Leasing a Tacoma?

If you read my post it says...and I quote, "When you finance a truck..you OWN IT once you are done with your payments" re-read it.

I guess all of the financial & consumer experts who you watch on TV or hear on the radio are stupid then...ie Clark Howard, Suzie Orman, and Dave Ramsey. They will all tell you leasing is one of the dumbest things you can ever do.

to the OP if you really want 4wd, I would just sell your '08 and buy another '08 or even an '07 with similar miles in a 4x4. Like someone else said..nothing ever goes as you plan, and you aren't "guaranteed" a job until you are getting the paycheck from it. Things can change really quick. I never though I would lose my last job, but the economy took a dive and they decided to close our site. I went from a good job to no job pretty quickly. Granted I have an even better job now, it still changes your outlook on things. My goal with my truck is to pay it off as soon as I can and drive it until the wheels fall off. My last vehicle was paid for and had 210k miles on it when I sold it and bought the truck. Not having a payment to make feels really good.

 

I only say guaranteed a job because the place I had my internship for a year and a half said they would hire me when I graduate. I guess I did something right. But that can obviously change too. I may not get another truck for another couple months but when I do I will let you all know what route I went.

 

I don't approve of that language sir.

 

Wow alot has happened on here since I last looked. I myself have leased and will do it again. In my opinion people that have never leased have neer put together the number to see what really it like.
Example: My truck was 26900 plus tax = about 28k out the door I put 3k down my payments are 345 for 60 months, my buyout is about 10k. 60x345=20700. 20700+3000+10000=33700 total invest in the truck when purchase it at the end.

If I financed and I got lets say a 6.5% rate. Payment is 489.50x60=29349. 29349+3000=32349. 32349 total invest after you make all your payments. This is assuming you could even get a 6.5% rate. You'll need almost a perfect credit score to get this or anything lower so I'm guessing people will be atleast 6.5 or more.

The total difference in price for a lease vs. a loan is only 1351 dollars. To drive a brand new truck and have my payments 144.5 lower each month, spending the 1351 dollars is was well worth it to me. Especially since I'm still in school and by the time I'm done with the lease I will be able to pay cash for the buyout. To some people this work, to some people this doesn't work. Basically dont knock it till you've actually done all the numbers and experienced it for yourself. People that finance dont own the truck any more than people that lease. The only way you own it is if you pay cash for it when you buy it. This is my 2 cents worth! Hope the OP can see what works best for him and see past all of the bashing!

 

To answer your questions:
1. This is true. However, there’s something else called a finance rate (which uses a money factor). It is used to determine how much you will pay to “borrow” the vehicle. Interest rates are for loans.
2. No. All money does not go to the principle. See below for detail.
3. Yes. They call that a residual. The residual value will almost always be the same cost at the end of the lease as if you were to go and purchase a similar truck used. If it’s not and the vehicle is worth less than the residual value, the dealership will negotiate the price with you.
4. No way. If you decide to buy, you’re going to pay interest.

When you lease a vehicle, you will likely lose money even if you buy out the residual.

Here’s an explanation to “set you straight.”

First of all, a lease price is determined by the following formula:

Lease Monthly Cost = Monthly Depreciation + Finance Rate + Local Sales Tax.

1. Where Depreciation = (Purchase Price – Residual) / Lease Term
2. Finance Rate = (Purchase Price + Residual) / Money Factor
3. And Sales Tax is base locally.

The question is: Is it more cost effective to purchase a vehicle or lease it with the intention of buying out the residual.

Here’s an example proving that buying the vehicle will in the long run, save you mula. This is specifically tailored to a Tacoma.

Facts For Lease with Intention to Buy Out Residual:
1. Purchase Price = 30K
2. Residual = 18K
3. Lease Term = 36 months
4. Money Factor = .001840 (TFS Typical Money Factor – You can ask a sales rep for your specific money factor)
5. Loan Term For Residual= 60 Months
6. Loan Interest Rate = 4.49%

First, you lease the truck.

Following the formula above where Monthly Lease Price = Depreciation + Finance Rate +Sales Tax (LA sales tax = 9.25%).

You will find that:
1. Depreciation is $333.33 Per-Month
2. Finance Rate PM = $88.32
3. Tax = $39

Total monthly payments should be $460.65

After the 36 month term, you’ll spend a total of $4583.52 on taxes and the finance rate.

