Buy out my lease or wait?

Being in the business myself I agree with almost all of this. Except I find its usually BETTER to lease through the MFG because there's often incentives for doing so. Take Honda for example, the 2017 Accord last month had like $3k lease cash and a .00059 money factor. No credit union will touch that. Same is often true for Toyota as well, and like you said BMW/Mercedes and even Audi).

The only cars that make sense to lease through a CU are ones that DONT have factory programs.... like the Tacoma/4Runner, which is why I leased mine through a CU with .00069MF and 65% residual

 

If I were u, I think u should stick it out. Not to gain anything.... But to get yourself on the right path. This will give u time to get your house stuff straight, your student loans, and then know that your negative equity is at least decreasing with time. Priorities I say.

I am a student right now, but the GI Bill is paying 100% and I also work part time making very good money in the Operating room as a surgical first assistant. When I go to PA (Physicians Assistant) school I will only have loans for this portion so I know my truck will not b a financial roadblock.

Get yourself on the right track by taking care of your must haves while paying the lease and then reassess when the time gets closer. As long as u r good with mileage and modifying, u should keep paying so u at least have a very capable truck while getting your finances on track.

The reason I say this... if u but out your contract and say u get rear ended etc, the overall value of he truck will suffer, and although u may keep it a long time the truck still is less desirable for resale at a premium asking price and then u again could b faced with potential negative equity depending on when u end up getting rid of the truck. If u keep it forever u would b fine, but if u r still paying a loan u used to buy the lease out and decide for something different to purchase u may wish u had just left well enough alone. Get your stuff straight and then address the truck. Good luck bro.

PS if u r a doc it won’t the u long to get back on track. B patient and make sound decisions from now on. Despite what people say we all stumble a few times and life. Just stay positive and make good decisions and u will b doing great.

 

Very true! Have you seen the lease cash from Chrysler though? If you lease through a CU, you can get $3k-$9k off the price.

 

I leased through TFS...no GAP required. I personally like leasing b/c I stay within the miles and keep it in perfect condition. And Toyota quality keeps the residual value high. This is my 3rd leased Tacoma. I have been right side up each time and have used towards the next vehicle. My current lease is a 36 month lease on a 2017 Pro. My payment is $380/ mo. All the other numbers (interest, MF, warranty, GAP, down payment, dealer/lender incentives, reside value percent, etc) are there just to distract you. Make sure you have a close-ended lease, and that you’re okay with your payment and the number of months. Don’t worry about all the rest.

 

Nice. Mine is through US Bank and they happen to require it

 

Sorry OP, my post has nothing to do with your orig question. If I were you, I’d ride out the existing lease. Then buy or turn it in to capture the value that I bet you’ll have.

 

I am going to keep the truck, as I already said. I have had zero problems with it. Those lecturing me on making better financial decisions, i am. I have a maxed out 401k, 457b, IRA and HSA this year. I have paid about 25 on my student loans this year as well as another 20k in credit cards.I live in a 80k house and live like a resident for the first few years - I am doing the right thing.

As others correct people on here have stated - the residual factor is the same regardless of the negative equity. I want to get to the end point where i own the truck. I like this truck, I don't want another one. So do I do the buyout today at about 40k? Or finish lease then buy it. Sounds like i buy it now. Another 100 bucks of a monthly payment is no big deal.

 

Then as Dave Ramsey would say, get rid of the truck, payoff the school debt and then save and put at least 50% down on the next truck and do not finance for more than 3 years, sorry just saying

 

The only issue with doing it now is the fact that u will b paying $100 extra for the length of the loan. Also, due to the high loan amount for a truck that is less than $40K is u may lessen the amount of banks willing to finance or not get the ideal rate u seek.

U obviously have a lot going on and I’m sure u can afford it (if u r doc u better b able to). At the end of the day it’s your money, truck, and commitment to pay. Do what u want, but u r asking our opinion and I for one am looking out for your best interest. I have worked with surgeons in the OR for 15 years and I can tell u that they don’t have these problems because they spend their money wisely. U r trying to do the right thing, but as stated by many, getting a loan at this point with all your other financial obligations may not b ideal. Either way u still have the truck remember that. Waiting a little longer isn’t going to hurt anything until u truly think it through. My best friend is a general surgeon and only uses cash and has paid his 450K house off in less than 8 years. That’s remarkable.

