Lease end coming up

New to this site so I apologize upfront if I am missing answer to this question already posted several times... I presently have 2016 Tacoma TRD Sport with a 36K / 3 yr lease coming due in August. Paying $430/mo and am at 33,500 mi now. Anticipate $900 in penalty in excessive miles come August. So unsure what best move is coming up. I have heard that buying truck at lease end ($25,000) and selling in a year is optimum maneuver dealing with a leased vehicle. I love the truck and it is in showroom condition - I'm not in construction or anything so it isn't a work truck by any stretch. I am handy and dabble in projects so I do haul wood around and such and throwing a kayak in the back. Not sure if I should just turn the truck around and release a new model. I have no time or interest in truck mechanics but I could view this truck as a long term investment for my trucking needs. My credit union rates would be about $300/mo/5yr with $5K down. If I roll over to a new lease I would have to cough the $900.

Anyway... I would welcome any input from the TW Community.

 

http://www.reddit.com/r/personalfinance

 

That subreddit will destroy him for leasing a Tacoma and advise him to buy a used 2007 Camry ASAP.

 

I mean that isn't a terrible idea

 

Absolutely. Spot on with the Camry, too. (Probably stemming from the "Millionaire Teacher" book.)

But over here everyone will encourage him to buy the latest TRD OR, 285 KO2s, and will tag Mobtown Offroad because he absolutely needs their shit.

Only fair for him to see both extremes and (hopefully) come to a rational middle ground.

 

I'm pretty sure there are people here that will destroy him because he didn't just buy it with cash.

Eh, I'm in the same boat. My plan is to purchase and keep at lease end, but there are multiple options. Take it to CarMax and get an offer there. The buyback might more than offset the 900 penalty, then you can go back to the dealer and lease another without it. Or, at the very least you can use their offer to negotiate trade in value at the dealership.

Or you can finance it without penalty, then sell in one year.

The only bad option for you is turning it in and waking away - that's mileage plus an additional $500 lease end charge. the other options besides that one can work in your favor if you play them right, you just need to know the current value and the projected value in one year to see which works best.

 

In your shoes, if you’ve had no issues and love the truck I’d just buy it. Tacoma’s have good resale value, your money is well spent.

 

If you don’t want to keep it, check current purchase price, and sell for a grand or more than that to recoup the money.
Should be around 27k. Sell it for around 30 private party or more if you can get it in your area. Then do what you want. Or buy it for 25000 in August. You should have equity either way.

 

You can go to a dealer now and sell it before your lease is up... and possibly owe nothing depending on the residual value and get into a new vehicle.

 

I always buy but my wife leases. She was 1200 over on her Rogue and took it to the dealer for service. Had 6 months left on the lease. Drove home in a new Maxima for the same payment.

 

We do this with gf's suv's every three years. Turn them in a few months before lease end, and lease new one. Same, or lower payment each time on new lease.

 

The first thing I tell people is this situation is that any money you have spent on the lease is water under the bridge. It doesn’t really change where you are now. You’ve got four options: Lease a new Tacoma. Buy a new Tacoma. Buy this Tacoma. Buy some other used Tacoma.

Leasing vs. Buying comes down to this: Almost everyone loses money when they buy/sell/lease. It’s a transaction cost. So, if you can hold on to a car for 15+ years, then that’s the cheapest. If you swap cars every 5 years, it’s still probably cheaper to buy. If you’d be buying and selling every 2-3 years, then leasing may save you money. That’s personal preference; Who am I to say what’s worth what to you?

The next easiest to eliminate may be between buying “this” used Tacoma, and some other used Tacoma. Other trucks are an unknown, they may have frequently towed 8k lbs through mountains with old oil. Or maybe they have been babied. You don’t know, but you do know your truck and it’s been treated well. So it’s probably best to eliminate the risk of the unknown. (This is different for folks who work their Trucks harder than average)

As between buying this used Tacoma and a new one: Is there anything you’d want to change? Did you get 4x2, but now want 4x4? Did you get Access Cab and now want Double Cab? Does a 3 year old truck feel old to you? The curse/blessing of retaining value is that a new truck doesn’t cost all that much more than a used one.

https://www.tacomaworld.com/threads/3rd-gen-tacoma-model-package-option-costs-master-list.388345/

Based on the above prices, a new TRD Sport looks like it Sould cost about $32k give or take $2k depending on options. Assuming the Truck will last 200,000mi, then having 36,000 miles mean it has 78% of its life left. At $25k you’d be paying 78% of $32k. Sounds like a wash. If you prefer to save more buy this one. If you have the money and prefer to start fresh, pick another new one.

 

Wow... I am amazed at the amount of feedback... thanks much as I digest the comments.

 

Yea.. depending on the vehicle and residual value this is the best thing to do. My wife is always in a Lexus so it's very easy for us.

 

I'm leasing too and I am planning to buyout, barring some future catastrophic mechanical issues.

I drive low miles, like 11k km per year low. This means at lease end my truck will have ~ 60k kilometers (37k miles) and it'll cost me $18k CAD (13.5k USD) to buyout. That is pretty insane for a used Tacoma. Try to find any 5 year old Tacoma with low miles for that price anywhere. You'd be hard pressed to find a 4x2 SR for that money let alone a 4WD TRD Sport DCLB with tech package and sunroof.

Plus factor in what has already been said about knowing your vehicle versus unknown used trucks and it's a no brainer.

The only thing that could sway me into another new lease/finance would be some huge update or game changing next-gen equipment (and no, not power seats) but I highly doubt Toyota will come up with something that will entice me that much to lose so much potential equity in this truck.

 

Your "buy out" means nothing without knowing how much you spent on the lease. I've written leases with zero buyouts.

To the OP...for the love of gawd don't take any financial advice from anyone on a Tacoma forum. Seriously.

 

Not sure what you mean. Are you talking about the negotiated price of the vehicle or how much money was put down? Putting money down only makes your lease payments smaller, it does not impact the buyout price. The negotiated vehicle price can.

 

You should calculate on leasehacker what you actually have paid for your lease. The amount youve put in to the lease + a high residual value could mean you end up paying a lot more for the truck than you could have originally bought it for.

 

430x36+25,000=$40,480 Is what that truck cost you if you buy it at the end of the lease.

 

Thats why buying out a tacoma at the end of a lease isnt worth it.