Secondly, you’ll buy out the residual which is $18,000 + Sales Tax ($1665) + Registration Dues ($450) = $20115:

You will find that:
1. Interest per-month will be $39.66 PM
2. Your total payment will be $374.91

Total interest for the loan = $2379.77

So, your grand total of interest, finance charges, and taxes for the lease and residual buyout loan = $8628.19

Facts for Buying the Vehicle New:

1. Purchase price = 30K
2. Loan Term = 60 Months
3. Loan Interest Rate = 4.25%

The loan price (with nothing down) would be 30K + Taxes ($2775) + Registration ($725) = $33500

You will find that :
1. Average interest per-month will be: $39.66
2. Your total monthly payment will be: $620.74

Total interest for the loan = $2379.77

So, your grand total of interest and taxes for the New Auto loan = $5154.77

The DIFFERENCE between the two loans is $3473.42. That’s how much more you’ll pay if you go the route of leasing then buying out the residual in this example. That’s roughly 10% of the purchase price.

My last point: Should you buy the vehicle for 3 years and sell it or should you lease the vehicle for 3 years and give it back?

The information is available if you use an amortization table. After 36 months of buying the vehicle, your principle balance will be $13,687.75 and the interest paid will be $3115.13. The total combined will = $16802.18.

If you sell the vehicle for 18K (same as the residual value), you will get back a total of $1197.82. Now, with these figures, you can figure out the actual cost of the vehicle use for 3 years.

$33500 (original cost) + $3115.13 (interest paid) – $19812.25 (Amount paid off) - $1197.82 (money received from the sale) = $15,605.06. This is the cost associated with using and selling the vehicle after 36 months of use.

If you lease the vehicle, you will pay (as shown in the above example) $4583.52 in finance charges and taxes. In addition, you’ll pay for the depreciation expense totaling $11,999.88 (333.33 x 36). Total lease cost for 36 months = $16583.40.

Difference is $978.34. That’s how much more you’ll pay to lease the vehicle instead of buying the vehicle and selling it after 36 months.

 

I have leased a few cars/trucks, if you like to get rid of cars every couple of years go for it. I bought my old truck when the lease was up, not that big of a deal. When your lease is up your payments will go down since it will be a new contract at the end for whatever the buyout is, so you would have a cheap payment. If you lease don't worry about miles on it if you are going to buy it at the end which i think you would since you will mod it. Just don't lease for 5 years, do a three year if you can.

 

This is all best case, interest rate of 4.5 and financing/leasing for only 36 months and assumming someone is willing to pay the 18k if you sell it. You can make leases look bad/good it all really matter as to what works the best for your particular situation. Why is everyone so against it? Its not your money, and most likely the person is going to do what works best for them anyways, not matter what advice they have been given. GL to the OP I'm done!

 

Yes. This is certainly a best case scenario.

I'm not against leasing.Leasing is great for me because I like a new car/truck every few years and I don't want to have to deal with selling the vehicle. Plus, my company pays for it.

 

Or buy a cheaper vehicle...

Typically most financial advisors will tell you that the total cost of your vehicles should not exceed 50% of your annual income.

The same reasoning being your mortgage payment shouldn't exceed ~30% of your gross monthly income.

 

i could see people leasing for the zero maintenance. i'd love to hvae a full coverage warranty on my vehicle at all times. the idea of never paying another repair bill or spending all weekend under a vehicle is nice. as i said before, its different for everyone and their situation.

 

hmmm... looks like i'm accidentally a financial genius then. you may worship me if you wish.

 

Wow. Do you do this for a living? lol Thanks for your attention to detail. Makes sense. Although all the business terms makes my head hurt. I'm happy to see that the difference between the two choices would not ake a devastating impact on your wallet. Sorry my response is not as long as your post! How you ben by the way? Seems like you don't come on as much.

Yea it would definitely be a 3 year.

Thanks for your imput Neil!

 

LOL. Kinda. I'm in finance.

I don't expect a long response from you or anything. I just wanted to set the facts straight.

Everything is good. I've been on here. Just not responding or anything. Super busy with starting my own business and going to school full time. Crazy life! I need to get out and wheel! This is the next best things, so I figured I'd start to contribute again.

 

Good for you man. Make da moniez!

 

Wow! What's your occupation?

 

That's what I was going to say. $45k for a tacoma?!

 

He's in Canada where everything cost alot more.

 

100% more?!