Paying off a lease early

Leased my first car a SR5 2WD last year at the age of 19 (with my brother as a co-signer) on 04/2021 with virtually no credit score as my credit history at the time was around 3 months old but fast forward almost a year later with a credit score of 750 I would like to potentially pay it off early ($12,000 remaining payments in the next 4-6 months) and this time finance a new 2022 TRD PRO/Off-road - do you guys think this is a sound financial decision? Ever since I found renters for my house I have been paying double the amount of my monthly payment. My main reason for a lease at first was because I knew I did not want to keep it long term and my primary goal was to raise credit but as I fell more in love with Tacomas I would like to finance a TRD to call it mine. Obviously this revolves around my wants than my actual needs but would love some opinions on the matter.

 

Hey! So leases work different than traditional financing. You pay a monthly rental charge then either turn it in or buy it out. First off, never ever pay for any lease in advance. It'll be lost forever if your truck is totalled.

Sounds like you wanna trade up into a TRD. If so, I would sell the SR5 to vroom or Carmax or similar. Hell you might even make money depending on what your residual + remaining lease payments are at.

 

Not a sound financial decision at all because of the price you'll be paying for the new truck. A sound financial decision would be to wait out this sellers market before changing trucks or better yet wait until next year when the new Tacoma comes out.

 

Agree with everything you posted here other than the part about losing money if it's totalled. You can simply get insurance to prevent this from happening just like you can with a finance or a cash purchase. It's different than GAP insurance (called replacement insurance where I live). Basically for an extra $15-20 per month, if you total a lease at any point the insurance company first will pay off what's owing to the leasing company and then give you the remainder in difference between that amount and the total price of the new truck. So basically you get all your money back minus tax and interest.

 

First, thanks for posting a picture with doggos included. Good job!

Second, sell the leased truck to Carvana.

Third, go make some calls and find your Pro or Off Road that you want.

Best deal right now is paying straight msrp. Do not pay markup or market adjustment pricing.

Don’t wait for the price to drop lower than msrp. You will only be in your early 20’s for only a few more years. Plenty of time to fix or learn from your own financial decisions as you progress in life.

 

That lease GAP insurance is just a total money grab for the leasing company. No reason to pay advance lease payments because you owe the entire lease payment regardless if you pay it early or pay a monthly basis. Unlike traditional financing where you'll save on interest if you pay in advance.

If you feel the need, most lease gurus will tell you to throw the extra payments you want to make into a separate account (earning interest/gains at whatever risk you're willing to take).

 

Talk to a Toyota dealer they might buy it from you due to low used inventory. I just paid $500 under MSRP for my 2022 TRD AC so around $36,500. How big of payment you want will depend on your down payment. Score is fine to get a 3~5% intrest rate or lower with 60 month. Find a trd off road with technology package for the OEM led headlights.

 

I would never prepay a lease myself either.

All I'm saying is you can insure a lease through your insurance company and not the lease company to protect yourself if you decided to put a large down payment on it for whatever reason.

 

I work in sales at a dealership, and I would discourage you from early termination unless you really, really NEED the a TRD and cost/price is a low priority to you, and the TRD is a necessity and not just mostly a want.

If you look at things from an overall cost per year, and if that is a consideration, riding out your lease and making an allocation order during the last 6-8 months would be the smoothest and most cost efficient transition to what you're trying to accomplish, and apply any incentives/rebates available at the month of which you take delivery.

$12000 is a lot of money to get out of a lease only to then make a 45-50k decision. Many people would say it's not right for them, but the question is, is this right for you?

 

Welcome aboard!
Some good advice above, consider it and make a good decision. You can always see what a dealer would do, but no way I would ever pay over MSRP. I personally would wait until toward the end of year and see what prices are then.

 

Presumably once he paid the $12k he would have quite a bit of equity in the leased truck as now the balance owing would be that of his residual only which would be much lower than the current value of the truck.

I would approach this from a different angle. I wouldn't pay the lease out. I would simply try and trade the thing in now and see what dealers are offering on trade for his truck. It could be that the trade value is simply very close to what's left owing on the truck total. In which case he would just negotiate the price of the new unit.

 

I don't know if it's good idea since you are on a lease. If you turn in early, you may (must) pay the remaining payments and/or the other fees.. probably termination fees depending on the dealer. If I were you, just wait until the lease is done and return the leased truck back to the dealer and purchase a TRD truck. FYI: If your leased truck has any damages or any wear/tear interior, then you may pay for the damage fees.

 

Is the lease with Toyota Financial?
On the website after you login, there is a tab named Lease-End Options , then go down to Purchase your vehicle. It will give you the purchase price as of today.

That is how much you pay to keep the truck today and no more lease. Or the payoff price if you sell to Carvana or anyone else.

For example if payoff says $27k and Carvana will pay you $33k then that will give you $6k in your pocket.

You don’t have to payoff the remaining lease payments.

 

OP, when I was your age, I would usually trade-in every 2 years (cars and motorcycles). Mainly because I wanted something different and could afford it. Keep photos of all you vehicles (like the picture in your original post) and you will have some great memories when you are older.

 

I agree. There's nothing wrong with looking at options. The leases we typically do require the full payment of the agreed on balance in early terminations plus fees, and often result in negative equity in these situations, but we don't know the exact terms of his lease. It depends on what a dealer would give him on a trade in, but it's been my experience that this most often would result in negative equity being rolled into the new loan, but you're right, the question is how much?

 

So very true!!!

 

You're doing something right. You have my two favorite dogs! That Lab is a total block head. He looks great! I'm not offering any financial advice. There's plenty of that going on around here but congrats for being in this position at your age. Choose wisely and try and not give the banks anymore of your money.

 

My wife leased as Nissan a few years ago. She took it in for service and came home in a new Maxima. They took her Rouge eight months early and put her in the Maxima. Cost nothing extra. My accountant son was with her but he said it was just a here ya go kinda transaction.

 

That sounds criminal! lol
I have read about 3rd party leasing banks , like US Bank having such terms.
I would never lease a car with those banks.

I learned a lot from the leasehacker forums and every car I have leased, I have sold early and even have equity and get a check cutout to me from Carmax or Carvana.

 

In this case, it's not early termination, it's early buyout. I would not expect termination fees to apply. Several options for the OP. Buy out the lease and sell the truck to a private individual or Carmax, Carvana, etc. Could also buy out the lease and then trade the truck on the new one. Could even see if the dealer would work a deal to trade the leased vehicle in on a new truck (I would watch the finance dept. like a hawk for this option). Given the current market, the dealer might give a really good trade in value just to have the inventory.