Leasing - New to it, need advice

[Viper1010]

Hey guys, so my truck has been shipped and is on its way. I was planning on financing the truck but am now considering the idea of leasing. My dealer is fine with me switching as it doesn't affect anything on his end.

Now I've bought used, I've bought new, but I've never leased, so I don't know/understand all the nuances.

Because I was originally looking to finance, I had omitted some items from the build to speed up the process and instead opted to buy them afterwards as add-ons. If I were financing, it wouldn't change anything; they'd add it to the loan.

But here comes the rub, I might be changing to a lease option. If I understand correctly when I lease, the residual is based on a pre-determined percent of the MSRP over a particular timeframe. If the truck had an MSRP of $10k, and they deem that after 36 months, it would retain a value of .6, that means $6k would be the residual value, and I'd be paying the difference ($4K) over the 36 months. (Think this is good so far.)

Now if I would have I added all the addons via the factory order, they would be part of the MSRP. Therefore I'd only be paying for 40% of these additional items during the first 3 years, and if I returned the lease, it would be the dealer's to worry about. More importantly, it would factor into the residual as it's part of the MSRP.

The question I have now is whether the addons are considered part of the MSRP if they are done at the dealership as they are in this situation. These are items that the factory could have done, but to speed things up, I opted out (once again, originally planned to finance, so it wouldn't have mattered). If they aren't considered part of the MSRP, does that mean that they would need to be paid off within the first 36 months, which would be no different than me buying them upfront?

I'm not sure if this makes sense or not. If not, I can try to explain better. I might be overcomplicating this. It's just really bugging me, as I wasn't planning on leasing, but I realize that it might be the best option with my current situation and therefore may have screwed myself over.

Thanks for your help.

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[Brad]

Based on my experience, I believe only options installed at the factory can be residualized. The dealer may be able to include them in your monthly lease payment, but you would be paying the full amount (plus interest) over the lease term. Now, accessories added after the fact (and not residualized) can be removed where possible and sold or transferred to another (compatible) truck assuming you are returning the vehicle after the lease term. I am a fan of leasing as it gives me flexibility in 2-3 years if my circumstances change, and need a different vehicle. I may pay a bit more in interest should I choose to keep the vehicle long term, but that is a cost I am willing to take for the flexibility. Plus, since with a lease the interest savings of putting a down payment is negligible, I can sell my current truck and invest that money and use it down the road should I choose to buy out the leased vehicle. Just my $0.02.

 

[Plat_2021]

I strictly lease my Trucks and this is one of the reason, I have Ford due the Spray in Bed Liner and other accessories. Items added on after the Build are not residualized. Depending on the item you may be able to transfer it to a new truck or Sell it online (Craigslist). Tonneau covers can be transferred unless there is a major redesign affecting the bed size. Spray in Bed liner (Linex), etc. since they can't be reused, there value will be used up at the end of the lease assuming that you don't buy the lease out. So although the Linex liner may be better than the Ford liner, I always go with the Ford for the Residual savings (much lower cost through the lease).

 

[jiggadog]

I crunched the numbers every way to Sunday when I bought my truck last year and if you plan to buy the truck at the end of the lease you will pay more for the truck all things being equal, namely the interest rates. If you do buy at the end and you finance you’re getting used car interest rates which are usually higher than when buying new.

I wouldn’t modify the truck for the reasons you mentioned because the value of those add in’s at the end of the lease would be worth pennies compared to the residual.

if you want a new vehicle every few years and can expense the cost of leasing it may be a good option. I wouldn’t put any more money down than you have to because all you are doing is prepaying the depreciation. If you’re going to sell the vehicle prior to the lease expiring you have to through the same BS as if you financed it so might as well just buy it.

 

[My1stF150]

My dealership told me that genuine Ford accessories can be redisualized but aftermarket 3rd party cannot. I had asked about a tonneau cover and window tints of which the latter would not be redisualized.

The question to also ask yourself is whether you can sell the accessory for something that is more than the residual value if you had rolled it into the lease. But it may not be worth the hassle to remove and sell. Or if you plan on getting the same truck again then maybe it's worth buying it and moving it to the new truck.

 

[2AActuary]

Leasing, in its perfect form, is really just a different way of financing. You’re capitalizing the depreciation and amortization, but never truly own anything. That’s why it ”costs less” in the short terms since you only paying for the depreciation; and not paying for any of the principal.

Go into the situation with eyes wide open as there are more moving parts and more ways for dealers to stack the deck in their favor. Leases used to be a much better option with there was almost a base subsidy built in to them where the residual value was set artificially high (e.g. less depreciation to have to amortize). I think those situations are largely gone.

On a lease - pay particular importance to the “money factor”. This is akin to the interest rate and this is a common area of gotcha. The other big one is the resididual factor.

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