Lease vs Buy

[benkey]

Have decided to join the Jeep family with Gladiator. Deciding between lease vs buy.

Here are the numbers for lease I got.
Trim Sport S Diesel engine
Msrp: $50,115
Residual value: $36,500
Term: 36 months
Down payment; $2,000
Monthly payment: $700

if I do the numbers, I pay $27,200 for driving the Jeep for 3 years that depreciates by only $13,615. Of course the tax and paperwork adds about $1,800. I live in GA.
I think the lease numbers are absurd. Better off to buy the Jeep.
Has anybody recently leased their Jeep? If so, would you share your numbers so that I can know how much I am off?

thanks

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[Gladiator_92]

I leased in late 2020 on a 2021 sport eco diesel. MSRP around 48K. I pay $419 a month with no money down. 12,000 a year for 42 months..

The sports hold their value the best of all the trim levels (according to the banks) you should have 72%ish resale value after 36 months on a lease so the lease payments are normally very good compared to other vehicles.

 

[Choatecav]

This is near and dear to my heart.

As a rule, I don't like owing anyone anything. Have always tried to pay everything off as soon as I can. When I bought my 2021 Mojave in late March, the dealership, who had treated me very fairly, pointed out that they had a special that month of zero interest. Absolute zero!

Well, I had the $$ ready to pay cash but decided to just place that money in a money market fund and set up the auto-monthly draw right out of the account.

So, any growth on the money while in the account I will get and the exact same dollar amount that I would have paid comes out at the end of each month in 1/36th amounts.

Again, it was contrary to my regular mode, but it seems to work well.

 

[NYC-4X4]

Like most here, I would say to buy/finance for a few reasons. It’s tough not to modify this vehicle and you would lose time and money taking off mods and selling parts after your lease. The truck holds it’s value really well. If you only plan to keep it a year, two, three, etc. you can sell it no problem at any time. Lease locks you in with less flexibility.

There are several pros to leasing like lower monthly payments and you know that in 3 years you can get something new, but you could always buy and trade-in too. The price you were given above seems terrible for this vehicle. If you are able to work out a decent price on a lease, maybe that’s what is right for you.

When negotiating a lease, never negotiate by monthly payments, the dealer loves that. The residual value is the only set number, negotiate the cap cost the same like if you were buying and then negotiate the money factor (find the best interest rate). Dealers also love to mask a bad deal, high rates and high down payment with low monthly rates. In your case, it seems they just threw out some crazy high numbers to see if you would bite!

 

[NYC-4X4]

This is near and dear to my heart.

As a rule, I don't like owing anyone anything. Have always tried to pay everything off as soon as I can. When I bought my 2021 Mojave in late March, the dealership, who had treated me very fairly, pointed out that they had a special that month of zero interest. Absolute zero!

Well, I had the $$ ready to pay cash but decided to just place that money in a money market fund and set up the auto-monthly draw right out of the account.

So, any growth on the money while in the account I will get and the exact same dollar amount that I would have paid comes out at the end of each month in 1/36th amounts.

Again, it was contrary to my regular mode, but it seems to work well.

Not only does this have nothing to do with the original post, it is bad advice to never owe money. Not just 0% but any debt under 5% is considered healthy and smart financially as long as you are smart with your money elsewhere (investments, high yeild savings, etc.) to beat the interest you are paying. Stay away from CC debt!

 

[jorbasaurus]

I decided to lease as I’m new to Jeep and SFAs so I wanted to give myself an out in case I hated it as a daily driver (I don’t it’s incredible ). numbers on my Overland lease:
-50,270 MSRP
-48 months, 40,000 mile cap
-3,000 down with a monthly of $380
-residual value in 2025 is 32k and some change

 

[JTBurns]

$700 is a really high lease payment. Definitely do not take that deal. If you're savvy with a lease, it may work out for you, but if you have good credit and want to keep it a long time, you're better off buying. Even trading this in "early, you'll get less depreciation than most other vehicles.

 

[Stitchedupseats]

Terrible deal. Family member just leased a 4xe Swith sticker close to 57k, 3k down for less than 430 mth.
Another friend- gladiator was 63 msrp, 1700 down, 670 mth.
Both 48 months 10k miles.

