Leasing: Good Deal or Not?

I never have leased a vehicle. So the OP is going to pay $288/m tax and fees included. That equals $10,368 paid out. If at the end of the 36 months he wishes to purchase he would pay the residual $29,000. Seems to me then the final price for the truck is 29000+10368=39368.

imo, if you can't afford to buy don't purchase the vehicle. As other mentioned 18K / year would rack up a lot of penalty miles. If I was the OP I would wait till I could afford to purchase the vehicle or look at a used truck.

 

I'm not opposed to the idea of leasing; in fact, we do it with the wife's SUV... However, the Tacoma is the last vehicle I'd lease simply due to how well they hold their value. Bite the bullet, pay it off in 5 then keep for 15 years.

 

I believe he would pay sales tax on the $29k.

 

It's never better, especially not on a high-resale item like a Tacoma

 

The Tacoma lease is excellent because it has a high residual. The idea when leasing is getting that residual up there. We perpetually lease the wife's vehicles. I buy mine with cash. Before I could pay cash I did not buy anything that I could not pay off in 36 months. Never had a four or five-year auto loan. I leased a 2019 Lincoln MKC Reserve for the wife. The vehicle has a $46K MSRP. My lease is $399 a month with no capital reduction money down. (I Never put money down on a lease beyond first payment and some titling fees.) Thats a great payment on a $46K MSRP. Residual is $27K. The only reason we obtained the lease so cheap is Ford tends to discount higher MSRP vehicles a ton.

 

Why do dealerships push leasing? It’s not because it’s in the customer’s best interest.

 

Why do all the actual people in the car business overwhelmingly lease their personal vehicles?? I mean its not like they're literally the professionals lol, I guess they all just have no idea what they're doing

 

high residuals make leasing a BETTER idea not worse lol

 

Anyone who decides to lease can afford to lease new every three years. Leasing is for those of us who don't view $399 as a lot of rent each month to drive a new vehicle. I was told not to pay cash for a depreciating asset when I bought my trucks. Then the same say leasing is bad.......Can't have it both ways. I pay for one and lease the other. I want the wife in a new vehicle every 2.5 years.

I'm probably going to buy a new truck in three years or (sooner if it proves to be issue laden) when Tacoma is redesigned and the Ranger is redesigned. Going to be interesting to see what Toyota does with the Tacoma drivetrain. Or see Ford put the 2.7 in the Ranger.....Doubt it.

 

Leasing is the most expensive way to operate a vehicle. So I would just avoid it period.

 

First of all if they over estimated depreciation all that means is you'll have MORE equity at the end, equity is a good thing

Second you're using a lease special that assumes MSRP, you negotiate the price on a lease same as you would a purchase.

Third if you plan on selling it at the end you get equity, WIN (and MORE win than if you would've financed and paid all those taxes up front). If you plan on buying it at the end you didn't "waste $3-$4k" that literally went to paying down your principal same way as you would have on a financed deal. Only thing lost is the acquisition fee but that amortizes to like $15/month so I'd say its a pretty fair trade for hedging your bets on a $40k vehicle.

 

Good question,

Guess number 1, because they are folks that typically are in a new vehicle often. Guess number 2, they get a new vehicle all the time.


I have yet to be shown how leasing a vehicle you plan to own is the best financial decision. Meaning getting ownership at the lowest cost.

 

I'll give you one more guess

Hint: they're professionals

Because its not about saving a few bucks, people buy cars all the time "planning to keep them til the wheels fall off" and 98% of them never do.

So lets propose some alternate scenarios where you DO save $ by leasing:

What happens if you car is totalled?

What happens if your car is stolen?

What happens if its in a bad accident but not totalled and it just torpedoed your resale value?

What happens if plans change and you decide to buy something else?

What happens if its a new model and turns out its a dud with terrible resale value?

What if theres lease cash you're leaving on the table?

What happens if there's a subsidized money factor of .00023??

What if you have 1099 income or have your own business??

