Although $0-down car leases are not uncommon, very few car companies actually do it. Honda and Acura are frequent players, as are Mazda and Subaru. But not Lexus — until now.
Lexus has announced new zero-down leases on a number of its popular 2016 models including the following:
IS 200T
GS 200T
GS 350
ES 350
IS 350 F Sport
For more details on these and other nothing-down lease deals, see Zero Down Car Leases are Back. Be aware that special manufacturer-sponsored limited-time deals such as these can vary, depending the part of the country.
What does it mean to get a zero-down lease deal?
A zero-down lease can mean different things, depending on who is offering it. Details can vary.
Generally, a nothing-down lease means no cap cost reduction, which is otherwise known as a down payment. However, a down payment is only a part of the total amount due at lease signing. There is also the first month’s payment as well as official tax, tag, and title fees. There can also be a security deposit with some leases.
In the case of the Lexus lease deals mentioned above, there is no down payment (cap cost reduction), no first month’s payment, and no security deposit.
However, if you take note of the details of each deal, you’ll find this statement, “Available on approved credit to very well qualified customers through Lexus Financial Services and participating Lexus dealers on a new 2016 Lexus. Not all customers will qualify.”
This means that, to be eligible for the offered deal, customers must have a good credit score, typically 700-710 or above. If you think you might be interested in these, or any other zero-down deal, you should know your current credit score in advance of your dealer visit to avoid problems.
If you don’t know your most recent FICO credit score, you should get it. What’s your FICO score? Find out now when you check your credit report for $1 at Experian.com! Don’t let car dealers know more about your credit than you know yourself.
Just to be clear on the above Lexus deals, you will still need to pay certain official taxes and fees at the time you sign for your lease. These are fees required by your state and county that are simply collected and passed on by the dealer. These charges are not negotiable.
Alternative financing deals on Lexus vehicles
In addition to the above mentioned special limited-time lease deals on certain Lexus vehicles, these same vehicles also have low-interest financing deals as well. In most cases, the deals are as follows:
0.9% APR for 60 months ($17.05 per $1000 financed)
1.9% APR for 72 months ($14.71 per $1000 financed)
These are terrific loan deals on the affected vehicles, not often offered by Lexus. Of course, the same credit requirements apply to these finance deals as to the lease deals mentioned previously. Again, you should know your most recent credit score in advance so that you’ll know what to expect when you visit a dealer. If you fail to qualify for one of the special offers, you’ll still be able to finance or lease, except at a higher finance rate (money factor, in leasing), assuming at least an average credit score.
Be aware that Lexus vehicles have a 48 month general warranty and a 72 month powertrain warranty. Although you would be completely covered during the 36 month leases previously discussed, you would be exposed to problems after 36 months if you choose one of the special financing deals discussed here. In that case, you might want to consider an extended warranty to cover the “gap” period.
Speaking of GAP, with these special financing deals that have such long payoff terms (60 and 72 months), you will be “upside down” for most of the loan term, even with the low interest rates. This means that if your vehicle is destroyed or stolen during that time, your full-coverage insurance will only pay the current market value of your vehicle, not the amount remaining on your loan — which will likely be greater unless you had made a large down payment or had a valuable trade vehicle at the time you purchased. Therefore, it’s wise to buy GAP insurance at the time you buy to protect you from this financially damaging possibility.
Summary
Lexus vehicles are some of the most luxurious and most reliable of any brand. Customer satisfaction is among the highest in the industry. However, it’s rare that you’ll find great promotional deals from Lexus — because they sell themselves and don’t need much help. Therefore, if you are interested in a new Lexus, the time to make a move is when these special deals are being offered. The deals only are good for one month, although they can be extended occasionally.
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