Is this a good lease deal?

Have you done the math on how much he'd be walking away with had he bought it?

 

IN today's market, yes - but in a normal one it isn't awful. You are welcome to return most leases to separate dealers who will want the car to CPO or resell or trade it in early for something else, you might even walk away with some $ in your pocket! The common leasing misconception is you are stuck with that car for the lease term. Buy it right-discounted sale price, good money factor with solid residual at the end putting down little to no money to drive a brand new car, i don't get the problem there. For a credit worth person who wants a new car every few years its perfect, the depreciation of your vehicle will not keep you up at night and the benefit of paying considerably less monthly 40-50% less is huge.

3 years of payments at...$600 verses $350 per month. He would "owe" 17400 so a nice 19k nut for the difference verses 7k leasing. But maybe the leaser was investing his 250 per month in the market, who is really ahead?

 

With no money down like the lease he would have financed about 45k. It would almost be about the same as if he had financed the truck as the payment would have been about 60% more per month then the lease payments. Yes he would pocket more at the end but he spent a lot more per month. Its really a wash.

If he paid cash he would have taken a 10k loss.

 

People that usually lease do it for the lower monthly payment/rent. If you live paycheck to paycheck buy a cheaper vehicle. If you have the money to buy it outright then buy it or get a loan and invest the money. You gamble that you can get a better return than the interest. I would never lease, but really don’t care how anyone else spends their money. You asked for advice, worth what you paid me for it.

 

You mean he would've paid $10000 to drive the truck for 3 years had he bought it?

 

Way more then that. Even at a 0% interest rate on a 60 month loan the truck would have been $750 month. He would have paid $27,000 to drive for 3 years leaving the balance of the truck at $18,000. With a $36,000 dollar trade in he would have walked away with $18,000 in pocket rather then $6000 with the lease.

His lease payments were $450. That means he spend $16,200 to drive the truck for 3 years leasing.

Lease, $6000 check after spending $16,200 $10,200 over all to drive the truck for 3 years

Buy, $18,000 check after spending $27,000. $9000 over all to drive the truck for 3 years

Cash buy would be inline with the other 2 options.

If you structure the lease deal right, there really isn't much different.

 

Mine is a lease. And, I plan on buying it outright when it comes due.
They took my trade in for $6k, I put like $3k down. My payments are similar to yours. My buyout is $28k at the end of 3 years. Given the track record of resale for these, I could easily get mid 30s, if the truck is still in good condition. A used taco, 3 years old, is retailing for that right now. For ME, a lease was a better option. I couldnt afford the monthly cost to buy outright at the moment, but I could lease for a couple years, then put down half of what the buyout is, and thats comfortable for me. By then, my bike is paid off, and that frees up some cash. I was skeptical about leasing initially, but, after weighing the options, for ME, it works out. Will I end up paying a little more? Yep. However, the trade ins right now are worth it, and if you have excellent credit, they will definitely work with you.

 

Whether you are buying or leasing, you still have to fight through the dealer shenanigans to get to the best deal.

The dealer is just handling the transaction and getting the same amount of profit based on the difference between invoice price and agreed upon sale price and any finance charge. That is why when a lease is up, the dealer has to make a bid on the car that is a better than the contract with the leasing company (residual value).

 

There are pros and cons to everything.
Leasing is an option for many, and, if the money works, do it. Not everyone has $50k kicking around to buy a truck outright.
Leasing, at least for me, cut the payments in half. And, when the lease is up, they offered my buyout at $28.5k.
When that time comes, I can have at least half that in cash. And, the rest can be paid off in a year or so. So, it works out, for ME, for a 72 month loan-paid off in 48 months.
If you plan on buying it outright at the end of the lease, opt for the super low mileage option. That may give you a higher buyback cost, but you can save that money not being spent on monthly payments, towards the end buyout purchase. Myself, I opted for 15k/yr, which is realistic for me, as I am on the bike a lot during riding season, so the truck will not get the mileage during riding season. I could, at the end of the lease, walk in, trade it in for a 2024 model, if I wanted, and lease that, at the same cost.
Or, I could buy the truck outright, for about $7k less than market value (based on todays prices), and be in a better position financially at that time. Not only will I have saved the difference in monthly payments-I will be buying the truck, knowing the history, for far less than another used one, never mind new. And, I will have a good chunk to put down on it-and pay off the rest in a year.
Again, it comes down to what works for you. I know people that trade trucks in every 3 years with leases. They figure, why buy, when you are gonna have a truck payment anyway-and you can get the newest model every few years?

 

I leased my 20 ORDC for $270 a month 2 years 10k a year. I also paid nothing down. My payoff next year will be around 30K Ill probably end up buying it Check out leasehackr.com. Lots of deals on there.

 

Owning vs leasing there is a slight advantage to your next car on trade in but that only has to due with the taxes paid. Other than that lease vs buying is case by case and buyer by buyer. /end

 

Lease deals can be great on not in demand vehicles, not so much on in demand vehicles like a Tacoma.

 

False. In fact that is completely opposite of what’s true.

 

Exactly.

 

Never put money down on a lease.

 

This is another big misconception about leases. You can put as much down as you want, if it gets you to the monthly payment that you want. Say if you put nothing down on a lease, your lease is 36 monthly payments of $400 for an all in total of $14400. But say you put $2500, now your monthly payment is $330 a month (14400 - 2500 = 11900 / 36 = 330).

The argument to not put money down on a lease is the same as paying cash for a car instead of financing it. If you have cash, it should be invested instead of spent on a car. The only negative of putting more cash down on a lease is if you drive it off of the lot and it gets totaled or stolen right away.

The OP's lease asked for a high down payment to get the the monthly price under $300. Thats the same reason why you see luxury cars advertised at $399/mo lease, because of a higher down payment in the $4000 range.

 

Little I MISunderstand

aspects of the current market is an aberation..........

I bought ....paid cash.....own my vehicle b4 Covid had an effect on the economy in total

1st time in history thata 2 year old vehicle is worth more after miles/maintenance

no one knows when the market economy will correct

true some /many will take advantage of the circumstances

sell my truck only to purchase another at inflated prospect...................makes no sense

someone is going to get caught out in the crunch.................

some might opt out or by now the market is in there favor...............that cant go both ways

now would NOT be the time the initiate a lease unless U could justify the market moving ahead as it has

 

I would suggest you continue to pay cash for your vehicles in the future. Seems to be what works best for you.

 

Depends if you can invest the cash for the entire truck. Average investment return in the US is 10%, so rather than putting 41k to the truck, you can put 4k and invest the remaining 37k. That investment will bring ~12k (3.7 + 4.1 + 4.5) in 3 years. Your total cost in 3 years will be 4k + (282x36) = ~14k. So in 3 years that truck will cost you only ~2k, or $55 per month.

Not a bad deal if you ask me, buying it will cost you a lot more than 2k unless you can sell a that truck for more than 39k in 3 years. Now 10% return is average, if your return is less, it will cost you more, if your return is better you can actually walk away with money. And of course do not spend the 37k on something else, that is the main issue with these approaches, act like you dont have that 37k.

I personally never pay cash for any vehicle. Investment return for the money you would put in will be much higher than interest they charge (for both leases and finances).

 

Exactly, putting cash on a depreciating asset makes little sense. You can easily invest that money and get more in return than the interest on the loan or lease. But the main issue is that people finance or lease their cars and then spend the cash on hand on something else. Only if they just invest the money (and act like they paid in cash and forgot that money)...