2017 Lease Payments

I ended up leasing mine because for one, I only drive around 7-8k a year and two I always buy a new car every 3 years, I had positive equity on my 07, owed 9900 and they gave me 13500 in the end im paying 390 a month, were as before I was still paying 450/mo on my original loan on the 07.

 

There is no such thing as a good lease. They are designed to separate people from their money! They dazzle you with technical terms that make you feel like your being smart, when in fact a lease is the most expensive way to own and operate a vehicle. And get you into more vehicle than you can realistically afford.

OP how about you buy a used car now, save the monthly payments, buy your Tacoma outright in a few years, and you'll never have to worry about miles, every little nick and scratch (still don't like seeing them) having negative equity (fancy financial term) and end of lease outlay.
Save the criticism, I'm right and unsubbed!

And you don't know who I'm voting either!
Although I wish Mickey Mouse were a candidate. At least we would know what we were getting!

 

Any transaction is designed to separate the consumer from their money. Your bubble gum from the 7/ Eleven is designed to get you off of your cash. Does that mean bubble gum is a bad financial decision?

Did you know Toyota has a damage allowance on their leased vehicles? So no, you don't have to worry about every nick and scratch.

There is nothing fancy about the term negative equity either.

You people on this board seem to know more about everyone else's financial/ professional situations and are quick to judge. Again, a lease is not indicative of one persons financial situation nor does it automatically mean they cannot afford a vehicle.

 

Ill let consumer reports do the talking

http://www.consumerreports.org/cro/2012/12/pros-and-cons-of-leasing/index.htm

There are other advantages to leasing:

• There’s often no down payment required when leasing, or only a low one.
• You can drive a higher-priced, better-equipped vehicle than you might otherwise be able to afford to buy.
• You’re always driving a late-model vehicle that’s usually covered by the manufacturer’s warranty.

As attractive as a lease appears, however, there are a number of disadvantages:

• Leasing typically costs you more than an equivalent loan, in part because of higher finance charges.
• Once you’re in the leasing habit, monthly payments go on forever. In contrast, the longer you keep a vehicle after a loan is paid off, the more value you get out of it.
• You have a limited number of miles in your lease contract, typically 12,000 to 15,000 miles a year. If you drive more than that, you’ll have to pay an excess mileage penalty of 10 cents to as much as 25 cents for every additional mile. On the other hand, if you drive too little, you don’t get credit for the unused miles.
• You must maintain the vehicle in good condition, or you’ll have to pay excess wear-and-tear charges when you turn it in. So, if your kids are apt to turn the interior into a finger-painting studio or your car’s a magnet for parking lot dents and dings, be prepared to pay extra.
• If you need to get out of a lease before it expires, you may be stuck with thousands of dollars in early-termination fees and penalties—all due at once. This could equal the amount it would cost had you stuck with the lease for its entire term.
• You aren’t allowed to customize your vehicle in any permanent way.

 

People that don't know leases or have never leased, or lease and know they only get X amount of miles a year but put double those miles, are always the ones wrongly commenting about leases.
Leases are not for everyone, but I have been leasing for over 20 years, drive a new car every two to three years and never, never been burned by a lease. Why? Because if you know leasing, you won't get burned. Plus, I always drive a car under factory warranty.
I don't drive cars forever, life's too short for that. Even for this Tacoma.
By the way, I made over $10,000 on my previous leased Jeep Wrangler when I sold it after three years. Yes, you can buy, sell or return your leased vehicle at any time during your lease. I had that much in equity on my Wrangler..yes, on a lease. But if you don't know how leases work, you could get burned, like everything in life. People should refrain from commenting on things they don't know.

 

How did you make over 10K? I don't understand how this is possible? And before I comment on this, I would like to know.

 

You make equity on a lease when your residual is lower than the trade-in value of the vehicle. Which is a near guarantee with high demand vehicles like the Tacoma or Wrangler.

I've found that the people hostile against leasing typically have no idea how it works.

 

So he made 10K? Please explain HOW that is possible, I flat out don't get it.

If this was the case, every one would be leasing.

 

Instead they are criticizing ones who do saying what a stupid financial move it is.

 

Again I ask, HOW DO YOU MAKE 10K on a lease?

 

Did you miss the first quote above?

 

No I didn't, but I still don't see how he MADE 10K. Just didn't happen.
First, I have never leased and don't know that much about them. 2nd, there is no Fing way you are leasing a vehicle and walking away with 10K more than you started, unless you got the vehicle way way way under value to begin with.

