One Pay Lease Program? Acura

[nissanK]

So the wife and I have been looking at purchasing and RDX from Silverhill Acura this year. Last year we shopped around found what we liked and started saving but we have been on the mail list since.

I received an interesting email from Silverhill Acura:

"This morning we got the good news from Acura Canada that they will be carrying over January’s program into February. Here are the highlights of the program:
Lease rates from only 0.9% for up to 30 months.
Finance rates from only 1.9% for up to 36 months
Cash incentive of $2500.00 on all 2013 RDX’s.
Also new to Silverhill Acura is a One Pay Lease Program. This program is an extremely interesting option for a cash buyer especially when the interest rates are incredibly low. This program allows you to make one lump sum payment at the time of purchase. At the end of the lease term you then have an option to return the vehicle or buyout the residual value. During the leasing term the residual balance amount is sitting in your bank account hopefully making you money."

We are looking at purchasing the RDX in cash, hence why the sales person sent this to me to peak my interest (mission accomplished).

It's interesting the idea of no monthly payments BUT it sounds like you are obviously paying all the lease payments up front for the lease term(with interest) AND taking the initial depreciation value drop as well.

Is their anyone who has looked deeper into this program? Or signed up? Have their been similar programs like this before?




Please don't start a purchase vs. lease debate again, I think we have enough of those......


MODS: Not sure if this is in the right thread, please move if needed.

[Sugarphreak]

...

[vtec4life]

I know BMW has been doing this for a long time, I dont see why any dealer wouldn't let you pay all your lease payments up front :dunno:

[nissanK]

Nope never doing a standard lease again/having a monthly car payment again. All that money can be invested better than in a depreciating car.

I haven't called them to get an actual breakdown of the numbers yet. Just curious if anyone has ever seen or done a program like this before.

[nissanK]

Originally posted by vtec4life
I know BMW has been doing this for a long time, I dont see why any dealer wouldn't let you pay all your lease payments up front :dunno:

Maybe you are right vtec....maybe they just slapped a new name on it to draw more buyers.....

[lilmira]

Works good for drug dealers lol. No proof of income? No problem, bam! Stack of cash up front.

[vtec4life]

Originally posted by lilmira
Works good for drug dealers lol. No proof of income? No problem, bam! Stack of cash up front.

Haha pretty much... its one of the best ways to hide cash. I had one lady put about 40K into a lease so that her soon to be ex husband couldnt get any of it because a lease is seen as a liability hahaha. (She was the sugar mama)

[Mibz]

Originally posted by nissanK
All that money can be invested better than in a depreciating car. Exactly, so why are you paying cash?

[gram]

Insurance:

OP :

With the one pay lease idea make sure that there is no risk if the car is totaled, ie. you can owe more that it is worth. I think this is called GAP insurance in Alberta? Make sure the insurance or the lease company will payoff the residual and prorate what you paid if you get in to a write off or possibly an accident situation(this may de value the car at the time to buy it out and I'm sure you won't want to keep it if something like that happens)

Just a heads up, people that buy cars usually don't think about this.

[max_boost]

Originally posted by Mibz
Exactly, so why are you paying cash? haha

I never quite understood the whole paying cash for a car argument.

If I had a good job and say $50K in the bank account. I would sure as hell lease the damn thing for $700/month at 2%. That's no big deal, pay check goes in, car payment goes out, it's electronic and you wouldn't feel the thing. Oh wait but you have a car payment? So what? Monthly payments are a way of life. :rofl: You go check your balance and there is still $49,200 in it etc.

Vs

Pay $50K and empty bank account.

Yea my car is PAID off, sofaking wut? It's now worth $42K.

Am I missing something here? :rofl: :clap:

[ddduke]

Originally posted by max_boost
haha

I never quite understood the whole paying cash for a car argument.

