Purchase Price for a 2016 Sport after Lease Term

[Fentress24]

I like to change vehicles every 3-4 years and have leased my last 6 vehicles. As for equity, you can build that up in a lease as well. My 2011 Limited was on a 4 year lease but the dealer really wanted it back after 3 years. They told me I had quite a bit of equity built up in it and having only 11,200 miles on it they obviously had a buyer for it. They paid off the remaining year on the lease, bought it from Ford and sold it plus gave me a very good deal on the 2014 MKT sitting in the showroom and a 3 year lease at 0%. As of today, I have 1 year remaining on that one. I agree that if you plan to buy it at lease end, you are better off financially to purchase it to start with. But having said that, a lease will allow you to test drive it for a period of time to see if you really want to keep it or not. Also, if the vehicle has been problematic during the lease you can simply walk away from it at lease end when it likely is not under warranty any longer.

Peter

All very good points!

Good to hear the argument for the other side.

I think OP needs to decide what he really wants. If the original plan is to buy out the lease, I would just save up until my monthly payments are where I am comfortable and buy during a good sale.

Keep us updated on the decision.

This might help you out:

http://www.bankrate.com/calculators/auto/lease-buy-car.aspx

 

[GrafX]

I have never really understood the reason for leasing a car if you plan to hold on to it long term. If you switch cars ever 2-3 years it could make sense, or if you have a work car allowance or write off.

You are technically renting a vehicle from Ford for the next 3 years. I understand the lower payments, but you have a significant down payment. I would wait for them to run a 60 month 0% or even an 72 month 0% and just buy it.

You will only pay $224/month on the lease but you will have nothing to show for it at the end of the 36 months. So 224/month x 36 months + you $10k downpayment equals a total amount paid of $18,064. Then you will have to either finance or pay cash at the end of your lease. A used 2013 Explorer Sport with less than 40k miles is currently selling for 35-40k. Say they cut you a deal and you only pay $30k at the end of the lease. You are out $48k or more for a truck you could have just bought for $44-45.

If you can get 0% for 60 months, put down $10k, your payments would be roughly $583. Over that same 36 months you would pay $20,988 + your down payment, but own the truck. If you get tired or it, or total it, you will have equity to work with. If you can save more $ and put more down while you research, you can get your payments even lower.

Long story short, If you plan to buy the lease out at the end, just wait for a good sale and buy the truck.

If you plan to drive for 2-3 years and move on, lease. If you have a car allowance or can write the payment off, lease.

The plan is to have the vehicle for years to come. I don't need a new vehicle every few years and feel I'm more practical type personality.

Kid$ are getting older, wife could leave me (or I can hook up with that hottie in accounting), medical expenses, I could lose my job, etc. These are just a few consumer confidence reasons why I'm gravitating towards smaller payments. The extra couple grand spread out over the span of a couple years is really added insurance in my mind and gives me comfort. Being locked in to larger payments means a little more budgeting and less spontaneous purchases, which is no fun.

Hey, I'm definitely no financial genius but boils down to this; I'm pretty sure my current vehicle won't make it past this year LOL

 

[GrafX]

My 2011 Limited was on a 4 year lease but the dealer really wanted it back after 3 years. They told me I had quite a bit of equity built up in it and having only 11,200 miles on it they obviously had a buyer for it.

Interesting, I wonder if the milage on the vehicle played any part? If it did, I may have exposed my poker hand to my dealership because I told them I live close to work and only average around 6,000 miles a year. I hope that wasn't a mistake and comes back to haunt me when it comes time to negotiate the purchase price.

But having said that, a lease will allow you to test drive it for a period of time to see if you really want to keep it or not. Also, if the vehicle has been problematic during the lease you can simply walk away from it at lease end when it likely is not under warranty any longer.

That's another aspect I really like.

 

[Fentress24]

The plan is to have the vehicle for years to come. I don't need a new vehicle every few years and feel I'm more practical.

Kid$ are getting older, wife could leave me (or I can hook up with that hottie in accounting), medical expenses, I could lose my job, etc. These are just a few consumer confidence reasons why I'm gravitating towards smaller payments. The extra couple grand spread out over the span of a couple years is really added insurance in my mind and gives me comfort. Being locked in to larger payments means a little more budgeting and less spontaneous purchases, which is no fun.

