Leasing in Michigan - a bit of confusion

[Epb1981]

People that don't understand how auto insurance works spread this misconception due to the "totalled and insurance won't reimburse you" theory.

If you put 5K down on a 40k vehicle on lease and the vehicle depreciates 5k when you drive it off the lot, and total it the next day, insurance says it's worth 35k and that's what they give you. You're out 5k.

If you lease a 40k vehicle and put 0 down, it depreciates 5k, and you total it the next day, it's still only worth 35k and that's what Insurance will pay. Leaving you on the hook for..... Drumroll please...... 5k.

Gap insurance protects you from depreciation, regardless of lease/loan/downpayment

when I leased through Honda, gap insurance was part of the deal. It was nothing I had to add to my insurance. Have you leased through jeep to know if that is not included?

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[TMarotta87]

You must have misunderstood me. I'm in the same camp as you, I DO think putting down a larger payment up front in exchange for lower monthly is the way to go.

The conventional "wisdom" is that it is a poor idea for the reasons I outlined above.

I see, and you're right, I did misunderstand the intent of your message. Sorry about that!

I do appreciate the helpful info people have shared here!

 

[Dietruck]

when I leased through Honda, gap insurance was part of the deal. It was nothing I had to add to my insurance. Have you leased through jeep to know if that is not included?

Gap is included. It is stated on thier site.

New car replacement is not.

 

[Epb1981]

Gap is included. It is stated on thier site.

New car replacement is not.

Exactly, and since you put zero down on the lease it's no big deal. Go get a new lease.

 

[lrtexasman]

People that don't understand how auto insurance works spread this misconception due to the "totalled and insurance won't reimburse you" theory.

If you put 5K down on a 40k vehicle on lease and the vehicle depreciates 5k when you drive it off the lot, and total it the next day, insurance says it's worth 35k and that's what they give you. You're out 5k.

If you lease a 40k vehicle and put 0 down, it depreciates 5k, and you total it the next day, it's still only worth 35k and that's what Insurance will pay. Leaving you on the hook for..... Drumroll please...... 5k.

Gap insurance protects you from depreciation, regardless of lease/loan/downpayment

My insurance company offers to pay over 20%!of the payoff in the event of a total for much less than gap insurance. I am with USAA, I recommend you check with your insurance company and cost compare with gap cost before deciding.

 

[zminnehan]

Hello everyone!

If I haven't dropped this in the right spot, I apologize, but I'd just like to get some thoughts on this sort-of odd situation.

So, a little background:

I'm currently sitting on a leased '17 F-150 that is due for turn-in late this year/early next year, whenever the early turn-in period kicks in. Naturally, I still owe on the lease and when the Gladiator started popping up I knew what my next vehicle was going to be - I always wanted a Jeep, but I just can't give up the pickup truck versatility. Only time I did in the past was when I had my '08 Nitro a few years back. Miss that toaster. Enter the Gladiator.

As of right now the option that makes the most financial sense to me is to lease, probably for 3 years. I built a Gladiator Sport S with a handful of options, came to between $43,000 and $46,000 basically, depending on if I added a few extras I didn't really feel I needed. I was trying to get my monthly costs as far down as possible, and using Chrysler's payment calculator right on the build website, was able to get some good base-line payment options (just a little over $300/month with about 5K down - i prefer to do things this way to control monthly costs).

Understanding that this payment calculator isn't 100% accurate, of course, but also seeing that it didn't factor in special discounts or anything like that and having talked to a few dealers, they were comfortable that this number was reasonable. Probably slightly low, but not much.

It's interesting that the financing/calculate payment buttons have disappeared from the build tool now, and perhaps this next bit has something to do with that...

Now, having consulted with my dealer of choice, the actual numbers came in:

I won't be putting $5K down on a $43,000 Gladiator and getting it for about $320/month.
I'll be putting between $7600-8600 down and getting it for $400+ per month, according to the dealer. This is just based on an inquiry and not on any credit checks or anything like that.

I spoke with the salesman and he went over the pricing and numbers and showed me that the dealer is not marking up the truck, as I feared they might. But the jump to double the previously advertised deposit amount, and the considerably higher payment, surprised me.

Is anyone else running into this? Or should I shop around and have a few dealers run numbers for me?