Ever thought of consulting with a financial advisor for advice? Maybe worth your while.

 

Oh my god people. I have no other obligations anymore because I have made smart decisions over the last 2 years. My wifes car is paid for, I have no credit card debt, i have a house that is 25% of what most doctors live in. My student loans I actually make minimal payments on now since my new employer will pay them off partly for me over the next 5 years. I am trying to time it right so that when I make my last payment they make their last payment and I don't pay a dime extra. I pay cash for everything now. I am not a fan of Dave Ramsey - but I do agree with 90 percent of what he says. I subscribe to the boglehead theory of investing - index funds etc. I am putting 75k a year into savings. I have a 750 credit score - anybody I ask is going to give me money

I have only been trying to get one question answered, and I honestly appreciate everyones input here. I want to know in x number of years when I own the truck 100% (which I will) is it CHEAPER for me to have finished lease and then financed/paid the residual - or just do the buyout now. Part of my original questions was also am I losing any "benefits" by taking over ownership now or keeping some of the liability on Toyota via a lease program. I know you can't put a dollar on that.

 

The only thing that might make it difficult for a buyout at this point would be the LTV (loan to value) ratio, and credit score. If OP's score is good, and income/debt ratio is good, LTV ratio of 130% is possible. Considering the $6k negative equity is probably paid down a little, you might be ok. You need to call your lender and get a 10-day payoff & per diem. Then, check that against KBB/NADA values.

As an example (complete BS numbers). Assuming you still owe 35k, but the truck is worth $33k. Using my local tax rate of 7.46% would mean a loan of roughly $37500, assuming no money down. Not a bad LTV, and should get approved with decent credit. At 2.9%, your payment is about $675/month for 60 months. Rough numbers for entertainment purposes only.

 

The other option is... if u r putting away 75K a year in savings, then maybe put a few thousand down to make the loan even out and procure a better interest rate. The lower the value vs. loan would give u the opportunity to get a better interest rate which will pay off in the end. Allocating money to one area to get u out of a sticky situation will pay off in the coming years if u decide to buy it out now.

 

Either way, you’ll be fine. Doesn’t matter which is cheaper today. You’re gonna be buried in money in a few years.

 

Keep paying the Lease. When it's done, you can decide to buy out or Lease a "Brand New" one.....

 

Yes, I am very fortunate that I am. Right now it is more peace of mind that I am doing the better of the 2 options. Fortunately in a few years a few k difference isn't a big deal. I will look into this more. If they want me to pay 6k to get the LTV closer I can do that, but i don't want to pay 40k for the truck outright.
As a general rule, are car loans better at local banks or credit unions? or does it just depend on the banker?

 

That makes sense. But like others have said, u may have gotten rid of some of that negative equity in a years time. Getting the pay off will def let u know what to do. U will figure it out man. There is always a way.

 

Shop around. Generally credit unions are pretty good around here. It depends though. One of the CU's I deal with is really interested in growing with the younger generation, so they offer attractive rates to slightly lower scores. Other ones take a more conservative route and chase after the 750+.

You will also have to see if you need to go through a Toyota dealer to make it happen. Since you are buying it out, you may be able to deal directly with Toyota financial and your bank of choice.

 

It's not all about the payment. EVen still the payment difference is like $40/mo. The REAL difference is $16k in lease payments + $30k buyout = $46k or $40k buyout now. That's a roughly $6k savings not including tax and interest on the $40k purchase. He loses nothing by buying it vs leasing in regard to benefits/warranty.

These trucks retain such great value, it only makes sense to lease if you get a smoking deal with a good buyout. Most of the deals I've seen have a high buyout.

 

You're right I'm honestly not familiar with domestic brands and I forget thats a huge part of the market.

It's also a lot harder for a normal shopper to figure out leasing independently, even though it's not really that hard and can save a ton of $ when done right.

Was it you that said you were a broker?? I did that for a while and still sell to a lot of brokers. People think all they do is markup the price and they can get better deals on their own, but the truth is if a broker is good they'll have access to deals no one else even knows about... like 3rd party leases that can save a ton of $

 

Yes, that's what I try to do. Bring more value to the client by being the sales guy, and finance guy all in one. New, and used.