Confused by some of the hate on the lease option. Seems wise for those wanting Low Down and Lower Monthly Payments

[VictoryLights]

I’m not an expert, but i think the big error is not accounting for the interest. I know you said you are keeping it simple, but the interest you actually pay in a lease if you back calculate it is typically huge.

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[HoosierDaddy]

I think you really need to run the solid math and get hard numbers to compare both scenarios.
I'd have trouble walking away with no car(equity) after paying them $33000.
You're also looking at financing for 8 or 9 years now? ...if you don't have the money saved to buy it outright by then.

I put on WAY too many miles to consider leasing ....

 

[VictoryLights]

I think you really need to run the solid math and get hard numbers to compare both scenarios.
I'd have trouble walking away with no car(equity) after paying them $33000.
You're also looking at financing for 8 or 9 years now? ...if you don't have the money saved to buy it outright by then.

I put on WAY too many miles to consider leasing ....

Agreed. You can’t just gloss over the interest you’re paying. That’s the entire way they make money off of a lease. You are taking a loan out for the depreciation of the vehicle PLUS interest.

As he said, you need to get hard numbers on residual value and lease payment and then back-calculate to determine how much interest you are paying. See this:

https://www.warreninfinance.com/calculating-a-leases-implicit-interest/

 

[splathead]

Now, am I correct in stating that regardless if you lease and then end up buying out your Bronco or finance your Bronco from the get go you will still be paying the same price of the Initial MSRP, minus differences in interest and some nominal fees of course?

Back in the day when I did lease, the difference in interest/fees was about 10%. You would pay 10% more to lease then buy vs buying outright.

I stopped leasing because every car I purchased I swore I would keep forever. Of course, that hardly ever happens.

The last couple of cars I purchased there was NO down payment. I was pleasantly surprised and just thought finance companies were doing away with them.

 

[11Bronco1776]

Not sure how you are getting that number. If I put in a badlands at 50,675 with $5003 down for 48 months and 13,500 miles it says $647 a month.

I get my numbers from here.

 

[Cappy]

So, the way it works with this lease, and something critical that you left out is interest. You cannot talk about a lease without calculating interest, whether you walk away from your lease or buy the vehicle, you're still going to pay it.

Looking at the total cost to lease, based on your numbers over 48 months lands you about $7,233 over what you would have paid with the same down and financed to own.

The difference being that the interest in this lease balloons at the end and then there's additional hidden fees, closing fees and dealer fees tacked on at the end, if you read the fine print.

If you're outside of your lease agreement by even 1 mile, or turn it in 1 hour late, you're gonna get hit for those on top of your balloon payment for roughly $10,000 over what you would have paid if you had just financed from the start.

I think that predatory nature built into the lease contract is why it's getting so much hate.

But you're a grown up, if you think you're equipped to handle the lease on the terms, do it.

_______

 

[atonge40]

Because once you get above the base trim the leases get pretty expensive. Those residuals fall and payments go up.

 

[BravoV4]

Residuals are definitely higher than any other Ford product. I'm surprised this hasn't been posted yet.

 

[11Bronco1776]

So, the way it works with this lease, and something critical that you left out is interest. You cannot talk about a lease without calculating interest, whether you walk away from your lease or buy the vehicle, you're still going to pay it.

Looking at the total cost to lease, based on your numbers over 48 months lands you about $7,233 over what you would have paid with the same down and financed to own.

The difference being that the interest in this lease balloons at the end and then there's additional hidden fees, closing fees and dealer fees tacked on at the end, if you read the fine print.

If you're outside of your lease agreement by even 1 mile, or turn it in 1 hour late, you're gonna get hit for those on top of your balloon payment for roughly $10,000 over what you would have paid if you had just financed from the start.

I think that predatory nature built into the lease contract is why it's getting so much hate.

But you're a grown up, if you think you're equipped to handle the lease on the terms, do it.

_______

Appreciate the info. Gives me more to look into involving the interest rates and how they effect things. As far as going over on miles or an hour late on turn in not worried, I am an adult.

As a safety net though my understanding is that if you go over on miles or there are wear and tear issues but are buying the vehicle out at lease end then there are no penalties. You just buy it at the predetermined price you agreed on at the initial contract. Thus making mileage and wear and tear penalties a mute point in that scenario, correct?

 

[11Bronco1776]

Residuals are definitely higher than any other Ford product. I'm surprised this hasn't been posted yet.

Is there a significance of residuals if you're planning on buying out the vehicle? Arent those more important if you're getting rid of it and that is where you could get hit hard?

I have full intention of buying the car at lease end unless something significant is wrong or substantially changes. Hence why I am seeing lease as saving grace from large downpayment initially.

 

[atonge40]

So, the way it works with this lease, and something critical that you left out is interest. You cannot talk about a lease without calculating interest, whether you walk away from your lease or buy the vehicle, you're still going to pay it.

Looking at the total cost to lease, based on your numbers over 48 months lands you about $7,233 over what you would have paid with the same down and financed to own.

The difference being that the interest in this lease balloons at the end and then there's additional hidden fees, closing fees and dealer fees tacked on at the end, if you read the fine print.

If you're outside of your lease agreement by even 1 mile, or turn it in 1 hour late, you're gonna get hit for those on top of your balloon payment for roughly $10,000 over what you would have paid if you had just financed from the start.

