Jeep Wrangler Forum banner

2015 Lease Question - Leasers Please Read

26K views 65 replies 25 participants last post by  Digger70 
#1 ·
I am not wanting this to turn into a lease vs buy flame war. If you are curious as to why I am considering leasing, then read the last paragraph of this post. My question is directed to those that have leased in the past couple years, in the process of negotiating a lease, or work at a Jeep dealer.

I have ordered a 2015 Wrangler Sahara Unlimited and negotiated my purchase price and trade-in value. When discussing financing, the sales manager tried really hard to talk me out of leasing and quoted a lease payment near the loan payment to prove his point.

We all know Wranglers have a high resale value and he said residual was at 63%, which is great. I am getting it basically at invoice, which is also good. Unfortunately, he quoted the money factor at around .0030, which is way higher than other manufacturers and comes out to around 7.20%. He claims that "Wranglers don't lease well".

Since I have heard that money factors are non-negotiable, I was hoping that someone on here that has leased a Wrangler or works at a dealer could back this up.

For those that question my decision: I am considering a lease because I drive low miles (work from home), like being under a warranty, and like getting a new car every 3 years. This will be my 3rd Wrangler and I have not had issues with negative equity on trade-ins, but it would be nice to not have to negotiate a trade-in and pay less per month if the end result is going to be the same for me.
 
See less See more
#2 ·
I am a Finance Manager at a non jeep dealer. Lease money factors work the same way as finance rates, meaning a dealer receives a "buy rate" can can mark it up from there. On leases most manufactures lending arms set the residuals and stick to them. Being that you drive low miles, make sure they are adjusting the residual to reflect that.
 
#3 ·
Leasing can be far more complex than financing. Different brands, models and even trims lease better than others. Wranglers do not lease terribly well while the Grand Cherokee does. Brands will also gear incentives towards leasing and/or financing.

The money factor is a little high but it is also subject to credit qualifications similar to interest rates. Some dealers will show you a higher one than what you actually qualified for.

I would say leasing is a good fit for you but your choice of vehicle is not the best. At the end of your lease you can turn it in, trade it in, or buy it. Most people trade it in. If you come to the end and your vehicle is worth more than the buy out, then you take the positive and put it towards the new vehicle by trading it. If you turn it in, then you lose it. If you plan on turning it in, then make sure you understand the agreement. The vehicle will be inspected and they will charge you for anything above normal wear and tear. Basically, if you turn it in with 4 bald tires, you will be charged for them.

If you've been trading in a Wrangler every few years and been in the positive, then you are doing very well. Why change it?
 
#11 ·
If you plan on turning it in, then make sure you understand the agreement. The vehicle will be inspected and they will charge you for anything above normal wear and tear. Basically, if you turn it in with 4 bald tires, you will be charged for them.
I have never personally leased a vehicle, but I have heard real horror stories about people being charged exorbitant fees for every nick, scratch, ding, and chip when the leased vehicle gets turned in. If one truly takes their Wrangler off-road, such could become a real problem.
 
#4 ·
hychenj said:
I am a Finance Manager at a non jeep dealer. Lease money factors work the same way as finance rates, meaning a dealer receives a "buy rate" can can mark it up from there. On leases most manufactures lending arms set the residuals and stick to them. Being that you drive low miles, make sure they are adjusting the residual to reflect that.
Thanks! He quoted me .0030, 63%, 36 mo, 10k miles, so I am assuming that was considered.
 
#5 ·
I have no input as to you topic but learning a little something.. Bought my wife a car (Scion XB) brand new.. now it is 5 years old just hit 14,000 milies you got me thinking about this lease deal especially being up north now..
 
