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  • avatar leescott 01/18/08 3:57 pm PST

    Leases never require any type of capitalized cost reduction (down payment). They may be advertised with one as a way to achieve a certain payment, but they are not required. Typically the inception money on a lease will consist of the first payment, security deposit, bank or acquisition fee and registration fees. If desired, some or all of these can be rolled into the capitalized cost and paid in the lease payment, but you end up paying interest on these.

    As for short term leases, most leasing companies will lease from terms between 12 and 60 months. However, because a lease payment is partially based on the amount of depreciation and depreciation in the first couple of years is less than it is over longer terms, shorter term lease payments tend to be very expensive.

    For example, let's say a vehicle has a 24 month residual of 69% and a 36 month residual is 59%. Say the MSRP is $35K. 69% of 35K is $24150, which means that you would be paying depreciation of $10,850 over 24 months, or about $452/mo. The 59% residual is $20,650, so you would be paying depreciation of $14,350, but over 36 months or about $399/mo which is over $50/mo less than the 24 month payment. However, keep in mind that these hypothetical lease payments don't include interest.


    The long and short of it is that a short term lease, such as an 18 month lease, would be very expensive when it comes to monthly payments. Of course, this doesn't even address the fact that if your friend's friend is coming from a different country, he won't have a social security number or a US credit background, which will make getting any type of loan difficult, if not impossible.

Answers

  • MrShift@Edmunds 01/07/08 12:57 pm PST


    sounds like a bad idea even if it were possible. (I've never seen that short a lease). Most leases require capitalization, which is a fancy word for "front money you never see again". So if this short lease of 18 months required $2,500 front money, well, that's $138 a month in ADDITION to the monthly lease fees, which on a short lease will be pretty high anyway.

    I'm thinking that you can rent a car on a fleet rate (longterm) for this kind of money, or just buy something. You'd be looking at $400--$500 a month easy, if not more. That's $9,000 for 18 months use of a car...ouch! (not including insurance, gas, etc. of course). He could buy a very decent older Japanese car for less than that, and still have equity when he sells it.



  • madmanmoo 01/07/08 2:12 pm PST

    You certainly can. Your credit needs to be very good though typically. Sometimes these leases will not be subsidized by the banks or manufacturer's so they may be much more expensive as well. It may be best to lease for 24 months on a subsidized lease and turn the vehicle in early. I would just consult the dealer and see which option would be best.

    Another problem that may arise for your friend is credit. If he has no credit from the U.S. then he may not be able to lease. If he does a one time pay, then he may be able to. Again, consult your friend and dealer.

    I have had many folks from out of the country do short term leases in the exact same situation.

    Good luck!

  • jchan2 01/08/08 9:26 pm PST

    You can definitely lease a car for that short of a time period, but you will take a major hit in depreciation, and your lease payments won't be cheap.

    Perhaps you could try exploring ZipCar.. But otherwise, I think your only other option is to buy a used car, and then resell it before he plans to leave the country.

  • leescott 01/18/08 3:57 pm PST

    Leases never require any type of capitalized cost reduction (down payment). They may be advertised with one as a way to achieve a certain payment, but they are not required. Typically the inception money on a lease will consist of the first payment, security deposit, bank or acquisition fee and registration fees. If desired, some or all of these can be rolled into the capitalized cost and paid in the lease payment, but you end up paying interest on these.

    As for short term leases, most leasing companies will lease from terms between 12 and 60 months. However, because a lease payment is partially based on the amount of depreciation and depreciation in the first couple of years is less than it is over longer terms, shorter term lease payments tend to be very expensive.

    For example, let's say a vehicle has a 24 month residual of 69% and a 36 month residual is 59%. Say the MSRP is $35K. 69% of 35K is $24150, which means that you would be paying depreciation of $10,850 over 24 months, or about $452/mo. The 59% residual is $20,650, so you would be paying depreciation of $14,350, but over 36 months or about $399/mo which is over $50/mo less than the 24 month payment. However, keep in mind that these hypothetical lease payments don't include interest.


    The long and short of it is that a short term lease, such as an 18 month lease, would be very expensive when it comes to monthly payments. Of course, this doesn't even address the fact that if your friend's friend is coming from a different country, he won't have a social security number or a US credit background, which will make getting any type of loan difficult, if not impossible.

  • vmontiel1 05/12/08 4:34 pm PST

    IF YOU ARE PLANNING TO LEASE A CAR FOR THAT SHORT TIME WHY NOT TAKING SOMEBODY ELSE LEASE OVER YOU WILL SAVE THE DRIVE OFFS AND YOU CAN GET A BETTER CAR FOR A LOT LESS.

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