I think that predatory nature built into the lease contract is why it's getting so much hate.

But you're a grown up, if you think you're equipped to handle the lease on the terms, do it.

_______

I’ve leased and bought and sometimes leasing is good. 1 mile over isn’t giving you a ballon payment. It gives you an excess mileage charge of $0.20/mile or whatever. Ford Credit has very specific rules around damage, etc. If you don’t get another Ford at the end of the lease there is a fee. This has always been disclosed to me. I’ve never had a lease turn in issue.

Most Ford leases do not have a “balloon” built in. They all have a buyout price at the end of the lease. Purchase is not required. The Mach E has a balloon option but that’s a different thing altogether.

I wouldn’t recommend putting money down on a lease though. You aren’t paying a lease down to get equity in the vehicle. You are paying for the use and the depreciation. Keep your money in your pocket and have the higher payment. If you total your Bronco on day 1 of ownership, that $5000 cap cost reduction is gone.

 

[Cappy]

Appreciate the info. Gives me more to look into involving the interest rates and how they effect things. As far as going over on miles or an hour late on turn in not worried, I am an adult.

No problem, happy to help. Glad to see your'e reasonable and responsible. It's refreshing, really.

As a safety net though my understanding is that if you go over on miles or there are wear and tear issues but are buying the vehicle out at lease end then there are no penalties. You just buy it at the predetermined price you agreed on at the initial contract. Thus making mileage and wear and tear penalties a mute point in that scenario, correct?

That depends on the aforementioned purchase agreement. Yes, if your plan is to buy the vehicle at the end of your lease then mileage is a moot point.

However, that begs the question, "If you plan is to buy all along, why lease in the first place?"

You'd save yourself quite a bit of money in the long term by simply financing at a lower apr or scrapping together a larger down payment.

 

[atonge40]

Residuals are definitely higher than any other Ford product. I'm surprised this hasn't been posted yet.

Yes, but they aren’t putting cash on the hood. They hook you with returning leasee, conquest, matching down payment, package discounts, stock discounts, and other incentives on other vehicles. An F150 XLT would lease about the same as a Bronco Base. The Bronco Sport is actually higher though.

 

[Darforce]

Maybe I am missing something significant so help me and others like me out here if that's true.

For those people that are unable to or are hesitant to throw down a large down payment, leasing seems like a good option. Leasing allows for you to put less down and have significantly lower monthly payments then straight financing would with the same amount down.

Example using my numbers but plug your own into it to help you out;

My Build is $54,170. A lease at 48 months allows me to only put down $5,353 driving 13,500 miles a year and gives me a monthly payment of $575.

Financing with that same amount down, $5353, a 48 month term at 3% interest gives me $1,067 month payment. A 60 month term gives me $866 a month payment. 72 Month term is $732 a month payment.

In order to get anywhere near my lease payment of $575, financing, I will need to put down $20,000. At 3% interest and a 60 month term and I am sitting at $603 a month payment. Extend my term to 72 months and I am now at $510 dollars a month.

So if I am unable to make a large down payment or I am wanting to keep more of my cash in savings for now, it seems like leasing is simply a better option.

By the end of my 4 year lease term I believe I will owe approx $21,217 dollars. Original MSRP $54170 minus my down payment $5353= $48817. Minus what I pay during the term of lease $27600........ $48817-$27600=$21,217. (I know that interest isn't accounted for and for the act of simplicity I am keeping it that way.)

Now, am I correct in stating that regardless if you lease and then end up buying out your Bronco or finance your Bronco from the get go you will still be paying the same price of the Initial MSRP, minus differences in interest and some nominal fees of course?

In my view A lease is really letting you change up when you pay the large down payment. I.E. doing it now vs doing it later, in this example 48 months down the road I can pay my remaining balance of $21,217 or even finance the car for another couple years to pay off the remaining balance. Thus allowing you time to save for that buy off amount if needed.

I see a couple of other perks to financing, I.E. not paying sales tax on total vehicle price on initial purchase, but will save those for later as this was alot to throw out there. I hope that all makes sense and I look forward to the thoughtful reply's.

Thanks for bearing with me on a long post. Damn excited for getting me and the fam a Bronco and want to do it wisely.

Yeah... I lease. I have had people tell me that I am “throwing my money away”. I like having the assurance that the money I pay every month is all I pay(except gas) no maintenance (I have that included). I’d hate to be 4 yrs in on a 7 year Loan and have things fall apart on me. I will most likely buy this vehicle that I am leasing and trade it when my Bronco arrives

 

[atonge40]

No problem, happy to help. Glad to see your'e reasonable and responsible. It's refreshing, really.



That depends on the aforementioned purchase agreement. Yes, if your plan is to buy the vehicle at the end of your lease then mileage is a moot point.

However, that begs the question, "If you plan is to buy all along, why lease in the first place?"

You'd save yourself quite a bit of money in the long term by simply financing at a lower apr or scrapping together a larger down payment.

The APR depends on the product. F150 leases often have a lower rate than a buy. I don’t expect that for the Bronco though. The APR on my Ranger lease is in the low 3s. Slightly higher than traditional financing, but there were more incentives to lease.

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