Question on Leasing a 2007 Silverado 1500

[matrikxx]

Hi guys,

 

So far i think this is the best quote from a local dealer in northern CA. What do guys think? Am i getting a good deal, yes or no?

 

Thanks,

Matrikxx

 

 

Lease Details

 

36 months @ $440.14 including tax

15K miles per year

$994.39 drive off

Residual $15,295.80

 

or

 

48 months @ $384 including tax

15K miles per year

$994.39 drive off

Residual $13,236.75

 

Vehicle Details

 

2007 Silverado 1500 2WD Crew Cab Short Box, MSRP $29,415

 

Color1: 41U Black Exterior Color

Color2: N/A

Trim: 19D Ebony Cloth Interior Trim

Package: 1LT LT1 Option Package

Engine: LY2 Engine: 4.8L, V-8

Trans: M30 Transmission: 4-Speed Automatic

Other: 1SZ Option Package Discount

AJ1 Glass: Deep Tinted

AP8 Remote Start Accomodations Package

AU3 Power Door Locks

AZ3 Uplevel Bench Seats

B30 Floor Covering: Color Keyed Carpet with Floor Mats

B32 Floor Mats, Front

B33 Floor Mats, Rear

B85 Moldings, Bright Body Side

C49 Defogger, Rear Window, Electric

C5U GVW Rating 6800 Lbs

C67 Air Conditioning, Manual

DF5 Mirror I/S R/V-Lt Sens-Compass/Temp

DL8 Mirrors, O/S, Power, Heated

E63 Body, Fleetside

GU5 Rear Axle 3.23 Ratio

JL4 Stabilitrak - Stability Control

K34 Cruise Control

PY9 Wheel 17" Chrome-Styled Steel

QPR Tires: P245/70R17-108S BW ALS

R9Z Sold Order Expedite

SAF Spare Tire Lock

UE1 OnStar Communication System

US8 Radio, AM/FM Stereo, Auto Tone, CD

V76 Recovery Hooks

VK3 License Plate Front Mounting Pkg

YF5 California Emissions

Z85 Handling/Trailering Suspension

ZY1 Solid Paint Application

[99silveradoz71]

It could be me, but those seem steep to me. I owed money on my trade for my 99, so when I bought her, I basically financed $30k...which with 5yrs o' payments, turned out to be about $609 a month. Just thought I'd toss some numbers to put it in perspective. Then again, I've never leased, so I can't really speak for typical lease rates. My truck is also a 4wd vs. the 2wd.

[rossn2]

Isn't a lease based on the full MSRP? And, don't you have to pay alot extra for more than 15k miles a year?

 

With all the discounts going on I would think you can buy a left-over new 06 truck from around $20K and finance for 5 years with cheaper payments.

 

 

It could be me, but those seem steep to me.  I owed money on my trade for my 99, so when I bought her, I basically financed $30k...which with 5yrs o' payments, turned out to be about $609 a month.  Just thought I'd toss some numbers to put it in perspective.  Then again, I've never leased, so I can't really speak for typical lease rates.  My truck is also a 4wd vs. the 2wd.

 

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[keebler]

Isn't a lease based on the full MSRP? And, don't you have to pay alot extra for more than 15k miles a year?

 

With all the discounts going on I would think you can buy a left-over new 06 truck from around $20K and finance for 5 years with cheaper payments.

 

 

It could be me, but those seem steep to me.  I owed money on my trade for my 99, so when I bought her, I basically financed $30k...which with 5yrs o' payments, turned out to be about $609 a month.  Just thought I'd toss some numbers to put it in perspective.  Then again, I've never leased, so I can't really speak for typical lease rates.  My truck is also a 4wd vs. the 2wd.

 

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An Engineer I used to work with and I analyzed the Lease vs Buy question a few years back in quite some detail. (I wish I had time to explain it all here.) The result is that a lease isn't automatically a bad deal, but frequently can be. Why? Because more people understand the buying process and are less likely to be fooled by the various terms, fees and costs. Few people understand the lease process so the dealer can easily slip in a bunch of extra cost without the buyer catching them.

 

I've been doing what I call a "self lease". I buy a vehicle for the best price I can and with the best interest rate I can get. I make payments and drive it for how ever long I want, and then I sell it for the best price I can get. My job is to be sure my payments will pay down the loan to the point where the vehicles value matches what I owe at the time I sell it. I've found that I can finance a new truck for 72 or 84 months and be at the cross-over point as I approach it's third year.

 

Using this method, I control all the aspects of the process. I insure a good purchase price up front, buy a vehicle with decent resale value, keep records and maintain the vehicle well and then sell it in the best condition I can at the best price I can reasonably get.

 

The dealer you lease from will do everything the opposite. they'll base the lease on full MSRP if they can (they shouldn't). They'll use the highest lease rate (interest rate) they can trick you into signing for. They'll assume the worst for residual (re-sale) value. They'll also go after you for wear and tear, excess mileage and any other fee they grab at the end of the lease. The dealer will be sure that the worst customer on the worst day will earn them money. If you take care of your truck like I do, they'll benefit and happily pocket the extra profit.

