Why is Leasing such a bad option?

JBinSD · 09-20-2016, 09:06 AM

I've come from 20 yrs of BMW leasing, where the "mother ship" inflates the residual (RV) of their cars to make leasing more attractive, and supplements the money factor (MF) to also sweeten the deal. The result is usual perpetual, happy leasees and a strong secondary used market.

For Chevy, the almost 50% hit on RVs after 3 years makes a lease a tough option, since you're paying for the depreciation one way or another, but without "mother ship" intervention, the market leaves the buyer holding the bag with the significant depreciation.

When I see a substantially lower sticker price on a nicely equipped Camaro, I thought "yay!", but when I actually figure out the numbers, although they start cheaper, they end (3yrs later) much cheaper, leaving me with the big hit. Frustrating, but I guess its a reality. It seems to encourage buying cheaper, avoiding options, and holding longer if you can, which I guess is generally sound advice in acquiring a depreciating asset, but it sure sucks some fun out of it. . .. .

Just an observation from a newbie. . .

Glen e · 09-20-2016, 10:03 AM

The BMW leasing model is one that Chev can't pull off, because of a lot of factors. As a factory rep for BMW for 24 years I can tell you that we cultivated the idea of selling leases getting the car back putting it through CPO ,and then re leasing it so that we had a constant turn a fresh vehicles that we could report. It's one of the ways that BMW keeps their abnormally high volumes And allows the factory report strong sales. Chevy can't really do this, a lot of the Beacon scores of people that are buying Chevrolet products are too low for leasing, and the CPO procedure In most chev dealerships is just not adequate enough to pull off the CPO turn ....you're looking at just the Camaro section, but they look at the entire lease portfolio. It's just a different whole set of factors

JKLNHYD · 09-20-2016, 10:32 AM

I've always thought that leasing wasn't such a bad option as long as you were personally fine with not making any modifications and you drive well within the mileage restraints. We leased one vehicle in the past 15 years and I can tell you it was a win for us. The key is making sure you ONLY pay for the depreciation (divided over the term of the lease). Anything more than that and it becomes less attractive.

JBinSD · 09-20-2016, 05:37 PM

I've leased for over 20 years because I like getting the "latest and greatest" every 2 or 3 years. I also live in Kalifornia, where sales tax is almost 10%. I don't put many miles on my car (10k/yr or so), so I can get away with it, but I know a lot of people can't. The depreciation on Chevy's is pretty huge though, 1/2 the value in 3 years is crazy. That comibined with high money factors, and its a recipe for lease-disaster.

My monthly payment on a $55k BMW is $500, on a Chevy it'd be about $750. Its a bummer, because I currently would prefer to be driving a Chevy. . .

SSport16 · 09-20-2016, 09:20 PM

Quote:

Originally Posted by JBinSD

I've leased for over 20 years because I like getting the "latest and greatest" every 2 or 3 years. I also live in Kalifornia, where sales tax is almost 10%. I don't put many miles on my car (10k/yr or so), so I can get away with it, but I know a lot of people can't. The depreciation on Chevy's is pretty huge though, 1/2 the value in 3 years is crazy. That comibined with high money factors, and its a recipe for lease-disaster.

My monthly payment on a $55k BMW is $500, on a Chevy it'd be about $750. Its a bummer, because I currently would prefer to be driving a Chevy. . .

Yeah leases on GM vehicles are horrible! I used to lease from GM for some of my past vehicles, haven't done so in quite a few years. Looked at the new Buick Envision, nothing down and out of my pocket, they wanted $600 / month! That was with mulitple discounts, including supplier pricing and some other rebates from a dealer that I have done tons of business with working directly with the sales manager who I know very well...told them no thanks, and walked out. $45k vehicle, that is insane, you can finance for close to a lease payment with GM.

Sp00ner · 09-20-2016, 09:36 PM

Quote:

Originally Posted by JBinSD

My monthly payment on a $55k BMW is $500, on a Chevy it'd be about $750. Its a bummer, because I currently would prefer to be driving a Chevy. . .

Really? MSRP on my car wasn't far off the $55k, and my lease is nowhere close to that... am I missing something?

This is my first lease, talked to a lot of people about it and I wasn't seeing the downside outside of big mods and mileage.

JBinSD · 09-20-2016, 11:50 PM

Chevy doesn't inflate their RV or buy down their MF, and generally their cars take a huge hit in depreciation in the first 2-3 years. A lease is just financing the depreciation, so you're actually paying more for a less-valuable car.

