about $200 per month higher than a comparable F150 lease with the same terms. The F150 residual value was at 65%. This is a huge difference in depreciation. Now I don’t know what to do. :-(
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BEWARE! VERY low residual value (depreciation) creates HIGH lease payments!
- Thread starter Drlangley
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Trust me you don't want to lease thru CCAP, I work for corporate so I can tell you some of the horror stories. I've seen people get huge and I mean huge bills at the end of the lease. Tires not at 8/32"? $$$ Mismatched tires? $$$ Scratches in the paint from running it thru the car wash? $$$ Stain in your seat? $$$ Decided to put a lift on it? $$$ Changed out the OEM wheels to aftermarket? $$$$$$$ And God forbid you go over your mileage...$$$$.
RBRK
Well-Known Member
You should get the Ford. Bottom line is if you are buying for residual value and the vehicle you want has a low one, buy one that is better. If you want a vehicle for what it is than you will have to accept it. I’ve always had good trade in values on my Ram trucks here but leases are different. I got 23 k for my 13 that I paid 42k new 5 1/2 years previously it had 90k. That’s more than 50% value after 5 + years and 90k. Who buys used stuff at 90k? Not me.
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Blazn
FifGen
I'm not savy on leases but I'm guessing the payment would be close to a 0 down 5 year loan?
If that's the case why not refinance for a regular loan. Or can't you just trade it in prior to or at 3 years in a similar fashion to someone who owes on a traditional loan? Hoping there is positive equity or minimum equity at that point?
I go through vehicles like socks and have been considering leasing myself for that reason. But my lame understanding is restore it back to original and trading it in is no different than a traditional loan. I heard you should never go to term and give it to the lease holder to avoid crazy penalties
If that's the case why not refinance for a regular loan. Or can't you just trade it in prior to or at 3 years in a similar fashion to someone who owes on a traditional loan? Hoping there is positive equity or minimum equity at that point?
I go through vehicles like socks and have been considering leasing myself for that reason. But my lame understanding is restore it back to original and trading it in is no different than a traditional loan. I heard you should never go to term and give it to the lease holder to avoid crazy penalties
You should check out this forum (https://forums.edmunds.com/discussion/50544/ram/1500/2019-ram-1500-lease-deals-and-prices/p10) you can post the model, your zip and the terms you are looking at and get a reply with the actual residual and money factor. 51% seems artificially low, most area look to be around 57-58% depending on the milage and trim for 36 months.
habu987
Stormageddon, Dark Lord of All
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Yeah, looks like @Drlangley was lowballed, and the 65% residual for the Ford seems very inflated. Comparing recent posts on the Edmunds forum, though the zip codes are all over the place, here are samples of what you'd see from Ford and Ram:
- 1500 Limited 4x4: 3.216% APR, 53% residual
- F-150 Limited 4x4: 1.15% APR, 57% residual
This is some great advice guys! Thanks so much... I’ve had very good lease experiences in the past with Ford Motor Credit and Acura Financial Services. I don’t think the dealer sets the lease residual value though, I think that is done through Chrysler Capital. SO, I may have to “shop” around for other finance options. Do y’all have any ideas to check into?
Wow... I’ve had good experiences with bothFord Motor Credit and Acura Financial Services. This makes me want to check out other finance company alternatives. Any good ideas?
Agitated
Well-Known Member
I can't imagine why anyone would ever want to lease a vehicle for personal use.
It's all about ROI. For someone replacing their vehicles every few years, leasing may often be advantageous. For someone that intends to hold on to their vehicle for many years, buying will likely be far less expensive. The break-even point will move around on a vehicle-by-vehicle basis, depending on depreciation, anticipated maintenance costs, etc.
Of course, leasing (and even exceptionally long-term financing, e.g. 72+ months) can also be used to attain a vehicle that would otherwise be unaffordable. My recommendation for someone finding themselves 'pushing the boundaries' of affordability would be to consult with a financial advisor before stretching themselves with questionable purchase terms.
Agitated
Well-Known Member
You don't think that depreciation costs are added in to a lease? Of course they are. And at the end you turn it in, hope there are no additional penalties such as mileage, prior crashes, paint defects, dents, and you have nothing. I know there's a lump sum due at the beginning of a lease. All I see is that it is a way for someone who can't afford something, to be able to have something they normally couldn't have. But no one ever comes out ahead on a lease. Ever.
Also, a vehicle never has a ROI. Unless you are a collector, a vehicle is never an investment.
