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What's a guy to do? How I think leasing a JT works......a guide for others

Which option should I go with?

  • Drive my rusty 235,000 mile Grand Caravan until I’m ready financially to buy a Rubicon Gator

  • Do a 2-3 year lease on a Sport S with decent options~ $445 per month and hope I can get a Gator afte


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steffen707

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Background:

It all started when I was conceived in the back of a plywood truck,
upload_2019-5-3_20-4-38.png

wait that’s like too much background.


Recent Background:

I ultimately want a Gator Rubicon, but because I recently bought a new minivan for the wife with all the bells and whistles last Fall, it’s not financially responsible to commit to an additional payment like that within the next 2 years. My income fluctuates too much. So actually buying cash, or conventional financing ANY JT right now is NOT an option for me. (so please don't suggest, just a waste of time)

I've started considering getting a lease for 2-3 years so I can test the waters and decide if this Jeep life is for this guy. At first I thought of just getting a sport or sport S because it would cost less, but then my wife said, "Lease a Rubicon so you know if the Rubicon is the truck you want to buy in 2-3 years when the lease is up". Afterall, i've never done overlanding, rock crawling, mudding (with my own vehicle).

So i dunno, maybe this city boy just needs a Sport S or Overland...... or maybe I’ll love the rugged outdoor life ( I am an Eagle Scout afterall and spent many days/nights in nature)

So I started looking at leases and what I think I discovered is this.


My understanding of how a lease works:

You can still negotiate the Cost of the vehicle you’re buying, so tread lightly and 5-7% off invoice can still apply. What FCA does is assign a “residual” value to the vehicle you want to buy at time of lease. (MORE ON THIS LATER) This is a % less than 100%. Think of it as the value left in the vehicle when your payments are over. So your payments are based on the“depreciation” of said vehicle. (100%-Residual%) I was recently quoted about 79% residual for a sport S. @Dietruck explained the % off is

There is also some kind of interest type thing/financing fee that’s rolled into the lease (IS THIS TRUE?) and each payment includes state and local tax, you don't pay for all of the sales tax up front like when you buy with conventional loan. You only pay sales tax on the portion you consume.

One dealer said their dealer fee is rolled into the lease payments, and the destination fee is rolled into the purchase price $1495 MSRP I believe. One dealer told me there was a $650 “acquisition fee” that the leasing company tacks onto the amount financed through the lease. Another dealer said their acquisition fee this month for them is ZERO, but that could change tomorrow.


Calculations 1: I did it this way first, then @Dietruck explained my calculations were off.

So, I would basically be paying 21% (100%-79% residual) of the negotiated sales price (invoice of vehicle and add-ons plus destination * 95% (with 5% below invoice with tread lightly dealer) plus dealer fee and acquisition fee / 24 payments).

So if invoice plus destination is $43,932 * 95% * 21% = $8,764 + dealer fee $75 + $0 Acquisition cost = $8,839.

This is for a 24 month and 10,000 mile per year lease. So $8653 / 24 = $368 *1.055 (sales tax) = $388…………but I was quoted like $425.

So I’m not sure where the other $36 per month came from, I’m guessing that’s the cost of the lease, like interest on a loan. (IF YOU KNOW PLEASE INFORM ME WHY MY MATHS ARE OFF)

Calculations 2: I feel like my calculations are still off.

So, I would basically be paying 21% of MSRP (100%-79% residual) less the 5% off Invoice with tread lightly dealer) plus dealer fee and acquisition fee / 24 payments).

So if MSRP plus destination is $45,660 * 21% = $9,588 + dealer fee $75 + $0 Acquisition cost = $9,663.

5% of invoice on this spec sheet was about 8.6% of MSRP is $3,926.

