Leasing a Jeep Gladiator

[WXman]

Leasing is a fantastic idea, IF you know what you're doing.

I leased mine ($39,840 sticker price) with a $28,500 residual at 48 months. I did not put thousands of dollars down. I only put down the first payment basically. I'll be under warranty the entire time I have the Jeep, I've modded it the way I want, I'm loving it every day, and at the end of my lease I will either 1) buy it and have instant positive equity or 2) turn it in and get a Gladiator or Ram 1500 of my choice. And my payments are a fraction of what some guys are forking over monthly.

I had a 2011 JKU on a 36 month lease once, and I turned it in at 13 months for a 2012 JKU. I didn't lose a penny in the transaction and my payment only increased $30/month on the 2012 because it had more options and equipment that I wanted.

The only time leasing is NOT the way to go is if you know with 99.9% certainty that the vehicle you are getting is the one you want to keep until it literally falls apart.

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[Tortooga Custom Works]

When you lease or buying with a loan, you pay interest. For a loan FCA is charging 4.46%. On the lease they are charging 5.208% (this is also call the money factor). This .62% difference is really the cost of removing the risk for you to them.

For leasing and buying with a loan you paid interest (or a money factor) on the whole amount not paid up front. So for a $30,000 for 4 years that .62% equals an extra 381.29 you pay if you put nothing down.

Also with a Lease you only pay sale tax on each payment not the whole price of the vehicle. Therefore if the value at the end is 15,000 (you need to check with the dealer what is really is) and your sale tax is 6%. Then that is $900 in sale tax you are not spending.

So the at the end of the lease with the sale tax saving you are a head of the game. The reason people say lease are a bad deal is when you know you will buy the lease out. So after the lease is up if you got a loan at %4.62 for 4 years for the last 15,000. You would paid your 900 is sale tax plus $1415.27 of interest. It the end you paid an extra $1790.47 over 8 years. Let’s say you did an 8 year loan instead of a lease. You extra cost comes back to that $381.29.

I am not looking to talk anyone into leasing. I am just looking to help people understand them. I have been doing a lot research in this area as I look at all options as well.

Leasing is a fantastic idea, IF you know what you're doing.

I leased mine ($39,840 sticker price) with a $28,500 residual at 48 months. I did not put thousands of dollars down. I only put down the first payment basically. I'll be under warranty the entire time I have the Jeep, I've modded it the way I want, I'm loving it every day, and at the end of my lease I will either 1) buy it and have instant positive equity or 2) turn it in and get a Gladiator or Ram 1500 of my choice. And my payments are a fraction of what some guys are forking over monthly.

I had a 2011 JKU on a 36 month lease once, and I turned it in at 13 months for a 2012 JKU. I didn't lose a penny in the transaction and my payment only increased $30/month on the 2012 because it had more options and equipment that I wanted.

The only time leasing is NOT the way to go is if you know with 99.9% certainty that the vehicle you are getting is the one you want to keep until it literally falls apart.

I'm glad I got beat to posting some math and examples.
My current approach is - I lease my wife's car, and I purchase my car. Although, I'm starting to realize I should be leasing my car, since I keep changing it every three years.

Although, no, I'm keeping my Gladiator for life... famous last words
I've literally said the exact same words 3 years ago to the month, and 6 years ago to the month... and well, you get the idea...

 

[steffen707]

I'm glad I got beat to posting some math and examples.
My current approach is - I lease my wife's car, and I purchase my car. Although, I'm starting to realize I should be leasing my car, since I keep changing it every three years.

Although, no, I'm keeping my Gladiator for life... famous last words
I've literally said the exact same words 3 years ago to the month, and 6 years ago to the month... and well, you get the idea...

My dad does keep his vehicles until they fall apart.
1983 chevy beauville van had 350,000 when he sold it for $500, he just retired his 1996 GMC Safari! had 400,216. Brake lines were rusted through, the shop discovered the bumper was being held on by the radiatior support, lol.

It can be done.

 

[CaliJK]

I'm actually looking at leasing a JLU for 39 months, as I'm thinking the gladiator may be just out of reach, and I want to really get back to a Jeep. My issue is my current truck, which I financed thinking I'd be driving it a lot longer, and therefore I'm upside down.

I worked out the numbers of lease vs finance for the term of lease, and buyout .under the lease, even if I buy out after 39 months, I'd be saving 8,000 vs a max term finance. The payments on lease are like $40 more/month, however, because a lease is giving me a lower interest rate, I'm saving $2600 over 3 years.

