Don't Buy a New Car — Lease It

Kiplinger's Personal Finance Magazine,  Dec, 1998  by Ed Henry

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Figuring the Lease Payment

DEPRECIATION

   A. Gross capitalized cost (cap cost)    $ --
   B. Cap-cost reduction                   $ --
   C. Net cap cost (A - B)                 $ --
   D. Residual                             $ --
   E. Depreciation (C - D)                 $ --
   F. Lease term (in months)                 --

   1. MONTHLY DEPRECIATION (E + F)         $ --

FINANCE CHARGE

   G. Finance base (C + D)                 $ --
   H. Money factor                           --

   2. MONTHLY FINANCE CHARGE (G X H)       $ --

SALES TAX

   3.  MONTHLY SALES TAX                   $ --

   ESTIMATED LEASE PAYMENT (1 + 2 +3)      $ --

RELATED ARTICLE: If you Really want to buy, get the best deal

WHETHER YOU'RE OUT to lease or buy, your primary goal is to negotiate the lowest possible price.

As noted in the accompanying article, new-car prices actually fell a bit over the past year. The fact that sales have remained relatively flat over the past five years will serve as a brake on price hikes as 1999 progresses. Still to get the best deal, you must drive a hard bargain and be willing to shop till the price drops.

SHOP THE INTERNET. If you're connected, the Internet offers instant access to a wealth of pricing and leasing information, Edmund's Web site (www.edmunds.com) is a valuable site for serious shoppers, offering prices, reviews and an up-to-date listing of rebates. Microsoft's CarPoint (www.carpoint.msn.com) offers all that, too, and will hook you up with nearby

auto dealers.

If you're not comfortable haggling over price, hiring a buying or leasing service could be a sound investment, You can order CarBargains, a national buying service for $65, and LeaseWise, its leasing counterpart, for $290 from the Center for the Study of Services. (Click on to www.consumer.checkbook.org/consumer, or call 800-475-7283). These services will shop local dealers and present you with a choice of several deals. The Center for the Study of Services shopped Los Angeles-area dealers to come up with the monthly payments and other lease details shown for selected cars in our tables.

For the latest on manufacturers leases--often the best deals going--visit IntelliChoice (www.intellichoice.com). You'll find the latest residual factors at www.carwizerd.com.

SHOP THE DEALERSHIPS. Visit as many as you can. You may find the best deals at high-volume dealerships and late in the month, when salespeople are scrambling to meet quotas.

Slow-selling models typically carry the most attractive pricing. You can do some sleuthing by checking the white label on the driver's-side door or door post. It shows the month and year that a car was made. The older the car, the longer it has languished on a dealer's lot.

SHOP ALTERNATIVE NAMEPLATES. Similar cars built by different divisions of the same manufacturer and those built for other companies can offer substantial savings.

For example, you may be drawn to the new Cadillac Escalade. But the GMC Yukon shares the same body structure, and its target price is $7,000 lower. Similarly, the Ford Expedition and Lincoln Navigator share the same underpinnings, but there's as much as a $4,000 difference in price. Isuzu's Trooper and its twin, Acura's SLX, are $10,000 apart. The Oldsmobile 88 and Pontiac Bonneville are closely related, but the target price for the Pontiac is almost $200 less than a similarly equipped Olds. The Toyota Camry and Lexus ES 300 are virtually the same--except for a $6,000 higher target price for the Lexus.