This is for a 24 month and 10,000 mile per year lease. So $9,588 - $3,926 / 24 = $235 *1.055 (sales tax) = $248…………but I was quoted like $425

So I’m not sure where the other $177 per month came from, I’m guessing that’s the cost of the lease, like interest on a loan. (IF YOU KNOW PLEASE INFORM ME WHY MY MATHS ARE OFF)

Calculations Conclusions:

This stuff gets so confusing, especially if you don't have a real example to work off of. I apologize if my math is way off for anybody trying to follow my footsteps. Probably easiest to do this, BUY FROM A DEALER THAT WILL GIVE YOU THE MOST OFF INVOICE AND LOWEST DOC FEE, THEN CALL IT A DAY. lol



The Residual Problem:

The problem is that if you order a JT today and negotiate a sweet 5-7% below invoice with all of the mods you’ve been dreaming of, and its delivered to the dealer 60 days later……… only the purchase price is guaranteed. The residual and interest rate can change, thus changing your lease payments.


Distance to dealer:

The local dealers don’t give great discounts around me. I found one about 90 miles away (we'll see) but probably can get better if I go to Iowa, North Carolina or Texas. If I fly there and drive home, I’ve got flight, fuel, plus that mileage counts towards the lease. The mileage isn’t a big deal to me, I’ll probably only put 6,000 per year on it. Well that’s a normal year, but if I go to EJS next year, EEEEK!

So lets say $400 flight one way plus 500 miles at 20mpg (easy figures, need 25 gallons at $4 per gallon. $500 travel cost. I think actual costs to Iowa would be like $350.

I’m getting a quote for the dealer to drive the car to me, and also for a transport truck to drop it off. I’ll probably just fly and drive home if its Iowa, not sure about NC or Texas. So 3 options here


The Gator Problem:

Some guy rained on my parade yesterday and said that often jeep only has new colors for a few years. If I’m stuck in a lease and Gator goes away, I might not be able to buy a new one after lease is up. Or I’ll have 2 Gladiators at the same time, or I’ll have to buy a used Gator. 3 more options


NOT MY OPTIONS PROBLEM:

Since the price can change without my control, I can’t lease/order my dream build. It also means I can’t order a bone stock sport or sport s. They’ll probably all have some factory options so I’m at the mercy of randomness and need to be ready at the drop of a hat to buy a vehicle off a lot with whatever options it has.


Total payments of leases:

Travel cost + Sport S with decent options $445 / month 24 months = $10,680 (assuming this doesn’t change because vehicle hasn't arrived yet)

Overland with decent options from local dealer $790 / month 24 months = $18,960 (not sure if this includes ALL fees) HOLY COW, too much money when i multiply it out!


My options as I see them:

1. Drive my rusty 235,000 mile Grand Caravan until I’m ready financially to buy a Rubicon Gator
2. Do a 2-3 year lease on a Sport S with decent options~ $445 per month and hope I can get a Gator after.

Fake options:

1. Win the lottery
2. Spend my roth IRA at age 36
3. Buy a Rubicon Gator in 5 months and if I don’t have enough money, just make the payment from my HELOC
4. Lease a Rubicon and if I don’t have enough money, make the payment from my HELOC
5. Meet one of the MANY BILLIONAIRES that other guys around here know and get a fat paying job and then just pay cash with my signing bonus.
6. Buy a YUGO
7. Build a plywood replica of a Gladiator and then pretend I’m at EJS when you guys are, and then go crazy like Ray Finkle.

2-Ace-Ventura-Pet-Detective.gif

If you made it this far, you rock!
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bangolia

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I have read the “logic” behind leading over and over here and I just can’t get on board. My vote if find a way to buy it when you can. I’m not going to tell you how to spend your money, just my $0.02.
 

Dietruck

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As a fellow Eagle Scout. I can help you put the right numbers together . Not that I wouldn't have helped anyway.

Residual is a percentage of the MSRP. Not your negotiated sales price. So that 5 to 7% off is like a down payment as far as your monthly payment calculator.

The money factor/ interest rate is missing.

What do you think the cost of repairs will be for the GC over the term you are going to lease?

How much do you think you would get for the GC?

Also I know a loan now is not an option for you but running the loan numbers just as a compare and see the total cost delta is a good idea. It helps ensure you are balanced.

In a few years what term loan would you get?

