Looking Ahead

I know it hasn’t been the easy for many of you trying to hunt down lease rates this month.  I too have been impacted since I was just about to begin shopping for my Sonata replacement. The good news is that a whole lot of you have stepped up to keep things alive, which is phenomenal. This may be the best way to keep things alive in my opinion. Going forward, I will do my best to establish a place to gather and share information, doing my best to provide you with the resources to make leasing an easier endeavor.

Starting this month, you will begin to see some of the changes that I plan to implement to further improve the site. Below are some of the things that you should expect in the coming months:

  1. Website redesign to accomodate the new structure.
  2. Crowd-sourced model will be refined (Kudos to Ron for the Google Forms suggestion). In future, I will have a more “home-brewed” system in place. In the meantime, Google Forms will do the job
  3. Based on the Aug-Sept poll results, lease rates will be streamlined, focusing key brands such as BMW, Audi, Acura, MBZ, Lexus, Infiniti, Honda and VW, with Volvo added whenever supplied. However we will not be limited to only those (see next bullet)
  4. There will be another list of rates for “one-off” models from all other makes (I decided this once I got a chance to see the Lincoln MKZ. I am really curious as to how much this ride goes for)
  5. Registration will be required to post questions, requests, interact with me and other members.
  6. Lease calculator will get a major overhaul and will be planned for mobile devices (this will take time and money to put together so please be patient)

There seems to be some “doomsday” reaction going around regarding this site being “shutdown”.  As you know, that isn’t the case. The truth is that my “source” decided that lease rates in exchange for referrals isn’t in their best interest anymore. No other source has stepped since offering to supply me with more numbers, so this is where we are.  Should the community choose not to grow from what we’ve built, then we all know what happens next.

As consumers, we will ultimately determine whether sites like this stick around. I have had three brokers supply numbers in the past and they all have stopped. That model was clearly not sustainable in the long haul. Our best chance is to get the numbers independently and share them with the community. We want their cars. We choose who we do business with. We don’t want to be cheated. Is that simple.

I will continue to contribute community to the best of my abilities. I genuinely hope everyone else does the same.

Thank you all for the many years of support. Let’s keep the wheels spinning.



Estimating Your Payments with the RWG Calculator

Any savvy lessee can tell you that the key to getting a good lease is “knowledge”. If you don’t know how to estimate payments, you run the risk of being fleeced by your salesperson. The only way to prevent this is to determine what a “realistic” payment is and try to work with your salesperson to achieve that.  Realistic payment estimates are essential because no dealer will work with you unless they are able to make some money out of each transaction. Like us, they got bills to pay too. Below, your will see a few lease calculation examples that should help you with your negotiations.

Calculating Your Payment – Inception fees due at signing

The quickest way to estimate lease payments is to assume you will be paying your inception fees upfront. This way, your calculations remain simple and quick. All you need are the basics: MSRP, Sale Price, Term (in months), Residual Value and Money Factor. If you want to take advantage of the RWG rating, you will need to know your mileage allowance as well. Check out the example below:

36 month | 15k miles | residual 61% | .00170 base money factor
MSRP – $36,490
Sale Price – $32,567 (TrueCar price minus $1000 rebate)
Monthly – $380+ tax
RWG Rating – 93.9

The assumption is that you will pay your inception fees upfront and keep it separate from your loan. Since the drive-off (inception) fees fluctuate depending on the cost of the vehicle, I generally assume it’s approximately $1500-$2000. Inception fees normally consist of the following: Your first month payment, Bank Fees, Dealer Fees, County/City fees, DMV registration and sales taxes associated to any rebates you are getting. In some states, you may have to include the sales tax for a portion of your lease depreciation or 100% for your vehicle’s value. For most states, sales taxes are calculated as an “use tax”, which is applied to your payment on a monthly basis.

Based on my location, my inception fees would amount to approximately $1335. Here’s how I estimated that:

DMV $315 (CA DMV Registration Calculator)
Bank Fee $595 (List of Bank Fees)
Dealer Doc Fee $45 (Capped in California, other states are uncapped so could be in the hundreds).
First Month Payment $380

Total Estimated $1335.

