Lease Buyout vs Purchase

Hello everyone, new member here! I apologize in advance for the length of this, I figured it was best to give as much info as possible. I am a first time Tacoma owner and have had my truck for ~2 weeks; actually first truck in general. I was hoping to get some advice on whether I should buy out my lease and purchase a different one (to get Toyota’s low interest rate), ride out my lease and then reevaluate, trade in and purchase new one, etc.

For some background, I’ve driven sporty coupes for the last 15 years or so, but decided to get a truck so I can quit asking friends and family to borrow theirs for various things. I started a lease on a 2020 Tacoma SR5 with blackout package, upgraded wheels, mats, locking tailgate, and some other odds and ends (no tech packages or anything like that). I have already fallen in love with the truck and want to make some upgrades to it, but don’t know if I should buy it, continue leasing, etc. I have leased my last few cars bc I like getting a new one every few years, but I’m to the point where I think I would rather start owning and not have a payment after a handful of years. Below are the specifics of my lease for reference, followed by a little more info:

MSRP was around $36.5k
I had around 4k negative equity in my trade in (remaining lease payments on a $60k car)
Gross cap cost: $40769.41
Cap cost reduction: $3614.02
Adjusted cap cost: $37155.39
Depreciation: $7367.25
Rent charge: $6528.03
Residual: $29788.14
36 months @ 12k with $365 payment

Where to start? So, I’m saving about $300 a month payment in the Tacoma versus my last car, so woohoo! But, as I mentioned, I love the truck and could definitely see myself in it for quite a while. I want to make some upgrades, but don’t know if I want to do that and turn it in at the end of the lease and “give” them the upgrades. I doubt I would buy it at the end of the lease. The reason being is, I will end up paying ~$14k total in payments and rent fee (more on this later) and the truck will be worth ~$29k at that time. That would make me end up paying ~$43k for a $36.5k MSRP truck. First, I would never pay full MSRP, let alone more than MSRP. I would probably end up just turning it in and buying a new one at that point.

The reason I’m wanting to get an opinion is because I have excellent credit...I’m kicking myself that I’m paying ~$6500 in “rent” charges. I know, I should have thought about that before. Too late now unfortunately so here I am.

What do you guys think? Is $6500 in rent charges beyond ridiculous? Average? Etc? Also, would it be completely idiotic to consider trading it in and taking a loss and buying one instead? I could pay the difference (within reason) out of pocket. I know my payment would be more per month, but that’s fine with me if I’m purchasing.

I can buy this one outright from the lease company for ~$39k or buyout my lease for around $7k (more than likely wouldn’t ever do that...”here’s $7000 and the truck” seems stupid. Lol).

Lastly, if I did get a different one I would probably get the TRD sport with some of the tech packages (something I’m kind of missing that my previous vehicles had) but haven’t fully made up my mind.

So, any input? I can “eat” a “I’m an idiot” fee within reason. :/

Thanks in advance for everyone’s time!

 

I would rather buy vs lease. But I drove my last truck for 14 years before replacing it and don't like having forever "payments".

 

Just ride the lease out and decide on buy out at the end, the nice thing is, you can still technically sell it when the lease runs out rather than return it. They have mega residual and you stay in control.

 

How would trading it in help? You're still on the hook for the amount in your lease agreement and you're already paying for negative equity on one trade in...

 

Leasing is like a prostitute. In the end you have neither the woman of the money. Buying after a lease is like buying an old prostitute. And it will likely need repairs before long.

 

Good thing I wifed up (purchased) my truck then when she was brand new with only 5 miles on the odometer. Is the truck really a prostitute though if the person who leased her was the first shes ever been with?

 

Ride the lease out save the extra funds to put down on a new truck .The buy out is shit . You can negotiate a better deal on a new truck .

 

OP, no roasting here. We all make all kinds of financial decisions. Sometimes we nail it and do it smart. Sometimes we don't. The key is to learn from our mistakes and make the best decisions we can going forward. The only real problem is when we don't learn from our mistakes. That's all experience is.

So here is the thing. You are where you are now -- as you point out. Everything else is water under the bridge. You have a truck that you like and you are saving money compared to your previous car situation.

It seems to me your best option is to stay the course. You have a 36 month lease. A lot can happen in 36 months. Toyota may come up with a new Tacoma generation. Inventory may start to return to normal (it most likely will). Prices will stabilize, etc.

You already know what you want to do. You like the truck but you want a model with more features. Ride it out. Pocket the savings and build a massive down payment on the truck that you seem to know you want and when you are at the end of your lease, turn it in and go get the truck model that you really want.

In the meantime, enjoy your truck now. Drive it. Have fun. Maybe invest in a few mods (but don't go crazy) that you can pull off the truck and sell to earn back what you put in. It seems to me the biggest challenge that you have is one of patience. Can you hold out for 36 months for the lease to run its course? If you can, do that. If you can't, well you know how much of a hit you will take.

