Buy out my lease or wait?

I am currently leasing a 2017 sport SB. I was negative on a trade in so payment a little higher currently 685. Anyways, I plan on buying it now, I wish I would have done in first place. I plan on keeping it for many years. Do I get any benefit for keeping lease then buying in another 2 years at residual value or around 29k? Or do I just buy out now? I am at 18k miles and have been taking in for regular care provided by the lease. If either option leaves me the same financially I assume makes more sense to lease to the end to get benefit of warranty?

 

How long is the lease? How much negative you put in? Me and @DoubleRGirl had a lengthy convo with a fella on this subject a while back

 

685 for a lease truck payment.....ouch. Im sure if you had that much negative equity transfered over, your lease buyout is still probably alot, therefore having to finance that, you may end up with an even more expensive truck payment. I would pay on the lease for a while and wait to buy it out.

 

I bought mine out early because I was tired of making payments. My payoff was way less than the value of the truck so I was in a good position. Depending on the state you're in, one benefit to riding the lease out is delaying paying the rest of the sales tax on it.

 

I was about 6k upside down in a trade. 3 year lease
2 to go. No money down. Was fully loaded sport I think got for about 36500 or so (father in law manager at Sonic dealer). Payoff current tly is 40k, can buy in 2 years at 30k.

So even if could get 34 or so private sale still upside down . I was looking at refinancing with local bank and payment would change much for a 5 year loan and would own in 5 years. I don't mind paying 3% interest, I have better places to be investing money with higher return.

 

I would put another year into payments before buying out to ditch the negative and all of the lease fees. How much is the early termination fee?

 

So you have 2 years left in payments... $685 x 24 = $16,440
Add in buyout at end... $30,000 (+ tax?)
Total at end of lease... $46,440 (not taking into account tax and interest if you are financing the buyout)

Or buyout now and finance $40,000 (+ tax, + interest will vary depending on term and rate)
A 5yr loan on $40,000 at 3% is roughly $720/month

 

Yes 47 was about total after trade in and taxes etc.
I can afford the increase in payment I just want stupid past mistakes to be over( working on student debt....) Besides some "free" oil changes is there anything I am losing from not leasing? Isnt there a standard 36k 3 year warranty regardless of buy or lease?

 

Just so you know, you didn't get the free oil changes for leasing, toyotacare comes with every new Toyota vehicle, 2 years 25 k miles.
So you wont lose that just from buying it.
And yes, warranty is the same.

 

So you are trying to pay off debt but willing to increase your payment? You are backwards. You need to finish out the lease, or pay it down then sell when you are even or positive

 

No, its fine. I am talking about 200k student loans ( I am a doctor). I am waiting until my new house (small house about 170k) closes before I can refinance my loans from 6.8 to around 4 percent. I have the money for a higher payment I just want the aggregate to be the lower of the two. I have paid down all my other debt and just want to get rid of car payment as quick as possible. Student loans are going to take a while even throwing a few thousand at per month. I guess the math is pretty straight forward and makes sense to just buy now. Past mistakes are made. I am going to buy it and keep if for years regardless of which path I go down, so should just buy now and finance the 40k.

 

Well if it were me I would keep the lower payment as long as I could. You gain nothing by increasing your payment right now, because either way you still make a monthly payment.

 

Ah. I did the exact same thing as you, except I didn’t lease. Financed the same amount as well. Hurts bad lol

 

Recommend a Dave Ramsey class on personal finance. 'Financial Peace'.

Even if you don't care for his personal value system, the principles of management still apply.

Susy Orman has a quite different personal value system, but teaches very similar principles of personal finance.

Even those who think they have it all mastered can usually find a nugget or two of value in one of these programs.

 

I'm an auto broker, and deal mostly with leases. Tacomas and 4Runners lease very well. IMO, I'd wait to buy it out until the end. Chances are, at this point your buy-out payment would be higher than your lease. Ride out the rest of the lease, pay off all the negative equity from your previous car, and if you still like the truck, buy it out.

Is it a lease through Toyota, or a credit union?

 

Ride it out or wait until someone crashes into you and totals it, then it's the banks problem not yours.

 

I'd be curious what your lease's interest rate is. If you leased through Toyota, they can provide you a payoff. You can then get a loan quote through them or another bank. If the lease rate is high, a buyout and loan at a lower rate may save you money in the long run. However, if you're trying to pay off other debts right now, I'd keep the payment as is (it will go up if you buyout and finance now) and focus on your other debts with higher interest rates like student loans.

At the end of the lease, don't rule out walking away and starting over with something new at a better price/rate.

 

An option not mentioned, dumping the truck at the end of the lease, puts you in a better financial position.

From what you've shared, you are about to make many more. Interest is not your friend, and time is not on your side. Regardless, good luck.

 

You'll pay thousands more in interest by riding out the lease than you would if you financed it through a credit union right now. But your payments will go up. So if you can afford an increase in payment I'd go for it as it will save you money in the long run.

Assuming you have 720+ credit than your money factor on the lease is equivalent to about 5% APR. With that same credit you can easily get a credit union loan for 1.9%, that 3% decrease in on $40k is gonna save you at least $3k in interest.

I am assuming you're leasing it through Toyota though but sounds like you are.

 

If by "dumping the truck" you mean giving it back to Toyota at the end of the lease... then no, that's the worst financial option in his scenario.

The leases are "high interest" and Tacomas historically have ALWAYS had equity at the end of leases and looks like it'll be the same for third gens.

So keeping the lease then dumping it at the end is basically telling him to "pay high interest for the next two years then let Toyota reap all the equity at the end"