#6 ·
medic0446 said:
Leasing can be far more complex than financing. Different brands, models and even trims lease better than others. Wranglers do not lease terribly well while the Grand Cherokee does. Brands will also gear incentives towards leasing and/or financing. The money factor is a little high but it is also subject to credit qualifications similar to interest rates. Some dealers will show you a higher one than what you actually qualified for. I would say leasing is a good fit for you but your choice of vehicle is not the best. At the end of your lease you can turn it in, trade it in, or buy it. Most people trade it in. If you come to the end and your vehicle is worth more than the buy out, then you take the positive and put it towards the new vehicle by trading it. If you turn it in, then you lose it. If you plan on turning it in, then make sure you understand the agreement. The vehicle will be inspected and they will charge you for anything above normal wear and tear. Basically, if you turn it in with 4 bald tires, you will be charged for them. If you've been trading in a Wrangler every few years and been in the positive, then you are doing very well. Why change it?
That all makes sense. Thanks. They hadn't yet pulled my credit when quoting all of this. The other challenge was that I cannot get the payment to match using lease calculators and the figures he quoted me. He said my lease payment would be like $590 and my loan payment would be $580. By my calculations, the lease payment should be more like $460. So, in my mind, if I'm gonna trade it in 3 years from now regardless, why not pay the $460 instead of $580.
 
#7 ·
Did the sales manager explain why Wranglers don't lease well? There is a lot of demand for used Wranglers specially one with low miles that hasn't been abused off road. Is it because they can be subjected to more abuse than a rental car?

Wanting a new vehicle every 3 years and not wanting to sell it yourself is a good reason to lease.

You don't have to get a lease from the dealer any more than you have to accept one of their loans. Get a couple of independent lease options.
 
#8 ·
spinlock said:
Did the sales manager explain why Wranglers don't lease well? There is a lot of demand for used Wranglers specially one with low miles that hasn't been abused off road. Is it because they can be subjected to more abuse than a rental car? Wanting a new vehicle every 3 years and not wanting to sell it yourself is a good reason to lease. You don't have to get a lease from the dealer any more than you have to accept one of their loans. Get a couple of independent lease options.
No, unfortunately he didn't really explain it well. He said that they sell well and their resale is high. That is what is confusing me as vehicles with a high residual value are great lease candidates. And like you said there is demand for used Wranglers with low miles I am sure so that would make it even more reasonable. It sounds like they have no problem selling Wranglers and therefore have no incentive to offer good lease deals either. Any recommendations for third party leasing companies?
 
#10 ·
You also have to pay attention to the lease terms as far as fees associated with turning the vehicle in at the end of the lease. Also, last time I looked at leasing a Wrangler, there was a fee of about $2,500 if you wanted to buy it at the end of the lease.
 
#25 ·
This had me worried since I've got an Unlimited on order to lease, that I plan on buying at the end. So, I sent my salesman an e-mail. He quoted a $350 bank fee, which is consistent with the last lease (Dodge Ram) I bought out. He also commented that fees that high usually happen when you're terminating the lease early.

I was able to get really close to the dealership quoted payment using the calculator on jeep.com, so I feel ok that they're not trying to hide costs. Don't forget about tax, title and other fees when you use it.
 
#17 ·
We're on our third JKU (second JKUR), all leased. Lease cost/mo were cheaper on all three than purchase price. We're always a decent amount under on our mileage and have had equity on both turn-in's. $2k the first time and $6k the second. This last go around was the most expensive of the three and the lowest payment by far because of the equity.
 
#19 ·
Awesome. Did you find that the money factor was high in your case? Like .0026 or higher? When you say that the payment was cheaper than purchase price, can you say by how much? $50, $100, more? If you would rather PM me I understand and please feel free to do so. It is looking like APR equivalent of the money factor is over 6% and the difference in payment might be less than $100.
 
#22 ·
So here come some questions. What is this "money factor"? Once you get to the end of the lease how do you know the price if you want to purchase the vehicle? Do they do a yearly check on mileage or is it just total mileage? Do you have to use the dealer for all factory scheduled maintenence? Do you have to keep all the receipts? I know next to nothing about leasing. Thanks in advance.
 
#24 ·
Purchase price for lease end is calculated at the beginning. You'll know what it is up front. And for Wranglers, it's less that what you could get by selling it outright. We just trade-in as it's easier and we get it in lease equity.