They explained to me that since the vehicle is new the banks basically have no data to realistically set prices, so they're jacking the cost way up, in so many words. I'm not sure I buy this exactly, and I unfortunately didn't have a ton of time to look really deep at it.

Just curious if people have been seeing this same thing come up.

I've also been reading that a lot of people have had luck finding pretty good discounts at a handful of dealers in the midwest - is there any hope that anyone's found any in the metro Detroit region? All the calls I've made put everyone at or slightly above MSRP.

Thanks everyone, and sorry for the novel!

-Tony

That quote is crazy. Not sure where you are located but I'm in Ann Arbor at a Jeep dealer. If you're still looking let me know I can get you a lot more realistic pricing

 

[MirMir]

Hello everyone!

If I haven't dropped this in the right spot, I apologize, but I'd just like to get some thoughts on this sort-of odd situation.

So, a little background:

I'm currently sitting on a leased '17 F-150 that is due for turn-in late this year/early next year, whenever the early turn-in period kicks in. Naturally, I still owe on the lease and when the Gladiator started popping up I knew what my next vehicle was going to be - I always wanted a Jeep, but I just can't give up the pickup truck versatility. Only time I did in the past was when I had my '08 Nitro a few years back. Miss that toaster. Enter the Gladiator.

As of right now the option that makes the most financial sense to me is to lease, probably for 3 years. I built a Gladiator Sport S with a handful of options, came to between $43,000 and $46,000 basically, depending on if I added a few extras I didn't really feel I needed. I was trying to get my monthly costs as far down as possible, and using Chrysler's payment calculator right on the build website, was able to get some good base-line payment options (just a little over $300/month with about 5K down - i prefer to do things this way to control monthly costs).

Understanding that this payment calculator isn't 100% accurate, of course, but also seeing that it didn't factor in special discounts or anything like that and having talked to a few dealers, they were comfortable that this number was reasonable. Probably slightly low, but not much.

It's interesting that the financing/calculate payment buttons have disappeared from the build tool now, and perhaps this next bit has something to do with that...

Now, having consulted with my dealer of choice, the actual numbers came in:

I won't be putting $5K down on a $43,000 Gladiator and getting it for about $320/month.
I'll be putting between $7600-8600 down and getting it for $400+ per month, according to the dealer. This is just based on an inquiry and not on any credit checks or anything like that.

I spoke with the salesman and he went over the pricing and numbers and showed me that the dealer is not marking up the truck, as I feared they might. But the jump to double the previously advertised deposit amount, and the considerably higher payment, surprised me.

Is anyone else running into this? Or should I shop around and have a few dealers run numbers for me?

They explained to me that since the vehicle is new the banks basically have no data to realistically set prices, so they're jacking the cost way up, in so many words. I'm not sure I buy this exactly, and I unfortunately didn't have a ton of time to look really deep at it.

Just curious if people have been seeing this same thing come up.

I've also been reading that a lot of people have had luck finding pretty good discounts at a handful of dealers in the midwest - is there any hope that anyone's found any in the metro Detroit region? All the calls I've made put everyone at or slightly above MSRP.

Thanks everyone, and sorry for the novel!

-Tony

I’m also from Michigan and I got exactly what I wanted to pay per month. I went in and told them I don’t want to go above this number and they agreed it was a good price. I’m also turning in a lease that’s due next August and they are waving my early termination fee. It’s a Grand Cherokee and I take very good care of my vehicles. I’m curious as to what dealer told you all that especially since they did not pull any of your credit reports.... I had that happen to me at a Toyota Dealership and I walked. The truck to this day is still sitting on their lot.

 

[Happycoop]

Just head over to Leasehackr forum and read some of the horror stories when folks new to leasing put lots of money down and then total the vehicle. At best, it's a long and arduous process to be made whole...unfortunately most people learn the hard way that they should never have done it in the first place. If you have the money to put down, just be responsible and put it in the bank and don't touch it except to add to the monthly payment (create a new account if you must so that you're not tempted to spend it).

From my experience (I'm on vehicle #54 right now), if you walk into the dealer without already knowing what your payment should be, you've already lost the battle. Arm yourself with some knowledge on the front end and the whole process will be much more pleasant.

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