Hey, I'm definitely no financial genius but boils down to this; I'm pretty sure my current vehicle won't make it past this year LOL

Being comfortable is the most important part!

I would recommend checking a couple dealers out for the best pricing. Wait for them to run a special and pull the trigger.

You'll love the truck. Ours has been great so far

 

[GrafX]

Being comfortable is the most important part!

I would recommend checking a couple dealers out for the best pricing. Wait for them to run a special and pull the trigger.

You'll love the truck. Ours has been great so far

Time is on my side, my friend. I've seen sales/incentives come and go so far this year and am picking up on trends and am learning when to strike. I actually wish I went to this forum before I even talked to the dealership. It's alright though because I only talked to one dealership, and being in Cleveland area, there's plenty to choose from.

 

[Fentress24]

Time is on my side, my friend. I've seen sales/incentives come and go so far this year and am picking up on trends and am learning when to strike. I actually wish I went to this forum before I even talked to the dealership. It's alright though because I only talked to one dealership, and being in Cleveland area, there's plenty to choose from.

Good luck! Keep us updated on how everything goes

 

[GrafX]

Looking for a realistic (or ballpark) figure for an agreed upon purchase price for a 2016 Sport model after a 3-year-term and $10,000 down.

Salesman told me he can't say anything until he has a Vin number. I'm not at that point yet because I won't be buying until August (I'm in save mode because of recently paid-off bills). My plan is to purchase the vehicle after the lease term and wanted to know what to expect. Below is pretty much the specs and payment I'm looking for when it comes to my next financial burden, heh. Let me know if you have anything else to add. This will be my first new vehicle purchase. Thanks!

Answer to my own post for others who are looking; my 2019 buyout price for a 2016 Sport with a 401a package is $29,750.

 

[Tuscany]

Answer to my own post for others who are looking; my 2019 buyout price for a 2016 Sport with a 401a package is $29,750.

I'm just not understanding a couple of things.
First, why put one cent of down payment on a lease?
That makes no sense. There are no savings what so ever when putting money down on a lease deal, and the money would be better used on paying down any debt you may have that costs you interest,

IMO, if you have 10k to put down on a clean deal, do yourself a favor and buy the vehicle outright. I'm not a lease fan. Leases make some sense to me if the buyer doesn't have the down money to begin with, and wants a new vehicle.

On an order, your dealer should have no problem accepting invoice as the purchase price minus any incentives.

 

[GrafX]

I'm just not understanding a couple of things.
First, why put one cent of down payment on a lease?
That makes no sense. There are no savings what so ever when putting money down on a lease deal, and the money would be better used on paying down any debt you may have that costs you interest,

IMO, if you have 10k to put down on a clean deal, do yourself a favor and buy the vehicle outright. I'm not a lease fan. Leases make some sense to me if the buyer doesn't have the down money to begin with, and wants a new vehicle.

On an order, your dealer should have no problem accepting invoice as the purchase price minus any incentives.

I explained it (or justified it) earlier in the thread. I get it though but here it is in a nutshell; I'm in a lucky position to live only 3 miles away from my job. Based on my Jeeps's odometer, I average 7k miles a year. I choose to go the lease route instead of buying because the lower payments don't force me to budget for $500 payments for 60 months.

Basically, I like to fly by the seat of my pants and like the fact I can save more money for buying it out or putting a nice down payment on a '20 vehicle. Either way, my daughter will be old enough to drive in 3 years and I gotta do something

All kidding aside, this is one frigging fun vehicle to drive.

 

[peterk9]

........There are no savings what so ever when putting money down on a lease deal, and the money would be better used on paying down any debt you may have that costs you interest,

Any money you put down reduces the total that you pay interest on over the length of the lease. So in fact, you are paying down a debt that costs you interest, what ever the rate may be.

Peter

 

[GrafX]

Any money you put down reduces the total that you pay interest on over the length of the lease. So in fact, you are paying down a debt that costs you interest, what ever the rate may be.

Peter

to add to that, I'm seeing 3 year old Sports going for 33-36k (this was my baseline). Based on that, I think I'm in the ballpark.

The point is, it gives me enough leverage to buy at the end of the term or put a nice down payment on a new 2020 model because it free's up income. It may not work for everyone, but it definitely works for me. I could ride a bike to work but screw that. You wanna ride a bike to work during a polar vortex??

