Mini's web site shows a lease deal of $249 a month for 3 years. In their first example, after a $2000 down payment, and $14625 end of lease purchase, the remaining amount is only $5875. At $249 a month, this is equal to 30% interest. I don't think so.

 

Leasing uses a money factor and not actual interest rates. Remember, you actually borrow the sum of the payments plus the residual. You pay interest on the entire amount, plus the difference between selling price (yes there is a selling price in a lease) and the residual. Actual money factor is serious hocus pocus, but unless you know all the figures, you can't really back out an interest rate.

You are borrowing the entire purchase price remember, not just the payments. Mini sells the car to a financial institution, you pay them.

http://www.edmunds.com/advice/leasin...5/article.html

 

If you want to buy a car, buy it! Only lease if you do NOT wantbto keep the car; paying the residual is almost always a bad move.

 

It's a Lease...what did you expect??!!

 

Go to this website if you want a calculator on lease payments. http://www.leaseguide.com/calc.htm

Always negotiate down to as close to dealer's invoice if possible. Don't forget taht there are some promotions running right now. ALso, convert money factor into interest rates, multiply the MF by 2400.

Do NOT let Mini dealer rip you off on the "acquisition fee". This is like points you pay up front on a home mortgage. It's complete BS as far as I'm concerned. Niello Mini in Sacramento tried to charge me $925 acquisition fee. I happen to know for a fact that MINI uses BMW Financial Services for their Bank. And BMWFS charges $725. So this guy was trying to rip me off by another $200.

Get educated on leasing, it's terminology, and how you can make it work for you. Don't walk into the dealer without knowing EXACTLY what your bottom line and max payment would be.

 

I'm not an expert, but I believe there is also GAP insurance included.

 

When I sold cars at Audi I would always tell a client that if they plan on keeping the car longer than 3 years to just buy it, shorter than that... why not lease? if you do not plan on keeping the car at lease end or usually keep cars 3 years or less than this is your best option. Always remember that money factor can be negotiated as well. Also, never tell the dealer a desired payment right off the bat, you will lose all of your negotiating power.

 

What are your thoughts on MINI Select since it's like a lease but you own the car? Still a rip off? There is a balloon payment at the end like a lease. Just wondering what others think.

 

$925 aquisition fee? Good grief! That's as bad as the dealers in Fla charging $900 'doc charge", that's nucking futz!

Find another dealer if they want to charge that much for this stuff......

There are costs associated with inititating a lease, as well as doing the documentation for a new car sale, and all dealers try to recoup those fees (because everyone thinks it's OK to negotiate the deal down to dealer invoice - how do they expect a dealer to stay in bidness making $100 per car?) by charging up front for them, but these stike me as more "because they can" than any real world cost.

As to the "rip off" cited above, try adding the 60 month payment at a normal interest rate with the same $2000 down, then see where the costs end up - it'll be about the same as the total of lease payments plus the residual. It's not necessarily a rip, it's just the cost of financing a large purchase.

 

every mini dealership makes more money from their service & parts dept. then they do on new car sales or leases

 

While there are some differences between a regular car loan and a lease, the basics are the same. Leasing a car is like buying a car and selling it at the end of the lease period. Except you know up front how much you will get for it when you sell it (provided you've kept your part of the contract by keeping the car in good shape and keeping the mileage below the allowed limit). Here's the data on the first 16 payments of a $20,000 car at 5% interest rate. At the end of those 16 months approx $5k of the car is paid for (balance is just above $15k) and the payments total total just a bit over $6k (16 x 377).


Month Payment Running
Year Amount Principal Interest Interest Balance
June 2010 $377.42 $294.09 $83.33 $83.33 $19,705.91
July 2010 $377.42 $295.32 $82.11 $165.44 $19,410.59
Aug. 2010 $377.42 $296.55 $80.88 $246.32 $19,114.04
Sept. 2010 $377.42 $297.78 $79.64 $325.96 $18,816.26
Oct. 2010 $377.42 $299.02 $78.40 $404.36 $18,517.24
Nov. 2010 $377.42 $300.27 $77.16 $481.52 $18,216.97
Dec. 2010 $377.42 $301.52 $75.90 $557.42 $17,915.45
Jan. 2011 $377.42 $302.78 $74.65 $632.07 $17,612.67
Feb. 2011 $377.42 $304.04 $73.39 $705.45 $17,308.63
Mar. 2011 $377.42 $305.31 $72.12 $777.57 $17,003.33
April 2011 $377.42 $306.58 $70.85 $848.42 $16,696.75
May 2011 $377.42 $307.85 $69.57 $917.99 $16,388.89
June 2011 $377.42 $309.14 $68.29 $986.28 $16,079.76
July 2011 $377.42 $310.43 $67.00 $1,053.28 $15,769.33
Aug. 2011 $377.42 $311.72 $65.71 $1,118.98 $15,457.61
Sept. 2011 $377.42 $313.02 $64.41 $1,183.39 $15,144.59

You can see that you've paid almost $1200 in interest to "own" $5k worth of car. That's expensive. Why? If you think of the car as being made of 4 chunks of $5k (4x5=20), then guess which one is the most expensive. The first one! Using our example above of 16 months, the 2nd $5k chunk would cost about $800 in interest, and the 3rd one about $500...the last year only costs about $200 in interest.