Everything has an ROI. But with a vehicle, it's not a positive ROI (except in the rare case of a collectible). Instead, you're looking for the 'least negative' ROI, i.e. the lowest total cost of ownership. And a lease rarely provides that unless the buyer is replacing the vehicle on a frequent basis.
I leased mine. It is my first lease because like others, vehicles are my addiction and I get a new one every few years. I haven't had a bad experience with owning and trading, but with this particular Ram being completely new, I decided lease for two reasons.
1 - To see how the leasing experience works, maybe I'll learn my lesson and never do it again, maybe I'll find it works great for me.
2- To see how the truck unfolds. If it's bulletproof, I'll buy it at the end.
I am leasing with the intent to buy, and I look at it as dating with the intent to marry. I'm 6 weeks in and I'll say it is nice to use every feature on the truck and not worry about "I probably shouldn't overuse that". For example, my Grand Cherokee Overland, I would avoid air suspension use in fear that if I kept the jeep for 6 years, it'd fail on me. But now, I've got running boards on, air suspension used heavily, Auto4 with no guilt, etc.
I strongly agree that if you are leasing to "afford" the payment or nicer car...just dont! But if you want to kick the tires for an extended test drive, it could be an option. I'll let you know in 2 years and 11 months. I am completely aware I could get burned by a dealer dinging me on things, but if that's the case and I intend to return the truck, I'll write a check and trade it like I've always done. I look at my "owning a new car every few years" hobby as to what others spend on hunting, golfing, etc. My vehicle is literally how I get to my happy place lol.
1 - To see how the leasing experience works, maybe I'll learn my lesson and never do it again, maybe I'll find it works great for me.
2- To see how the truck unfolds. If it's bulletproof, I'll buy it at the end.
I am leasing with the intent to buy, and I look at it as dating with the intent to marry. I'm 6 weeks in and I'll say it is nice to use every feature on the truck and not worry about "I probably shouldn't overuse that". For example, my Grand Cherokee Overland, I would avoid air suspension use in fear that if I kept the jeep for 6 years, it'd fail on me. But now, I've got running boards on, air suspension used heavily, Auto4 with no guilt, etc.
I strongly agree that if you are leasing to "afford" the payment or nicer car...just dont! But if you want to kick the tires for an extended test drive, it could be an option. I'll let you know in 2 years and 11 months. I am completely aware I could get burned by a dealer dinging me on things, but if that's the case and I intend to return the truck, I'll write a check and trade it like I've always done. I look at my "owning a new car every few years" hobby as to what others spend on hunting, golfing, etc. My vehicle is literally how I get to my happy place lol.
chrisfuss
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That is not true it depends very much on the manufacturer. BMW ie is known to heavily inflate residuals to lower payments use multiple security deposits instead of down payments if you are over miles use their discounted mileage adjustment program and lease works great. But not every manufacturer has programs like that and lease works better for some than others...
Well said. You want to have the option to keep or return the truck at the end of your term, i.e. 'buyer's insurance'. The only cost associated with that strategy—presuming equally favorable lease and purchase terms—is that you will pay a bit more overall to purchase at the end of a lease than you would have paid if you had purchased up front. Likewise, my decision to buy the truck presumes that I will want to keep it. But if I end up changing my mind, I'll pay a similar penalty (due to depreciation) if I sell it too soon.
Agitated
Well-Known Member
Im confused. This is on the ram trucks site. It clearly states $3149 due at lease signing. Just for the “priveledge” of being able to lease.
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Very true with BMW, especially the 3 series. They're the new Chevy Cavalier around here, everyone has one. I always get a kick out of it whenever someone sees one and goes oh wow brand new BMW, it's literally cheaper to lease the BMW than a Ford Focus.
Audi, too. Before we purchased my wife's Q5, I stumbled across some internal paperwork leaked online that showed the target persona of an Audi buyer (age, sex, income, and other demographic data), competitive information, and typical ownership traits. It was staggering to see how FEW luxury car customers actually purchase.
True, certain brands go for more of the "stigma" than an actual luxury buyer. Thats not to say they are bad brands or a bad way to go about it. It works.
Most people aren't car people so they don't really know any better. For example, I've owned 2 Mercedes C350s, both bought used. The first one was a 2008 that I paid 18,500 for, the second was a 2013 Coupe that I paid 30k for. Both cars I always heard it from people Mercedes this and that, you must be rich etc etc. Then I bought my truck (64,500 sticker) and nobody bats an eye or thinks anything of it. It's amazing the level of prestige some of the luxury brands have built for themselves, that is worth a ton.
