The Best Lease Deals – Adam’s Lease List
Looking for the Best Lease Deals? If not, you should be. Approximately 1 out of 4 new car drivers lease their vehicles.
It's a smarter way to finance a vehicle if you have good credit, drive fewer than 20,000 miles a year, and like to change your vehicle every 4 years or sooner. Compared with a purchase, the Lessee pays a lower monthly payment, less sales tax, little or no up front money, and no risk of the vehicle's future value. This last benefit is the most beneficial component of leasing. The future value - called the "residual" is set at the beginning of the lease. The Leasing Company is taking the risk that the vehicle will be worth the residual value at the end of the term. If the vehicle is worth less, the Lessee returns the vehicle and suffers no loss; but the Leasing Company must sell that vehicle at an auction (referred to as "remarketing") and will take a loss on the vehicle. If the vehicle is worth more than the residual, the Lessee could exercise their option to buy the vehicle and keep it; or better yet, use the vehicle as a trade and have the vehicle's equity applied towards the next lease or purchase. It's like having a stock option - if the price is lower than the option, you lose nothing; if the price is higher, you can take the gain. All the purchasers of vehicles, by comparison, are taking the risk of their vehicle's worth. If the market goes up they win (like the Lessee would), but if the market goes down they lose (where the Lessee would walk away).
All of this being said, a consumer with good credit will typically pay $200 a month to finance $10,000 at 7% over 60 months - a typical new car loan. For a lease to be more attractive it must provide a payment less than $200 per $10,000 (with no money down). Adam's Lease List only recommends those leases where the payment is $150 a month per $10,000. In other words, a $30,000 vehicle would have a monthly payment no greater than $450; a $40,000 vehicle would have a payment no greater than $600.
For a lease to qualify for "Adam's Lease List" - mathematically it will have to have a residual higher than 50%, a low money factor (small interest rate), and a large discount off of the MSRP (so the difference between the cap cost and residual are as little as possible). Only then will it produce a payment at or below $150 per $10,000. It's the perfect balance - and allows a consumer to measure any vehicle - regardless of price - to determine whether they are receiving a good lease payment.
If the payment is higher than $150 per $10,000 - it is not a "good" deal. And the closer the payment approaches $200 per $10,000 - the consumer would be better off buying the vehicle. One note, however, if the payment is above $150 - it means that either the residual is not good or the discount is small - which would suggest that it is not a good vehicle to buy either. Why would you want to buy a vehicle which doesn't hold its value? That is what the residual measures - what percentage of the original MSRP is the vehicle worth in the future. The higher the residual, the better the vehicle holds it value.
Best Leases December 2011 - sorted by Payment
Best Leases December 2011 - sorted by Body Type
Best Leases December 2011 - sorted by Brand