I’d keep shopping.

 

[Jay Gatsby]

Decent disscussion and video on lease vs buy here...
https://www.jeepgladiatorforum.com/forum/threads/buy-vs-lease-a-detailed-discussion.16770/

 

[benkey]

Thanks much guys. Very helpful.
I did realize the numbers were bad.
I looked through the thread that @midironman and got bunch of info.
I will come up with numbers before I make an counteroffer. Thanks

 

[Wkyfiregladdy]

I look at a lease as renting.... you pay all that money into a vehicle that you drive and gain no equity at the end

 

[GCoop]

Why not lease and buy at the same time? I went into my transaction completely set on leasing since I plan to be on to another vehicle in the next 3-4 years. Even with the high residuals I could not make any of the lease numbers I was getting work for me.

I had heard something about people sometimes being able to originate a lease directly from third party lenders and independent banks. So, one day during my search for alternate leasing options I ran across a credit union offering a lease-like car loan. Having never heard of such a thing before I began my research.

What I found was that there a a few of these programs out there mostly offered by credit unions and they are all NOT alike. Some are offering what amounts to just a balloon loan and even though I am not a financial advisor and offering any sort of advice in this post this type of debt is EXTREEMLY risky for depreciating assets. I chose to stay far away from these offerings.

The most promising thing I found was an offering coming in many different names but the most common was "Lease-like auto loan" The key differentiator with many of these offerings and the MOST important aspect in contained the fine print was what you see in the final bullet point below --- An option that gives you the option to return or "walk-away" from the vehicle for a small fee.

At the end of the loan term, members have the flexibility to choose any one of these options:

• Sell the car to pay off the remaining loan balance.
• Keep the car and refinance the remaining loan balance into a new loan.
• Return the vehicle to the credit union (for a $199 fee), and shop for a new car with a new loan.

This last option reduces the risk of being "under water" at the end of the term. Again, not all of the programs have this option so it is wise to be cautious, do your research, and understand what you are committing to before mistakes are made.

For me and my needs this made sense for a number of reasons.

1. Since I actually own the vehicle I can do what I want to it with the only worry being how it will affect the market value at the end of the term
2. I can sell it at any time and any amount over the calculated residual I get to pocket. Very advantageous in today's climate
3. I can choose to keep it and the end and refinance. Again, with any amount over the residual going into my pocket or into reducing the principal.
4. Most important if the used car market tanks in 3-4 years and I owe more on the vehicle than what it is worth I can walk away for a small fee.

I'll say it again. I am not a financial advisor, didn't stay at a holiday inn express last night, and am just a random user name on some forum on the internet so do your own research to see if an option like this might be something that meets your needs. For this reason I am not listing my bank or any other banks offering this type of product.

If there is actually anyone that reads through this to this point - Sorry for the long post but since I just recently went through the same types of decisions and found something that not everyone knows about just wanted share and maybe help.

EDIT: Forgot to add an example of payment -- For me a $49,000 42 month term ends up being right at $442 per month. Much better than the 600+ per month no money down leases I was getting.

 

[Erievon]

That's a terrible lease quote. Ugh. 27,500+36,500 is 64k for a 50k msrp. The lease number must be astronomical on that. I realize there is interest, tax, dealer fees etc, but 14k worth is way too much.

 

[RobertRinAustin]

I look at a lease as renting.... you pay all that money into a vehicle that you drive and gain no equity at the end

Isn't true at all. No reason you can't sell a leased vehicle if you have equity. Going through this now on our 2018 Lexus RXL. We have about 6 lease payments left, but still have over $5k in equity.

OP- obviously you know the lease quote is crap. You need to negotiate the selling price just like a purchase, including any excessive fees. Also willing to bet the MF is marked up so you could negotiate on that as well.

 

[benkey]

I created this sheet to negotiate for lease. Got the info from reading other threads.

I have offered $575 per month, 36 month lease, 10k miles/year, $0 down + doc and other fees. For Rubicon trim.

None of the dealers are responding.

Biggest difference is the residual value and cap cost. I am assuming 72% residual after 3 years and invoice pricing for cap cost.

Let me know if my numbers are too optimistic and need to adjust the residual.
Thanks

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