If I had a good job and say $50K in the bank account. I would sure as hell lease the damn thing for $700/month at 2%. That's no big deal, pay check goes in, car payment goes out, it's electronic and you wouldn't feel the thing. Oh wait but you have a car payment? So what? Monthly payments are a way of life. :rofl: You go check your balance and there is still $49,200 in it etc.

Vs

Pay $50K and empty bank account.

Yea my car is PAID off, sofaking wut? It's now worth $42K.

Am I missing something here? :rofl: :clap:

You never know where you're going to be in a year or 2. If you have 50k then you're an idiot for spending it all on a car, but if you spend 25, own it and still have 25 you're in a better position. If you're in a pinch then you can sell it, the money is yours and you don't have to worry about payments.

What if an emergency occurs where you lose your job/are forced to empty your savings, now you're fucked cause you still have a $700 payment every month and are out of cash.

What if you're out of work? Do you really want to be making $700 payments each month.

I don't get why any one would ever finance or lease.

[nissanK]

^^summed up exactly why we pay cash. Thanks Duke.

Payments are a way of life for people who can't afford it. If you set aside money for a car, while still living, investing, trips etc.... That money you saved is for a car only, nothing else. If you lose your job or another recession hits and you have to eat into your savings, all those payments (that people think are a way of life) will chew those savings up.

Wife and I are looking primarily at used. Used 2013s are already going on sale. Let someone else take the initial hit and I can scoop up a dependable like new car for a deep discount. Then I have 700 NOT going to a depreciating car. This one time lease payment just peaked my interest since I never heard of it before and the wife is more partial to the 2013s.

I'm going to email the salesperson for a breakdown of this program. Might be useful info for anyone else interested.


Edit: mortgage payments are the only exception IMO

[Mibz]

If you're in a pinch then you can sell it, the money is yours and you don't have to worry about payments. You say this and then next paragraph pretend that it's impossible to sell a leased/financed car, haha. If you have car payments and lose your job you sell the car the same way you would as if you bought it. In some cases you'll end up better off than if you'd paid cash, in some cases it'll be worse, usually depends on how far into the term you are.

NissanK, you're saying things like "Then I have 700 NOT going into a depreciating car" but I don't think you fully understand it. You're right, you've got tens of thousands going into a depreciating car. The car is gonna depreciate regardless of how you pay for it. Difference is you've got 5 figures invested into a depreciating asset, people with payments only have the amount they've paid.

[ddduke]

Originally posted by Mibz
You say this and then next paragraph pretend that it's impossible to sell a leased/financed car, haha.

Typical beyond, always twisting what someone says. I don't know where I pretended that it's impossible to sell a financed car. If you sell a financed car, you get nothing back and most people who have financed cars are in to them for way more then market value. If you own the car, atleast what you get back is yours.

I don`t know why all the credit ballers on this site get so upset when someone feels that payments are a pain in the ass and interest is bullshit.

[msommers]

A finance rate at 1.9% makes sense if you can invest the remaining money during the term that nets more than 1.9% + $2500. Otherwise, cash makes sense.

Everything else about losing a job, depreciation etc are negligible as they're factors no matter how you obtain the vehicle or need to get rid of it.

[Mibz]

Originally posted by ddduke
Typical beyond, always twisting what someone says. I don't know where I pretended that it's impossible to sell a financed car. If you sell a financed car, you get nothing back and most people who have financed cars are in to them for way more then market value. If you own the car, atleast what you get back is yours. Okay, well I didn't mean to do that. I honestly interpreted what you said to mean that if you had a car payment then you were stuck with it. My bad. As for whether or not you're up or down when you go to sell, as I mentioned it's totally situational.


I don`t know why all the credit ballers on this site get so upset when someone feels that payments are a pain in the ass and interest is bullshit. Now you're twisting my words, haha. The only reason I'm in here arguing is because of the attitude NissanK has shown when it's clear he doesn't have a complete understanding of the situation. Not once have I said that buying a car with cash isn't the right thing for some people to do, but he's coming in here saying that it's ALWAYS the right thing to do, and that's false.