The Money Factor determines the interest you'll pay. MFx2400 would get you an equivalent APR for a loan.
 
#23 ·
In my view, it's just math. Add up what it will cost you over the term of the lease, as opposed to buying it. Leasing has it's benefits. If you are in a high tax area (like here in Canada) you only pay tax on your monthly lease payment. If you buy and finance, the tax is payable on the total amount up front, so you end up paying interest on the tax amount too. If you decide to get out of the lease early, it can be assumed by someone else (at least in Canada it can) and you are only out the money you've spent on lease payments up to that point. If you finance, there is a possibility you'd be out the tax if you sell it early.(instead of trading). I leased a Toyota Corolla back in 2004. Best thing I could have done. 6 months into the lease, we found out kid #3 was coming. The corolla just wouldn't cut it with three car seats.
 
#26 ·
Hi , new here!

I think one of the primary reasons why Wranglers are "poor" lease vehicles compared to the Grand Cherokee is the money factor. MF is the sunk cost (interest) associated with the lease and is essentially guaranteed profit for the company (just like normal interest in buying). I suspect companies can use this to set artificially high residuals. Heck, it could be just to promote selling versus leasing. Another discussion.

Regardless, the Grand Cherokee has a APR equivalent MF of near 0%. This means the monthly payment is almost all towards the vehicle (depreciation) and the additional "fee" to lease (the interest aka MF) is very low. For a Grand Cherokee, I think there is a strong argument for leasing (more on this later). With the Wrangler near 5% to lease, it is not nearly as attractive to lease because overall interest rates ("fees") to buy are ~ 1-2%.

If there is an additional $2500 to purchase the vehicle at the end, Jeep is definitely trying to make leasing unattractive for the Wrangler.

There is one thing with leasing I think people forget. One of the greatest benefits of leasing (majority of leases) is the power in the decision to have the first right to buy or return the vehicle after the lease has expired. It is a way to protect yourself from the risk the vehicle tanks in value for some reason (widespread manufacturing defects, you've got damage on your title). If the MF (cost of using a lease) is low enough (think Grand Cherokee), you could make the decision that additional costs associated with leasing is worth the protection from unexpected depreciation. It's up to you.

This could change, and I'm sure the dealer won't like it, but you should be able to turn it in at the end of a lease and let the dealer eat depreciation costs as long as things have been repaired to spec. Which is nice.

Someone from the industry speak up if I am wrong.
 
#31 ·
$590 for a lease? If you get the low mileage 10k mile per year lease, that is seventy cents a mile. That is insane
 
#32 ·
Interesting, I have never heard anyone evaluate a lease based on cost per mile. I have heard the general rule of thumb is a payment less than $135/mo per $10,000 is considered a "good deal" and anything around $100/mo per $10,000 is considered a "great deal".

Using that logic, a lease payment under $540 would be considered not getting ripped off. Again, the $590 was quoted to me with a money factor around .002979, 63% residual, 36m term, and 10k miles. The caveats are: I did not see their math and the sales manager was aggressively trying to talk me out of considering leasing and did not even want to quote me a lease payment until pressed hard. I have tried calculating this by hand and by two separate lease calculators and was unable to reach the $590 number, so it may be bogus.

Regardless, Wranglers are leased using the "standard money factor" which is over 6%, thus making the payment higher. If the money factor were .0015 (3.6%) that would drop the payment by over $100 and .0015 is considered a high money factor in comparison to other vehicles that have lease specials.
 
#36 ·
Ok so a couple of you have done leases. Can I get one of you to put actual numbers to a lease. What I mean is how do they come up with the lease amount? What is your end of lease buy out? That kind of stuff if it helps. I am looking at lets say a $30K Wrangler. How accurate is the lease calculator at Jeep.com?
 
#37 ·
I responded to your earlier comment and suggested you check out this website which does a good job of explaining how leases work, how they are calculated, and what the terms mean: Complete Guide to Saving Money Buying or Selling a Car

Did you check out that site?

