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Lease or Buy?

Old 10-03-2017, 07:02 PM
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Default Lease or Buy?

I bet you heard that before but now it's my turn to decide. A little history, I've had a Dodge Dakota since they debuted, 3 of them. They all exceeded my expectations. I wanted to get another one but they don't make that line anymore. The present truck I bought new in 2004 and it's starting to show it's age. The last 8 months it finally started to cost me with some significant front end work and the other day I hear a loud grinding sound. I think one of the front wheel drive shafts is busted. It goes to the shop again in the morning.
I'm leaning this time to leasing since I put low mileage on my truck now that I work 10 minutes from home. I'm now looking at a 2017 Ford F-150 XT Supercab. Perhaps a 3 year lease that I can build equity and roll it over for another new vehicle down the road.
Here's my present ride which only has just over 62k on the OD:
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Old 10-03-2017, 08:06 PM
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How do you build equity in a lease?
Old 10-03-2017, 08:18 PM
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Originally Posted by rcskywalker View Post
How do you build equity in a lease?
Lease equity is when your car is worth more at the end of the lease than the buyout that was established when the lease began. This happens when the lessee drives less than the mileage allotted. Since I drive less than 5k miles a year it's a good bonus.
Old 10-03-2017, 08:26 PM
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You are paying for that differential in your lease payments. The perfect lease is one where the residual is = fmv at the end of the lease. Negotiate the residual based on a lower mileage allowance.
Old 10-03-2017, 08:26 PM
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But its never your vehicle. You gave them more equity in THEIR truck. Unless the fine print has you with first right of refusal at the residual value purchase price...I don’t see how YOU get to capture the equity.
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Old 10-04-2017, 12:30 AM
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Originally Posted by rcskywalker View Post
But its never your vehicle. You gave them more equity in THEIR truck. Unless the fine print has you with first right of refusal at the residual value purchase price...I don’t see how YOU get to capture the equity.
My nephew just upgraded his family minivan after his lease expired and is now driving a more expensive model at slightly lower monthly payments.
Old 10-04-2017, 09:13 AM
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The "build equity on a lease" seems hit and miss, I have heard about it before, but not sure if the dealer was really just playing with numbers/rebates on the next vehicle to make you think you beat the system. Also, not sure if you are more likely to do this with a MFG lease vs a CU/bank based lease.

The only way I would lease is to do it on a vehicle that I'm not sure I would want to keep. Drive it 2 or 3 years, if you don't like it turn it in, if you love it, buy it out and drive the wheels off of it.
Old 10-04-2017, 09:42 AM
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I've had great luck selling and or trading in leased vehicles for more than the residual value 'buy-out' of the vehicle and as such I rolled that money into a new vehicle. In fact I did this with all 3 cars that I ended up leasing - a Lexus and 2 BMW's. It happens but it depends on the type/brand of vehicle and the terms of the lease, but I never go into a Lease with this in mind. If market conditions/values allow me to exit the lease in this fashion I will capitalize on it.
Old 10-04-2017, 09:44 AM
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Originally Posted by ericinmich View Post
The "build equity on a lease" seems hit and miss, I have heard about it before, but not sure if the dealer was really just playing with numbers/rebates on the next vehicle to make you think you beat the system. Also, not sure if you are more likely to do this with a MFG lease vs a CU/bank based lease.

The only way I would lease is to do it on a vehicle that I'm not sure I would want to keep. Drive it 2 or 3 years, if you don't like it turn it in, if you love it, buy it out and drive the wheels off of it.
This.

Never go into a lease with the idea of building equity. Does it happen? Oh yeah, but does it not happen? Hell Yeah !!

Jay A, if you are going to lease, a couple of points. First look at the Crew cab vs the Super cab. Crew usually has a higher residual, so better payments. Same with 4X4 vs 4X2.

Also if XLT make sure it has Nav System. MSRP for Nav is approx $800 less discount of $500, so a net of $300. Since the residual is figured on MSRP before discount, the residual will be approx $400 higher with a cost of only $300.

