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Discussion Starter #1 (Edited)
I'm comparing options for leasing vs financing in the San Francisco Bay Area.

The out the door price for a Mazda3 S Grand Touring with the tech package is $30,008. The breakdown is $27,151 for sale price, $2451 for sales tax, and $406 for registration and fees. The pricing that I received was from using an auto broker which was slightly cheaper than the TrueCar pricing.

Financing for 60 months at 0% with $2500 down payment is $458/mo.

Leasing for 36 months can range from $349/mo to $376/mo depending on the 10k, 12k, or 15k/yr mileage option. Residual value will vary from 51% to 54%. Money factor is 0.00008. Drive-off is $762 to $789.

I'm looking to keep the monthly cost down but I drive a lot of miles. I'm averaging a minimum of 20k/yr and plan to keep the car which leads me to several questions.

1. Does it make sense to lease the car and purchase it at the end of the lease? I can finance used around 2.24% from my credit union for 48 or 60 month options.

2. Is the lease buyout option the residual value of the car regardless of whether you're over or under the mileage limit at the end of the lease?

3. Can the lease buyout option be lower for excess mileage?
 

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It is never good idea to buy out your leased vehicle, in the end you will end up paying more. They will never give you better option you will benefit from. If you plan to drive 60k mileage per year there is no way you should lease. To calculate your car purchase or lease you can create simple excel formula. Don't forget to find out about money factor according to your location. Also, I got sGT 2014 in 2015 for $24,400ish before taxes and fees. If you wait a bit you might get a better deal.
 

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Discussion Starter #3 (Edited)
From articles that I've read, the lease purchase price is preset, so am I correct in assuming that if I exceed mileage there is no penalty in purchasing a "preset" price or are there hidden fees that I might be missing.

The price was higher because of the tech package adding on another $2600. I was looking at purchasing used but there's not too many out there right now. The 2015 models have a $1250 rebate until 11/2. If I wait another 1 to 2 years hopefully more people will be selling their leased cars. I would save roughly $50/mo if I didn't have the tech package but my main concern was safety. I drive 2.5 hours day with traffic and even if I'm careful there's always someone out there that wants to cut you off. Having the smart city brake as part of the tech package might make a difference if it can react faster than I can.
 

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https://www.youtube.com/watch?v=_8nnhUCtcO8
I would not trust technology fully. The people dont sell their leased cars, they just return them. Then the dealership "recondition" them cosmetically and sells them as certified pre owned. Which great value if you get the right car with extended warranty (not warrenty :)). If you are open for used car, I would suggest to get one.
 

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For the question 1, people who lease car usually don’t buy it after lease end. If you do, you will be paying for the car for 8 years.
For the question 3, No.
If you think you will keep the car after lease end, it is better off to purchase it at the beginning because you will end up paying less. I’ve got 0.9% rate from my dealer. GL
 

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Discussion Starter #6
From researching leasing vs buying, I've only come across one article where it mentioned the total amount spent in the end was relatively close but I'm not able to find it for reference.

Most people that are leasing typically don't purchase the cars at the end of the lease, so I haven't been able to find much information about it.

Running my own numbers this is what I've found assuming that the residual price is what the price will be at the end of the lease. The articles I came across with mentioned that the price is already negotiated in the lease paperwork for purchasing at the end of the lease.

Leasing
349 * 36 = 12,564
16,359 residual
16,359 * 1.10 = 17,994.9
17,994.90 @ 2.24% for 48 months = 392.27
17,994.90 @ 2.24% for 60 months = 317.29

392.27 * 48 = 18,828.96 + 12,564 = 31,392.96
317.29 * 60 = 19,037.4 + 12,564 = 31,601.4

2500 down
337.77 * 48 = 16,212.96 + 12,564 = 28,776.96
273.20 * 60 = 16,392 + 12,564 = 28,956

Finance
0% 60mo - 500.13 * 60 = 30,008
0% 60mo - 458.47 * 60 = 27,508.20 + 2,500 = 30,008.20

1.99% 60mo - 525.84 * 60 = 31,550.40
2.24% 72mo - 445.80 * 72 = 32,097.60

2500 down
1.99% 60mo - 482.03 * 60 = 28,921.80 + 2500 = 31,421.80
2.24% 72mo - 408.66 * 72 = 29,423.52 + 2500 = 31,923.52

Finance scenario
If I can obtain 0% I would finance for 5 years and it would be cheaper compared to leasing and purchasing at the residual price.

If I don't qualify for the 0% rate it would be slightly more to purchase compared to leasing and my monthly payment would be higher.

Leasing scenario
In the leasing process, I would be making payments over a total of 7-8 years but my monthly payments would be lower. Looking at the data for total payments it would be less than purchasing. If I make a 2500 downpayment on the residual value of the car at the end of the lease the savings are more.

Is there something that I'm missing? Leasing and purchasing the car at a low interest rate seems to be cheaper overall. I would be able to keep my payments at $350 or below.
 

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Sorry for being OT but $30k OTD for Sgt even with tech pkg is pretty high. FWIW, I am not sure where you are located but I picked up my '15 6mt Sgt w/o tech pkg for $26 OTD in socal. I would shop some more before I finalize my decision if I were you. IMHO purchasing would be a much better option for you because of the amount of driving you do. Also buying out a lease will almost never work in your favor financially. GL w/ the purchase.
 