I really don't care how you spend your money, but it seemed to me like NissanK was misinformed, so I asked why he thought paying cash was a good idea and he gave attitude. It's not about me getting upset at somebody buying a car "the wrong way", it's about people insulting others over an uneducated and/or misinformed opinion on finances.

[max_boost]

Originally posted by ddduke



I don't get why any one would ever finance or lease.

Yeah you have a point. We should just pay cash for everything. :werd: :rofl:

[Aleks]

Originally posted by ddduke


You never know where you're going to be in a year or 2. If you have 50k then you're an idiot for spending it all on a car, but if you spend 25, own it and still have 25 you're in a better position. If you're in a pinch then you can sell it, the money is yours and you don't have to worry about payments.

What if an emergency occurs where you lose your job/are forced to empty your savings, now you're fucked cause you still have a $700 payment every month and are out of cash.

What if you're out of work? Do you really want to be making $700 payments each month.

I don't get why any one would ever finance or lease.


Originally posted by ddduke


Typical beyond, always twisting what someone says. I don't know where I pretended that it's impossible to sell a financed car. If you sell a financed car, you get nothing back and most people who have financed cars are in to them for way more then market value. If you own the car, atleast what you get back is yours.

I don`t know why all the credit ballers on this site get so upset when someone feels that payments are a pain in the ass and interest is bullshit.

Or you can lease that $25k car and keep the $50K in your bank account and pay a measly $300ish per month or whatever the lease is to drive a brand new car. It's easy to get rid of the lease (take over, sell the car etc). Lets say that happens after 2 years. You get rid of the car, you're out your 2 years worth of payments and have nothing to show for it.

But if you paid for it cash and spent 25k on it up front if you sell it in two years you'll get back 25k - the depreciation which in most cases works out to close to what sum of your lease payments would have been in 2 yrs.

If you compare apples to apples and pick right cars to lease there is usually no to very little difference in paying cash, financing, or leasing a brand new car. A lot of people don't get how leases work so they shy away from them. Now if you keep your car for 7+ years paying cash works great as you save the 1-3% interest you would have paid on most leases/finances.

[nissanK]

Originally posted by Mibz
I really don't care how you spend your money, but it seemed to me like NissanK was misinformed, so I asked why he thought paying cash was a good idea and he gave attitude. It's not about me getting upset at somebody buying a car "the wrong way", it's about people insulting others over an uneducated and/or misinformed opinion on finances.

You asked why I would pay cash, I gave my explanation. I didn't mean for it to come across as attitude, I felt I was just answering your question. I'll admit I get quite passionate on subjects like this simply because I've learned living my life without payments (and being debt free) in this city is the one of the best decisions we've made.

Just trying to throw a different approach/idea out there. :thumbsup:


I've been down the conventional lease road before and I never will again. It's just interesting how I asked about this program and the thread got sucked back into the lease vs. cash vs. finance debacle again.

[Calgarian]

One of the key advantages of the one pay lease over paying for a vehicle in one lump sum is the plan b end of lease value. If the vehicle happens to depreciate beyond what is expected (major accident) you have a guaranteed buyback amount. Acura and Honda leases also come with gap protection.
For this option to make sense the interest rate on the lease also needs to be lower than what you feel you could earn in an investment devise.

[Mibz]

Originally posted by nissanK
I'll admit I get quite passionate on subjects like this simply because I've learned living my life without payments (and being debt free) in this city is the one of the best decisions we've made. Well this is the key. It may be the best decision for you, but that doesn't mean it is for others. You accused people who make a different decision of living beyond their means and while I'm not saying that doesn't happen, it's not universally true.

This has got to be the gentlest end to a financial discussion Beyond's ever seen, haha.

[boarderfatty]

One downside to a lump sum lease payment in my mind would be for those that write their vehicles off for business purposes. The reason you dont buy is because when you purchase you have to write off over so many years and calculate depreciation on the price, you are also very limited in the amount you can write off in the purchase price. A lease you can write off 100% of the payment with a monthly value far higher than what purchase value would be when broken down monthly.

