# Lease then Buy, how much extra?



## Eleven (Jun 1, 2007)

wow...thanks for all the replies guys. I have a more clear understanding of the situation now.

*Kzang: *you are right on the money, lower monthly payments was my priority, but after reading all the feedback, I'm gonna take some time to think it through..

Thanks!


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## SARAFIL (Feb 19, 2003)

BasicMarinWheels said:


> Unless I missed it, nobody else has mentioned another one of the biggest factors: If you lease, then buy, *you are effectively giving up most of the price reductions you achieved when you initially negotiated the lease*.




No you're not.

When you lease, your payment is based on the sale price you negotiate. The depreciation portion and interest portion of the payment are both based on your cap cost. Yes, your residual is based on the MSRP, but you don't give up your price reduction since you save that money over the term of your lease.

Simply put... if you negotiate $2000 off, then your lease payments will be reduced by that $2000 over the term of the lease, plus the interest that you would have paid on that amount. Whether you buy the car at the end or not... you have already gotten the benefit of your discount during the lease term, you do not give anything up.


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## shabbaman (Dec 16, 2002)

SARAFIL said:


> Simply put... if you negotiate $2000 off, then your lease payments will be reduced by that $2000 over the term of the lease, plus the interest that you would have paid on that amount. Whether you buy the car at the end or not... you have already gotten the benefit of your discount during the lease term, you do not give anything up.


Yet another reason for ED.


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## mrvuml (Nov 14, 2007)

BasicMarinWheels said:


> Unless I missed it, nobody else has mentioned another one of the biggest factors: If you lease, then buy, you are effectively giving up most of the price reductions you achieved when you initially negotiated the lease.
> 
> For example, say the MSRP of the car you want, optioned as you want, is $45,000, and you negotiate a purchase/lease price of $43,000. THen, say your residual is 64% (mine is). Your payments are based on the assumption that you will "use up" 36% of the value of the car. That is 36% of your purchase price of $43,000, or $15,480, plus finance charges.
> 
> ...


Residual is based on MSRP not sale price.


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