Lease Buyout - Can Dealer refuse me the option?

OP,

Question for you. Who is the lease paperwork with? The dealer? Toyota? A third party? I sympathize with you that sometimes the paperwork can be very hard to decipher. Keep in mind that on some level it was designed to be that way.

My suggestion is you call who ever holds the lease and ask them "if I buy this truck right now, how much do I have to pay you?" Then ask, at the end of the lease, the same question. Then look at your paperwork and try to verify their answer. When dealing with financial institutions I always verify three times before I assume I know.

That will tell you a lot. But don't fear what the dealer will do. How many more years on your lease? When done you can walk in and tell them you want to buy, here is the contractual buyout price and here is a check from my bank. Not sure they have a lot they can do and sales should not even be involved at all really. This is a contractual issue with finance.


Link to an article with some basics. This is not a big deal really but this backgrounder may help calm your nerves:
https://www.edmunds.com/car-leasing/buying-your-leased-car.html

 

You don't need to go to the dealer at all. Get in touch with TFS and tell them your intention, ask for the buyout, and get a loan or cash to cover it. It was really easy and the TFS folks were helpful, nice, and pleasant.

 

Totally agree with you. If I were in the OP's shoes, I would find out what the buyout is. Looking at that number will tell him a lot. I would ride out the lease -- assuming that payments were low, save the cash so that I could pay it off (by the way, he could finance the buyout with no problem but whether that is smart to do would depend on interest rates) and then wait. Who knows what the market for used Tacomas will look like in two to three years. We know the truck will hold its value, of course, but the question is will it still be crazy ridiculous in two or three years? Who knows. But if the lease payment is low and the buyout is low there is no harm in waiting and playing it out.

But we would need to see the actual numbers to know ...

 

I generally agree with you except for one small thing that the OP is missing out on anyway. At least here, I could get a new car loan rate for up to two calendar years after the lease / purchase. So, I bought mine out at about 1% less than the used car rate. Given that the OP is a 2017, I would think that window is closed?

Actually, I ended it a few months early as I bought in September of 2017 and I had until the end of 2019 to complete the loan process.

 

Technically, you need to read and understand your lease contract.

You are currently leasing (ie renting) the truck from the dealer/Toyota. It is their truck. Unless it is written in the contract, then you have little leverage.

 

True but again in a few years I'll be in the market for a vehicle. Whether I go used or new I won't get the kind of value as just buying the lease off of Toyota. If I wanted to I'm sure I could even make a few thousands in a private sale afterwards.

 

What is your actual buyout?

 

It's with Toyota Financial Canada. Lease is up in 2023 so I'm planning on doing exactly that.

 

$18500 CAD. My current mileage is ~26500 kilometers. I project ending the lease with 40K kilometers (~25K miles).

 

I would definitely call them (no dealer involvement necessary). Honestly, $18K for a five year old Tacoma with low mileage. I think the answer is pretty clear.

 

Right. But I'm paranoid that Toyota credit will "reappraise" the vehicle and slap a different buyout on it citing the contract language of "well we estimated the residual value when you signed the contract, but we recalculated it now based on your mileage".

 

I work in finance at a Toyota Dealership. You can buy it out no problems. They can’t refuse the buyout option to you.
I don’t know about some dealers, but I’ve never seen that be an issue where I work.
If the customer doesn’t buy them we do a lot of times because they are a good used vehicle for us to sell. But I’ve never seen someone try to keep the customer from getting first option.
And like what was already said, it’s in your contract. so enjoy it and don’t worry.
if the dealer tries to give you a hard time go to another dealer to buy out.

 

??

The amount that you owe is the total cost of the lease minus your deposit and current payment amounts. Your remaining value and residual are contractually locked in.

The only appraisal risk is that of your Bank / Credit Union. They need to ensure the value that they are financing. I had no problem in my case, even without any options. Here, my CU allowed 110% of the loan because tax was still owed on the financed amount.

Seriously, call TFS or go to the website and start there. No one is trying to scam you on the buy out. LoL!

 

Will try to reach them but no one answered this morning when I tried to call in. I have an amount I'm planning on putting down so I wouldn't even need the full loan, maybe 75%.

 

There are business hours.

The is excellent. I was just saying what is possible. We wanted to seal up the buy out as we were also getting a used car for our oldest a month later.

 

no these guys aren't answering, just tried again lol. the contract seems pretty clear when I read it over again but again this is my first new vehicle so just wanted to make sure I know what to expect.

 

It is probably a different site up there, but this is the website:
https://www.toyotafinancial.com/us/en.html

It will give you a buy out amount guaranteed through a certain date.

 

You missed my point. You are not getting over on Toyota by buying it. You would however be walking away from a lot of cash if you didn't since the residual value is higher than what was calculated into your lease. This is from increased value and the lower mileage. You are breaking even by buying it out. You lose by just turning it in.

 

OP you're making this more difficult than it needs to be, I know you're up north, but I'm assuming it's similar to the U.S.. You are borrowing the vehicle from Toyota for the terms of the lease contract. But, you can buy out the contract at any time by requesting the pay out amount from TFS and paying that amount. At the end of the lease, you can:

1. Lease return
2. Purchase it
3. Trade it in

The only manufacturer that I know of that does not allow a lease buy out is Tesla (3 and Y).

Personally, I wouldn't buy a vehicle at the end of a lease. You're making monthly payments for the length of the lease, say 3 years. Then you'd be taking taking a used car loan for another 60 months to buy it. You'd be paying 8 years for the vehicle and at a higher interest rate the entire time. If you like the truck, you'd be better off just trading in at the end of the lease to take advantage of the high residual. Use the positive equity from the trade in to purchase a new one. Never do a lease return unless you don't need another vehicle or the trade-in value is really low.

 

You have the world's cheapest Tacoma buyout ;-)

For those that are curious: $18.5k Canadian is about $14k USD
How much is the tax you will have to pay on the purchase?