This number is actually low because there are extras fees associated with your DMV registration. In addition, cities will sometimes charge extra fees here and there as well. If the dealer does electronic filing of your registration, there will be a cost associated with that too. If that wasn’t enough, you also have to pay taxes on any rebates and any advertising fees that certain dealers charge (Think MACO and Training for BMWs). When it’s all said and done, expect to pay AT LEAST $1335. To be on the safe side, I like to estimate my inception fees to be in the $1500 range and if you pay advertising fees, it’s more like $2000. The best way to know what you are paying for is to have your dealer itemize these fees so you know exactly where your money is going.

Once you have determined what to expect (in this case, you are looking at a $1500 drive-off with a $380 monthly payment +tax) you will know what to tell your dealer when they ask you how much you can “afford” per month and how much you plan to “put down”.

Calculating Your Payment – $0 Drive-Off

To get an idea as to what you would be paying per month on a $0 drive-off deal, you simply add-on the drive-off to your sale price. In this case, we know the sale price minus the rebate on the 2012 TL is $32567 and we estimated our drive-off to be about $1500. This comes up to a total of $34067 for your sale price (which we generally refer to as cap cost). In order to figure out the monthly payments, just plug the total into the sale price Fees to Roll In (thanks for the correction BD) field of the calculator and hit “calculate”. If you have to pay all your sales tax upfront, add that in there as well.

36 month | 15k miles | residual 61% | .00170 base money factor
MSRP – $36,490
Sale Price – $32,567  (TrueCar price minus $1000 rebate)
Fees Rolled In – $1500 (Estimated inception fees)
Monthly – $424+ tax
RWG Rating – 93.5

One thing to note here is that this is a simplified approach, so your dealer’s numbers will vary slightly (usually a little higher). However, I think that you should be within reasonable dollar amount so it shouldn’t be that big of a deal.

It is more advantageous to do a $0 drive-off lease when the money factor is low. Please note that the $0 drive-off leases do take a very small hit on my RWG rating system (about 0.4 pts) and that is due to the fact that you are paying interest and taxes on items such as your DMV registration, bank fees, dealer fees,  and so on. But in the grand scheme of things, those costs shouldn’t be too significant if your money factor is low.

RWG Rating System

The rating system I use is fairly straight forward. Anything above a 90 rating is considered a good lease. Ratings higher than 100 are exceptional. Ratings lower than 85 should probably not be considered. Personally, I would not recommend leasing anything below a 90 rating if getting more car for your money is a top priority. If you are willing to pay a little extra to get what you want, I wouldn’t go below 85. Please note that the rating does not take into consideration sales taxes and it also assumes you will pay your inception fees up front.

If you plan to use the rating system to compare $0 drive-off deals, make sure to do that for all cars to ensure a fair comparison. I would recommend adding $1500 to the sale price for all vehicles in the comparison to compensate for the usual drive-off costs.

How to Identify Good Deals

There isn’t a fancy way to figure out what makes a lease a good one. The best way to get a “DEAL” is to make sure at least TWO of the THREE main components of a lease are attractive. By components, I mean the following:

Residual Value. The first thing I look for is a HIGH Residual Value. I do not typically buy my cars at lease-end so leasing a car with a low residual value doesn’t make any sense. Because of that, I like to go for models that have residual values in the high-50% or low-60% on 36-month terms. I find 36-month terms to be optimal in terms of payments and wear-n-tear. 24-month are great, but may feel a tad short, while 48-month leases are too long and add too many unexpected expenses.

Money Factor. You want to keep this low so you don’t get charged too much interest on the loan. I usually shoot for leases with the “four zeros”, the ones that fall below 0.00100 or 2.4%.  You can calculate the interest rate by multiplying the money factor by 2400.