All of those scenarios you save $ by leasing. And even if none of those apply you've spent a few hundred more dollars in the long run to protect yourself in case they DO apply... hence the best way to summarize the benefits of leasing are thinking of it as "hedging your bet" on a depreciating asset.

 

Insurance covers me in most, and I am not spending a few extra hundred above what I need.

Oh and business are a different story, government has helped them get tax breaks us middle class workers pay for.

And again, for the average person, leasing is not cost effective. I don’t have and extra couple hundred bucks to waste, but please put more money into education and I may have an extra 20 to spare next year.

Oh you forgot one more what if’s. You die, then your family can just turn it back in. Actually, aren’t there fees if you get out of a lease early?

And yes, car sales people are professional salespeople, not financial experts. They need the vehicle market to keep moving, and they tend to be in a new vehicle often, does this make financial sense? Our society continues to move towards this use for a short time and then get new, it’s only helping our consumerist economy, not doing shit for our world though.

 

I believe the lease is the better way to go. I just leased my Tacoma, after the lease the truck buyout is $18500. A five year old Tacoma is definitely worth more than $18500 so I can pay off the remainder, sell the truck for a hefty profit and roll the money made back into my next lease

 

How much will you pay in that 5 years?

 

Not in a lease where you want to turn the truck in. If you surrender the vehicle, you lose all equity so this is only "beneficial" if you buy it out compared to a lease where they nailed it dead on. It's still a far worse scenario than financing. Paying more during the life of the lease is bad for obvious reasons if the intent is to turn it in.

And I used the same assumptions in calculating the financed side so it's equal in the buyout scenario. Either way, I didn't assume the usual taxes added to a lease payment or all the other fees due at signing/termination that don't get added to a finance arrangement so let's call it a wash.

My sales tax would cost me $105 over the course of the loan if I paid minimums. That's like 6 months of Toyota acquisition fees on a lease.

Also who is selling what? You don't sell a truck at the end of a lease, you buy it at the residual or you turn it in. If you turn it in, you lose every extra cent that went into the truck. If you buy it, now you're paying a much higher interest rate than would be available new and compound interest is a bitch.

The $3-4k value came from the actual end cost on my truck vs what I would have paid for a typical lease+loan arrangement assuming current rates and a 3-year loan on the residual with a pie in the sky interest rate. It also assumes I don't go over the 12,000 annual mileage limit or do anything to reduce the value of the truck. Basically, $3.6k is an absolute best-case scenario.

 

Your insurance doesn't care if its leased or financed, I think you're overlooking WHY you're better off leasing in the case of total loss.

If I lease a $38k tacoma today and put $0 out of pocket my payoff tomorrow is going to be $3,500-$4,000 LESS than if I financed as I haven't paid ANY taxes on it.

Say truck gets totaled, your insurance doesn't care what you owe, they only pay you the value, so if you financed you're screwed as you're buried in your loan, unless you put down a ton of $ in which case you just kissed it goodbye anyways. If you leased you're getting back $3-$4k MORE than you would've if you had financed as your payoff is $3-$4k LOWER. Same applies to selling it or trading it in, you avoided thousands in taxes by leasing.

And I'll just tell you the real answer on why car business guys almost always lease: because they know how it works and how to take full advantage of it and work the system, but you can too! With the internet there's all the information you need to take advantage yourself. Same goes for financial "experts" for that matter, vast majority don't beat the market and with the fees they charge you're better off just dumping your $ in an index fund from the get go.

 

Like I said you don't have any idea how it works lol. I've leased 2 vehicles prior to my Tacoma, didn't turn in either one, also didn't buy either one... so what happened?? Oh thats right I sold them and cashed in the equity lol. But according to you thats impossible... so how did I do it?!

 

That's not a standard industry lease then. At most you can use equity towards your next purchase but you don't get to walk away with cash at the end if you overpay. The only reason they let you roll it over is because they're fucking you on the next one too.

Also I've worked at dealerships for three of the major OEMs and have an MBA now, I'm very familiar with how finance works and I can say right now that there is almost no scenario outside a long-term 0% where the dealership is losing.