I heard that a downpayment on a lease is wasting money. Is this true?

 

The second number is the total of the lease payments, the down payment, and the residual amount. In other words, this is the total amount of cash required to own the car using this type of lease. The 3% is the tax in NC.

MBEGuy

I figuered as much, but wanted clarification. To me it is much more important that I know what I am going to pay out of pocket and the residual has nothing to do with it. I drive the monthly payment down until the dealership manager caves in or I walk. I almost never make my final deal with a salesperson. I don't care what the residual is because it will be turned in in pristine shape and I drop the keys. My Saab dealer bought my last car from the lease company. If the residual is high the lease company can eat it.

 

Here are a couple of links that give you spreadsheets for calculating loans and leases, when it asks for user name and password just hit cancel, it will download it anyway:

Loan spreadsheet

Lease spreadsheet

 

Yes, do not pay a down payment on a lease and generally do not lease for longer than the warranty. Leases are typically for short haul whereas if you are going long haul, you should get a loan so that you own the car. The three year mark is generally where you would break even as you could usually sell the car for more than what you owe for a loan.