And the amount owing in 3 years for a buy out, is only $3,000 more than what a 2016 you Sahara is currently going for. While that's no guarantee, and I'm not basing anything solely on that, in theory, I could be in good shape. My parents had a lease, and at the end of term they were reselling for $5000 more than the buyout. Sales guy seemed pissed they decided to buy it out and keep it.

But yea, all depends on persons situation, I want the gladiator, but at the price, and known issues Jeep has had with 1st year models, waiting 3 years might not be the end of the world.

 

[SleepyJeep]

I wouldn't say that. It depends on the goals of the customer. If you are only looking at the monthly payment there are ways for the dealer to game you for both leases and buys. When you know the numbers behind the payment you can win out. Especially if don't care if you have the car long term. I know people that have brought out leases for 10 grand under the buyout price. Aka they paid less in the long run. The biggest change with a lease is the customer no longer holds the risk for resale value. They do paid a price for the removal of the risk. At the same time they have a way to dump the car at a known price. If the car is worth more you get to use that value on a new car. If it is worth less you can rework the deal or just walk away. If your goal is own the car for the long term then your right a lease is in most cases a bad deal.

Also just because the dealer makes money doesn't mean it is a bad deal. The key find a way the dealer and you both get something from the deal. Everyone has different needs.

Not to mention, if you own a business and if you can write off the lease you get massive tax benefits... It all depends on the situation for different folks.

 

[ZEN357]

I wouldn't say that. It depends on the goals of the customer. If you are only looking at the monthly payment there are ways for the dealer to game you for both leases and buys. When you know the numbers behind the payment you can win out. Especially if don't care if you have the car long term. I know people that have brought out leases for 10 grand under the buyout price. Aka they paid less in the long run. The biggest change with a lease is the customer no longer holds the risk for resale value. They do paid a price for the removal of the risk. At the same time they have a way to dump the car at a known price. If the car is worth more you get to use that value on a new car. If it is worth less you can rework the deal or just walk away. If your goal is own the car for the long term then your right a lease is in most cases a bad deal.

Also just because the dealer makes money doesn't mean it is a bad deal. The key find a way the dealer and you both get something from the deal. Everyone has different needs.

I never said I didn't want the dealer to make money. They gotta eat too. My whole point with leases is at the end, unless you buy the car out, you have nothing. As far as the dealers making money, I always buy a new or newer car (no more than 2 years old). I always give them the chance to finance it for me, and I usually buy the extended warranty and have it undercoated by them so they make the commission off the services, financing and warranty.

 

[bangolia]

I never said I didn't want the dealer to make money. They gotta eat too. My whole point with leases is at the end, unless you buy the car out, you have nothing. As far as the dealers making money, I always buy a new or newer car (no more than 2 years old). I always give them the chance to finance it for me, and I usually buy the extended warranty and have it undercoated by them so they make the commission off the services, financing and warranty.

Let’s talk about undercoating for a second. Benefits? I have not purchased a new car ever. But this seems to be a snails tactic.

 

[ZEN357]

Let’s talk about undercoating for a second. Benefits? I have not purchased a new car ever. But this seems to be a snails tactic.

I live in the upper Ohio Valley where we get alot of snow, salt on the roads and grime on the underside of our vehicles. I have always had my vehicles undercoated so everything underneath is protected. I have never had to replace fuel lines or brake line on any of my vehicles. Now with that said I bought my Step-Son a 2003 Buick Regal from my sister for $500. she took car of the vehicle, it was garage kept, and always maintained, except she did not have it under coated. It has 150,000 mile on it when I bought if for my Step-Sons first car, after fixing a bunch of stuff that needed attention, the one thing that was a pain in the butt, was the brake lines. We had to replace every brake line because they were rusted out because she chose not to spend the money and have it undercoated. Say what you want, but I'm a believer in undercoating as long as it;s done right.

 

[ThirtyOne]

I never said I didn't want the dealer to make money. They gotta eat too. My whole point with leases is at the end, unless you buy the car out, you have nothing. As far as the dealers making money, I always buy a new or newer car (no more than 2 years old). I always give them the chance to finance it for me, and I usually buy the extended warranty and have it undercoated by them so they make the commission off the services, financing and warranty.

You can look at it as having nothing or you can look at it as having the difference between the loan payment and the lease payment over 3 years and compare that to the equity you would have in your loan. And then technically you should adjust that for NPV.

Like some of the others have been saying there is a lot of math and you have to actually do the math. There is so much conventional wisdom on leases and the reality is it is correct - but only some times. You just can't generalize when it comes to leases. You have to do the math both ways and see what makes sense.

 

[ThirtyOne]

They’re better on Wranglers than most. You have to use a negotiated selling price for a real calculation, not MSRP. There are people doing zero down leases on JL Sports for $350 a month...

