Leasing question

Add MD to the list along with TX I guess, but in the vast Majority of states you only pay tax on each payment. I guess they could say this is part of your "down payment" to make it sound better.

In above states it seems leasing is not as sensible. Adding over 2k in taxes into your payments or up front washes out most the benefits it seems to me anyways. I would rather purchase if I lived in Texas or Maryland

 

I've purchased and leased multiple vehicles, and there are benefits to both. From personal experience, if you like a new vehicle every few years, lease. As other posters have said, it's easier to turn in and you're at less risk of losing value due to accidents, wear and tear, etc as the residual is a stated value in the contract. Specifically with Toyota/Lexus, I've turned vehicles in early as trade in's and gotten more than the residual, so those numbers worked favorably. That said, you pay for convenience and leasing is convenient. If you're like me and always have a car payment anyway, this might not bother you a whole lot, and you can get into a nicer vehicle than you might otherwise afford.

On the other hand, if you intend to keep the vehicle, buy with cash or finance it. Buying out a lease is seldom financially sound. I planned on purchasing a leased vehicle one time, until I did the math on the lease cost plus residual and financing. That said, I financed the Tacoma with plans on holding on to it for awhile.

 

If you are going to get a new car/truck again in 3 years leasing makes more sense. You won't be upside down and might even have equity - especially with a taco. Trade it if you have equity, return if you don't. If you pay cash (not financing) you will take the full depreciation if you trade/sell it which may or may not be more than the lease payments. However, you will have the opportunity cost of lost interest if you had invested that $30-40K.

If you plan to keep a vehicle for 8+ years you should buy outright or finance. Leasing makes no sense there. If you want a new one in 3 years or you are trying out the taco and not sure you want it long term then a lease makes more sense. You have various options at the end and you will know from day one how much each option will cost (return, buy out, trade in is somewhat an unknown).

That said, if you have $40K burning a hole in your pocket might as well just pay cash. You won't lose a cent on interest (financing) and probably won't make much putting it in savings. If you do trade it in 3 years you'll likely get a decent deal just as if you traded a lease but you'll have $30k in equity not $2k. Of course, that $30k is just what's left of the $40k you gave them when you bought it. You will have paid tax on the purchase but you'll get a credit for that tax for the $30k (or whatever) you get on the trade in.

 

With a lease you are basically paying for the depreciation of the vehicle. In essence it's the difference between the cap-cost (the price you've agreed to pay) and the residual (the projected value of the vehicle with no more than the predetermined mileage and in at least average condition for that mileage and lease term).

There's nothing wrong with leasing as long as you fully understand what it means. If you're the type that wants a new vehicle every 2-3 years and you maintain them well it might be right for you. Sometimes a lease allows you to step up to a more expensive vehicle and/or higher trim for a cheaper payment than a retail deal would be.

For some people leasing is perfect. They want a vehicle that's always under warranty and is always newer. Maintenance is generally coverd for most of it. At about the time the warranty is expiring and the tires are wearing down....boom, you step out of that one and into a new one. That's a win for some people and they don't mind that monthly payment because they're paying for the convenience of never having to spend much more than gas and car washes on it.

Here's what to avoid. Never slap a bunch of cash down on a lease. You're lowering the cap cost which reduces the difference between the cap and the residual....effectively lowering your payment. But it's almost always better to hang on to your cash. Better off to negotiate the cap cost instead.

Secondly, never lease a vehicle for longer than the bumper to bumper warranty. You're liable for any repairs once the warranty is up. 36 months is generally considered max term on a lease. Don't get talked into longer than that.

Look carefully at the mileage restrictions. Leases can be structured for any mileage. But don't set it up for 12k a year when you know you drive 15k. Additional mileage can be bought fairly cheaply at the setup of the lease....generally 10 cents or so. But is generally 25 or more cents at the end of the lease if you go over because you have effectively lowerd the residual value by going over the allowable mileage. Bottom line....buy the mileage you need at the beginning of the lease....not afterwards.

If you beat the shit out of your vehicles....don't bother with leasing. It's value will be well under the projected residual. You'll pay the difference....dearly.

You mentioned cash. If you know for certain that you will only keep this vehicle for 3 years and you want to hang on to some of your money, you could always prepay a 3 year lease upfront.

 

I bought mine with 0%. I probably put a little too much down considering I earn about 7% on money between investments and dividends. Never have leased and never will. I had a CU rate @ 1.74% but chose the 0% and gave up $1500 rebate. It was a wash. Unless you just have to have a 2018s the deals on the 2017s are awfully hard to pass on right now. I was going to wait until January but between the $1k price increase and rebates it made no sense to wait. That and the fact that I found a truck with no dealer adds or port options.

 

You get around that by negotiating price of vehicle before talking finance options.

 

Yup, lots of dealerships get kickbacks for having the client finance with their go to bank or credit union.

