Need your help: Highlander lease with plan to buyout

Alright guys, I need some help/advice and since the people on here are so great with help and advice, I figured I'd ask here.

My wife needs a new car, and we want to get a Highlander. We've been looking at '10-13 Highlanders with around 50-70K miles on them, mostly because they are in our $275-300 monthly payment range, with about $5K down payment. Basically something in the $20-25K range. Today I contacted the sales manager that I bought my new Tacoma from back in 2015. I had such a great experience with him. He offered me a more than fair price for the Tacoma and no bullshit that I've found with typical car salesmen. A salesmen that just came of as a honest guy that wasn't trying to dick me around. With having nothing in stock at his dealership that fit our price range and knowing our monthly payment, he asked asked about leasing a 2018 Highlander. This is something I never considered. After talking some numbers with him and getting the benefits of having a brand new car and all maintenance covered, things are starting to look almost too good to be true. I need your input on if this is too good to be true, or a good decision with the intent to buyout at end of lease. Here's a screenshot from the lease details:


So basically after 3 years of $296.99 ($10691.64 after 3 years) payments, we can buy the Highlander for $26,863.
3 year old Highlanders now are selling for $28-30K with much higher miles (50-70K miles).
He went on about the positive equity we would have in the vehicle at the end of 3 years. Even if we went over the 3 yr 36K mile agreement, the dealership would buy the vehicle from me before the lease is up so I wouldn't take the penalty and would earn the equity on the sale.
Unless things drastically change, we have full intentions of buying the Highlander at the end of the 3 year lease. Yes, I understand that this turns into a 7 year payment (3 yr lease + 5 yr loan for buyout) but the numbers seem too good. Am I missing something here? Is this too good to be true? What would be the downside to this and why would you recommend me not choosing this option? Our other option is to buy an 6-7 yr older vehicle with 60-70K miles on it, and will also have to account for required maintenance (Tires, brakes, tune-ups, ect). Also having no idea on the previous care and maintenance done to the car prior to us buying it, I'm taking a shot in the dark that it could be a totally reliable car or being a complete POS. I'm one of those guys that is meticulous about maintenance and upkeep, and knowing the care history of a car.

So what are you thoughts? Everything I've read online says leasing is a bad idea because you are basically "renting" the car and paying the deprecation on it with nothing to show for at end of lease, but no one talks about the buyout option when the residual is lower than the value of resale.
Thanks for taking the time to read this, and any advice/input is welcome!

 

I've leased my wife's last 2 SUVs and my mom's too. I'm actually planning to talk about buying cars and leases vs financing future videos to expand my YouTube channel. There are a lot of people who will say it's a rip as you say about "renting" but it's not your car unless you hold title.

You're giving them $4276 cash upfront to reduce payments. ThThe goal you want as a wise lease customer is to minimize your upfront cost. Yes you'll have higher payments but you're not using your $5k savings to do it.

Don't just focus on the payment but the overall cost to lease. If you keep it under 12k miles per year you're good to go. If higher you may be paying more $ later. My wife killed me on her previous suv but it is what it is. You get a hit trading in/selling any high mileage vehicle.

Looking at your money factor it's pretty good but I would confirm with a few more dealers. Shop around on the discount off msrp and be sure all rebates and factory to dealer incentives are applied to it.

Basically you want the lowest price possible. The lowest money factor. The highest residual value possible. The least amount of drive off (upfront cash). Do not give any down payment or cap cost reduction. That combo will be a sound deal.

I totally understand your concerns about a used car. Our 04 Lexus GX470 didn't ever have major issues but it did have 200k. I would have kept it for me but not for her and the kids. I got her a 2016 MDX and it was actually a POS and had dangerous transmission problems so I took the hit and dumped it for a 17 RX350 and it's so nice! A highlander is a cousin of that suv.

 

Thanks for your input. I should have mentioned above that this is not only for my wife, but my two young kids too. I want the piece of mind that they are the latest safety ratings if God forbid something were to happen. My wife's work is less than a mile away from home, so daily commuting would be minimal and we should stay under the 12K miles/year. Any long distant road trips we would do in my Tacoma.

You talked about minimal upfront costs, resulting in higher payments. We have saved this $5K for the purpose of a down payment. We would much rather use the $5K than have a higher monthly payment. I don't think we could afford the monthly payments if we put zero down. In my researching, I found a great post on leasing and things to consider. I need to run some of these equations and this will give me a better idea on negotiating.

 

I leased my tacoma and bought it at the end of the lease because the intrest rate was lower to lease than to buy. I didn't finance at the end but paid cash. I did a 4 or 5 year lease. I figured how much I needed to save every month to buy it at the end of the lease and put it in the bank

That Highlander is nice. We just bought my wife one with the same specs a couple months ago. I really like the black leather and that it doesn't have all the chrome on the outside

 

There's nothing wrong with leasing. The majority of people who say it's bad usually know nothing about finance or are afraid of debt. It is also favorable to lease if you trade in cars frequently.

The deal looks solid but you do not want to put money down on a lease. If the car is totaled during the lease you will not see the money again. It can end badly if you put money upfront on a lease. If you drove the car off the lot and the next day it was totaled you would be out 5K. Just put the 5K in a bank account and take some from it monthly to help offset the higher payment.

 

Leasing makes sense if you like to switch vehicles often and if you do end up liking the vehicle enough to purchase at the end of the lease. I have nothing against leasing because in my opinion the payments tend to be more favorable for the consumer. Which you can get more car for less monthly payments. Example my wifes RDX we purchased (paid off now) and payments were $600 per month for 5 years yet my MIL's 2 Cadillac's (SRX and now XT5 during the same period as my wifes RDX purchase) lease payments are roughly $400 per month. My MIL has way more tech and insanely nicer interior than my wifes RDX. And I agree with comments about peace of mind for the little ones. I don't want my son in an older outdated vehicles with 200k miles. Only difference in our situation is my wife plans to keep her RDX for at least 5 more years which we will be putting $600 per month into some sort of savings account to fund her next vehicle purchase in cash. My MIL will not have this amount saved up because she likes new leases every 2 years. Therefore, I do disagree with the statement that people who say it's bad know nothing about finance or are afraid of debt. I'm not afraid of debt, I just dislike debt. I'm paying off my Tacoma aggressively now and been cash flowing my tuition for grad school for the last year.

However; I love the new Highlander and I don't think you can go wrong with the choice.

 

This means you are overpaying for the the 3 years of usage, compared to the theoretical case of buying the vehicle with cash now and selling it after 3 years.

 

Thank you everyone for your input! I went over these post with my wife, and ultimately we decided to go with the lease and budget to save for a solid down payment at the end of the lease. Wife is super happy, and I feel better knowing my wife and kids are in one of the safest cars on the road today. Thanks again!