Also you can sell off your lease to someone else if your ready to buy and still in the lease. Both the lease cars my brother has he brought from someone who was looking to get out of the lease. He picked up the payments the lease was signed over to him. To my surprise, this is a common thing.


 
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steffen707

steffen707

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As a fellow Eagle Scout. I can help you put the right numbers together . Not that I wouldn't have helped anyway.

Residual is a percentage of the MSRP. Not your negotiated sales price. So that 5 to 7% off is like a down payment as far as your monthly payment calculator. DOH! Though that's better.

The money factor/ interest rate is missing. How is this calculated?

What do you think the cost of repairs will be for the GC over the term you are going to lease? Not sure, could be fine, probably $300.

How much do you think you would get for the GC? KBB says $1001

Also I know a loan now is not an option for you but running the loan numbers just as a compare and see the total cost delta is a good idea. It helps ensure you are balanced. Hmmm, not sure I follow. Am i trying to caclulate the cost of leasing for 2 years vs the loan for 2 years, and compare those 2 numbers to see how much more i'm paying per year on the lease?

In a few years what term loan would you get? ?????, good question, no idea where interest rates will be,

Also you can sell off your lease to someone else if your ready to buy and still in the lease. Both the lease cars my brother has he brought from someone who was looking to get out of the lease. He picked up the payments the lease was signed over to him. To my surprise, this is a common thing. I had no idea this was a thing. Is there a Craigslist for this sort of thing? How does one sell, or buy their used lease?
Thanks for the response, now I gotta re-run the math and update my post..........
 
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steffen707

steffen707

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@Dietruck
5% of invoice is $43,932 * 5% = $2196, but MSRP is $45,660 which is only 103.933% of Invoice.
This doesn't make sense to me, i thought 5-7% below Invoice equated to 10-12% below MSRP?
 

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Dietruck

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@Dietruck
5% of invoice is $43,932 * 5% = $2196, but MSRP is $45,660 which is only 103.933% of Invoice.
This doesn't make sense to me, i thought 5-7% below Invoice equated to 10-12% below MSRP?
5% of a small number is not the same as a 5% of a bigger number.

Sent you my number in a PM
 

starrsRN

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Don’t lease a vehicle especially if you want a Rubicon in the end anyway. Your litterally throwing the money away. Drive your clunker until you can afford it, or have enough to put down in a gator Rubicon so your payment is manageable for you. Only you and your household know what you can swing and what you can’t. Leasing no matter how big and fancy they make it appear to you is never going to work out in your favor. You are renting a vechile that you will never own. Your smarter than this haha
 

Tortooga Custom Works

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The difference between involvement and commitment can be described by ham and eggs. The chicken is involved; the pig is committed.

@steffen707 I dare say you are committed. I haven't had a chance to read through all this - but I'll catch up tonight and i'll give my input.

Smart is to continue doing this math. Sorry @starrsRN but saying that leasing will never work out in your favor is an incorrect statement. It assumes then that financing would always work out in your favor. Which is also incorrect. Even paying cash won't always work out in your favor.

Everyone needs to do the math for themselves and decide based on their own income, budget, family and acceptance of risks.
 

Dietruck

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The difference between involvement and commitment can be described by ham and eggs. The chicken is involved; the pig is committed.

@steffen707 I dare say you are committed. I haven't had a chance to read through all this - but I'll catch up tonight and i'll give my input.

Smart is to continue doing this math. Sorry @starrsRN but saying that leasing will never work out in your favor is an incorrect statement. It assumes then that financing would always work out in your favor. Which is also incorrect. Even paying cash won't always work out in your favor.

Everyone needs to do the math for themselves and decide based on their own income, budget, family and acceptance of risks.
I agree. I think there is enough information in the 3 plus leasing threads to answers 90% of the questions. I am with @ralphjjr, do the numbers. Balance your needs and wants. Be truthful with yourself on what your wants are and the cost. Car buying to me is also an emotional purchase. Not only do I look at the cost, risk and other fact based factors. I also look at how a car makes me feel and how much is that worth.