So that like me buying/leasing a 36K taco but getting it at 25K, then driving it for like 5 minutes and selling it at 35K. That would be making 10K.

 

I'm guessing he's suggesting he recouped 10k by selling it as opposed to turning it in.

 

Yes, that is correct. You are obviously not going to end up with more money than your began with.

To most leasing means driving a vehicle for a set term and turning it in at the end of term and walking away with nothing. Yes, that is one scenario, but not the only one. I will give you an example of how else it can work. We'll use the Tacoma for example.

Say you buy a Tacoma--it's 40K. There are really only 3 numbers you need to know when leasing.

1. Cap cost (that is the cost of the truck, after negotiating and down payment.)
2. Money factor (that's just a fancy term for interest rate. Like a traditional car loan, there is a interest in leasing as well, and it's usually 1-2 percent higher than a traditional loan)
3. Residual value (that's the cost to buy out the truck at the end of the lease term)

So for our example, let's just say the cap cost of the truck is 40K, and the money factor is set from Toyota @ .00190. (From money factor to interest rate, just multiply by 2400) So now we know interest rate is 4.56 %. It's not great, but not bad for a heavy in demand vehicle.

Something like the Tacoma, Toyota says the residual is 70% after 3 years. That means at the end of the lease term (3 years) the buy out price for the truck is 70% of 40K = 28,000.

During the course of the 3 year lease, there is always a 'buy it now' price. That number usually be the number of payments left + residual. For something like the Toyota, after 2 or so years into the lease, the buyout price becomes much lower than what the truck is worth.

If you 'sell' during this time, you come away with extra cash, but not more cash than you began with.

 

This I can see. Thats why I was so adamant about how he made money.

 

This makes sense, so is it fair to say I could do the same with a loan? After talking with a coworker, former car sales, the way he explained, in a lease you only finance the depreciation value and this is why the payments are low.

 

Yes, now you're starting to get it...

It's just like a traditional loan, except your payments are going towards the pre-determined depreciation value. There are some upsides for leasing, like if you use it for business and can write off the payments. Or, if you rather spend less money per month on a vehicle than a traditional finance, so you can have more liquid cash to invest, etc.. Here's is one upside... When you lease a vehicle, you're only paying taxes for the lease term, and not the entire vehicle. However, if you decide to buy the vehicle at lease end or during the lease period, you will have to pay tax on the residual. But... If you sell the car, trade in, then you don't owe taxes on the residual.


Like I said, at anytime during the lease term, you can:

a) buy the vehicle outright
b) sell it private party
c) trade it in

Most smart folks won't turn in a completed lease Tacoma. You can do any of the above and get back more $$.

But say you started a Tacoma lease, and decide to buy it at the end of the lease, why not just buy it in the first place?

That's a common question:

a) you may not like the vehicle, and unsure if you want to keep it long term, if you don't like it, you can sell it and walk away from the truck with not much cash out of your pocket. Remember, most don't put any down payment.

b) you may want to keep your monthly expenditures low, so you can keep your cash liquid for other reasons. Most rich guys I know lease their cars.

I sold my leased '15 WRX after only 1 - year into the lease, and I was dead even as far as what the vehicle was worth and what the buy out price was.

 

Yes I am now starting to get it, but still don't see it as being a wise way to go. I don't own a business so I am not able to use this to cancel out my owed taxes. And yes, with a lease you can bail sooner, but you must jump back into something. I am one that keeps vehicles beyond the loan term, so for me its driving with out a payment, and then having something of value to put down on my next vehicle.

Oh and the guy I talked with, said very clearly, never let the dealership talk you into a lease, its a win win for them, always.

 

I'm glad you are getting it. Some folks here are very adamant that a lease is just renting a vehicle, and when I try to explain all the scenarios, they just don't want to listen.

As you mentioned, leasing is not for everyone - just think of it as a different way of buying a vehicle, but obviously not the only way. For your specific needs, leasing would absolutely not work for you, as if you bought the truck at the end of the lease term, you would have paid 5% interest, as opposed to say 2% if you have top tier credit, so yes, it would have costed more.

For some, leasing absolutely makes sense. One other scenario is if you're looking to buy a house and need to get a mortgage. Instead of having a 35K+ loan, your liability for leasing is much lower. That will change your debt to income ratio.

 

Leasing may be a good idea on some vehicles. The Tacoma, no way. They hold their value too good to throw money away on a lease.