 

[Tuscany]

Maybe it's different in Canada.

In the States, a lease is a binding contract with a fixed payment for the period that the vehicle is rented.
You can make each and every monthly payment as the contract states, or you can pay the entire lease off on day one. The final cost is exactly the same.

So having said that, it makes absolutely no sense to pay a single cent of down money.

 

[Tuscany]

I explained it (or justified it) earlier in the thread. I get it though but here it is in a nutshell; I'm in a lucky position to live only 3 miles away from my job. Based on my Jeeps's odometer, I average 7k miles a year. I choose to go the lease route instead of buying because the lower payments don't force me to budget for $500 payments for 60 months.

Basically, I like to fly by the seat of my pants and like the fact I can save more money for buying it out or putting a nice down payment on a '20 vehicle. Either way, my daughter will be old enough to drive in 3 years and I gotta do something

All kidding aside, this is one frigging fun vehicle to drive.

Your residual cost is based on the miles you leased. So if you only put 21,000 on a 36,000 lease, you have screwed yourself out of 15,000 miles that you have paid for. You may or may not buy the car in three years, things change. And a car with 21k vs 36k in mileage may not differ as cost much as you think.
Is a 10k lease possible in your case?

Anyway, Go to your dealer, ask them to price the car at invoice minus your 10k and rebates and see what the payment is. Since you are planning on keeping the car, look at a long schedule. Compare the two and then make your decision.

 

[peterk9]

Maybe it's different in Canada.

In the States, a lease is a binding contract with a fixed payment for the period that the vehicle is rented.
You can make each and every monthly payment as the contract states, or you can pay the entire lease off on day one. The final cost is exactly the same.

So having said that, it makes absolutely no sense to pay a single cent of down money.

It is the same here. But without any money down, your monthly payments will be higher and therefore the monthly interest cost will be higher. If you chose to put a down payment against the total lease cost, then your monthly payments will be lower as will be the monthly interest total. The interest rate doesn't change but the amount of interest you will pay does. Say your total lease is figured out as being 20k over 3 years at a rate of 3%. If you chose to put $5k down, then you are only paying 3% on $15k for 3 years. So you are saving 3% on $5k. It may not be much but you are still lowering your debt. Each person will have to figure out which way works best for them based on their own financial situation.
I've always used the down payment and the multiple refundable security deposits to lower the interest rate to reduce my monthly obligation but will re-examine this prior to my next lease next year.

Peter

Peter

 

[Tuscany]

Peter,
Respectfully, A lease agreement is not the same as a loan agreement. It's a contractual agreement to pay a set amount divide into monthly installments. Pay monthly, pre pay all of it, it doesn't matter. There is no interest savings.

If I rent a house for 1,000 a month, there is no discount if the tenant repays the entire year up front. If one chooses to prepay, that's ones choice, but it is not necessary, nor is there any savings for doing so.

If I am wrong, someone please chime in and correct me.

 

[peterk9]

Peter,
Respectfully, A lease agreement is not the same as a loan agreement. It's a contractual agreement to pay a set amount divide into monthly installments. Pay monthly, pre pay all of it, it doesn't matter. There is no interest savings.

If I rent a house for 1,000 a month, there is no discount if the tenant repays the entire year up front. If one chooses to prepay, that's ones choice, but it is not necessary, nor is there any savings for doing so.

If I am wrong, someone please chime in and correct me.

For some reason we are not connecting. The contract takes into account whether or not you have a down payment. If you have no down payment your monthly costs will be higher than if you put money down up front. If the cost of the lease is $20k on a 36 month lease then that is divided by 36 ($556) plus your interest payment of 3% $17) on that amount for a total of $573/month plus tax. If I put $10k down up front, then my monthly payment will be $278 plus 3% ($8) for a monthly total of $286 plus tax. Where you are realizing the savings is in the 3% interest rate on the monthly total ($278 vs $556). If I were to pay the full lease cost up front I would save 36 months of interest payments.
The only thing I have to pay up front on the $10k down payment is tax, no interest. That is what makes the difference. It is just like a loan. Instead of borrowing $20k at 3%/month for 3 years I'm only borrowing $10k at 3%/month.
I also have the option of paying off the lease cost at any time during the 3 year period. Are we getting close?

