Back when I used to actually get a newspaper, one of my favorite activities was to go through the Saturday automotive section and look at all of the ridiculously low lease deals being offered. I would dream about how I would handle being in a situation where I had little choice but to take advantage of one of those deals. It appeared that my “dreams” were about to come true.
After deciding against repairing our Grand Caravan, Carlo, we needed to act fast. We had just shelled out $1,200 to get out from under the Dodge and didn’t have much money left. I started halfheartedly looking at new minivans, as we could still qualify for a zero-down loan. In reality, with two kids in daycare and my wife still working part time, the $407-per-month payment – plus repairs – was killing us. As we started discussing it, we realized we hadn’t used the third row, or even stowed it, since we settled into our new house a year before. A smaller car, with a smaller payment, would certainly make life much easier.
We’d had nothing but good experiences with Shadow, our 2003 Pontiac Vibe, so I started focusing on the few redesigned models sold before Pontiac was shuttered. Since Carlo only had less than 18,000 miles left on his warranty when we bought him, the bulk of the five-year loan was outside of this period. I hated making payments on a vehicle that was out of warranty. This time around, if I was going to buy a used car, it was going to be on no more than a three-year note.
At the same time, I remembered all of those lease deals I used to see in the paper. Let me make one thing perfectly clear – I am no fan of leasing. I believe that leasing is best for businesses and people like my rich, retired uncle who likes driving new cars and doesn’t want the hassle of negotiating a trade-in. For most everyone else, I’ve seen too many situations where things ended badly. Either the commute changes and the mileage limit is exceeded, or the lease ends at the worst possible time, like right after a layoff. The most frightening situation was with the same family member to whom we gave Shadow. He continuously exceeded the mileage limit and rolled the fees into the next lease, which was why, at the time he went “away,” he was paying $411 per month to lease a rental-spec Altima S. The car already had 38k of the allotted 45k miles with 15 months left in the lease. Yikes. On the flip side, those who don’t drive nearly the amount of miles for which they’ve paid end up leaving money on the table.
However, just like there are situations where renting an apartment is a better option than buying a house, auto leasing also has its time and place for us regular folk. In reviewing my own personal situation, we were actually pretty good candidates for leasing:
- We were broke, but had two young children and required a dependable vehicle with modern safety features.
- Both my wife and I worked close to home in two different fields and were unlikely to both change jobs or get a transfer that required a longer commute. If one of us did, we could just swap cars.
- By the end of the lease, both kids would be out of daycare, and we’d be in a much better place financially, enabling us to again buy a car.
I started searching for good lease deals, and noticed an online ad for a 39 month lease on the new Chevrolet Cruze for $159 a month with $899 down. When I clicked on the ad for details, the down payment (cap-cost reduction) was actually listed as $0. I’m not sure whether or not this was a mistake, but, if necessary, I was going to hold them to it. Being partial to anything that’s not a shade of gray, we chose Imperial Blue Metallic as our desired color. We even watched that extended-length Chevrolet commercial, Hawaii Five-O, and I pointed out to my wife that Kono was driving the same car. She nodded approvingly.
Desiring not to be a bait-and-switch victim, I was determined to lease the $159 car if we chose that option. I found a dealer about an hour away that had both a 2009 Vibe for $10,997 and a 6-speed manual Cruze LS with the color listed as just “blue” and no pictures. We were helped by Linda, who I believe was an artist but was working in sales because she needed an income. I had her pull up the ad on her computer and pointed out the model I wanted to test drive. When she pulled the car around, it wasn’t the Imperial Blue Metallic we liked, but the Ice Blue Metallic that looked hideous in pictures but quite striking in person. We even let her come along on the test drive, since this was a lease so, who cares?
After the long drive to the dealer in Shadow, with his excessive engine and road noise and stiff ride, the Cruze was a revelation. Smooth and quiet with a slick-shifting transmission and seats that hugged you. It also had plenty of standard equipment for a base-model compact Chevrolet. This particular Cruze wasn’t a complete “ace of base,” to steal a line from TTAC. There were 3 options: audio controls on the steering wheel with Bluetooth, floor mats and a spare tire. This raised the payment to $165 per month, but it was worth it to me to have Bluetooth and a spare tire.
After arriving back at the dealer, Linda informed us that she had a customer coming in for an appointment. We told her to just give us the keys to the 2009 Vibe and we’d find it on the lot and test drive it ourselves. When we finally found it, the poor thing was clearly rode hard and put away wet. It only had 40,000 miles, but looked like it had a lot more. We could understand why it had been sitting on the lot for five months, with several small dents and scratches and a tired looking interior. On the test drive, it drove no different than Shadow, which was not surprising since it had the same engine and transmission. It was also just as loud and rode just as stiffly. My wife didn’t even want to take a turn driving.
So, we now had a choice between a hacked three-year-old Vibe (it was produced in early 2008) with no warranty for about $300 per month for three years or the brand new, much nicer, fully warrantied Cruze for $165 a month. We both agreed, while on the test drive in the Vibe, that in this situation leasing made much more sense.
We informed Linda that we’d like to lease the Cruze, and she looked at us with one of those surprised, “Well, that was easy” expressions. We had to wait to see the finance guy since they were extremely busy that weekend. When we finally sat down with him, he started talking about the down payment. After informing him that no down payment was required, we pointed him toward the website. After the shock wore off, he told us that he would need $1,500 from us for tax, tag, license and dealer fees. Having trouble believing that this added up to exactly $1,500, I asked for a breakdown of the charges. He had us go back to the waiting area while he pulled that information together, and said it might again be a while since he had other clients to see. As we were starving by this point, we took that opportunity to head down to Arby’s for “lupper.” When we got back, we waited for another half an hour, but had to get home since our sitter needed to leave.
When we asked if we could just come back the next day, the sales and general managers were dumbstruck. That would be breaking the cardinal rule of car sales – never let the customer leave until the papers are signed. After giving it some thought, the general manager said that if we could come back at 11:30 AM the next morning, he would give us a full tank of gas for the new car as well as Shadow. That worked for us, especially since leaving gave me a chance to run my own numbers for the costs due at signing.
We arrived back at our appointed time, and they had thoughtfully moved “Charlie” into the showroom for us. We sat back down with a different finance staff person than the previous day, and he started the conversation with, “So, we agreed on $1,500?” Here we go again. When I asked for a breakout of the charges, he turned his monitor around to show me, and up on the screen were a bunch of codes and numbers which told me nothing. I whipped out my spreadsheet, which included all of the required charges, prepaid sales tax*, and even their stupid $499 dealer fee. My total came out to $1,351.11. He brought in his manager, who looked at the spreadsheet, looked at me, and said, “Just give it to him.” After the papers were signed, one of the dealer staff helped connect my phone to Bluetooth, since this was our first experience with the technology, and went over the finer points of the car. We then drove Charlie right out of the showroom.
Re-reviewing the paperwork that night, I was stunned at how they ended up working this deal. Prior to the Great Recession, automakers and finance companies artificially inflated residuals in order to offer attractive lease deals and ended up stuck with millions of cars worth far less. In order to make this deal happen, Chevrolet and GM Financial cut the selling price of this car from around $17,450 to $14,200, resulting in what appeared to be an astonishingly low $8000 residual. The Cruze had just came on the market a few months prior, and there wasn’t yet much in the way of purchase incentives. Honestly, if I had bought the car outright, I don’t think I could have negotiated a deal this good.
Charlie ended up being a trusty but short-lived companion. Next week, with apologies to Paul Harvey, I’ll share the rest of the story.