Sale Price. An aggressive sale price is also a great way to keep your payments low. As you know, the size of your lease loan is determined by the difference between your sale price and residual value. If the gap between your sale price and residual value is low, the size of your loan will be smaller. This will also help keep the finance charge (money factor/interest) minimal, thus keeping your payments lower. Sale prices that are close to 10% off MSRP are probably the best. Any percentage above that is just icing on the cake.  A good deal hunter would generally look for a vehicle that sells for a big discount (plus rebates and incentives), high residual value and low money factor. This combination typically yields the lowest monthly payments and gives us the most bang for the buck.

What’s a good example of a good deal? For the month of July 2011, the 2011 Infiniti G37 Journey Sedan looks very attractive. It boasts one of the higher residual values for 2011 models (58% @ 15k miles per year over 36-months) and has an easy-on-the-pocketbook 0.00058 money factor that breaks down to a low interest rate of 1.4%. The average sale price for this sedan in the Southern California region is 12% off MSRP and as of July 2011, there’s $1000 loyalty cash and $1000 dealer cash that’s available until August 1st, 2011. This certainly isn’t the only car that’s considered a good deal, but it’s one of them.

Here’s are some helpful links to get you started on how to estimate your own lease payments:

Now go find yourself a good deal!


What’s Going On – September 2010

Welcome back to yet another fun-filled and exciting month of leasing! I too have began researching on what my next lease will be even though it’s still a bit early in the game for me. It can’t be helped I guess. This year has been fairly kind to lessees with a decent number of good leases throughout the year, so I couldn’t help myself from keeping my eyes out for something to replace my G. Anyway, lets get down to business!

Lease Calculator 3.0 is LIVE!

As I mentioned last month, I have been working on a new version of the lease calculator in order to enhance your research experience. Here’s a rundown of what I changed:

Fee Itemization removed, Added “Fees to Roll In”

I didn’t think there was a point to having these fees listed separately (its not like the dealer does that anyway), so to simplify things, all you need to do is decide whether you want to pay them up front or roll them into your lease. However, you still need to have your dealer itemize your fees to be on the safe side.

Cap Reduction removed

Cap reduction is generally a bad idea when it comes to leasing, so no point having that anymore. When faced with the decision to put money down in order to lower your payments, opt for Multiple Security Deposits instead (if the bank allows it).

Added “Miles per Year”

This field will be used to adjust your Deal Rating. Deals that have low payments and more miles are better than those that have similar payments but less miles. More on this later.

Added “Discount off MSRP” , Added Money Factor to APR conversion

These are just visuals for those who want to know how much of a discount they are getting  and how much interest they are paying.  This information should provide most people with a good way of determining whether buying is better than leasing.

Deal Rating system reworked

The deal rating system has been reworked due to the fact that it only took into consideration your base monthly payments vs the MSRP of the vehicle. For most intents and purposes, that’s not a bad system for 36-month terms. But what happens when you go with the longer or unconventional terms such as 27, 39 or 42? Or what if you are leasing at 10k instead of 15k miles per year? This new rating system attempts to address those issues by separating the payments, term and mileage allowance and giving extra consideration to the latter two factors. The payments accounts for approximately 70% of the rating while the term and mileage take 5% and 20%, respectively. So what qualifies as a good deal? Anything that’s rated 90 or higher, with the more exceptional deals exceeding 100. Anything below 90, use your judgement.

Check out the New Lease Calculator

Lease Calculator 2.1

UPDATED Per JR’s suggestion, I have modified the CAP COST REDUCTION AFTER TAX to add the tax to the cap reduction and subtract the tax you pay up front.

I’ve made a minor update to the Lease Calculator. You can download the latest version by clicking on the image below.

What’s New?
I have incorporated the Deal Rating, which is an general indicator as to how good your deal is. This is based on the discussion Matthew and I had in the E-Class July 2009 post, where Matthew stated that his brother, who works in the industry, considers deals around 1.0% of a car’s value (MSRP) to be an excellent lease. Based on my past experiences, I have concur with his assessment for the most part. However, I think that in today’s market, were leasing has become a bit more expensive, anything under 1.2% before taxes is a pretty sweet deal. Let us take the 09 Acura TL deal I received a few days ago as an example.

