You’ve been lusting after a Chevrolet Corvette for years, and, finally, decided to put one in the garage. Knowing you get quickly bored with cars, a Corvette C8 lease comes to mind. After a few years of use, you can turn it back into Chevy and move on to another set of wheels. With this in mind, let’s look at what’s involved with leasing a Vette.
Given the popularity of the C8 at launch, a 2020 Corvette lease is out though there's always a certified pre-owned option for earlier models if that is your interest.
So, we’ll be looking at a 2021 model. It’s worth noting that the craziness of the current market and the red-hot demand for Chevy’s sports car makes this a challenging time for a Corvette lease. Discounts are non-existent, and a good deal right now is paying the sticker price.
In fact, given current conditions and sky-high valuations, you might be better off buying a Vette. That said, read on for an example of a Corvette lease, but keep in mind that real-world numbers may be very different.
A Corvette Lease By The Numbers
We’ll use a 2021 Corvette Stingray in mid-tier 2LT trim for our example. With a few options, the car has an MSRP of $71,880. Of course, you can price a Vette up to six figures, but the 2LT Vette is well equipped, and there are actually some in dealer inventory.
Unlike a standard purchase with a straightforward car loan, a car lease is calculated differently . A monthly lease payment is based on the car’s depreciation and residual value . Depreciation is the loss of value of the vehicle during the lease length (the term ). Residual value is how much the car is determined to be worth at the end of the agreement. Interest (sometimes called the money factor ) is charged on both depreciation and residual value.
Another essential component of a lease is the capitalized cost ; your bottom line price is for the car. In the case of our Corvette example, we’ll assume no discounts and no dealer markups. Note that a down payment or trade-in can reduce capitalized cost. Further, other factors can increase the payment, which we’ll look at later, but let’s dive into the numbers.
2021 Chevrolet Corvette Coupe 2LT
MSRP: $71,880
Lease Term: 36 months/36,000 miles
Depreciation: $21,715 (MSRP minus residual value)
Residual Value: $50,165 (69.79% of MSRP)
Interest Rate/Money Factor: 6.2% (shown as 0.00258 for lease purposes)
Step 1: Monthly Depreciation
(Capitalized Cost – Residual Value) / Months = Monthly Depreciation
($71,880 - $50,165) / 36 = $603.19 monthly depreciation
Step 2: Monthly Finance Charge
(Capitalized Cost + Residual Value) X Money Factor = Monthly Finance Charge
($71,880 + $50,165) X 0 .00258 = $314.87 monthly finance charge
Step 3: Monthly Payment
Monthly Deprecation + Monthly Finance Charge
$603.19 + $314.87 = $918.06 monthly payment
The residual value, which the leasing company determines, can be affected by the length of the lease, mileage allocation, trim level, and model year. The above example uses information supplied by Caredge.com.
The leasing company also determines the interest rate (or money factor) and it’s not unusual for the dealer to include an interest rate markup. The Corvette example uses a standard GM interest rate. However, this number can vary greatly depending on the borrower’s credit rating, lease term, and manufacturer subsidies (which don’t exist for the Vette).
If you see an interest rate shown in money factor form (a decimal point, not a percent sign), just multiply the number by 24 to determine the interest rate. For example, 0.00258 X 24 = 6.192%.
Other Lease Costs
The Corvette lease example doesn’t include the first month’s payment (which is usually due at drive off) and other costs. Let’s explore these details.
Sales Tax: Just like when buying a car, leasing a car involves sales tax. However, the way it’s calculated may be different. Some states apply tax to the monthly payment, while others charge the tax against the capitalized cost. For example, Texas would charge a 6.25% sales tax ($4,492.50) on the $71,880 price of the example Corvette. In contrast, New Jersey leviescharges a 7% tax onlyon the monthly lease payment, which works out to $64.26 per month or $2,313.36 over the lease term for the sample Corvette.
Acquisition Fee: GM Financial will collect a non-negotiable fee, typically $695, to initiate the lease.
Security Deposit: GM Financial will collect a security deposit at the lease’s start and return the money at the end of the lease. The deposit amount is usually close to the monthly payment and, in some cases, may be waived. Charges for excessive mileage or wear may be deducted from the deposit.
Disposition Fee: While not an upfront fee, a disposition is charged at the end of the lease and ultimately adds to your costs. GM Financial charges $395 and will waive the fee if you lease another GM vehicle.
GAP Insurance: GAP or Guaranteed Auto Protection coverage pays off the lease if you car is totaled or stolen and there’s a shortfall between the car’s value and what you still owe. For a pricey ride like a Corvette, it’s cheap peace of mind. Some insurance companies offer a less expensive GAP policy.
Fees and Costs: Dealer processing fees, registration costs, and add-ons like a wheel and tire protection plan will add to your costs.
Doing The Corvette Lease Math
WIth an idea about these extra costs, let’s see what the numbers now look like on the Corvette lease example. We’ll calculate Texas sales tax ($4,492.50), a $695 acquisition fee, $150 in registration costs, and $200 in dealer fees. We’ll also assume the security deposit was waived and you want to do a zero cash down lease.
That all adds up to $6,455,56, including the first payment. Put this amount out as a down payment and the monthly payment will stay the same at $918.06. Add the $6,455,56 to the lease’s capitalized cost (and no money down) and the monthly payment goes to $1,114.08.
What About A Loan?
How does a Corvette loan compare to a lease? Let’s look at some more numbers.
$71,880.00 |
purchase price |
$ 4,492.50 |
TX sales tax |
$ 150.00 |
Registration |
$ 200.00 |
Dealer fee |
$76,722.50 |
TOTAL |
$0 Down Loan |
5 Years @ 5% |
6 Years @ 5% |
Monthly Payment |
$1,448 |
$1,236 |
Loan Balance @ 36 months |
$32,387 |
$40,958 |
If you’re intent is to hang to a car as long as possible, then a loan almost always makes more financial sense than a lease. However, if you regularly turn over vehicles then the answer becomes less clear. This is especially the case with high-end vehicles like a Corvette.
You might also wonder if you can make money buying the Vette and flipping it in three years. Assuming that approximate 70% residual holds up, then maybe. However, if GM production and the market get back to normal, then that strong valuation may weaken. Using the zero-down, five-year loan example, here’s how the numbers might work.
$50,165 |
Projected Resale Value (what you might be able to sell the car for) |
($32,387) |
Loan Balance @ 36 months |
$17,778 |
Potential Profit |
But, you also have to account for the higher monthly payment for a loan ($1,448) versus a lease ($1,114), a difference of $334 per month. So, based on selling the Vette at 36 months you have to deduct $12,024 ($334 X 36) in higher payments.
That leaves you a net amount of $5,754 , or about 8% of the original MSRP. The return is even lower when you figure in sales tax and other costs. And, that’s based on a solid residual value and resale price, reasonable interest rate, and that nothing happens to the car.
What does this all boil down to? Simply lease or buy a Corvette because you want to drive the car. Don’t look at it as an investment. Save that for the Bugattis and Ferraris .
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