The finance company that is giving you the lease, say Chrysler Financial, has a set money factor and residual rate on each model of car. For example, for a 2015 Sahara Unlimited, they say that the money factor is .0026 and the residual is 63%. The money factor is your "interest rate" and both the money factor and residual vary based on the model of car, length of lease, and number of miles.

When you negotiate the purchase price of your vehicle, say $30k they use that as the capitalized cost. The residual is a percentage of MSRP, so let's say that $30k purchase prices really has an MSRP of $33k.

Your capitalized cost is $30k and your residual is $33k x 63%, or $20,790. They are betting that the Jeep will be worth $20,790 at the end of your lease. If you want to buy the Jeep at the end of your lease, that is also the price you would pay for it.

Your lease payment is made up of 3 parts, your depreciation cost, finance cost, and taxes.

1) Take the capitalized cost - residual value. Or, in our example $30k - $20,790. That is $9,210. This is how much the Wrangler will depreciate over the next 3 years. Divide that by 36 and you get $255.83. This is your depreciation cost.

2) Take the capitalized cost + the residual value and multiply by the money factor. Or, in our example ($30k + $20,790) x .0026. This is your finance charge and is $132.05.

3) Tax rules vary by state as do rates. If your sales tax is 7%, most states charge you tax on the sum of the two payments above, so ($255.83 + $132.05) x .07 is $27.15. This is your tax payment.

When you add up all three parts, you get the lease payment. So, $255.83 + $132.05 + $27.15 = $415.03. That is your monthly lease payment using the example above. *I made up the residual and money factor, your actual numbers will differ.

Please also remember that when you lease there is an "acquisition fee" that the lease company gets. This can be between $500-$1000 and will need to be added to the cost of the vehicle or paid up front. Also, there is typically a "disposition fee" of around $300-$500 when you turn the car back in. This is the cost to clean and prepare the vehicle for sale again.

Some lease companies also require a security deposit, just like renting an apartment. This might need to be factored in as well. At the end of your lease, you may have damage or wear and tear that is not covered and they can charge you to repair those or take it from the security deposit. There is also the penalty if you go over the mileage, usually around $0.15/mile over.

I hope this helps, but please check out the link I provided to get a good overview of things you should know.
 
#39 ·
Next round of questions. Will dealers let you custom order a vehicle to lease? Are the money factors like interest rates in that they depend on your credit or are they pretty much a set thing? Once you get done with the lease and decided to return the vehicle if the vehicle is valued at more that the residual (I hope I used that correctly) do you get that money or does it vanish? If it is valued at less, however you have no extra wear and tear on the vehicle do you have to pay more?

Oh I almost forgot. Most things i read say do not pay a down payment. My plan is to trade in my current car (09 Honda Civic) and use the money from that to pay any "due at signing" type costs and apply the rest to the lease. Any thoughts?
 
#40 ·
Yes, dealers really don't care if you lease or buy for the most part. They are selling the vehicle to you or the leasing company. Either way it is a sale for them. I have been told that they have more incentive for you to buy, because they have the potential to make more money, especially with extended warranties that you wouldn't buy with leasing.

Money factors are dependent on credit and they typically tack on a slight bump for profit, just like the interest rate on the loan. You can sometimes negotiate the money factor down, but only slightly.

The residual value is a guess by the leasing company as to what the vehicle will be worth. If the value is actually higher, then you have what is called lease equity. In theory, you could buy the vehicle at that price and then turn around and sell it or trade it in for the true value and take the profit. To avoid the paperwork and hassle, most dealers will just credit your next lease with this equity. If the vehicle is worth less than the residual value, then you just turn it in and that is it. You are not responsible for their bad guess. Some companies, like BMW will artificially inflate residual values to get you a lower lease payment.