 

Using my method places all of the risk on me -- in return, I keep all of the profit when my planning goes well. What if my payments weren't high enough to pay down the loan? Well, drive it some more or pay up when you sell it. What if the re-sale value is low? Again, drive it some more or cough up the difference when you sell it. What if I paid too much in the beginning? You see the pattern...

 

The benefit it gives me is ultimate flexibility. If I like the truck, I can keep it for as long as I want. If I hate it, I can sell it next year. In any case, I don't have a problem being in charge of my own destiny in this regard.

 

Anyway...

 

I just bought a truck very similar to the one you got quotes on and I paid $22,500 for it ($28,870 MSRP as I recall) My down payment paid the taxes plus $1,000. My payments are $370 a Month.

 

If you can't lease a truck for less than the payments on a loan, something is wrong!

[cerbomark]

Plus if you add all those # s up it s comes out to a little more than MSRP.. Why are you paying MSRP ? If a loan or a lease , they should be discounting something on the MSRP... Mine was MSRP 35K,.. Paid 31K

[matrikxx]

Sorry guys, i forgot to mention. A buddy of mine works for a company that is own by GM, so they apply the GMS employee discount and reduced it to $26,211.

 

It sounds like I'm getting rip off here. What is the reasonable price of the vehicle i should pay, monthly payment, and drive off fees, etc?

[keebler]

Sorry guys, i forgot to mention. A buddy of mine works for a company that is own by GM, so they apply the GMS employee discount and reduced it to $26,211.

 

It sounds like I'm getting rip off here. What is the reasonable price of the vehicle i should pay, monthly payment, and drive off fees, etc?

 

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Is this the new body style or the old one?

[cerbomark]

if it s the new boby style, then buy it at 26k. If it s the old style I think it s still too high.. PS always shop another dealer before deciding.

[Deep Blue]

Sorry guys, i forgot to mention. A buddy of mine works for a company that is own by GM, so they apply the GMS employee discount and reduced it to $26,211.

 

It sounds like I'm getting rip off here. What is the reasonable price of the vehicle i should pay, monthly payment, and drive off fees, etc?

 

<{POST_SNAPBACK}>

 

 

 

 

Is this the new body style or the old one?

 

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I assume it's the new body style. If it isn't, you would definitely be losing on the residual. Leasing is to your best advantage if you want to drive a fairly expensive vehicle for a limited period of time. In that situation, if you negotiate well, your lease payment will almost always be less than a loan payment with less down to start. It can also be an advantage if you want to drive a vehicle for a limited period that you suspect you may have difficulty selling yourself.

[matrikxx]

It is the new body style, thanks for your inputs.

[keebler]

I assume it's the new body style. If it isn't, you would definitely be losing on the residual. Leasing is to your best advantage if you want to drive a fairly expensive vehicle for a limited period of time. In that situation, if you negotiate well, your lease payment will almost always be less than a loan payment with less down to start. It can also be an advantage if you want to drive a vehicle for a limited period that you suspect you may have difficulty selling yourself.

 

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The only reason a lease payment is lower than a loan payment is because you can be assured that there will be no equity built up during your lease.

 

Most people believe that the lease cost is ONLY depreciation. However, the lease payment includes interest along with depreciation. for example, some of the super-expensive cars in the world have very low depreciation, right? We all know that the lease payment is still very high on these. Why? Because the leasing company has money tied up in its capital (the vehicle) and they either pay interest on the money they borrowed to provide the vehicle to you, or they're entitled to earn interest on the money they had in the bank that's now tied up in your vehicle. Either way, there's interest invloved in the Lease Payment.

 

Unless you believe that the leasing company can get a better interest rate and pass the savings on to you, you're no better off leasing than you are by borrowing. The odds are good that the interest rate they get is higher than the effective interest rate you're paying.

 

As for depreciation, there's no advantage for the leasing company. They may be able to buy vehicles in bulk and negotiate a lower cost up-front, but they're in the same boat as you as far as residual value at the end of the lease. (In fact, the leasing company will wholesale the vehicle and you probably won't.) Again, the cost of depreciation is virtually identical between leasing and buying.

 

No matter which way you go, choose a vehicle that will have good resale value and buy it a price that is competative. Don't go crazy getting a deluxe vehicle soley because of the perception of better residual value. Remember, that a more expensive vehicle will have more interest expense and it will eat away at some of the gains you make by having a good residual value.

 

The only thing that can be said in favor of leasing is the convenience and security. You have the security of knowing what your expenses will be, and the convenience of someone handling the transaction of buying in the beginning and selling at the end. However, the world is full of examples of convenience and security and the odds are heavily against you when it comes to saving money at the same time you get convenience and security. (Like the typical extended warranty plan, for example.)

 

Other than convenience, the odds are on your side that if you buy the vehicle carefully, take care of it, make reasonable payments and then sell it when your done, you'll be no worse off than the leasing company.