If you do a lump sum lease though I would assume that it is well over the monthly limit and not sure if you could break it up and carry the write off on over the few years to take advantage of lease benefits, or lose the write off on any value above what the monthly limit is.

[ExtraSlow]

The other big advantage of paying cash for a car is that it reduces your financial complexity. Some people work really hard to try to squeeze out an extra percent of possible gain, but they complicate their lives a lot in the process.

No car payment = one less thing to worry about. :thumbsup:

[nissanK]

^^Agreed. I'll admit I like to keep my finances as simple as possible.

[CapnCrunch]

Originally posted by boarderfatty
One downside to a lump sum lease payment in my mind would be for those that write their vehicles off for business purposes. The reason you dont buy is because when you purchase you have to write off over so many years and calculate depreciation on the price, you are also very limited in the amount you can write off in the purchase price. A lease you can write off 100% of the payment with a monthly value far higher than what purchase value would be when broken down monthly.

If you do a lump sum lease though I would assume that it is well over the monthly limit and not sure if you could break it up and carry the write off on over the few years to take advantage of lease benefits, or lose the write off on any value above what the monthly limit is.

You don't have to lease a car to write it off. You car lease, finance, or straight up own it and you still write it off.

[CapnCrunch]

Originally posted by nissanK
^^Agreed. I'll admit I like to keep my finances as simple as possible.

Just so I understand, you sign a traditional lease but instead of making monthly payments, you pay off all of the monthly payments at the beginning of the lease?

[Xtrema]

Originally posted by ddduke
I don't get why any one would ever finance or lease.

Finance and lease can work in some scenarios.

1) You need something you can't afford to pay cash for. IE you want a minivan but don't want the issue of buying out of warranty used cars.

2) Make it easier on your books if you can write it off.

3) Help your cash flow, instead of paying $70K out right for a car, you can put that down as down payment for a $300K house and would have netted you around $15K in profit in the last 4 months which will well cover more than interest cost on a 3year lease. All the while you are only $4K in driving a $70K car.


I was in the cash crowd before but not any more.

Once you figure out how much $ you lose on depreciation on higher end cars, depreciation when you get hit etc, there are definitely cases for leases.

[ercchry]

why are there so many math haters on beyond?

cash in a depreciating asset is stupid. period. money is too cheap, take advantage.

so $50k in the bank. $50k car, right?

lets look at this over a 5 year term

cash:

purchase car, $50k, done

in 5 years sell car, lets say $20k?

so total worth in 5 years? -$30k

now lets see what happens when we use our friends, the bank...

finance car, $0 down. 5% interest, over 5 years. $943/month

total paid over 5 years, $56,580

sell car in 5 year, -$36,580 :(

oh, wait... we had $50k to play with. right?

well... calgary is pretty unique right now. no inventory on the used home market, no rentals available..

a few sub $200k condo projects...

so lets put 20% down on an income property... a $200k condo

so $40k down, $160k mortgage, 3% fixed for 5 year term (over 25yr).

rent it to be revenue neutral...

so in 5 years?

$23,230 has been paid down on the mortgage. still have $10k in the bank... so +$33,230

total worth after 5 years? -$3,350 :eek:

but, ohh the rates increase, the world falls apart... blah, blah, blah...

sell the place for what you bought it for... $12k in fees... still ahead $15k. the next 5 years are even better though if you dont cash out ;)

[max_boost]

Credit makes the world go around. It's all good. :D

[blitz]

Jesus, the answer to every financial question is not "Buy a rental condo" :rofl:

[max_boost]

Originally posted by blitz
Jesus, the answer to every financial question is not "Buy a rental condo" :rofl: :rofl: :thumbsup:

[ercchry]

Originally posted by blitz
Jesus, the answer to every financial question is not "Buy a rental condo" :rofl:

it is for the next 5 years! :bigpimp:

[nissanK]

Originally posted by CapnCrunch


Just so I understand, you sign a traditional lease but instead of making monthly payments, you pay off all of the monthly payments at the beginning of the lease?