Peter

 

[MikB]

I don't even know if, after reading this thread, I have anything that could apply to this situation. For myself, I have never considered doing a lease. Over the years, since I paid off my '01 Bullitt, when I traded that in on a '11 Mustang GT, I got plenty out of the Bullitt for a good down payment. Since I was used to relatively high payments, they simply became part of the budget. Buying the new Mustang, my payments stayed in the same ballpark as my previous one even though the newer Mustang was 10k more.

When I retired and all my income was settled, I put my budget to paper, of which I use to this day and was able to get a maximum figure amount that I could comfortably pay each month. Since I paid off all my outstanding bills before I retired, I had none to deal with. I bought the '11 Mustang as a 'retirement gift' to myself, 6 months before my retirement so, that was the only extraneous bill I had going into retirement. When I put my budget to paper, I had figured out that I was well within my maximum for a car payment for which was only about half of the max amount I would be comfortable with paying.

The other thing that turned out to be a positive was that I was never underwater with what I owed having put down a good down payment in the first place. This set up allowed me to trade the '11 Mustang for a '13 Mustang GT/CS. An upgrade. Even though I had only two years into the payments on the '11, the amount I owed on the '11 at the time of trade in was 9k less than it's trade in value so, that 9k went in for the down on the '13 which automatically, the new Mustang was well above water versus what was owed on it compared to it's value.

When I traded up for the '15 Explorer I currently have, I had 10k equity built into the Mustang and thus, that 10k went for a down on the '15 explorer. The explorer is in the same boat with equity already built in and my payments for the Ex are 100 dollars a month less than they were with the '13 Mustang.

As I said earlier, I have a built in max monthly payment in my budget and my current payment is still, only half of that. The other half simply goes into savings.

I don't know if I am building to a point here but, overtime, I was able to set up a formula to upgrade my purchases by always being above water on what was owed versus trade in value to get to the next higher level and keeping my payments well in the ballpark of my budget.

Down the road, I may trade up again and keep this 'formula' going. I don't know if that will happen again, I'm pretty much happy with my Ex and have no plans on doing another trade but, that's what I said about my last Mustang so, you just never know. But, if I do, you can be sure I will continue to use this formula.

 

[fwrogg]

I explained it (or justified it) earlier in the thread. I get it though but here it is in a nutshell; I'm in a lucky position to live only 3 miles away from my job. Based on my Jeeps's odometer, I average 7k miles a year. I choose to go the lease route instead of buying because the lower payments don't force me to budget for $500 payments for 60 months.

Basically, I like to fly by the seat of my pants and like the fact I can save more money for buying it out or putting a nice down payment on a '20 vehicle. Either way, my daughter will be old enough to drive in 3 years and I gotta do something

All kidding aside, this is one frigging fun vehicle to drive.

on behalf of your Daughter get the Mustang Convertible in Yellow.

 

[Tuscany]

For some reason we are not connecting. The contract takes into account whether or not you have a down payment. If you have no down payment your monthly costs will be higher than if you put money down up front. If the cost of the lease is $20k on a 36 month lease then that is divided by 36 ($556) plus your interest payment of 3% $17) on that amount for a total of $573/month plus tax. If I put $10k down up front, then my monthly payment will be $278 plus 3% ($8) for a monthly total of $286 plus tax. Where you are realizing the savings is in the 3% interest rate on the monthly total ($278 vs $556). If I were to pay the full lease cost up front I would save 36 months of interest payments.
The only thing I have to pay up front on the $10k down payment is tax, no interest. That is what makes the difference. It is just like a loan. Instead of borrowing $20k at 3%/month for 3 years I'm only borrowing $10k at 3%/month.
I also have the option of paying off the lease cost at any time during the 3 year period. Are we getting close?

Peter

Point understood. Just not a viable reason IMO.
If interest is the motivator here, rates are so low that there are better returning investments for that down money.
The smartest way to buy if financing is needed to a home equity load. That makes all interest tax deductible.

http://www.carsdirect.com/auto-loans/should-i-put-any-money-down-when-i-lease

With due respect, I'm not one to lease, and I see no real advantage of a lease down payment...at all.
If someone chooses to lease, this is good read.
JMO.

 

[peterk9]

"The smartest way to buy if financing is needed to a home equity loan. That makes all interest tax deductible."

Unfortunately that doesn't apply in this country.

Peter