MSRP – 39,445
Sale – 32,595
Residual – 53% (15k/yr for 36-months)
MF – 0.00184
Payment – $423

Rating – 1.07 (Excellent)

With a 1.07 rating, The Acura TL I got a few days ago is great. I would have been that much better if it included tax, but our taxes here in California have gone up 1.5% in that last 3 months, so that puts a pretty huge damper on almost any lease. Still, this was pretty solid.

Now lets take a look at the MB E350 where I am going to take Lee’s quote as an example.

MSRP – 57,085 (Prem I, Sport, Woodgrain)
Selling price – $43,585 (10,000 MB cash + 3,500 off)
Residual – 36mos./15K (43%)
MF – .00165
Payment – $642

Rating – 1.12 (Good)

As you can see, this deal really is very good. Some people, such as Wayne have reported the following deal: 56,775 MSRP / 41,494 Sale Price. That calculator spits out a cool 1.03 rating which is pretty awesome.

I figured this addition into the calculator should help you in your decision process, so have fun with it. As always, I welcome any thoughts and/or suggestions on how to improve this calculator. If you are having any problems with it, remember to keep it simple. Don’t roll in any fees or cap reduction and you should get a pretty good idea how good the deal really is.

Lease Calculator 2.0 and other News…

Lease Calculator 2.0

I know, you are all probably eagerly anticipating December’s lease rates and the best thing I got for you right now is an updated on the Lease Calculator. Well, don’t be too disappointed! The new lease calculator is rather nifty. I added some new fields such as “Sales Tax Paid in Advance”; “Previous Balance” (for those who plan on carrying over some negative equity from their existing vehicles; monthly payment calculations assuming you roll in all fees into the lease; and monthly payment calculations assuming you pay inception fees in advance. Cool huh? I thought so. I based it loosely on my own lease contracts. I still haven’t exactly decyphered their system yet…but it’s only a matter of time.

Lease Rates

Patience…if you haven’t noticed, they usually surface around the 2nd week of each month, while some (Audi) will carry over through a good portion of this month since they just released last week.


It is a good time to buy since we’re looking at year end right now. 2008 model clearance is on! You waited all year long to buy a car, this is as good a time as any. Lot of “Winter” promotions with low APR going on right now. I said it before and I will say it again, no lease will beat 0% financing. If you are looking to lease a car that offers 0% financing, consider buying it. Specially since a lot of those 0% financing deals are for 60 month terms.

Auto Industry and the Economy

GM builds 4 similar SUVs (Acadia, Enclave, Outlook, Traverse) across 4 different brands…WHY!?!?! Need I say more? If they can’t learn to manage their company, they don’t deserve a bailout. That’s what I mean. I hear a lot of the “if the gov’t isn’t going to bail us out, the economy will end fall into a depression, etc…” That may be true, but that’s a half truth. It sounds more like someone is trying to save their own skin.


I will be away on vacation starting Christmas until January 10th. That means I will be MIA for approximately two weeks, most likely with limited internet access. Hopefully you can all survive without me for that time period. 🙂

Update: Lease Calculator v1.2

I’ve made some changes to the lease calculator, so be sure get the newer/updated version. This version includes a couple of changes:

  • Added “Total Taxes on Down Payment”. This shows how much taxes you will owe if you put XYZ down to reduce the cap cost. That number is them added to the “Due at Signing” field.
  • Acq/Bank fees and Dealer Doc fees are now taxable and is automatically added into the “due at signing” field.

So go ahead and download the new Lease Calculator to replace the old one. Please understand that not all states lease cars the same way. I do my best to “cater to the masses” but it’s practically impossible to cover all the different rules, taxes, etc… from each state.  So you may need to use the calculator “creatively” in order to get the desired results.

Special shout out to Dave ISM over at for bringing this to my attention. Questions, comments, issues? Leave me a comment.