You got 0% on A Tacoma, term? (48/60/72) if 60 or 72 months then Wow and Congrats, Seriously! Where was this at and what region as I am not seeing any incentives on the tacos? And 1.74% is amazing in of itself, what was the term on the 1.74% though and was this very recently prior to the last couple major fed rate hikes?

Either way Enjoy your trucks Fellas

 

Nope on a Tundra. 60 months. 1.74 was also 60 with Austin Telco. I qualified with them because my brother lives in Austin. Bought a TSS Tundra. $2k rebate with 0% or $3500 rebate. Thought about a DC but resale, sliding rear window and $500 higher rebate sold me on CM. Needed the larger truck for towing bigger boat. 2200 Champ Bay scales @ 5000 lbs. Pic of Tundra is after adding Pro grille and 6112 Billys. Towed boat from LaFayette to Dallas with Tacoma. Ran 70 - 75 whole way back but at 10 mpg the 21 gallon tank was not going to work. I had to stop twice for gas and filled up right before picking it up.

 

Heck I just realized I am on the wrong forum. Sorry

 

Sale price is the sale price plus acquisition fee around 33,870
Price at the end is the residual value, set by Toyota about 60% of msrp around 21400
Minimum starts are 1st payment, registration and dealer fee.. around 700-900
The deciding factor will be the current money factor or rent charge around 45 per month

If they won't give you the info keep looking for a new dealer
Look up average sale prices in your area and offer them that if they give the rest of the information so you can decide to buy or lease...
But don't shop till you're ready to buy and if you get a fair deal from a good dealer just buy it....

https://www.truecar.com/prices-new/...319&incentiveIds=&trimId=304138&zipcode=53150

33,268

Or buy one from WI we just give them away up here....

I leased mine first and bought it out at the end for 19,000 4 years later it's still worth 25,000
A lease is a good way to test if you want to buy it, things happen, bad truck, accidents, new models....
I leased 2 4Runners than bought out the Tacoma...

 

Here's a thought, let's say you have 30K in a savings account and you use it for a new truck. In 5 years your truck is maybe worth 20K. The 30K that was in the bank is still worth 30K. Yes, you can replace the 30K by making payments to yourself. but will you when other things come up? I think it's wise to pay for a vehicle up front but not if it cleans you out.

 

Right. Lol.

Beautiful Tundra by the way but yeah, no 0% or incentives besides dealer discounts on. Tacoma currently that I know of.

What is a TSS Edition? I've never heard of it, Regional special edition?

 

Leasing always gets some stupid comments.

I leased a 2017 Tacoma TRD Sport DCSB 6AT 4x4 with JBL/Nav in June and am paying $346/month AFTER taxes with $0 down and 15k/year. Show me another $38k vehicle you can get for $346/month.

I'm active military in a revolving deploying unit, so I'll just turn it in early and have paid chump change to drive a brand new vehicle with a warranty and included service for 18 months...and do it all again when I get home.

 

That's a really amazing deal!! Congrats and enjoy! Got my deal beat by quite a bit.

Crew Cab? What's your location and did you have a trade in with any equity that they used to offset? 36 or 39 months? And 15k miles? Prob could have saved another $20 opting for 10k or 12k mi/yr unless you drive a shit ton when not deployed.

 

Exactly my thoughts as well.

 

If you put 30k in the S&P 500 5 years ago, it would be worth $51,900 now. The 30k loan would have cost $2800 in interest. If you can afford the payments, putting your cash in the market is a no brainer

 

Yep, i use my money to invest is property and or the market so I really never use it to pay off my cars...as long as the interest rate is less than 3%---i have no problem making those payments because I can get a better ROI elsewhere.

 

Yes, crew cab. I got it from Crown Toyota/VW in Lawrence KS. No trade. 42 months. Yes, I drive a ton. I honestly think that you could lease it for just over $300 if you did 10k miles on a shorter lease. US Bank has them at a 78% residual, which is insane. It's the only car acquisition I have allowed myself to make on the same day of a test drive.

 

Good stuff Brother! Great deal! Volkswagen (VW) dealership you said though? Was it brand new or a 2017 that they still were able to lease to you or am I misunderstanding? Just like I did, you went a little longer on payments. I did 39 and you did 42 which helped me lower payments and residual a bit.

Toyota financial whom I have been with for about a decade (leasing and or purchases, usually the 0% deals) did not have a better lease rate than a somewhat local credit union so that's who they used for my lease.


And I'll freely admit I do not miss deployments. Had a blast while I was in and wouldn't trade my experiences for the world but yeah they are a kick in the ass. Stay safe out there!

 

Oops. Type-o. Crown Toyota, and yes, brand new. I leased a VW from Crown VW before my previous deployment, lol.

Crown set my lease up through US Bank. I used VW financial last time, and it was cake turning it back in. I have read US Bank is a little shittier, but we will see late next year.

For me, it's all about minimizing the payment each month, because I know I'm turning it in early. The terms aren't particularly important to me, ha ha. $0 down and max mileage is all I care about.