My JLU Sport S with some options is $323/month and I put down basically my deposit ($1,000). But that is in NC where taxe on cars is only 3%. Another complication with leases - you can't compare payments across states because the taxes are rolled in and they vary greatly.

 

[MPETE]

Let’s talk about undercoating for a second. Benefits? I have not purchased a new car ever. But this seems to be a snails tactic.

I work for a car dealer, albeit in parts. I have, for many many years, believed undercoating to be a gimmick and just a way for the dealer to make extra profit.
BUT, have you seen how quickly trucks start to rust nowadays? I have a 6 year old F150 (granted, it did come from canada) the pinch weld on the tailgate looks HORRIBLE. and if you look underneath the cab, there are spots that definitely concern me. And its not just vehicles from Canada. I see trucks that live somewhat pampered lives, garage kept, and less than 10 years have visible rust starting on body panels.
I also own a 23 year old S10. The truck was undercoated from dealer when new, but I swapped the regular bed for a stepside when the truck was around 8-9 years old. The bed I put on was not undercoated. The underside of the bed and fender lips are now in HORRIBLE shape and will likely have holes before much longer. However the cab floor is still in great shape. S10's also are notorious for frame rot and my undercoated frame, while showing its age, is still very solid and should be good for years to come.
I am not sure if I trust dealership undercoating, BUT, If I buy new or only a year or 2 old, I will absolutely be looking to have my JT undercoated.

 

[Moonridge]

I was recommended to post this reply here. I do work for a Jeep dealer and hopefully this can explain a lease in more detail. For the people that are saying dealers push leases because we make more money, is a flat out lie. We rather have you finance the vehicle so we can get back end money from the banks.

How leasing works with Jeep dealerships is there are three leasing companies that we can use. Chrysler Capitol, US Bank, and Ally. Right now the main lease bank is most likely going to be Chrysler Capitol, because they have crazy high residuals. Leases are based off 3 factors: term, residual, and money factor.

Terms are 24, 36, 39, and 48 months. Your term depends on if going a longer term lowers payments, or if your vehicle you are purchasing has a "sweet spot." JL Wranglers have a great 39 month lease and a good 48 month lease.

• Next factor is residual, which is based on the value the bank thinks the vehicle will be worth at the end of the term. Now I don't have the Chrysler Capitol rate sheets yet, but I assume at least above .70. Sports having your highest residual, Overland 2nd highest, and Rubicon the lowest. (I heard rumors of .80 which is crazy.) Take your MSRP (residuals aren't based on discounted prices or rebates) multiply by your residual and you get your residual value. Your residual value is the buyout price at the end of the lease, and that value stays the same from the beginning. Higher residual, better resale value, better payment. Lower residual, standard resale, worse payment, less you owe at the end of the lease. How do these cars have $200 leases you may ask? Well that is our final factor...
• Money Factor, which is really a fancy term for interest rate. Just take your money factor .00175 for example. Multiply by 2400 and you get your interest rate 4.2%. Money factor is based on vehicle and credit. To make things simple, like JL Wranglers, Gladiators are not going to have an incentive based rate. So expect around that example I gave earlier.

The reason why I am choosing to lease, and why I recommend them is basically a lower start cost of ownership. GAP protection is included in a lease. You also get a very low monthly payment compared to a purchase payment. Potentially up to $300-$400 in savings per month. The things to watch out for is your driving miles 10k, 12k, or 15k and making sure you don't have any major damage on the vehicle in case you turn it in. (Chrysler is pretty accepting when it comes to damage repair, anything smaller than a softball is ignored.) Even if you are going to mileage out your lease, you can still get a great starting lease payment then buyout your lease at the end with no penalty from the bank. You can also sell and trade your lease if you want to make some money, if your in a good equity position.

Couple protips:

Don't try to roll negative equity in a lease, your negative will not go into the residual. It is one of the quickest ways to pay off negative equity if you can make the payments. Same thing with aftermarket parts it doesn't go into the residual, so you end up getting a much higher payment for something like a lifted Jeep from a dealership.

Always get a pre term inspection scheduled by Chrysler at your house or work. For some reason the reps will tell you that you don't need it, just take it to a dealership. You can get blindsided by the cost a of small repair that you could of taken care of for half the price Chrysler Capitol charges.

Sorry about the blog post, talking about leasing makes me a little long winded.

 

[Blown7]

I was recommended to post this reply here. I do work for a Jeep dealer and hopefully this can explain a lease in more detail. For the people that are saying dealers push leases because we make more money, is a flat out lie. We rather have you finance the vehicle so we can get back end money from the banks.

