Leased Viper is Sickening

[A1998]

Last year I had the opportunity to buy the Viper I always wanted. It was a low mileage used Viper in great condition. I had a classic muscle machine that someone was willing to buy and this would just about pay for my Viper. I put money down on the Viper to hold it until he came up with the money. Well he backed out at the last moment on buying the muscle car. My dealer talked me into leasing the car with an open end lease so I could pay the car off anytime with no penalty and I could afford the payment. Well a year later I have sold the muscle car. Went to pay the lease off and discovered in order to pay the car off it is going to cost me $13,000 more than the selling price of the car. This equates to a 35% interest charge over a period of 15 months!! I thought I was dealing with a reputable bank and dealer. I think I could have gotten better rates from the mob!!

So for you that are looking to get the Viper of your dream, don't think you can Lease it than really fall in love with the car so much that you want to purchase it,unless you are ready to pay the piper.

Sick to my Stomach!!

 

[GTS Bruce]

I have never considered leasing any vehicle.It is way too expensive. GTS Bruce

 

[Rocket65C]

I feel for you-I leased a Toyota instead of buying for no reason other than I thought it might be beneficial for tax purposes, but was assured by the salesman that the cost would be the same. Well, at the end of the lease, they tacked on a bunch of hidden fees and charges on to the residual that made it far more expensive than just straight out buying. Last lease I'll ever do.

 

[viper spray]

Take your paperwork to your lawyer and have him look it over.

 

[Lee00blacksilverGTS]

Run the numbers one more time and see what happens if you continue to lease the car till the end of the lease and then still buy it, there is a possibility you are looking at the penalty for ending a lease early. Never a good idea.
Run the lease to the end and then pick up the car at the residual price. What would that price be?

 

[garolittle]

Bummer. At least the car has not been wrecked. I know that does not make you feel much better but it really could have been worse. Hang in there.

 

[Photo pro]

I have leased 4 out of my last 6 autos. I carefully compare the TOTAL out of pocket over the life of the lease to the TOTAL cost of the amortized bank loan. I can tell you that on the 4 leases that I have had, I actually came out ahead of the bank loan. They are very tricky and require a little math and maybe an amortization calculator but you can get into the right kind of deals.

I am currently leasing a 2003 Jeep Cherokee. The payment was lower on the 1st three years than a bank loan. I can purchase the Jeep for $12,000 at the end (which I will). I guess that former banking career pays off sometimes.


The worst thing you can do is bail out ahead of the lease term which that's what you are trying to do. I'm not sure about the 35% figure that you mentioned but you may have a lease that front loads its paydown. Your leases interest rate was clearly stated on your paperwork. I hope you were O.K. with the rate at closing. Maybe you can ride it out to term and come out better. Invest the *** of cash you have now into a CD that will mature with the lease. The CD interest may help offset the lease rate. Just a thought.

 

[ViperJohn]

The best time to lease is when the manufacturer is offering incentives on a specific model. You should always work out buy VS lease before making your final decision.

Could you please share some details about your lease?

 

[Craig 201 MPH]

You have to be a fool to lease a car.

 

[Photo pro]

It would be foolish to not weigh in all of the options.

To say it never works is wrong.

 

[Craig 201 MPH]

Or to spell weigh wrong....

Manufacturers and dealers love leases, they get full MSRP on the car. I'd never do it.

 

[ViperJohn]

You have to be a fool to lease a car.

Not necessarily Craig. I was buying my wife a new car every 2 years. I recently put her, or should I say she chose, a 48 month lease. I saved $2000.00 in taxes, put no money down, first payment was taken care of, a few thousand dollars in rebates and incentives, a high residual (53% after 4 years) and ****.....We got a payment that is about $250 to $300 a month cheaper than if we had bought the car.

If the manufacturer offers good incentives, leasing can make sense, IF you don't exceed your mileage. We have only put 6 to 8K miles a year on her car, and we have a 12K mile per year limit. I have been using her car for my job to save the miles on my truck. Interestingly enough, the vehicle we leased had a 50K MSRP, the lease worked out $200/month cheaper than a lease on a 45K car on an Infiniti FX45 or FX35.

 

[1TONY1]

You have to be a <font color="red"> fool</font> to lease a car.

Instead of calling you names.....like I was going to, I will just ask you why, and what gives you your experience to say so ????????????????

 

[Craig 201 MPH]

You have to be a fool to lease a car.

Not necessarily Craig. I was buying my wife a new car every 2 years. I recently put her, or should I say she chose, a 48 month lease. I saved $2000.00 in taxes, put no money down, first payment was taken care of, a few thousand dollars in rebates and incentives, a high residual (53% after 4 years) and ****.....We got a payment that is about $250 to $300 a month cheaper than if we had bought the car.

If the manufacturer offers good incentives, leasing can make sense, IF you don't exceed your mileage. We have only put 6 to 8K miles a year on her car, and we have a 12K mile per year limit. I have been using her car for my job to save the miles on my truck. Interestingly enough, the vehicle we leased had a 50K MSRP, the lease worked out $200/month cheaper than a lease on a 45K car on an Infiniti FX45 or FX35.