If you are happy driving a new truck for X dollars a month, with no money out of pocket and a maintenance package. Lease

If there is money let at the end of lease that is a plus.
Old 10-04-2017, 01:46 PM
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All good advice thanks! I've been picking the brains of family members that lease rather than getting the info from the dealer. I initially told the dealer I'm not one for all the bells and whistles. The only thing I required was 4x4 and a tow package and first asked about the regular cab. He showed me the Super
cab would be better in the long run.

Here's the package:
KEY FEATURES INCLUDE
4x4, Chrome Wheels. Electronic Stability Control, Brake Assist, 4-Wheel ABS, 4-Wheel Disc Brakes, Tire Pressure Monitoring System.

XL trim, Oxford White exterior. Alloy Wheels, Turbo, 4x4, CLASS IV TRAILER HITCH RECEIVER, EQUIPMENT GROUP 101A MID, Tow Hitch.

OPTION PACKAGES
EQUIPMENT GROUP 101A MID 4.2" Productivity Screen in Instrument Cluster, compass, XL Power Equipment Group, Power Glass Sideview Mirrors w/Black Skull Caps, manual-folding, Power Door Locks, flip key and integrated key transmitter keyless-entry (includes Autolock), Illuminated Entry, Power Front & Rear Windows, Perimeter Alarm, Power Tailgate Lock, MyKey Owner controls feature, Radio: AM/FM Stereo/Single-CD Player, 6 speakers, SYNC, enhanced voice recognition communication and entertainment system, 911 assist, 4.2" LCD display in center stack, Applink and 1 smart charging USB port, DELETES auxiliary audio input jack, Cruise Control, STX APPEARANCE PACKAGE Fog Lamps, Rear Window Defroster, Wheels: 20" Machined-Aluminum, flash gray painted pockets, SYNC 3, enhanced voice recognition communications and entertainment system, 8" LCD touchscreen in center stack w/swiping and pinch-to-zoom capabilities, Applink, 911 assist, Apple CarPlay and Android Auto and 2 smart charging USB ports, Note: SYNC AppLink lets you control some of your favorite compatible mobile apps w/your voice, It is compatible w/select smartphone platforms, Commands may vary by phone and AppLink software, Black Billet Style Grille w/Body-Color Surround, black mesh insert, Driver/Passenger Seat Back Map Pocket, Box Side Decal, STX Sport Box Decal

Last edited by Jay A; 10-04-2017 at 02:41 PM.
Old 10-04-2017, 01:54 PM
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This is the second time I have heard of the equity on a lease thing, and now I am itching to see what I can trade my wife's Traverse in for at the end of the year. It's a 2015 on it with 18K miles.

Has anyone ever negotiated a vehicle's price as if they were buying and then after an agreed upon price, turn around and tell the dealer you want to lease based on that price? I have heard that as well, but just don't see how it's possible.

OP, I have same truck, same color, 4X4 with the crew cab. 4.7L in it and just turned 115K miles. It's a good truck, but it has definitely been $500'ing me to death the last couple years. I did the ball joints on it, was not fun or that cheap and the control arm bushings are shot now, loose and squeaky. I'm starting to feel the itch, but need it around another 2 years.

Front CV's are not a big deal on this truck, probably won't be a big hit, if that's what it is.
Old 10-04-2017, 02:31 PM
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Originally Posted by Jay A View Post
All good advice thanks! I've been picking the brains of family members that lease rather than getting the info from the dealer. I initially told the dealer I'm not one for all the bells and whistles. The only thing I required was 4x4 and a tow package and first asked about the regular cab. He showed my the Supe rcab would be better in the long run.

Here's the package:
KEY FEATURES INCLUDE
4x4, Chrome Wheels. Electronic Stability Control, Brake Assist, 4-Wheel ABS, 4-Wheel Disc Brakes, Tire Pressure Monitoring System.