How leasing works with Jeep dealerships is there are three leasing companies that we can use. Chrysler Capitol, US Bank, and Ally. Right now the main lease bank is most likely going to be Chrysler Capitol, because they have crazy high residuals. Leases are based off 3 factors: term, residual, and money factor.

Terms are 24, 36, 39, and 48 months. Your term depends on if going a longer term lowers payments, or if your vehicle you are purchasing has a "sweet spot." JL Wranglers have a great 39 month lease and a good 48 month lease.

• Next factor is residual, which is based on the value the bank thinks the vehicle will be worth at the end of the term. Now I don't have the Chrysler Capitol rate sheets yet, but I assume at least above .70. Sports having your highest residual, Overland 2nd highest, and Rubicon the lowest. (I heard rumors of .80 which is crazy.) Take your MSRP (residuals aren't based on discounted prices or rebates) multiply by your residual and you get your residual value. Your residual value is the buyout price at the end of the lease, and that value stays the same from the beginning. Higher residual, better resale value, better payment. Lower residual, standard resale, worse payment, less you owe at the end of the lease. How do these cars have $200 leases you may ask? Well that is our final factor...
• Money Factor, which is really a fancy term for interest rate. Just take your money factor .00175 for example. Multiply by 2400 and you get your interest rate 4.2%. Money factor is based on vehicle and credit. To make things simple, like JL Wranglers, Gladiators are not going to have an incentive based rate. So expect around that example I gave earlier.

The reason why I am choosing to lease, and why I recommend them is basically a lower start cost of ownership. GAP protection is included in a lease. You also get a very low monthly payment compared to a purchase payment. Potentially up to $300-$400 in savings per month. The things to watch out for is your driving miles 10k, 12k, or 15k and making sure you don't have any major damage on the vehicle in case you turn it in. (Chrysler is pretty accepting when it comes to damage repair, anything smaller than a softball is ignored.) Even if you are going to mileage out your lease, you can still get a great starting lease payment then buyout your lease at the end with no penalty from the bank. You can also sell and trade your lease if you want to make some money, if your in a good equity position.

Couple protips:

Don't try to roll negative equity in a lease, your negative will not go into the residual. It is one of the quickest ways to pay off negative equity if you can make the payments. Same thing with aftermarket parts it doesn't go into the residual, so you end up getting a much higher payment for something like a lifted Jeep from a dealership.

Always get a pre term inspection scheduled by Chrysler at your house or work. For some reason the reps will tell you that you don't need it, just take it to a dealership. You can get blindsided by the cost a of small repair that you could of taken care of for half the price Chrysler Capitol charges.

Sorry about the blog post, talking about leasing makes me a little long winded.

So lets do some math...Lease for 36 Months (pick a number) some money down (pick a number) You have to guarantee not driving beyond a certain number (pick a number).. if all goes correctly your saying you get to "rent" the vehicle for that time.

At the end of that time ...IF you want to own the vehicle , now you have to take out another loan on the residual, plus the sales tax, for another 3,4 or 5 years.....

Now do the math for 6,7,8 years total ......

You really need some advice from Jay Leno and Suze Orman

https://www.cnbc.com/2017/06/29/jay-leno-and-suze-orman-agree-dont-lease-a-car-buy.html

https://jalopnik.com/the-one-time-jay-leno-was-wrong-about-cars-1790091121

BTW I work for a Billionaire he hates debt and If I leased a vehicle he would fire me....

 

[Chance_P]

At the end of that time ...IF you want to own the vehicle ,

And IF you don't want to own the vehicle?

What's your time worth in having to sell a used vehicle vs trading in the lease?

What tax incentives does your state give for trade ins?

As you pointed out, there are a lot of IFs involved. IF everyone's situation was the same, then your assumptions could be correct.

And I'm sure your boss would agree.

 

[WXman]

So lets do some math...Lease for 36 Months (pick a number) some money down (pick a number) You have to guarantee not driving beyond a certain number (pick a number).. if all goes correctly your saying you get to "rent" the vehicle for that time.

At the end of that time ...IF you want to own the vehicle , now you have to take out another loan on the residual, plus the sales tax, for another 3,4 or 5 years.....

Right, which is why I said that if you KNOW that you're going to keep the vehicle for 15, 20, 30 years then it makes better sense to "buy" it. But, how many people keep a vehicle until it literally falls apart? Very very few. And, leasing is NOT like renting. When you rent, your payments don't go toward ownership of anything. When you lease a vehicle, every payment you make does advance the total principle downward so that you are getting closer to ownership with each month that goes by.

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