Question about leasing

Some of you may have already have seen that I am a first time Toyota/Tacoma buyer but the truck I got....I did it under a lease. I only drive a total of 10 to 11 miles round trip to work everyday and I really don't do any long trips that often. I was upside down in my 06 Jeep Cherokee and I started to notice a lot of problems with it....so I figured that I would getting something that I knew I could rely on. Plus, my wife and I are expecting our first child in August. I tried to find a good used truck with low mileage on it but really the estimated payments on the ones I look at was right around the same payments I am paying under the lease of my Tacoma. Anyways, I leased the Tacoma for 48 months. According to my contract, the residual value on the Tacoma after the lease is right around 21,100. I know I have a few options after the lease like buying the truck at the residual value, turn the truck in and be done with it or lease a new Tacoma, or according to Southeast Toyota financing....if the truck is worth more than the residual value....I could keep the "profit" or use the "profit" towards a new truck. Any advice from anyone that has leased or is currently lease on what to do at the end of the lease. Now, I know I have to make that decision at the end but I don't want the dealership to con me into something that I might regret. Also, the finance department at the dealership said that I could trade in the truck before the lease is up. Does anyone know how that works?

 

You can buy it out, trade it in, or turn it in. You can do any of this at any time during the lease. But, you're going to be on the hook for the lease contract you signed.

You can trade it in on any vehicle at any dealer at any time. Just like a loan though, you may find you owe more than the vehicle is worth. And I assume they rolled your negative equity back into the lease.

In my opinion your mistake was leasing for 48 months. My rule of thumb is no lease longer than 36 months.

Also, when you buy the truck at the end of lease, you're on the hook for sales tax of the sale and the dealer may try to get you w/ dealer prep and handling as it's a 'new' sale. Often times your credit union will have a dealers license and can handle the sale/transfer of the vehicle between you and the lessor which is usually the manufacturer but may be the dealer or another third party lessor.

 

I was looking at a 36 month lease but it was outside of payment window unless I could put more money down.

 

I have leased three vehicles over the last 5 years, two Scion xB's and an iQ. All were 24 month but that was because it worked out better for me. If you put together a simple spreadsheet you can see what your total cost is for any scenario, and you'll probably find that there's not a lot of difference in cost between a 36 and a 48 month lease, including the down, if any, monthly payments and the residual. I made out like a bandit on the two xB's, the first lease ended right after the tsunami wiped out the Toyota factory and xB's were extremely hard to get. A dealer gave me $300 less than sticker price for it and after paying off Toyota financial for the residual, I pocketed $7,500!!! That covered my down and payments and left me with almost $500 in my pocket. The second one wasn't quite so good because the resale values of the xB's dropped a bit since the factory was back up and running. I still ended up with just over $2,500 from the dealer that bought it. I used that towards my '07 Taco. The iQ is only 12 months into a 24 month lease and we'll keep it at the end, my wife loves it!
The big winner for leasing is if you have a business, you can likely write off the entire amount.

 

I guess the good thing thing about buying it when the lease ends is that you will know the true condition of the truck. You know when it was serviced and if any other maintenance has been done on it. Also, the good thing is the assurance of not being upside down trading it in at the end.