Why You Should Not Lease! A sampling of Yukon Denali Leases

If you have read through this site, you know that I offer many ways to help you figure out if you are getting a good deal on your lease. I also stress the importance of not leasing a car if you are at all unsure of any factors that determine how a lease is done. It is to easy to not know what you are getting and when you are purchasing something such as a Yukon Denali, you are spending $50K. You should know what you are doing, but many people do not.

I decided to sample Yukon Denali leases since most of them come fully loaded and it lessons the chance for expensive upgrades. Using Edmunds.com, I determined that the cost for a fully loaded Yukon Denali with an extra 5K in add-ons (sunroof, larger wheels, DVD, Navigation, etc) should cost about $50,000 not including any rebates. Through some research I was able to collect details from offers and prior purchases of leases.

I sampled 10 Yukon leases and here is what I found:

Car Year Model Lease Term Monthly Payment Residual Miles Allowed Total Payments
1 2007 Denali 39-Months $ 728.90 $ 34,320.10 39,000 $ 28,427.10
2 2007 Denali 48-Months $ 565.38 $ 26,723.60 60,010 $ 27,138.24
3 2008 Denali 39-Months $ 638.08 $ 32,659.40 48,775 $ 24,885.12
4 2007 Denali 39-Months $ 742.00 $ 33,176.20 39,000 $ 28,938.00
5 2007 Denali 48-Months $ 673.31 $ 26,365.00 96,000 $ 32,318.88
6 2007 Denali 48-Months $ 718.32 $ 28,919.80 60,016 $ 34,479.36
7 2007 Denali 39-Months $ 722.07 $ 36,651.00 39,000 $ 28,160.73
8 2007 Denali 48-Months $ 763.85 $ 28,725.60 60,025 $ 36,664.80
9 2007 Denali 36-Months $ 744.34 $ 32,193.00 54,000 $ 26,796.24
10 2007 Denali 39-Months $ 797.73 $ 35,000.00 32,506 $ 31,111.47


You can see the payments, terms, and residual payoffs vary greatly. Next I totaled the payments over the term and added the residual to determine the final cost (It does not show any down payment the buyer put towards the car so assume the total price below is lower than the actual total price). I then put in the cost over the same term for a 5% loan based on a fully loaded Yukon with $5K in upgrades costing $50K and compared the two.

Car

Total Cost

Total Cost $50K + 5%+ Tax

Difference

1

$ 62,747.20

$ 57,901.34

$ 4,845.86

2

$ 53,861.84

$ 58,895.30

$ (5,033.46)

3

$ 57,544.52

$ 57,901.34

$ (356.82)

4

$ 68,792.20

$ 58,895.30

$ 9,896.90

5

$ 58,683.88

$ 58,895.30

$ (211.42)

6

$ 63,399.16

$ 58,895.30

$ 4,503.86

7

$ 64,811.73

$ 57,901.34

$ 6,910.39

8

$ 65,390.40

$ 58,895.30

$ 6,495.10

9

$ 58,989.24

$ 57,572.61

$ 1,416.63

10

$ 66,111.47

$ 57,901.34

$ 8,210.13


You can see the difference. Car 10 ended up over $8,000 higher than the $50K car I put together. In fact, out of the 10 cars I sampled, only 3 came in better, and two of them we would have to assume they had full upgrades and did not put more than $356.00 dollars down. Also notice how bad most of the 39-month leases worked out.

If any of the 7 other cars had put money down, the terms become worse. To make matters worse, the blue book on a 2007 Yukon Denali is $37,000. Wow, look at car 1 and car 10, at the end of the lease term you have to pay nearly what the car is worth today after making 27 payments of over $700 per month. Sound like a good deal? I guess if your spending $50,000 on a car what is an extra 6-10K right? At least you had a nice sales person and your car payment met your budget.

I hope this puts a little more light into how much a lease can cost you if you don’t know all the terms. I would like to say that someone spending $50K knows the terms, but as demonstrated here, that is not the case.

Leasing any car, expensive or not, you can get ripped off. There is a reason all the ads push leases, either do your homework or don’t lease. Remember never buy a car based on a car payment.

If anything know this.
-A lease is simply financing the depreciation of the car. American cars lease bad as they do not hold their value. Cars like Toyota, Honda, and Nissan lease better.
-The more a car holds it value, the better your lease payment.
-Down payments for leases should be very small since any amount is usually applied to the residual (a dirty trick), which if you turn your car in the money is pocketed by the lease company.
-Always know the total cost if you were to buy the car at the end of the lease. Dealers will say this does not compare to a purchase, that is a lie. It does and it should be close to what you would buy the car on a conventional loan under market interest rates.
-You will be upside down on 90% of leases.

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