You are correct that down payments are strongly discouraged. The reason is that if you were to total the vehicle after driving it off of the lot, you would never see that money. The leasing company owns the vehicle and the insurance would pay them directly for the value of the car, you get nothing. You definitely want to have gap coverage or make sure it is included in the lease for similar reasons. Also, any down payment that you make is not going to impact the residual value whatsoever, only the capitalized cost. So, yes, your lease payment will be lower, but in the end the residual value is the same and the vehicle's value in 3 years will also not be impacted. So, basically you lose the money regardless. Also, it is strongly discouraged to buy the vehicle at the end of the lease.

With that being said, I was going to use my trade-in credit as well, regardless of whether I lease or buy. I don't really view this as money "out of pocket" and it is only $2,600, so not a huge amount. I had to put $500 down to order the vehicle and will be putting down another $500 at signing, just to help offset the sales tax or lower the lease payment. If I total the Jeep I would only be out $1,000 cash and $2,600 in trade credit and I can live with that.

As always, negotiate the purchase price of the vehicle first, before you get to financing. Then, negotiate the value of your trade-in, before discussing balance owed. Once you agree on the purchase price and trade value, then you can negotiate your financing.
 
#41 ·
I'm leasing then buying. That's the most cost-effective way for me since I have BK on my credit report and was only able to get 6% interest. The BK should be off when the lease is up then I can get a lower payment. The lease payment is about $99 less than what I'd pay if I bought outright. And I wouldn't have been able to get the Jeep I have. What I'm paying a month leasing a JKWW ($380) is the same that I'd be paying for a bone stock JK with auto, a/c and soft top. I'd be upwards to $500 a month for 7 years for a JKWW bought outright.
 
#42 ·
Digger70 said:
I'm leasing then buying. That's the most cost-effective way for me since I have BK on my credit report and was only able to get 6% interest. The BK should be off when the lease is up then I can get a lower payment. The lease payment is about $99 less than what I'd pay if I bought outright. And I wouldn't have been able to get the Jeep I have. What I'm paying a month leasing a JKWW ($380) is the same that I'd be paying for a bone stock JK with auto, a/c and soft top. I'd be upwards to $500 a month for 7 years for a JKWW bought outright.
Well you could lease and then return it with some lease equity and then lease a new one or buy a new one at that point in time. Just another thought. Those of us leasing now will most likely be seeing the next gen wranglers when the lease is up.

And your 7 year old BK is still causing you issues? I would have thought that would be far enough away.
 
#43 ·
Well you could lease and then return it with some lease equity and then lease a new one or buy a new one at that point in time. Just another thought. Those of us leasing now will most likely be seeing the next gen wranglers when the lease is up. And your 7 year old BK is still causing you issues? I would have thought that would be far enough away.
I think those kind of financial things might stay on 10 years. I had a repossessed vehicle that lasted that long anyway.
 
#52 ·
The residual is determined by the finance company doing the lease and it varies based on the specific vehicle you are leasing, down to the trim level and the number of miles you are doing the lease for.

For example, a 2015 Sahara will have a different residual than a 2015 Rubicon. If you do 10k miles per year, the residual will be higher than if you do 12k or 15k miles per year.
 
#58 ·
i know this is an older thread but now being in 2016, i just got an offer on sport S with a residual of 69% 12k miles, 36 months. my logic tells me something smells funny but having read some of these posts dating back to 2014 im starting to think that i may just have a normal deal here. any advice? btw thats $3k down, lease payments of $364 per month
 
#59 ·
Lease



We leased a 2013 loaded 2dr freedom edition. Put $2500 down
39 months at 12k miles a year with a 2nd tier lease through US BANK. ( didn't quailify for jeep lease cause we didn't have a 800 credit score)

$290 a month with a $18,700 buy out at end of lease

We think we did pretty good on the deal and plan to buy it before are November 7th lease end.

Problem is they say my payoff is $21960.99 plus taxes and fees....as of today. That's with 7 payments remaining

..What? So where is the extra $1200 coming from....the bank first said it included taxes and fees then the 2nd time we called they said it did not include taxes
 
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.
Top