I recently leased a 2009 ES350 UL edition. I got what I believe is a good deal -- over $600 below invoice on the cap cost, a 36-month, 12K mi/yr lease with 0.00075 MF using a 47% residual. (The dealership says the standard ES 3yr residual is 49%. I've found online that this 2 point spread does exist, but I don't know if those are the current residuals.)

Here's where it gets murky. I received a "Lease Agreement Correction Notice" from LFS indicating that the 36,000 mile allowance is incorrect -- the actual number is 45,000. I called LFS to question this and was directed to contact the dealer.

My salesman told me to enjoy the extra mileage, but I replied that if I had needed the extra mileage, I would have specified it, and I was more interested in saving money if that were possible (I estimate it would be around $900). He said he'd look into it and get back to me.

He followed up last night, telling me that all his numbers were correct, and the only outcome of pursuing this with LFS would be to lose the extra miles; that LFS had made a mistake.

Is this possible? Should I press this issue with the dealership and/or LFS? While it's nice to have extra headroom on the mileage allowance, I'd really rather save the money if it's at all possible.

I called LFS back to try to understand who sets which numbers, and I seem to be getting a run-around -- the dealership says the residual is set by LFS, and LFS says that each independently-owned dealership sets its own residuals. My salesman, throughout the entire process, has been forthcoming, genuine and easy to work with, and I have no reason to doubt him. Could it be that LFS practice is to not deal directly with consumers and simply shuffle them back to dealers?

Sorry for the long post!

sobi,

LFS establishes the residual factors; not the dealership. Fund providers always establish residuals with the guidance of their residual insurance carriers unless, of course, they self insure the residuals. DEalers have absolutely nothing to do with establishing or setting residual factors.

I have no idea what the residual factors are but it sounds as though 47% is paired with an annual mileage allowance of 15K and 49% is tied to an annual allowance of 12K. As such, the dealer is most likely mistaken and should have used 49% instead of 47%. Do I understand you correctly???



Before going any further, I need to be certain what residual factor was used to establish the residual value in your lease agreement as well as the associated annual mileage allowance because, quite frankly, I'm a little confused at the moment. You're telling me the dealer used 49% which reflects 36K while LFS claims that 49% is paired with an annual allowance of 15K. If LFS is correct, then logically, the 12K annual allowance would be paired with a residual of around 51% or so.

Please clarify.

Thanks for the quick response, John.

There appears to be two residuals on the ES -- one for the non-UL edition and another for the UL edition. These two residuals have been two points apart: for example, if the non-UL ES residual was 51%, then the UL was 49% for the same lease terms.

I began my search for an ES in late May, and every dealer gave me the same residual of 49% for a 3yr/36K mile lease. One dealer suggested I look at the UL edition, saying that if I was going to drive an ES for three years, why not drive the best one I could get. The salesman told me then that the residual on the UL edition was two points lower, or 47%, for the same 3yr/36K mile lease.

So, if LFS didn't make a mistake, I'm thinking that maybe the residuals increased by two points? If not, then I guess my salesman is correct, and LFS thinks that my car isn't a UL edition and increased the mileage allowance based on the residual being 47%. Does anyone know the current residual?

sobi,

I would contact Tarry at leasecompare and ask him for the residuals. It's pretty sad when you can't get straight answers to simple questions. Sorry I couldn't offer more help.

Good luck!

Lexus Auto Lease Programs – Effective June 2009

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1) Use the data listed below each vehicle model, and the Lease Formula at the bottom of this page, to calculate a manufacturer (captive) lease payment.

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NOTE: Choosing a lease program, captive or bank, with the lowest money factor and a realistic residual value will provide you with the best overall leasing option.

2009 Lexus ES350 – 6/09
24 Month – Residual 54% of MSRP – .00050 Base Rate
36 Month – Residual 47% of MSRP – .00050 Base Rate
48 Month – Residual 38% of MSRP – .00070 Base Rate
60 Month – Residual 29% of MSRP – .00245 Base Rate

2009 Lexus ES350 w/ Ultra Luxury – 6/09
24 Month – Residual 52% of MSRP – .00050 Base Rate
36 Month – Residual 45% of MSRP – .00050 Base Rate
48 Month – Residual 36% of MSRP – .00070 Base Rate
60 Month – Residual 27% of MSRP – .00245 Base Rate

Residuals posted are for 15K miles/year. Add 2% to Residual for 12k mi/yr and 3% for 10k mi/yr on all terms

Lease Payment Calculation Formula:
(Cap Cost – Residual Value) / Term = Depreciation
(Cap Cost + Residual Value) X Base Rate = Interest
Depreciation + Interest = Base Monthly Payment

Terms Used in Lease Formula:
CAP COST = Vehicle Purchase Price (amount financed)
RESIDUAL VALUE = MSRP (window sticker) X Residual %
TERM = Length of Lease in Months (3 years = 36 months)
BASE RATE = Dealer’s Buy Rate (dealer can mark this up for profit)

NOTE: The manufacturer (captive) lease programs provided are for reference only. Base Rates may vary by region. Your dealer has the option of offering you a higher rate.