I'm not sure of the details yet. Hence why I opened this thread to see if anyone has done the program.

[nissanK]

Originally posted by ercchry
why are there so many math haters on beyond?

cash in a depreciating asset is stupid. period. money is too cheap, take advantage.

so $50k in the bank. $50k car, right?

lets look at this over a 5 year term

cash:

purchase car, $50k, done

in 5 years sell car, lets say $20k?

so total worth in 5 years? -$30k



Let's take out the condo/property variable AND look at the money that wasn't going to the car payment.

So at the end of the five years:

Residual Car value + Money Invested = Net Worth

So

$20K + ($943/month x 60 months) = $76580 (with no interest growth on the cash):bigpimp:


If we go with the bank in your example:


total paid over 5 years, $56,580 sell car in 5 year, -$36,580 oh, wait... we had $50k to play with. right?

(-$36580) + 50K = $13420

Now of course here we are dealing with a no interest growth scenario on the cash, but you're guarenteed to pay the 5% on the car.

[Mibz]

EDIT: nm, I don't really want to be involved anymore, haha.

[Xtrema]

Originally posted by nissanK


Let's take out the condo/property variable AND look at the money that wasn't going to the car payment.

So at the end of the five years:

Residual Car value + Money Invested = Net Worth

So

$20K + ($943/month x 60 months) = $76580 (with no interest growth on the cash):bigpimp:


If we go with the bank in your example:



(-$36580) + 50K = $13420

Now of course here we are dealing with a no interest growth scenario on the cash, but you're guarenteed to pay the 5% on the car.

First of all, leasing is all about driving a new car within warranty period.

Lease period only works towards the 1st 3-4 years of ownership. Once you get into 4th and 5th, it will work against you.

If you put $60 into a car and given say 20% depreciation per year.

Year 1 you have 48K, year 2 you have $38K, year 3 you have 30K.

In the mean time, you would have paid round $13K per year on lease payments on a 4% lease. Yes, it's $9K more than depreciation BUT, you still have $60K in your pocket to play with.

If that $60K pay back 5% per year, you would have break even.

And remember, 1 accident that your car will worth thousands less.

[ercchry]

Originally posted by nissanK


Let's take out the condo/property variable AND look at the money that wasn't going to the car payment.


whatever makes you feel better about it :dunno:

but thats kind of not the point...

to borrow $50k over 5 years mean you paid the bank $6580... but you used your cash to turn that $50k into $73k there for coming out ahead... its math... 1+1 /= banana

[403Gemini]

If I had $50,000, I'd hate to throw that all away on a car... even if it meant no car payments.

I'd rather $400-$500/mth in car payments and sit on $50,000. "In case something happens" like losing my job? I have $50,000 to float me for quite a few months vs being out $50,000 completely, but hey - I have a nice car still right? ;)

I do believe it's best to keep most debts down. I paid off my credit card and my line of credit, all I pay per month now is my mortgage and my car payment - that being said I also live within my means. With all other payments cleared off, I could have bought a nicer car, instead I went with an Elantra. I'd rather pay a very small amount of money per month on a car that gets me from A to B safely and is reasonably good on gas... that being said my work also gave me a new F150 so I get a fun vehicle to drive around in when I want lol

I think people just need to live within their means and acknowledge you can't always have nice things and accept that.

[nissanK]

I did this example based on guarentees.

You're guarenteed to pay the 5% on the vehicle, not guarenteed to make 5% on your investments correct?

[nissanK]

Originally posted by ercchry

but you used your cash to turn that $50k into $73k there for coming out ahead... its math... 1+1 /= banana

Nope, that was working from $0 in the bank after purchasing the 50k vehicle.

