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

[11Bronco1776]

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/

Appreciate the link it's a good read. I've looked into some things regarding implicit interest and I've seen vehicle leases offered at or near the same interest rate as the finance interest rates. These numbers being the same I am thinking it is a wash?

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[CMBRONC]

Appreciate that something to look into on myend for sure

The lease payment includes the interest/finance charge. There are two components of your estimated $575 lease payment. Depreciation of ~$373 per month and finance of ~$202 per month, these total the $575 payment. The $575 doesn't include estimated sales tax of ~$28 per month, the total monthly payment would be approximately $602., assuming Utah sales tax of 4.85%.

Using the MSRP/Cap cost of $54,170 and a 48 month residual value of 57% determines your lease end buyout option of ~$30,877. So if you buy the Bronco at the end of the lease and finance the $30,877 @ 3% for 48 months the payment would be $683. The total cost of the Bronco over the 8 year period would be ($5,353 down + $28,950 ($602 x 48 mo) = $34,303 = Lease cost) + ($683 x 48 mo = $32,784 = Purchase cost) = $67,087. I assume there would be additional sales tax if you purchase at the end of the lease, this could be an additional $1,500 in cost.

 

[11Bronco1776]

The lease payment includes the interest/finance charge. There are two components of your estimated $575 lease payment. Depreciation of ~$373 per month and finance of ~$202 per month, these total the $575 payment. The $575 doesn't include estimated sales tax of ~$28 per month, the total monthly payment would be approximately $602., assuming Utah sales tax of 4.85%.

Using the MSRP/Cap cost of $54,170 and a 48 month residual value of 57% determines your lease end buyout option of ~$30,877. So if you buy the Bronco at the end of the lease and finance the $30,877 @ 3% for 48 months the payment would be $683. The total cost of the Bronco over the 8 year period would be ($5,353 down + $28,950 ($602 x 48 mo) = $34,303 = Lease cost) + ($683 x 48 mo = $32,784 = Purchase cost) = $67,087. I assume there would be additional sales tax if you purchase at the end of the lease, this could be an additional $1,500 in cost.

Holy Cow you're awesome. How did you determine the 373 and 202 amounts? Where did you find those? Gonna run some numbers........Thanks!

 

[CMBRONC]

Holy Cow you're awesome. How did you determine the 373 and 202 amounts? Where did you find those? Gonna run some numbers........Thanks!

I used the Edmonds.com lease calculator.

Given the lease payment of $575 from the Ford site, the 57% residual value from Ford, the down payment amount, 48 month term, etc... The only missing item from this is the money factor or interest charged for using the vehicle over the 48 month term. Given that we have all of the other numbers I backed into the MF. Please keep in mind this is just an estimate and is only based on the Edmonds lease calculator, others with more knowledge may provide more accurate calculations.

https://www.edmunds.com/car-leasing/calculate-your-own-lease-payment.html

MSRP/CAP Cost $54,170
Residual = $54,170 x 57% = $30,877
Down Payment = $5,353
Adjusted Cap Cost = $54,170 - $5,353 = $48,817
Depreciation = $48,817 - $30,877 = $17,940 / 48 months = $373 mo

Adjusted Cap cost = $48,817
Residual = $30,877
Total = $79,694
MF .00253 (estimated)
Finance charge = $79,694 x .00253 =$202 mo

Total Lease payment = $575

Using a MF to interest calculation, the MF used here of 0.00253 yields an interest rate of 6.072%. (.00253 x 2,400)

 

[11Bronco1776]

I used the Edmonds.com lease calculator.

Given the lease payment of $575 from the Ford site, the 57% residual value from Ford, the down payment amount, 48 month term, etc... The only missing item from this is the money factor or interest charged for using the vehicle over the 48 month term. Given that we have all of the other numbers I backed into the MF. Please keep in mind this is just an estimate and is only based on the Edmonds lease calculator, others with more knowledge may provide more accurate calculations.

https://www.edmunds.com/car-leasing/calculate-your-own-lease-payment.html

MSRP/CAP Cost $54,170
Residual = $54,170 x 57% = $30,877
Down Payment = $5,353
Adjusted Cap Cost = $54,170 - $5,353 = $48,817
Depreciation = $48,817 - $30,877 = $17,940 / 48 months = $373 mo

Adjusted Cap cost = $48,817
Residual = $30,877
Total = $79,694
MF .00253 (estimated)
Finance charge = $79,694 x .00253 =$202 mo

Total Lease payment = $575

Using a MF to interest calculation, the MF used here of 0.00253 yields an interest rate of 6.072%. (.00253 x 2,400)

Appreciate your energy on that and the info, very helpful. I am sure many will find it helpful too.

