'16 Lease Residuals (not for everyone, I know)

Here are some numbers I just got from a dealer. The model is an SR5 DCSBTSS 4x2:

MSRP 32980
Residuals 12000 miles/ yr

2yr 25054 (76%)

3yr. 23746 (72%)

4 yr 20777 (63%)

No special money factor

 

Again, thanks for this information. Regarding the "bold" section above, would I be correct in assuming (if you happen to know, of course) the following: If with zero money down my payments were $338 and if I chose to put money down/trade equity as a down payment (to lessen the monthly note) to $238, would the MSD then be $250 instead of the $350? Just trying to see if the monthly payment AFTER any down payments/trades would affect each MSD cost OR if it is strictly based on what the monthly payment would be not including down payments/trade. My assumption is that there is a direct correlation between monthly note after additional down payment/trade and cost of each MSD. Thanks for any help you can offer.

 

Sorry, I don't know the answer to your question. I can think of absolutely no reasons to do cap cost reduction (i.e. money down) on a lease, so I never investigated this option. My guess is that your assumption is correct; it's just based on the actual monthly payment, regardless of how that payment was achieved.

I've done a BMW lease with MSDs, and a Toyota lease with no MSDs (because the promotional money factor was already near-zero), but never done cap cost reduction. TFS definitely has an MSD program, though.

 

Shot in the dark, I was taking. But thank you for your input. As an aside, some folk may consider cap cost reduction/money down in an effort to balance or control their debt to income (monthly) ratio for future needs (home loans, personal loans, etc.) to be certain that they are not challenged by a financial institution and denied lending for said needs. Just a thought. Thanks again!!

 

I would advise those folks toward one-pay leases, which AFAIK incur no debt load, and lower the MF similar to MSDs (although the return is never nearly as good as you get with MSDs). Of course you have to have enough liquid assets to pay the lump sump up front.

Cap cost reduction is a big liability, because you could potentially lose that money if the vehicle is totalled. That's not true with one-pay or MSDs.

 

True enough! Did you say earlier that the MSDs accrue interest, or were you referring to the fact that your monthly note reduction and the check at lease end comprise the overall "earned interest"?

 

This. I don't see on Toyota financial's website where MDSs earn anything on their own. I am completely new to this and wish I had known about them before leasing the wife's lexus. I have always purchased (outright) vehicles in the past.. Trying to be "smarter" about it.

 

Same here. It will certainly be an inquiry that I make for future leases. Big ups to @the phew for enlightening!

 

They effectively are an investment instrument, but they function by lowering your lease money factor instead of paying you interest directly. On my BMW, I paid $2450 in MSDs, and the lower MF reduced the 3-yr lease cost by $940. This is a 38% return on investment, or over 11% per year. Good luck beating that with stocks/bonds/CDs/etc.

 

To put what phew says in different terms.

It's a very low risk way to gain $940 off of an investment of $2450. He paid a $2450 security deposit to save $940 overall on his lease, because it's a 'savings' of $940, he doesn't have to pay taxes on it. You'd be hard pressed to make $940 off of a $2450 investment any other way (especially after taxes). Of course a lucky hand at the casino can give you similar or higher returns, but at higher risk.

 

Negotiated my ass off but I got it down to $314 a month 36month/12k miles a year with $2k down. Views/thoughts? Trd o/r 6spd manual with tow package

 

Does the $2k include all inception fees or is that in addition to fees? And does this price include sales tax?

 

Includes sales tax and only fee is the $399 doc fee or whatever it is

 

What was the MSRP and agreed upon price (before down payment, etc.)?

 

Thanks! Can I ask which dealer you bought from? I'm in New Jersey too.

 

Based upon the residual values listed, I don't think the most cost effective thing to do is lease.

 

Actually the higher the residual value, the better a lease is. especially if one can get a Cap reduction discount. Only paying for 28% of the truck.....If the money factor is good that is a slam dunk deal for anyone who will put 10k a year on the truck

 

Higher the residual value, the lower the monthly payments during the lease. If you intend to buy the truck at lease end, it isn't very different from financing, except for some tax savings. (With leasing, the tax is added to the monthly payment rather than to the principal).

Use the lease calculators on a Frontier and see how much higher the monthly payments are.

 

How do you think most of the cars on the road are they are leased who can pay and would pay 700$ a mnt. The one %

 

4x4 if not damn I don't pay that much