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Discussion Starter #8 (Edited)
Did you make a down payment? The 30k OTD was with 0 downpayment. This is also for the model with AT since I don't know how to drive MT and includes the tech package. I'm in the San Francisco Bay Area.

Without the tech package it would be roughly 26k OTD with 0 downpayment. The sales tax added onto the tech package also drives up the cost. Assuming a 9% tax and 24k for the base option it would be $2160. Sales tax with the tech pkg at 26600 would be $2394. After adding registration and fees it'll add on several hundred more which makes the 30k number close. The pricing I obtained was with an auto broker that uses Edmunds TMV and negotiates with multiple dealers so it ended up being slightly lower than TrueCar pricing. Also, in that quote there other options (door sill trim plates, rear bumper guard, wheel locks) added on that total to $280. I don't plan on getting those options but I asked for data to compare 2015 and 2016 pricing, so it was based in existing inventory through all the dealerships they compare. The broker will also ship a car from LA to SF if there's a significant price difference.
 

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@J2S2M $26k OTD seems good but if you tack on the automatic transmission ($1,000) and tech package ($2,600), you're looking at around $30k.
@KrazyDawg I've never leased a car before, but I also think purchasing would be better for you since you drive a lot. If you want to keep the monthly payment low, maybe skip the tech package? I think in total, I got my 2014 sGT automatic w/o tech package for about $30k with tax and everything plus I also got the extended warranty for the car. I think there are better deals now since I bought the car when they first came out, there wasn't much room for bargaining.
 

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Discussion Starter #13
$27,151 with the tech package, AT, and $280 in options that I'm not interested in. I just got a quote back from Putnam Mazda in Burlingame for $25,698 with the tech package. It's the last one left in their inventory with those options which might explain the price drop to clear their inventory. From DGDG, I got a quote of $26,981.
 

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$27,151 with the tech package, AT, and $280 in options that I'm not interested in. I just got a quote back from Putnam Mazda in Burlingame for $25,698 with the tech package. It's the last one left in their inventory with those options which might explain the price drop to clear their inventory. From DGDG, I got a quote of $26,981.
Damn. Do it.
 

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Honestly, I have never understood the attractiveness to the consumer for a lease option for any vehicle. Leasing options are always hyped by all car manufacturer dealerships because they make the maximum possible money for cars that are leased. I certainly don't recommend leasing a vehicle if you average 20k miles per year. If you are financially constrained from buying a brand new vehicle, consider buying a slightly used vehicle still under warranty for thousands less. Just my take on things....
 

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Before I started in the car business, I never understood the concept of leasing either. Until I started getting feedback from customers who have been doing it for years.

If you buy the car fully, you're on the hook for the market value. Imagine what would happen to that if Mazda made a serious boo-boo like VW and GM? How much value would your Mazda retain then after all that? What if you live in the Northeast like I do and you have an AWD CX-5 and suddenly no snow for 3 winters? What if you drive so much that you depreciate the car faster than the normal rate the car itself depreciates? Look at all the technology that these cars have and how fast technology now advances. In 3 years, our Mazdaconnect systems will be outdated. Think about it, why are cell phone contracts only last 2 years? Because in 2 years the capabilities of technology literally DOUBLES. There's plenty of arguments for a lease option.

This is why I lease my daily drivers. I've had 8 cars over the years and every one of them always had some sort of issue that got me taking the bus or left me stranded on the road. It's also cost as well. I realized that on a 5 or 6 year loan, eventually I'll be paying for maintenance and parts ON TOP of the monthly note. Even after paying it off, keeping a car running once it goes over 100k will pretty much cost the same as the note itself. At that point, why am I keeping a 100k mile car that at this point is not worth anything and still sinking money into keeping it running? Granted, I can keep leasing and always have a payment but on the buy option I have the same scenario...

So I came to the conclusion that if I'm always going to have some sort of money going into a car, I might as well put it into have a new, reliable car every 3 years. I have an 84 Trans Am that can feed my hot rodding habit anyway so I have no itch to do anything on the daily driver.

For the high mileage driver, it can also go either way. Buy, drive it into the ground, and accept the fact that your car won't be worth as much compared to what you paid for when it was new (and also consider the fact the ENTIRE time you never really owned the car while you are paying it off, because the bank has your title. Once you're done though, you own a 5 or 6 year old car with 80-100k miles). Lease, drive 20-30k a year, pay depreciation up front, and get out of it and into another car...rinse, wash, repeat.

The only way you have no choice but to finance a car is if you drive over 30k a year. A lease car can't have over 100k miles over 3 years.

Anyway, that's my .02. Pros and cons to both options, it all matters what works best and what you feel comfortable with. This ain't a pitch, just an honest observation and I get nothing out of it.
 

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Personally, I drive too much to afford a lease. I also do not think leases pay off on less expensive cars, as they are often used to simply lower payments for folks who do not really have the means to replace their car every three years. Most of those people would be better off paying off a car and sticking with it long term. The other use case that I do think leasing works for is on luxury cars with poor repair histories (i.e. BMW, Audi). You're going to be spending the money either way- if you won't buy a CPO, then just lease new. Can't understand buying those new.
 
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