 

[Austin26]

I'm in the middle of a lease right now. The option to buy it at the end is almost always higher than what it's value will be but yes it is an option. It's also financially prudent to keep it very close to or to the end or otherwise you'll take a bath (lose money). When you return the vehicle there is usually a disposition fee plus whatever is owed for any damages above whatever the manufacturer deems normal wear and tear, and mileage overages. And the tires need to be good. Also, you're without a vehicle at the end of it so you must plan accordingly. There's good and bad but I'm highlighting the parts you may not be aware of.

 

[Squatch]

Former Ford Red Carpet Lease expert here from 20 years ago:

So, it's really hard to beat Ford's when comparing leases and GM was the best at that balloon payment. Ford's don't have one.

• No balloon payment
• Fixed per-mile overage charges
• You don't have to pay extra if you don't want to buy a Ford at the end
• Salesperson gets paid on a percentage of that down-payment instead of the gross(minus any way the dealer can screw them too; you're not special, they even screw their own employees)

If you are leasing:

• Pay. For. GAP. Insurance! If not through Ford, have it through someone
• Ford WearCare on a vehicle like the Bronco may be worth the investment if you want to drop the keys off and leave at the end
• Overestimating your mileage sucks almost as much as underestimating it
• Warthog is coming and there's usually a loyalty bonus--often $1500, I think
• It's really going to be better for those who know they don't want to keep this Bronco

Leased an F150 without a bed liner, military move was effed up and had to use the bed. Many other atrocities befell my poor beast of burden totaling an estimated $1300-2000 in damages at lease-end. However, knowing that crap would happen to an F150 that wouldn't be expected with a Mustang, I had WearCare and just signed a paper that I turned it in and walked away from the tired beast. I didn't owe anything.

• I knew I wanted a new vehicle at the end of the lease
• I put nothing down (sorry salesman)
• Monthly payments were less than financing
• Less risk, for me, than financing
• Even with thousands of miles in military moving, I was under mileage, because I always lived close to my place of work.

I don't recommend it for people who aren't 99% sure they don't want this Bronco at the end of it or if you are a high mileage commuter.

Just my two cents. None of it should be considered to be financial or legal advice, but I like the posts by @CMBRONC but cars own you and not the other way around. Always.

 

[Bronco4lyfe85]

That’s not real life. Leases are based off credit and other factors as well.

 

[Compta38]

I have no problem with others wasting their money.

 

[Jchetty]

I didn’t read the entire thread so forgive me if this has been posted.

Dealers write up the lease to benefit them. I agree that they love to make the residual low. For vehicles with insane resale value, they make the residual high because they want the car back.

Doing so makes your payment higher. But there is one thing a savvy consumer can do. Sell your lease.

If you are going to trade a vehicle in, you don’t want to buy it, and it is worth more than the residual- either sell it or trade it in. But don’t just hand it over to the dealer you leased it from. If you do, your losing out on a few grand.

 

[broncoSJ]

Do you pay tax twice if you lease and then buy the vehicle at the end if the lease??? That’s nuts

 

[Lowcountry Bronco]

No hate on leasing, do what works for you. I'll be purchasing and will have a sizable down payment to get payments where I want but will own it afterwards and can modify or sell as I choose, so that's what works for me.

 

[BabaYaga]

I don’t recommend putting any money down other than first payment. If wreck or theft happens that money will be gone, gap will cover the vehicle but not the money you put down.

I wouldn’t worry if you are a couple of hundred miles over or if there’s small damage To the vehicle at the time of returning it as long as you’re getting another car with them. I’ve seen cases were they don’t care if the car has over 1,000 miles over the limit because they’re getting another deal out of you. Now if you are planing on returning the vehicle they will put that car under a microscope and look for every detail plus a $350 return fee which is pretty standard for all makes.

If you don’t drive much, want lower payments and won‘t be doing crazy off-roading and modifications I think leasing is a good option.

 

[PaBronco]

Former Ford Red Carpet Lease expert here from 20 years ago:

S

• Pay. For. GAP. Insurance! If not through Ford, have it through someone
• Ford WearCare on a vehicle like the Bronco may be worth the investment if you want to drop the keys off and leave at the end

Good points in the reply. In reference to the above two bullets, my company leased a F150 for me in 2019.

Gap insurance was included in the Ford lease price.
The Wear Care, for up to $5,000 in cosmetic damage, was only an extra $5 per month.

Verify the above is the same with a Bronco lease, but I believe it should be.

Bottom line OP, just do the total calculations and see what works best for you. I will point out, when ever I leased a vehicle, I don't lease for a period that extends beyond the factory warranty. If you lease for 4 years at 13,500 miles you may be getting into new tire territory, etc... before you return the vehicle.

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