In that situation yes... if you only want them for a couple years then it does make sense, just nothing I don't think I would ever do..

 

[1TONY1]

they get full MSRP on the car.

Wrong again. You can negociate just like you were buying.

 

[Photo pro]

In that situation yes... if you only want them for a couple years then it does make sense, just nothing I don't think I would ever do..

Actually Craig, no that doesn't make sense. If you want a new car every two years, a 48 month lease will stick it to ya.

 

[cratica]

I agree, leasing is one of the most irresponsible things you can do with your money. There are no good lease plans, they are a scam and are aimed at making it "appear" more cost effective and beneficial to purchaser. Answer this question. What do dealers ALWAYS try to get you to do, purchase or lease? It's ALWAYS lease. They aren't looking for your best interest, only theirs.

There are leases that are certainly much better than others but NONE that are better than paying cash or purchasing via a loan with the best interest rate possible.

 

[Photo pro]

Some of you are missing the point. It works for some. It works for me. I am saving. I did the math on six different lease plans. Four of them were $$better$$ than an outright bank loan over the life of the lease. You can't put ALL leases in one basket. They are ALL different.

I also set up floor plans for dealers. I will tell you exactly why they want you to lease from them. It's all about incentives. They get several thousand dollars on the backend of the deal that you never see. Leases increase their chances of closing the sale.

"There are leases that are certainly much better than others but NONE that are better than paying cash or purchasing via a loan with the best interest rate possible.

Can't argue with the cash comment. Some leases have a much lower rate than a bank loan. Again, not all leases are the same!!!

Oh, well I'm through beating my head against a wall.

 

[ERDOC]

I agree, leasing is one of the most irresponsible things you can do with your money. There are no good lease plans, they are a scam and are aimed at making it "appear" more cost effective and beneficial to purchaser. Answer this question. What do dealers ALWAYS try to get you to do, purchase or lease? It's ALWAYS lease. They aren't looking for your best interest, only theirs.

There are leases that are certainly much better than others but NONE that are better than paying cash or purchasing via a loan with the best interest rate possible.

Leasing is not "ALWAYS" wrong. It depends on the vehicle and where you catch it on the depreciation scale. For instance, I leased an 01' 911 turbo for 1048 per month for 36 months with 15k miles per year. At the time, the car had 7800 miles and was 15 months old. The negotiated selling price was 91K but by using leasecompare.com, the value of the car was set at 108k at the time. The value of the car was depressed during that time because Porsche decided to ramp up production of the 996 turbo and saturated the market. The values the banks used were well behind the true market value therefore I got the car for what others were paying for regular 996's. The second great thing about leases are the potential tax savings if you are small business owner. We deduct 70% of the usage from our taxes for company expenses which is thousands more that if we could deduct through a traditional purchase. Thus, before making such a statement, you should research the facts. There are very few Always and Nevers in this world.

 

[PaViper]

The problem here is not the lease, some times leasing is a good thing. The problem here is the "open end lease", which at one time was illegal in Pa. (might still be). On a closed end lease, you always know the residual value.

 

[Joseph Houss]

1TONY1 is on target!

A lease should be considered a "financing alternative"... and should NOT be used for adjusting a payment that you just can't afford.

If you scribble BOTH scenarios on a piece of paper (lease vs financing)... and make sure you include ALL the expenses, and the lease comes out equal or better (with the added value of handing in the vehicle after 2-3 years and not have to consumate the "total sale" nor pay sales tax on that part of it...which is what a lease offers), the lease becomes a valid alternative.

Here's MY take:

Option 1 - Purchase the vehicle outright:

Advantages:
- No interest penalties as no borrowed money

Disadvantages:
- Total sales tax due immediately
- If the market "tanks" for that particular vehicle, residual value is YOUR gamble

Option 2 - Finance the vehicle:

Advantages:
- Sometimes your money has better "investment potential" staying in your business, or your home.

Disadvantages:
- Interest
- Bank fee
- As above, total sales tax and residual value gamble

Option 3 - Lease the vehicle:

Advantages:
- "Pay as you go" (no down payment... unless you get talked into the rather silly "cap cost reduction", which is only a method of making the monthly payment look smaller)
- Locked in residual value/purchase option (not necessarily the same... check your lease contract)
- Sales tax required for payment value only (I believe this varies from state to state, but in NJ, you only pay sales tax on the "piece" of the vehicle that you are committing to lease
- And here's the kicker... you are not responsible if the value "tanks"... and in many cases the leasing company may offer you a lesser buyout if you say "no" to the purchase option.