That's because when you are "buying" the first $5k chunk, you are paying interest on the other 3. Paying for the 3rd one and you are still paying interest on the other 2. etc...

Total amount paid for the deal mentioned is about $11k (2000 + 249 x 36) with about $6k being principle and the other $5k interest.

Backing into the "interest rate" from those numbers gives a lease rate of about 5.8%.

 

This does make more sense now. My wife's lease is up soon and she is thinking Mini. I feel better after your explanation.

 

I did the Mini Select financing because it was cheaper than a regular loan. It's basically like a normal loan except they finance only about half of the price of the car and then at the end of you term you either pay off the balloon payment or refinance it...or sell the car if you want...but you don't have to worry about mileage and stuff like a lease and you can do whatever you want to the car.

 

While doing a lease or a balloon payment allows you to have lower mothly payments, it does stretch out the loan term considerably if you want to keep the car long term, and ultimately you will pay a whole lot more for the car if you amortize the residual.

 

I'm late to this party but IMO all leases are a ripoff. Found that out 20 years ago. That was an education. Of course there are some instances where a lease makes perfect sense.

 

A lease is not a rip off, it's just another way to finance a large amount of money.

Every finance scheme costs, some cost a little more than others, some are more appropriate for some buyers than others.

In general, the shorter period you amortize the loan, the less it costs you. Leases and balloon payment schemes have the effect of costing more, because after the shorter first part, there's a large balance to deal with. If you lease a car and pay the residual in cash, it will still cost you more than if you put the residual down and financed the balance over the same term, because there are fees and such associated with a lease that are not with a loan. The difference is, with a lease you do not own the vehicle unless you pay the residual and buy the car from the lease company at the end, you're just "renting" it long term.

The cheapest way to buy a car is to finance it for the shortest term - the shortest of which is to pay cash!

Sometimes people do a lease or balloon payment scheme because they can't afford the payments otherwise - in that case I question whether they should be buying that expensive of a car?

 

If saving money is the name of the game you are playing then never, ever lease unless you own a business and you can write it off (in which case buying is still better).

Edmunds did a break down of buying a new $20,000 car with a six-year loan vs. leasing two $20,000 cars. The costs were near identical with only a few hundred dollars difference on what you spend to buy the car vs. what you spend to lease two. The only difference is at the end of six years you have a car you could turn around and sell for ~7,000 (assumed value based on averages for the sake of the comparison) vs. a lease where you have nothing to show for it. 7K isn't anything to scoff at.

I assume that $250 is before tax, title and license too. So it is really going to be around $280 a month. At that point, my three-year loan on my 04 MCS with 34,000 miles on the clock is only 50 bucks more a month AND it's an S AND in three years it will be all mine. I put about 2K down on it too.

 

"The cheapest way to buy a car is to finance it for the shortest term - the shortest of which is to pay cash! "

Not at today's intestest rates.

 

Yeah, you definitely have too look at the benefits of paying cash vs. financing. I spent a lot of time crunching the numbers and running a hundred different hypothetical solutions before I found what was best for me.

I could have easily put down about 60% of the price of my car and paid off the remainder in under two years, but I wouldn't have any savings. Interest on my loan is only $800 over the next three years, a negligible cost, especially if there is some financial emergency. I chose instead to just put the standard 20% down and save the rest for a rainy day. Better option, IMO.

 

Well, you can never earn as much in interest from a bank as you'll pay in a loan.

And it is true that if you can get 0% financing, that's a great way to go, especially since they're doing 60 month loans that way now.

And I agree there are times when it makes sense to take a loan for part of the purchase, as long as you're aware of the costs and they make sense.

But none of that makes a lease a rip-off...........and not every one quallifies for the 0% rates.

 

I was only pointing out that your previously universally true statement that paying cash is the cheapest way to buy a car is temporarily incorrect. We live in interesting times.

"Never borrow money unless it would cost you more not to," is my motto.

 

Yep, I understood your point, and the 0% stuff is a game changer, no doubt.

Good motto....