The only other option you have is to see if you can negotiate the price of the buy out (sometimes possible, but most of the time not). Plunk down the money and buy the truck. Then sell it and go get the truck that you want. I personally wouldn't do this but it is an option. The challenge is that now is not the time to be doing that. With inventory where it is you gain on the sell side but lose on the buy side.

Good luck to you ... and please report back what you decide ...

 

I have never leased a vehicle, so I have never heard some of these terms. Like @averagejp said, ride it out and buy anew truck when the lease is up.Good luck with this.

 

Thanks, everyone, for your opinion. I figured riding the lease out would be my best option. I probably should have never looked back over the contract afterwards; then the $6k rent fee wouldn’t be stuck in my mind. But, it is what it is and I’m where I’m at.
Anywho, I have a great truck that I love and I’m saving money on my monthly payment, so I’m happy in the long run.

thanks again everyone!

 

You can switch it to purchase anytime & put the same amount you would need to put down on a new truck & get lower payments.you don’t really loose the money when leasing if you get a good lease deal at the end of the lease it’s called residual value truck is $41k & the residual value is $26k that’s $15k over 3 years $416 over 36 months and on lease you pay the tax every month not all of it on purchase $29 a month $$1,044 is the tax so $13,956 so $41k so $27,044 is your residual value you get to buy the truck for so you didn’t really lose the money that’s how it works FYi

 

I feel like you already did the deed in terms of the lease so staring at that $ amount is a moot point (which you mentioned later). I feel like it's more appropriate to look at it as a 3 year old truck, that you know every mile about, is going to be $29+tax I assume to buyout. The way Tacomas sit today, that sounds like a decent deal ...maybe less so in 3 years if supply/demand changes drastically.

There is a reason they push the lease so hard and try to make it sound really lucrative...and for a lot of people, it's all they want in a car and they have the money to do it. I think the Tacoma as a 'brand' is one of very few sound, long term, investments you can make with a vehicle. We'll see if the 3rd gens live up to the reputation.

 

you still got 3 years before you have to worry about any of this, just keep paying off your neg eq. Then in 35 months figure it out.

 

If you buy it, it is yours. There are multiple reasons I will never lease. But what attracts people are the low monthly payments and always having a new vehicle. But it isn't truly yours. If you opt to buy it at the end, you're still paying more than you should.

The benefit of it though is that you get a new vehicle. At the end of the lease you can decide if you want to make it yours. It is technically used, even though you're paying more for it, but you are the only owner and you know its quirks. If not, you can get a new lease on a newer model.

The flip side of that is you can always just sell it if you own it. Or, you can do whatever you like to it without worrying about what the dealership is going to say or do to screw you later on.

 

Dave Ramsey
https://m.youtube.com/watch?v=jImyTdlyQQE

 

What money factor/interest rate does that work out to on the rent charge? Seems way too high to me, but maybe not?

Either way, your monthly payment is very low for a brand new truck. Keep the lease, enjoy it, modify it all you want (within reason). When the lease is up, DO NOT give it back, unless you had an accident with it and there is a big carfax claim on it.

Simply sell it privately or to Carmax or one of those places or buy it out for yourself. The truck will be worth more than the buyout, especially in 3 years with inflation and prices of trucks constantly going up!

My guess is that if you were to sell it in 3 years it will probably be worth 33-34 grand so you would recover half or more of that rent charge back. So don't worry and enjoy!

 

I started with a lease for the low deposit and small payments with the intent to buy it out, which is what I did 2yrs in. I lost a small amount of money that ended up being inconsequential in the overall scheme, mainly because we were not anticipating needing a vehicle at the time.

My advice would be to check with your bank or preferred auto loan company and verify when they no longer offer a new vehicle interest rate loan. It should be two calendar years, but I do not know if that is universal. I bought out my lease then and got a 1%+ lower interest rate than the used car rate. One year into the payments and I have cut the term significantly with some extra $$ going in.

 

This popped up on my feed today, thought it was funny after reading this thread, so OP which one are you!?

 

Submit it to Vroom for a quote for them to buy it. If it's higher than your current buyout, you can sell it to them and they handle all the BS and cut you a check for the difference. Did this with my wife's leased Honda that we hardly drove.

If you have negative equity from the previous vehicle, that may not work out. But with the demand Tacomas are getting right now, you may be able to come out ahead.

Then you can rid yourself of the lease and look to purchase one with terms more suited for your planned situation.

Or just ride out the lease and decide when its over whether you still want the truck or if the new one out at that point is better suited for you.

Don't fret too hard on the people roasting you for getting a lease. It makes sense in some scenarios. Only thing is you may have to return it to stock if you modify it before turning it in.

 

Thanks everyone! I decided I am going to keep my current Tacoma...wait for it...but convert the lease to a purchase. I won’t take a hit on a trade in, and I will end up saving ~$4000 interest taking the loan instead of leasing. Plus, best of all, after 3 years I’ll only owe ~10k on it instead of $29k if I chose to purchase it after the lease.