@steffen707

I am not going to say u should or shouldn't lease. Just decide what is right for your reasons and be realistic with the numbers.
 

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I agree with everyone here - do the math again but if you can't write off the lease in your business then I would think you would find it hard pressed to come out on top of this. The smarter move IMO is to drive your clunker wait a year and half and buy a Gator used. You don't really need a Rubicon just buy the best used Gladiator you want/get in Gator and then work on the truck to upgrade it to Rubicon level by adding your own Mopar parts. You seem to be handy enough since you have a PhD in plywood, so it shouldn't be a problem for you ;). If I was in your position that is what I would do... plus you would get the joy of working on your own truck and you would know your truck inside out.

My gf didn't want to sell her 2005 VW beetle convertible due to some emotional attachment that I can't understand :), but I worked on the car and put a lot of custom parts in it (upgraded, suspension, brakes, sway bars, new engine and transmission mounts, re-upholstered the interior, new soft top, etc - spent around $20k on it cuz she wants to take that convertible to the grave LOL) so that the car drives like a dream. Pretty much everything in the car except the motor, transmission, body and frame have been replaced :D. Since I worked on it, I pretty much know what is in the car and it is easier to maintain for me.
 

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starrsRN

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The difference between involvement and commitment can be described by ham and eggs. The chicken is involved; the pig is committed.

@steffen707 I dare say you are committed. I haven't had a chance to read through all this - but I'll catch up tonight and i'll give my input.

Smart is to continue doing this math. Sorry @starrsRN but saying that leasing will never work out in your favor is an incorrect statement. It assumes then that financing would always work out in your favor. Which is also incorrect. Even paying cash won't always work out in your favor.

Everyone needs to do the math for themselves and decide based on their own income, budget, family and acceptance of risks.
I think we can all come to the agreement that if your going to be upside down in a term for the life of the loan/lease you shouldn’t buy said vehicle correct? So when going to buy a JT or any vehicle for that matter you have to realize the minute you take those keys you have forfeited 3k in depreciation...right away. Financing IMO is the best way to go about a vehicle purchase. Put down 10% and pay it off as quick as you can. Leasing gives you nothing and if you plan on buying it in the end anyway why didn’t you just finance it to begin with?
 
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steffen707

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I agree. I think there is enough information in the 3 plus leasing threads to answers 90% of the questions. I am with @ralphjjr, do the numbers. Balance your needs and wants. Be truthful with yourself on what your wants are and the cost. Car buying to me is also an emotional purchase. Not only do I look at the cost, risk and other fact based factors. I also look at how a car makes me feel and how much is that worth.

@steffen707

I am not going to say u should or shouldn't lease. Just decide what is right for your reasons and be realistic with the numbers.
Thanks for the help @Dietruck
 

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So the challenge, I think, is our projecting our own desires, fears, budget, income, experiences, and risk-taking - on other people.

So much of our decisions are based on how we feel:
I also look at how a car makes me feel and how much is that worth.
I don't need a gladiator. No one does. I want one. So part of my math is deciding how much I'm willing to pay for that desire. I LOVE airplanes, and I want a kit fox... but my math has showed me that I can't do that with my money, or with my time, right now. But others can - even other's in similar shoes to mine.

I'm going to spin some statements - I'm not picking on anyone. Just trying to make a point.

if you can't write off the lease in your business then I would think you would find it hard pressed to come out on top of this.
The challenge here is defining what "on top" means. That could mean so many different things to different people. So it cost him $5000 more than it cost me... but he got it sooner. That's what "on top" means for him... Do I hate him? Yes. do I want to judge him? Yes. LoL. But none of that matters - he's on top.
She got it for $10,000 less by flying across the country and driving it back. Good for her. That's definitely "on top" for her. But that just doesn't work for me.

spent around $20k on it cuz she wants to take that convertible to the grave
$20K on a 15 year old car!? What a horrible decision! I would have...
Just kidding... I've done the same thing. To someone else it sounds crazy, but in the circumstance I was in it was the best decision for me. And it sounds like it was the best decision for you. I feed on peoples excitement and happiness. It makes me giddy just to think how happy your gf must be to see her car all fixed up.