OPTION PACKAGES
EQUIPMENT GROUP 101A MID 4.2" Productivity Screen in Instrument Cluster, compass, XL Power Equipment Group, Power Glass Sideview Mirrors w/Black Skull Caps, manual-folding, Power Door Locks, flip key and integrated key transmitter keyless-entry (includes Autolock), Illuminated Entry, Power Front & Rear Windows, Perimeter Alarm, Power Tailgate Lock, MyKey Owner controls feature, Radio: AM/FM Stereo/Single-CD Player, 6 speakers, SYNC, enhanced voice recognition communication and entertainment system, 911 assist, 4.2" LCD display in center stack, Applink and 1 smart charging USB port, DELETES auxiliary audio input jack, Cruise Control, STX APPEARANCE PACKAGE Fog Lamps, Rear Window Defroster, Wheels: 20" Machined-Aluminum, flash gray painted pockets, SYNC 3, enhanced voice recognition communications and entertainment system, 8" LCD touchscreen in center stack w/swiping and pinch-to-zoom capabilities, Applink, 911 assist, Apple CarPlay and Android Auto and 2 smart charging USB ports, Note: SYNC AppLink lets you control some of your favorite compatible mobile apps w/your voice, It is compatible w/select smartphone platforms, Commands may vary by phone and AppLink software, Black Billet Style Grille w/Body-Color Surround, black mesh insert, Driver/Passenger Seat Back Map Pocket, Box Side Decal, STX Sport Box Decal

Looks like a nice truck and with the STX App and mid level XL discount packages you should have a total of $2000 in factory discounts.

Remember every thing I discuss applies to NC. Lease rules, rebates sometimes residuals vary by state or region, so be careful.

I would still have the dealer quote a XLT Crew 4X4. Crew has a 2% better residual and XLT has a $750 better rebate than XL Supercab.

Dang this gets confusing. Glad I got out of retail 18 years ago.
Old 10-04-2017, 04:35 PM
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Well I got my Dakota back from the shop already and it was a bad CV joint. Total bill $238.00, not bad at all and now it feels like a new truck!
Old 10-04-2017, 05:14 PM
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The Dakotas are stupidly easy to work on, and parts are cheap. I'd keep going with that until the engine bites the dust or the body rusts out, or you just flat outgrow it. I have a 99 extended cab (no rear doors, unfortunately) that is a great beach truck but gets 13mpg driving lightly, and it's due for rear end work, after I've put a low mile motor and rebuilt trans in it and done the brakes, most of the hvac, shift cable, front hub/bearings, front axles, and maybe some other stuff. I could live with a few more repairs to get it back to nearly new underneath, but the paint is in rough shape and the bumpers and cab corners are rusting out, plus without the rear doors it's a real PITA to get to anything back there and I can't comfortably carry more than 1 passenger.

I decided earlier this year to step up to the F-150, crew cab, xlt, 4x4, blah blah blah. What took up the entire back seat of the Dakota now fits in the 40 part of the 60/40 rear seats, so I can have all that and fit 3 others comfortably. Plus I'm getting an honest 22mpg driving around the OBX summer traffic. The STX package is a great deal, so once you do decide the Dakota isn't worth keeping around, it's a truck to look at closely.
Old 10-04-2017, 05:18 PM
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I managed some of the largest lease portfolios in my 24 years working at Ford Credit.

A big trick is dealers can add back the big package discounts to the MSRP before they multiply the MSRP by a percentage to come up with the Lease End Value. The higher the LEV, the lower the payments.

For example, the 2.7 Ecoboost engine is discounted something like $1,250. there are other discounts that make certain well equipped trucks an exceptional value.

You should tr to figure out the total dollar markup on a vehicle because most retail leases are being cashed out at MSRP. That is a much higher dealer profit than on an average retail sale.

