July 2009 Announcements

The first half of 2009 has concluded and we’ve probably seen a lot of solid leases during this time. It is quite surprising considering the fact that two major automakers have declared bankruptcy; lending is stricter; and many long-time dealerships have shutdown or cut back on their payroll. Leasing is still alive, unfortunately, they aren’t as cheap as they used to be.

Leases Thus Far

Despite the lack of cheap leases, we’ve seen Mercedes being very competitive in their lease programs, specially with the C350 and the discontinued CLKs. If you look closely, other Mercedes Benz models are also enjoying very low money factors. Other honorable mentions include BMWs 328, who’s lease rates have gradually become worse (although the coupe is still looking good). The IS250s, which have a really low money factor right now. The Audi A4s on the other hand, have been unspectacular for the most part (don’t get me started on the A5). Infiniti’s G37s sedans lease rates have began improving, but the same cannot be said about the G37 coupes. Acura’s TSX and TLs have a very good residual values, but their money factors need a little bit of work. MINIs are still very strong leases despite having the money factors hovering well over the .00200 threshold. The same can be said about the Toyota and Honda’s Hybrids.

Leasing Hints

There are two types of lessees out there…Those who enjoy leasing new cars every 3-4 years and those who use leasing as a way to get themselves into a car they will eventually buy out. Make sure you identify which one you are before you start looking into which models to plant to lease. Cars with high residual values should almost never be bought out at lease-end because you will more than likely overpay. High residuals are generally inflated by the banks to keep leases affordable, it helps them move cars in the short run, but they get nailed 2-3 years down the road do to poor resale values. It is always prudent to opt for the car with the lower residual value and low money factor (over the one with high residual and high money factor) because it gives you the flexibility to buy the car at a more affordable price in the end. That comes in really handy when you exceed your allowed mileage and are facing hefty overage fees. If you don’t know what I am talking about, be sure to read the “lease-to-buy” guide I put together.

When you deal with a salesperson. Be prepared. Do not show up to your dealership without knowing any numbers. You negotiate leases like you do with purchases; you start with the sale price and have your dealer detail all fees, money factors and residual values. If you want to know if the deal is sound, do not roll any negative equity into the deal nor put down any cap cost reduction towards the vehicle. Time and time again, I get emails or comments asking me to examine dealer quotes that involve large amounts of cap reduction or a bunch of negative equity. The more numbers you involve, the more confusing the math becomes. Keep it simple! If you owe a lot of money on one car, you should not roll it into a new car. Pay it off or wait a bit longer before you decide to get into another car. Paying for two cars when you only get to drive one is rather pointless. Dealerships will not absorb that kind of negative equity on your behalf. They are a business, not a charity. Now, if you plan on putting a lot of money down, you should understand that you are basically prepaying for your car in advance. Sure, it does save you on finance charges, but if you are leasing a car that is charging you less than 1% interest it makes more sense to put that extra cash in something like an INGDIRECT savings account and collect interest on it. Here’s an added bonus…should you ever decide to swap your lease down the road, you still get to keep your money. That isn’t going to be the case if you put it as a down payment.

July 2009’s The List

Starting the month of July, I will be taking a different approach to THE LIST. Instead of crunching lease numbers for a bunch of base model cars, I will only focus on models that look like good deals for that month. In addition, I will try to equip them realistically, so that the pricing is more in line with what you should expect. The goal here is to speed up the posting of lease rates and only focus on cars that people want to lease.

That’s all folks, hope you have an awesome and safe 4th of July weekend! I will be MIA during that time, so try not to overpay for your cars during this time! 🙂

4 thoughts on “July 2009 Announcements

  1. happened to stop by MB dealer, and learned that C300’s July money factor is sub 0.001, like 0.0008*. Do no remember the exact number though. Asked them about C350’s cash rebate (like last months), and it looks like it’s gone this month. MF of 350 seems still low though. Good luck.

  2. Yeah the $2000 rebate is a gonner unfortunately. I wonder what the selection on the 09 C350s is at this point of the year tho.

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