I think we can all come to the agreement that if your going to be upside down in a term for the life of the loan/lease you shouldn’t buy said vehicle correct? So when going to buy a JT or any vehicle for that matter you have to realize the minute you take those keys you have forfeited 3k in depreciation...right away. Financing IMO is the best way to go about a vehicle purchase. Put down 10% and pay it off as quick as you can. Leasing gives you nothing and if you plan on buying it in the end anyway why didn’t you just finance it to begin with?
I agree about depreciation. That's a fact of life. Some people let it get to them, other's just deal with it. I'm in the deal with it crowd. Depreciation is like death and taxes. I can't do anything about either. Which brings up another point - there are a lot of things we can't do anything about. Gas prices is another. I bought a brand new Suburban in 2005. I was right side up until 2008... Great deal, until the world decided that gas prices needed to be $4 and no one wanted an SUV. I ended up paying money to get rid of it. Bad decision? Nope. I made that money back in about 4 months. But, that was me, and my circumstances. For someone else it may not have worked out so well.

Being upside down on a loan/lease is also a personal decision. Some can deal with it - if you're going to own the thing at the end of the term, why does being upside down matter? If you want the thing bad enough, and you can spend the extra $$, does it really matter?

It's so relative and subjective. Some of us like to hang on to our cash, some of us don't. Some of us like really nice things, some of us are fine with sort of nice things. Some of us have disposable income, some of us don't.

Financing is the best option for you - yes, totally. I can agree with that. But it might not be the best option for me, or the other guy.

I'm not a risk-taker, but i'm also not risk-averse. I'm calculated. If I want it, and it's possible, I'll do the math, I don't mind paying extra. I'm going to get out of it what I want. I work hard for the money, it does nothing sitting in a bank waiting for me to die.

For the record. I'm probably Financing :CWL:
I want to own this car. This is my forever car... but I said that about my last car too, and the one before that. So I'm still doing the math, and talking to my wife. What really makes sense? Right now I want to own it. But the last 3 cars I've owned are absolutely proof that I'm not good at owning cars. I literally sold them in under 3 years of owning them. So should I keep taking a loss on depreciation? It's a jeep... I might. Apparently I still have like 3 months to decide..
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The challenge here is defining what "on top" means. That could mean so many different things to different people. So it cost him $5000 more than it cost me... but he got it sooner. That's what "on top" means for him... Do I hate him? Yes. do I want to judge him?
Yeah totally, I agree with you on how it is entirely subjective. I just meant from a dollars and cents perspective you will end up paying more in the long run if you wanted to own that particular car if you lease first then buy and you don't have a viable write off in your business. Idk any situation where this might be different... But, beyond that sure I am paying $2500 more than most people here for my LE because I am not driving to Idaho or somewhere place to pick up my LE. I figured for me that was an acceptable premium to pay to get it locally... so I completely understand that it is subjective and end of the day you want to make the right decision financially but you also want to be happy :). I tend to be the guy who makes the decision for happy more I suppose :D

$20K on a 15 year old car!? What a horrible decision! I would have...
Just kidding... I've done the same thing. To someone else it sounds crazy, but in the circumstance I was in it was the best decision for me. And it sounds like it was the best decision for you. I feed on peoples excitement and happiness. It makes me giddy just to think how happy your gf must be to see her car all fixed up.
LOL Yeah, that is exactly why I gave this analogy. For most people tbh even me it sounded like an absurd idea to hang on to some old car that was not even that special but it was special to *her*. I didn't want her driving in a beat up clunker that was not reliable as we both have successful careers and I decided to just upgrade the heck out of the car instead of buying a new one. And yes, it is fun to watch how she gets so excited and happy when she drives her car and when she hears from our mechanic here who did a tune up said "That car drives like a race car" hahaha ...
 

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Everybody’s financial situation will be different, and in this case I just don’t understand leasing somethingtemporarily...until the Rubicon model can’t be bought.
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