Tapasvi

Hello

I arrived from London to CA this month on greencard.

I have been quoted this deal by International Autosource for 2018 Toyota RAV4 XLE FWD 36 month lease.

Down payment is $2800

Monthly payment is $369

Residual value is $16097

36 x $369= $13,284

The add $2800 = $16,084+ $16,097= $32,181

This is significantly more than the retail value of car which is about 26K.

Is this markup expected ?

Thanks !

Jack8602

Yep, it's expected.

It's how they make their money because your choices are somewhat limited in gaining finance upon entering the US.

mrken30

You could always buy something like a 2 year old Jeep Patriot or Kia Sportage with 1 or 2 years warranty for $14k. Depends if you have the cash and if you want a brand new car.

Pulaski

Yes it is, but all leases are like that - reflecting the cost of finance among other things. Not all of that difference is their profit, they had to find $26k to buy the car and they borrowed that from a bank or the money markets, so the lease company is paying interest on their borrowing costs of funds used to buy the car.

mrken30

The actual value may be less than this, and you need to make up the difference.

SpoogleDrummer

I was thinking that it was a very low value for a 3 year old RAV4, I'd expect it to be worth 21k+ if it's looked after so unless you buy it at the end of the lease IAS are making a tidy profit.

mrken30

KBB gives a value of $13k+ for a 3 year old RAV 4 with 36k miles.

SpoogleDrummer

KBB have been nowhere near reality for years. Autotrader seems to be pricing them closer to 23K.

Pulaski

So a RAV4 is expected to lose only 20% in three years? I don't think so!

I think the relevant end-of-lease value is the wholesale/trade price, because all that happens at the end of the lease is that the car is sold to a trader, or at auction. Whereas you are looking at what you would expect to pay for a three year old RAV4 in good condition.

SpoogleDrummer

Surely you take into account both when deciding whether to purchase the vehicle or not at the end of the lease, I'd certainly buy a 3 year old RAV4 for 16K if I'd been the one driving it even if it was just to sell on.

Pulaski

You or I probably would, but the lease finance company is only interested in what they expect to be able to flog a three year old leased vehicle for, so they can price the lease.

Ecto17

Have you asked IAS about Fords? They seem to get Fords very easily and we noticed when getting quotes for a variety of cars from them that the Fords were the best value leases versus list prices.
Also a friend recently got a couple of VW directly from the dealer on their expat deal and the Jetta was incredibly cheap, maybe not everyone's taste but worth looking into.

eg76

We avoided IAS - just thought the markup was a complete rip off.

VW will do expat deals on leases in California as will some other companies. Mazda gave us a reasonable deal without too much extra expense. You could also talk to some of the other Auto Brokers and see what they come up with in terms of options (we used Autoland).

If you can, the best option is to buy a 2nd hand car. We found that if you put a reasonable downpayment in, dealerships were more than happy to try and work with you, especially if you are employed by a reputable firm (and can prove etc.).

UKtoCT

i had a ridiculous quote initially by IAS but when i had a dealer provide a more realistic quote (for expats), IAS dropped their monthly quote by 50% on a newer car.
Just do your research and ensure IAS quote is close to what you can see online

Ecto17

We had the same experience, once we had a couple of quotes from Ford dealers they came down massively and if you are flexible on exact spec and color then that can help.