Disadvantage:
- You don't own the vehicle (unless you opt to purchase at end of lease) so it surely doesn't add to your personal net worth!
- "Bail out" in most cases, is just about the entire cost of the payments
- Acquisition fee/disposition fee (some lease companies have 'em...some don't)
- Maintenance of vehicle as you must return it in a condition that is appropriate for a vehicle with the years and mileage contracted to (no ding over a certain size, etc, in our case, we all keep our cars in above average condition, so that really shouldn't be an issue)
- Interest (of course, as the leasing company is buying the car, and you have to pay them for the "use of the money" as you would a bank if it was financed

So the bottom line is to add up ALL the expenses to each alternative:

Immediate purchase= Total dealer Invoice (including trade) + Sales Tax

Financed purchase= Down payment (and/or trade) + total payments + total sales tax

Leased = Cap cost reduction (and/or "trade") + bank fee + total payments + disposition fee (if any) + purchase option (and if you really want to be fare, the sales tax you would pay when and if you agree to the purchase option)

Whichever is the lowest price, in theory is the best option... but then factor in the "intangables" and you may find that even if the lease alternative is a $1-3,000 additional expense, depending on your intentions of keeping the vehicle, your personal feelings about selling or trading a vehicle after you've decided to move on, and of course, how many miles you plan on putting on the vehicle....

you may, in fact, change your opinion as to which is best for you!

 

[MaxedGTS]

The problem here is not the lease, some times leasing is a good thing. The problem here is the "open end lease", which at one time was illegal in Pa. (might still be). On a closed end lease, you always know the residual value.

Alot of car dealers are a pain in the *** to deal with. i've bought and sold many cars. its like you have to be a lawyer to read the contract to buy i NEVER buy a car impulsively,i ask for the contract to look at for a couple of days and go back later. Many car dealers wont let you take the contract to read Thats when i say F'em and walk away!!!

 

[GraphiteGTS]

Leasing makes no sense. Tried it once and hated it. If I can't pay cash for a depreciating asset, I don't buy.

 

[Big Medicine]

LEASETRADER.COM gives a reach around by avoiding cap cost reductions. Someone else already paid it.

 

[Andy 98 RT/10]

You have to be a fool to lease a car.

Craig is right. Leasing just doesn't make any financial sense for the consumer.

 

[VIPR GTS]

Joeseph is right on. Many people do not want to keep a vehicle more than three years and do not want to face the probable negative equity position that is bound to follow a traditional bank loan. Of course you could buy the vehicle with a 36 month loan, but then instead of negative equity you just have to live with the loss of your money. In any case, an open ended lease is just asking for trouble and throws any lease advantages out of the window.

 

[Bugeater]

Jesus there are some dumb replies to Leases here. Leases do make sense in alot of situations. On a Viper? Highly unlikely. I always lease 1 vehicle. It makes alot of sense in multiple situations. Aside from the obvious like business tax write-offs, I lease a personal-use vehicle because:

1. I like to always have 1 car under full warranty.
2. I like to change cars frequently (read: less that 3 years)
3. I like to use the cash freed up as a result of lower payments, property taxes, and no initial downpayment for other things.
4. I understand cashflow management.
5. I understand time value of money, and can calculate lease vs. buy, and then apply the numbers to other mathematically-intangible factors to make a lease decision.
6. I understand leases, and that nearly every instrument that affects the total out of pocket expense is negotiable:
PRICE OF CAR
RESIDUAL OF CAR
MONEY FACTOR
MILEAGE
CAPITAL COST REDUCTION (Downpayment)
LEASE TERM
ETC...

There is a decent write-up on leases, "Leasing 101" (it biased towards leases I think, but you can take that into consideration and absorb the facts of the writeup) Go to:

http://www.alg.com/news-information.asp?page=news_lease

 

[Joseph Dell]

Also, Consumer Reports (not that I believe everything they print) did an article on leasing vs. buying about 9 months back. they ran all the numbers and the result was that depending on the vehicle and the deal you got, leasing could save 1-2k and in some cases 3-4k over buying. But that presumed that one could negotiate the vehicle price first (aka: don't tell them that you want to lease until after you've negotiated price) and then run the #'s on rates for lease vs. buy.

I'll see if I can find the article...

JD

 

[Joseph Houss]

Good Point Joe...

Like I said... it's just another financing alternative, and should be negotiated just as vigorously as you would if you were paying cash.

The reason why leases get a bad rap is because many go into a dealer saying "I need my payment to be $***.xx", and then the dealer (if they're not the honest, loyal dealers like the ones we have on this site) can work the "numbers" to maximize their profit... rather than your savings.

Just think, "Sure, we can get you there, as long as you give us a down payment of only $3600". That $3600 lowers the montly cost of a 36 month lease by $100 per month... but does NOTHING for you... except spend your money faster!

 

[JWVIPER]

Just a few points that I even recently learned,

I have always leased daily drivers, toys (MB SL, Vette, Viper) pay for in cash not even a loan since I dont like the idea of a nut for something that is used part time. I just got out of my last lease in NY (own all cars now) since Leasing is no longer done in NY, and I was able to negotiatie the buy out on my MBE320 down to the tune of 8K off the listed purchase option which in turn when I added up all my payments from the initital lease a steal for this car. Not saying this can always be done but I now own the car for a lot less. Worth a try for anyone stuck in a lease. Keep in mind this thru MB and MB Credit, Bank loans on leasing cannot do this.