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I just got this question:
What are the pros/cons of getting a 24/36 month lease?
I teach my clients to ALWAYS look for a 24-month lease – when the price is right that is.
Let me explain:
Most people lease a car (in my humble opinion) the wrong way.
They obsess about the low monthly advertised payment. But they forget to include the other costs. These other costs often double… sometimes triple the true monthly payment.
The big forgotten cost is the down payment. At a minimum, a down payment is at least $2,000.00. I have never seen a down payment requirement for less than $2,000.00 – never. Sometimes, down payment requirements are many thousands of dollars. I have seen some approaching $20,000. Thus, the low monthly payment is no longer so low.
Another hidden high cost is the “Rent Charge“. This is “lease speak” for the amount of interest the leasing company charges us to borrow money to lease a car. Usually, the Rent Charge is close to 10% of the Cap Cost of the car. This adds many more thousands to the cost of leasing.
And then there are the fees. We are charged advertising fees, destination fees and many other miscellaneous fees in between. Again, this adds many more thousands to the cost of leasing a car.
My clients are taught to run simple math to see if a 24-month lease is better (or worse) than a 36- or 39-month lease. We do this by calculating the total cost per mile. (It does not matter how many miles we choose… as long as we use the same mileage amount for both calculation scenarios).
For example, let’s say a new Toyota RAV4 is going cost us about 35-cents-a-mile for a 36-month lease. And the Toyota RAV4 calculates to 48-cents-a-mile for a 24-month lease. Clearly, the cheaper 36-month is the way to go.
But sometimes, a 24-month lease is almost the same cost per mile than a 36-month lease. It is rare, but it does happen. And when it does, I prefer to get into a 24-month lease.
Why? A few reasons:
Most people turn in a leased car under the allotted mileage – like this:
My lease runs out in June on my Ford explorer limited I’m under my mileage allotment. I have only 21,000 and my lease miles is for 40,500 – just wondering if Ford will give me back any money on my lease?
Yes. Some automakers do indeed rebate a few hundred dollars when we are below the mileage allotment. Yep. That is all – hundreds.
The savvy way to go is to get bids from Wall-Street-funded car buying services instead. They might pay us THOUSANDS for our same vehicle.
New visitors to this vlog love to ask me about the best luxury car lease deals – like this:
Do you track the deals your clients make? If so, what is the success level with Lexus RX-350s? Nissan Muranos?
I do not officially track my clients’ deals, but many like to brag about the deals they get and volunteer to have me write a blog post about their success. I document their case studies here.
Sure, the Lexus RX-350 is a fine luxury car for lease. So is the Nissan Murano. My new-car leasing system gives you a great chance to get any new-car lease near 1% of the MSRP – always $0 cash down, sign and drive.
I am HUGE, MASSIVE fan of all Volvo cars these days. They are nailing it right now. They are super safe, surrounded by the latest technology, nice on the eyes – even more luxurious than Mercedes-Benz, BMW and Audi at tens of thousands less.
And no… these are not Volvos from the past. Ever since Ford sold Volvo to Geely, they have been redesigned to look fantastic.
The only downside is its self-driving technology. It is not ready for prime time just yet. Tesla is the king of autonomous driving right now. And Volvo is playing catch up. But my guess is all automakers will be perfecting autonomous driving in just a few months.
The best part is they lease well… meaning, Volvo cars offer the biggest bang for the buck these days. I regularly see my clients get their new Volvo super close to the 1% rule – again, always $0 cash down… sign and drive.
A lot of my clients are here in the good ol’ USA on a temporary worker visa. And they want to know if they can lease a new car – like this:
I am a foreign worker here in the USA on a visa. So I was wondering if I can still lease a new car when I’m on a visa? I have around 17-18 months left on my visa and I can extend the current visa for another 3 more years. Thanks.
In all the years I have been offering my KTL USA At-home Leasing System, I have never been asked for help for a denied lease to foreign workers.
In fact, I would bet 1 out of every 7 of my clients is from Eastern Europe – temporarily living on either the east coast or west coast here in the USA. And they have never reported a problem to me. Car sellers in California and New York regularly lease cars to foreign workers. With that said, a car seller in the middle of America will probably be confused about leasing to a new customer with a temporary worker visa.
I understand those with work visas find leasing a car is MUCH easier than financing a car. Because the credit requirements for most leases are less stringent than financing a car.
Here is the important part: the standard lease “term” is 36 months. Lease companies need to have the work visa last longer than the lease term. So I would extend your current visa for another 3 years as soon as possible.
The best part of using my new-car leasing system is we are in contact with dozens of car dealerships at the same time. So if one is unfamiliar with leasing to foreign workers – no problem… you just lease your car with another car seller.
This is one of the most-asked questions I get on this leasing blog… “Who is responsible for replacing tires on a leased car?”
Like this one:
Reason why I stumbled upon your website and you was due to not wanting to pay for an extra set of tires on my 2nd year of a 3-year lease. Felt it was a cost I could use elsewhere. I read about what you and your package is all about and it inspires me knowing there’s hope for people who are 3k miles over the expected mileage. Not sure how your selected aggressive buyers work for people with worn out tires. Is that taken into account when my vehicle is appraised? Just curious how that all works once my vehicle is chosen to be bought out of the lease contract.
Thanks for your honesty and all the knowledge you’ve shared with us so far!
I am a TERRIBLE liar, so honesty is all I got:>
If we “flip our vehicle” (something I STRONGLY suggest for anyone to try – nothing to lose, everything to gain)…
Being just 3,000 miles over the limit is chump change in the end. The wholesale mileage “whack” is roughly 5 cents – in your case $150. Yep, just $150. That means 3rd-party car-buying services will merely lower their appraisals by just $150… but they might be willing to pay us hundreds or even thousands to buy out our vehicle.
About your tires. This is where the leasing hustle begins. The standard 36-month lease (or 39-month lease) almost always forces us to get new tires. This way, when we turn in our cream puff with new tires, the dealership will flip our barely-used vehicle for a MASSIVE profit on their used-car lot… complete with us funding the new tires!
But once again, flipping our vehicle avoids it all. No need for tire replacements… no need to worry about any over-the-mileage penalties – heck, even that EXTREMELY profitable $350.00+ “disposition fee” vanishes. We allow a 3rd-party car buying service to flip our car as is… and we get a direct deposit (or FedEx) for any “lease equity”. In the rare event we are “underwater”, the amount owed is often a fraction of what the leasing company will charge us.
The “fleecing” “industry” loves to scare us half to death about damage and over-the-mileage penalties. Being scared = higher profits for them…
We can fight back by flipping our car and ripping up the lease agreement. And there is nothing they can do about it.