2021 Jeep Gladiator Sport S Lease NJ

[Keith D]

I know this is difficult to determine without seeing all of the numbers but this will be my first Jeep and my first lease, so I'm just looking for some general guidance from some real Jeep Gladiator subject matter experts.
I am looking at a 2021 Gladiator Sport S which has the S package plus cold weather package and a hard top. The MSRP is $43,290.
The lease deal I have been offered is 42 months / 12,000 - $5,000 down and monthly payments of $339 all in (all taxes, dealer fees, etc.. rolled into the downpayment and the monthly lease.)
Any thoughts?

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[DirkG]

Welcome Keith and congrats on your decision on a Gladiator. You won't be disappointed.

I've been leasing vehicles for over 20 years and have helped a countless number of family and friends into leases or purchases. Leasing is not for everyone, but it offers financial perks (taxes) and flexibility that a standard purchase does not. I'll hold off on the "is a lease right for you" question and assume that it is for the sake of the thread.

The first thing that jumps out of your lease is the $5000 down. Put down as little as possible (I always put $0 down) because there's a chance you could lose that money.

How? If the vehicle is stolen or gets into a car accident, there's a good chance you lose the 5 grand. Here is a perfect example. I'm not sure about NJ, but here in CA every lease has GAP insurance (by law). The user Stupidjerkface in that hyperlinked thread just totalled his Jeep. If it was on a lease, his insurance company would cover the wholesale cost of the vehicle in the current state just prior to the crash (mileage, wear, etc.). So let's say a $45K Jeep was wholesaled at $35K (ballpark). Now let's say the monthly payments and residual still come out at $41K. So $6K is still owed to the leasing bank. If he put $5K down, as you would, that lowered the capital due (but not all) and then GAP insurance covers the remaining $1K. That $5,000 is gone; you don't get it back.

If he put $0 down, then the GAP insurance would cover all $6K and all the owner would have lost was simply the monthly payments. I know this first hand because I had a 2013 Mazda 3 commuter and a lady hit me and totalled it after only 3 months. I put $0 down and the GAP insurance covered a $4.5K difference in wholesale versus owed. I walked away having only made 3 payments of $290.

So, if you put $0 down and absorb the $5000 into your payments, that's an extra $139 a month or $478 total a month (probably a little more considering the tax will go a tad up). I know that might look scarier, but it's the same as you were paying before but just limiting your risk out 36 months.

I don't have the particulars in front of me like money factor, NJ tax rate, residual, etc., so there are several generalizations here. BUT, that being said, $0 down $480 a month lease on a $42K vehicle is not bad, but a tad high. The 10% rule is a "great deal" lease is 10% of a vehicle's sale price. So a "great deal" lease on a $42K vehicle would be $0 down, $420 a month (before taxes). Those are hard to come by (but very possible), so I'd try to get into the $0 down, $460 range (including taxes). Go $0 down and keep shaving off the monthly payment. You'll soon be in a Gladiator.

 

[Keith D]

Welcome Keith and congrats on your decision on a Gladiator. You won't be disappointed.

I've been leasing vehicles for over 20 years and have helped a countless number of family and friends into leases or purchases. Leasing is not for everyone, but it offers financial perks (taxes) and flexibility that a standard purchase does not. I'll hold off on the "is a lease right for you" question and assume that it is for the sake of the thread.

The first thing that jumps out of your lease is the $5000 down. Put down as little as possible (I always put $0 down) because there's a chance you could lose that money.

How? If the vehicle is stolen or gets into a car accident, there's a good chance you lose the 5 grand. Here is a perfect example. I'm not sure about NJ, but here in CA every lease has GAP insurance (by law). The user Stupidjerkface in that hyperlinked thread just totalled his Jeep. If it was on a lease, his insurance company would cover the wholesale cost of the vehicle in the current state just prior to the crash (mileage, wear, etc.). So let's say a $45K Jeep was wholesaled at $35K (ballpark). Now let's say the monthly payments and residual still come out at $41K. So $6K is still owed to the leasing bank. If he put $5K down, as you would, that lowered the capital due (but not all) and then GAP insurance covers the remaining $1K. That $5,000 is gone; you don't get it back.

If he put $0 down, then the GAP insurance would cover all $6K and all the owner would have lost was simply the monthly payments. I know this first hand because I had a 2013 Mazda 3 commuter and a lady hit me and totalled it after only 3 months. I put $0 down and the GAP insurance covered a $4.5K difference in wholesale versus owed. I walked away having only made 3 payments of $290.

So, if you put $0 down and absorb the $5000 into your payments, that's an extra $139 a month or $478 total a month (probably a little more considering the tax will go a tad up). I know that might look scarier, but it's the same as you were paying before but just limiting your risk out 36 months.

I don't have the particulars in front of me like money factor, NJ tax rate, residual, etc., so there are several generalizations here. BUT, that being said, $0 down $480 a month lease on a $42K vehicle is not bad, but a tad high. The 10% rule is a "great deal" lease is 10% of a vehicle's sale price. So a "great deal" lease on a $42K vehicle would be $0 down, $420 a month (before taxes). Those are hard to come by (but very possible), so I'd try to get into the $0 down, $460 range (including taxes). Go $0 down and keep shaving off the monthly payment. You'll soon be in a Gladiator.

Thanks for your help Dirk. Your advice makes me glad to have found this community. What do you think of the 42 months? I'm not a huge fan because it pushes me past the 3 yrs / 36,000 warranty but the overall cost for 42 months was $135 dollars cheaper than the overall cost of the 39 month lease.
Now using your 10% guide, it looks like my price is not bad and I have a shot at bringing the monthly down. If I stretch out the 5000 over the life of the lease and add it to the 339, I will be at 458 per month. The MSRP of the Jeep is $43,290 and there is a $1500 incentive which I'm guessing you would say should come off Jeep's end; so the retail price of the Gladiator is $41,790. My monthly includes everything including taxes and fees. Now if your 10% is all in, then I would need to get to $417.90 per month. Using that as a guide, I would have to look at my current deal as $5000 down and $299 per month. I will keep working with the dealer. Thanks again

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