Ford is currently offering 0% up to 72 months on '16 Mustangs, makes it hard not to consider that, does Chevy ever get aggressive? I know we're coming into the heavy sales season, so waiting becomes a game for the '16 inventory to evaporate, but free money doesn't suck. . .

09-20-2016, 09:06 AM	#1
JBinSD Drives: '23 LT Vert M6'16 Hyper 2SS Vert MT Join Date: Sep 2016 Location: Carlsbad, San Diego, CA Posts: 604	Why is Leasing such a bad option? I've come from 20 yrs of BMW leasing, where the "mother ship" inflates the residual (RV) of their cars to make leasing more attractive, and supplements the money factor (MF) to also sweeten the deal. The result is usual perpetual, happy leasees and a strong secondary used market. For Chevy, the almost 50% hit on RVs after 3 years makes a lease a tough option, since you're paying for the depreciation one way or another, but without "mother ship" intervention, the market leaves the buyer holding the bag with the significant depreciation. When I see a substantially lower sticker price on a nicely equipped Camaro, I thought "yay!", but when I actually figure out the numbers, although they start cheaper, they end (3yrs later) much cheaper, leaving me with the big hit. Frustrating, but I guess its a reality. It seems to encourage buying cheaper, avoiding options, and holding longer if you can, which I guess is generally sound advice in acquiring a depreciating asset, but it sure sucks some fun out of it. . .. . Just an observation from a newbie. . .

09-20-2016, 10:03 AM	#2
Glen e Retired from Car mfrs.... Drives: 2LT RS/HR-V Join Date: May 2013 Location: /Fort Lauderdale Posts: 10,044	The BMW leasing model is one that Chev can't pull off, because of a lot of factors. As a factory rep for BMW for 24 years I can tell you that we cultivated the idea of selling leases getting the car back putting it through CPO ,and then re leasing it so that we had a constant turn a fresh vehicles that we could report. It's one of the ways that BMW keeps their abnormally high volumes And allows the factory report strong sales. Chevy can't really do this, a lot of the Beacon scores of people that are buying Chevrolet products are too low for leasing, and the CPO procedure In most chev dealerships is just not adequate enough to pull off the CPO turn ....you're looking at just the Camaro section, but they look at the entire lease portfolio. It's just a different whole set of factors __________________ Glen CLICK HERE for detailing a new car: detailing for non detailers CLICK HERE for how to rinseless CLICK HERE for EASY wheel sealant Last edited by Glen e; 09-20-2016 at 10:33 AM.

09-20-2016, 10:32 AM	#3
JKLNHYD Defending the Nation... Drives: '16 Summit White 2SS, A8, Sunroof Join Date: Dec 2009 Location: Long Beach, MS Posts: 443 View My Garage	I've always thought that leasing wasn't such a bad option as long as you were personally fine with not making any modifications and you drive well within the mileage restraints. We leased one vehicle in the past 15 years and I can tell you it was a win for us. The key is making sure you ONLY pay for the depreciation (divided over the term of the lease). Anything more than that and it becomes less attractive. __________________ '16 2SS, A8, Sunroof, non-NPP "SURSUM AB ORDINE"

09-20-2016, 05:37 PM	#4
JBinSD Drives: '23 LT Vert M6'16 Hyper 2SS Vert MT Join Date: Sep 2016 Location: Carlsbad, San Diego, CA Posts: 604	I've leased for over 20 years because I like getting the "latest and greatest" every 2 or 3 years. I also live in Kalifornia, where sales tax is almost 10%. I don't put many miles on my car (10k/yr or so), so I can get away with it, but I know a lot of people can't. The depreciation on Chevy's is pretty huge though, 1/2 the value in 3 years is crazy. That comibined with high money factors, and its a recipe for lease-disaster. My monthly payment on a $55k BMW is $500, on a Chevy it'd be about $750. Its a bummer, because I currently would prefer to be driving a Chevy. . .

09-20-2016, 11:50 PM	#7
JBinSD Drives: '23 LT Vert M6'16 Hyper 2SS Vert MT Join Date: Sep 2016 Location: Carlsbad, San Diego, CA Posts: 604	Chevy doesn't inflate their RV or buy down their MF, and generally their cars take a huge hit in depreciation in the first 2-3 years. A lease is just financing the depreciation, so you're actually paying more for a less-valuable car. Ford is currently offering 0% up to 72 months on '16 Mustangs, makes it hard not to consider that, does Chevy ever get aggressive? I know we're coming into the heavy sales season, so waiting becomes a game for the '16 inventory to evaporate, but free money doesn't suck. . .

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