With a lease, you are negotiating payment--not selling price. Offer the dealer a much lesser monthly lease payment--depending on the dealer markup on MSRP vs. Invoice amount. The bigger the markup, the lower payment you can offer.

Of all leases, you should find Ford Credit's Red Carpet Lease to be more transparent than other brands. They usually won't throw back end charges or other dealer profit makers at you. The dealer ought to be glad to handle a lease end in order to have the shot at doing business again.

And don't fall for all the current lease advertising,--with huge capitalized cost reduction--or down payment. One of the big plus' of leasing is low initial cash outlay. Another plus in some states is reduced up front sales taxes with taxes being charged on just the monthly payment.
Old 10-04-2017, 06:41 PM
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Originally Posted by Bamaman View Post
I managed some of the largest lease portfolios in my 24 years working at Ford Credit.

A big trick is dealers can add back the big package discounts to the MSRP before they multiply the MSRP by a percentage to come up with the Lease End Value. The higher the LEV, the lower the payments.

For example, the 2.7 Ecoboost engine is discounted something like $1,250. there are other discounts that make certain well equipped trucks an exceptional value.

You should tr to figure out the total dollar markup on a vehicle because most retail leases are being cashed out at MSRP. That is a much higher dealer profit than on an average retail sale.

With a lease, you are negotiating payment--not selling price. Offer the dealer a much lesser monthly lease payment--depending on the dealer markup on MSRP vs. Invoice amount. The bigger the markup, the lower payment you can offer.

Of all leases, you should find Ford Credit's Red Carpet Lease to be more transparent than other brands. They usually won't throw back end charges or other dealer profit makers at you. The dealer ought to be glad to handle a lease end in order to have the shot at doing business again.

And don't fall for all the current lease advertising,--with huge capitalized cost reduction--or down payment. One of the big plus' of leasing is low initial cash outlay. Another plus in some states is reduced up front sales taxes with taxes being charged on just the monthly payment.
Here's what I was quoted with the 2.7 Ecoboost engine:
Sticker price is $42,960 after discounts the price quoted is $33,360
I could lease $180.00 per month for 24 months with $2995 down or $305.00 per month $0 down.

Or 36 months $204.00 per month with $2995 down or $289 with $0 down

I'm leaning to a 36 month term.
Old 10-04-2017, 06:44 PM
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Originally Posted by Jay A View Post
Here's what I was quoted with the 2.7 Ecoboost engine:
Sticker price is $42,960 after discounts the price quoted is $33,360
I could lease $180.00 per month for 24 months with $2995 down or $305.00 per month $0 down.

Or 36 months $204.00 per month with $2995 down or $289 with $0 down

I'm leaning to a 36 month term.
What's the residual
Old 10-04-2017, 07:18 PM
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Originally Posted by BACKTOTHESEA View Post
What's the residual
That's one of the first questions I have when I meet the dealer.
Old 10-04-2017, 07:41 PM
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Jay A ask what is money factor is, some dealers will show big discounts on M.S.R.P and market up money factor. When leasing try to do sign and drive or just first payment. Dealers will try to get your upfront fees, reg. fees, taxes etc.Do compare different trim levels as those will have different residual value and sometimes more expencive car may lease out better and definitely shop around.
Old 10-04-2017, 07:52 PM
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Originally Posted by misha16 View Post
Jay A ask what is money factor is, some dealers will show big discounts on M.S.R.P and market up money factor. When leasing try to do sign and drive or just first payment. Dealers will try to get your upfront fees, reg. fees, taxes etc.Do compare different trim levels as those will have different residual value and sometimes more expencive car may lease out better and definitely shop around.
Thanks I have shopped around and this deal is very compatible with other quotes I got. The reason I'm leaning on this dealer is they sell Jeeps to and my wife is on her 3rd Jeep through them. We've been very happy with their service over the years. One time during a raging snowstorm I drove there when the 4wd wouldn't engage. This was 15 minutes before they closed for the day and they fixed it on the spot! It turned out to be a factory adjustment that was never done.

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