I do agree with you, it's what someone is comfortable with. I just thought your example was missing a couple of details haha

[ercchry]

Originally posted by nissanK
I did this example based on guarentees.

You're guarenteed to pay the 5% on the vehicle, not guarenteed to make 5% on your investments correct?

there is no guarantees in life... but since the mortgage is FIXED for the same 5 years the only variable left is keeping a tenant. but that was just an example of what you can do with your money.

so what if you lend your car to a friend who crashes it AND was drunk... no insurance payout. $50k gone... same shit. risks with everything :dunno:

[nissanK]

I would like to get back on the topic though.

I think everyone has made valid points on both sides of the coin :thumbsup:

[ercchry]

well i really dont understand this prepay lease thing. if its just the payments up front, whats the point? if you save the interest since you are not actually borrowing anything... sure, do it... if the vehicle makes sense as a lease to begin with

[Xtrema]

Originally posted by nissanK
I did this example based on guarentees.

You're guarenteed to pay the 5% on the vehicle, not guarenteed to make 5% on your investments correct?

What's guaranteed is a $15K Kia Rio.

I'll pay cash for that. :rofl:

And my example is a 3.9% lease, not exactly cheap.

[max_boost]

Originally posted by Mibz
EDIT: nm, I don't really want to be involved anymore, haha.



Originally posted by 403Gemini
If I had $50,000, I'd hate to throw that all away on a car... even if it meant no car payments.

I'd rather $400-$500/mth in car payments and sit on $50,000. "In case something happens" like losing my job? I have $50,000 to float me for quite a few months vs being out $50,000 completely, but hey - I have a nice car still right? ;)


That's exactly what I'm trying to say! And when you have lease rates that are ridiculously low like that 0.9/1.9 etc. I'll gladly keep my $50K in the bank.

The other thing, y'all have no mortgage? Dump the $50K into that instead. :confused: or unless you don't, then that's just straight up cash you got to throw around. :bigpimp:

[ercchry]

Originally posted by max_boost



The other thing, y'all have no mortgage? Dump the $50K into that instead. :confused: or unless you don't, then that's just straight up cash you got to throw around. :bigpimp:

thats the other option that has huge long term payoffs...
$50k onto the principle today > a new $50k saved up over the next 5 years

[Twin_Cam_Turbo]

I dont know the OP or what his financials are, but never again will I dump so much into a car even at 0.9% financing and a sizable downpayment like I did, id rather drive a $10000 car and be making good ROIs on propertys than sinking money down a stupid car.

[M.alex]

this is stupid. invest in race cars, not property :nut:

http://becauseracecar.org/wp-content/uploads/2011/06/TRUNK-SPACE-650x432.jpg

[Xtrema]

Originally posted by ercchry


thats the other option that has huge long term payoffs...
$50k onto the principle today > a new $50k saved up over the next 5 years

More like $7K saving on interest on 3% and 25 yr amortization.

[ercchry]

Originally posted by Xtrema


More like $7K saving on interest on 3% and 25 yr amortization.

depends how big your mortgage is :dunno:

but $50k takes over 4 years off your total mortgage length on a $400k mortgage so closer to $30k in the long term... could be even more if interest rate increase between now and the end of the mortgage

[Xtrema]

Originally posted by ercchry


depends how big your mortgage is :dunno:

but $50k takes over 4 years off your total mortgage length on a $400k mortgage so closer to $30k in the long term... could be even more if interest rate increase between now and the end of the mortgage

Long term, sure. $7K is only for the 1st 5 years of a 25yr amortization.

[Calgarian]

Originally posted by ercchry
well i really dont understand this prepay lease thing. if its just the payments up front, whats the point? if you save the interest since you are not actually borrowing anything... sure, do it... if the vehicle makes sense as a lease to begin with

On Acura's one time lease you only pay the interest on the residual (this is the amount you are not paying up front). The one time pymt is the total financed value less the residual plus the interest cost on the residual amount for the term of the lease. Fees and GST are over and above.