Reader Qs (August 2, 2017)

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Here are the latest Reader Qs, along with my replies!

Zach asks:

I loved your most recent appearance on Tom Woods’ podcast!  I’m not a car guy by any means, but it was a fascinating listen. We’re moving to Los Angeles and, for a few different reasons, my wife is insistent on leasing a new car instead of buying a used one, like you have recommended. We have a decent amount in savings, so we are willing to pay a significant portion on the down payment to lower the overall money paid over the course of the lease.  Will that help us tamp down the price? Besides that matter, do you have any other advice for getting the best price possible?

My Reply:

Lease deals, like car sales, vary considerably depending on the make/model. So the first thing to do is have a look around and check out what’s available in the general class of vehicle you’re interested in.

You want to find a model that is a slow seller. This does not necessarily mean it’s a bad car – just that it’s not selling particularly well. This gives the dealer (and the manufacturer) an incentive to get these models off the lot – whether by sale or by lease. As an example, Chevy has been offering incredible lease deals on the Volt; at one point just $200/month.

Look for models that haven’t been updated recently – or which will be updated soon.

Leases are always negotiable – even when they’re not advertised as such. There is no law against your making a counter-offer.

Most leases amount to a monthly rental payment that’s based on a portion of the value of the car, and the depreciated value over time. This is why monthly lease costs are usually less than monthly car payments toward purchase of the car.

Depreciation rates hugely affect lease costs. Put another way, what the car is worth at the end of the lease, its residual value. Cars that depreciate faster have a lower residual value at the end of the lease and so are worth less at the end of the lease – which leaves the lease company/dealer holding the keys to a car they can’t sell (or lease again) for as much as a car that didn’t depreciate as much and which has a higher residual value.

You will not only usually be able to get a better lease deal on a car with low depreciation rates (due to higher residual value) you will usually get into a nicer/better car, too.

So, check out depreciation rates on the makes/models you might be interested in before you begin to shop for the lease!

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  1. Visit [sic] to learn about current, best lease deals & how to negotiate a lease.

    Zero down is best, i.e. never pay a capitalized cost reduction (CCR)
    But that doesn’t mean zero out of pocket.

    IIRC, Volts were leasing for not much over $100 last spring, Bolt LT currently under $250.