Leasing???

I did just the opposite as I was well informed. I sold my Tacoma instead of giving it back to the dealer. Still had 4 months left on the lease. Made $900, dollars Toyota give me a check for $350 instead of me paying them $350 for disposition for releasing with them. Got a Tundra for cheaper than the Tacoma. Did the same thing to the wife’s Acura and made $1200 on her lease. My lease is up in about 17 months I think. If the market continues the way it is I stand to make back around $10k, making my leased Tundra free to drive for 3 years. As it is I can walk away right now with money in my pocket. But this is and a big if, the market stays the same. If it does, I don’t see me getting a new lease at the same price I have now considering MSRP prices, no negotiation on new Tundras and the fact that the tundra is more expensive now. In which case I will buy out the lease and keep driving it till a better deal comes alone. Not to mention I am not feeling the new tundra and as much as I trust Toyota reliability, I don’t want to be the guinea pig for a new model.

 

When I ran the numbers - leasing every 3 years was ~22k more total cost than purchase at the 10 year mark.

I have never owned a vehicle more than 3 years.

Now with my tundra - total lease cost for 2 years was about 9k. Bought out at the end of the lease for 31ish.

Because of the crazy market I could probably recoup my lease cost - but then what, turn around and pay more for something? Nah..

I have really been surprised how many people get border line offended when I tell them I lease.

Anyways - 59k truck, 3 year lease, my guess is you are high 4s/ low 5s.

 

And where would you be had you purchased the truck on similar terms? $15k? 25?

I’m just saying that a prudent person, careful with money, will save in the long term. If you expect to use the dealer for all maintenance and trade in every 2-3 years than you probably don’t classify as a prudent financial person. Plus on those situation the difference is narrower. I tend to keep vehicles 10+ years, which is the reason I buy Toyotas. When I buy, I consider cost of ownership per mile, I’m sure there is an insane difference between those with a 3 year lease, those with a 3 year purchase, and those with a 12 year purchase.

some of the wealthiest people I know, have wrath not because of their wage, but because of their prudent behavior and careful money habits.

I have a 6 yr old 4runner with 75k miles on the clock, pd in full. I could sell it today for more than I paid for it… given this is a crazy market… but that will never happen with a lease.

 

The fact is, this amount of money to some people just doesnt matter. Financially prudent or not.

 

These guys with their 'leasing can be a good idea...'' Please. You pay to get in. You pay while you drive it. You pay to get out. It doesn't matter whether you're leasing cars, copy machines or airplanes. Leasing is ALWAYS the inferior choice.

 

Who's paying to get out of a lease?


Your argument is identical for buying as well:

Paying to get in (down payment)
Paying while you drive it (monthly payment)
Paying to get out (Realizing the loss on a depreciating asset when you sell)

 

One should never use always or never. It’s always a bad idea to use always or never. All joking aside, depending on tax laws, planned usage, terms, and a number of other variables, leasing can be financially advantageous. It may always be a bad idea for you, but is often a good idea for others.

 

Leasing isn’t for everyone and neither is buying. Also pros/cons to both. Say you bought your truck and financed it for 6 years and kept it for another 4, total 10 years. Say the total price for your truck was 40k. Now I lease for 3 years, it roughly comes out to $13.5. I can drive a new truck for the next 9 years for the same price as your truck. And take for instance, Toyota, everything is covered for those 3 years, even oil changes. So all I do is put gas and drive. At the end of 10 years your shopping for a new truck. Grant, your going to have a truck you can trade in for cash. But if you are smart you flip the lease instead of returning it and put money in your pocket over those 3 leases. And I understand that this isn’t the case for some vehicles because they lease poorly and the residual value is higher than the vehicle is worth, but using a Toyota as an example it very likely to make money on lease end.

 

I made money on my last lease and Toyota paid me to release. Didn’t have to pay to get out of it.

 

I don’t get the misunderstanding of leases, your lease payments plus the buyout at the end of the lease term always equals the initial purchase price. The exact same as if you financed it. If I buyout my lease at the end and want to keep the vehicle for 10+ years after, I still NEVER pay more than the initially negotiated purchase price.

 

The angry anti-leasers don't understand leases and how useful they are.

Research was made a long time ago on the cheapest way to own a vehicle.

It was determined that buying a clunker and keeping it a year was the cheapest method.

Leases aren't for everyone. Not sure why people are so angry about it.

 

Again, people have no idea how leases work. You do not have to return the car you leased it from. This simple fact and the insane market now means people are making a killing.

If I had a lease to return, I would shop around to see what the market seems it is worth. If it anything at or above buyout- sold. This way the leasing dealer can’t try to make up some bogus charge.

Angry anti-leasers just want to believe what they believe. Same way with people and their antiquated views about mortgages (especially arm), crypto, and credit cards. Your knowledge from the 70s doesn’t really apply today.

Imagine all those guys that bought a Raptor only to find out about cam phasers. Add to that Ford’s inability & unwillingness to properly address the matter. Wouldn’t they love to return it and the end of their lease or even sell it Carvana right now.

 

Thanks, I have always been a bit hazy on how they worked, as I've never leased a vehicle. I always pay cash or mostly cash for a used Toyota or Lexus with 100k+ miles, drive the hell out of it for 8-10 years, then sell it around 200k, although my last Lexus I drove until 260k, as I liked it so much and it was still reliable. My wife's current Lexus is at 180k miles, is starting to have the once a year expensive maintenance/ repair items come up (last one was over $1k) so I'm starting to explore the options for replacing her vehicle within the next year or two. We really want to get her a hybrid 4wd good size SUV with a third row. That leaves us with a Lexus GX/ Sequoia (too expensive and a gas pig - we only need one of those, and that's my Tundra), a Highlander Hybrid (too small and tiny 3rd row, basically the same size as her RX), and a stock SR5 4runner (which we love but would like better gas mileage, as most trips away from the house can be a 100 mile round trip... These are rarer though, and she primarily uses it for short errands around the house).
So this is where I got the idea to lease, which would be: Lease a 4runner for 3 years, hoping that they make it the next vehicle to come with a hybrid option, so if they do, we can buy the lease out and sell it, then switch to hybrid 4 runner (on financing, since we would plan to keep it 10+ years) also I'm paying for it, and I want her to have a vehicle that's got capabilities past what she will ever need, living in the mountains and being the kids primary mode of transport, so I want the costs to be fairly cheap for the next few years until the kids are both in school, and she can go back to work, and afford a more expensive purchase payment herself, hopefully on a hybrid.) If they don't come out with a hybrid 4 runner, which I would think is 50/50 at this point, we would just buy out the lease and keep it. Also with vehicle prices being so out of control out the moment, locking in a future purchase price at todays potentially lower costs seemed like a positive of leasing. So the biggest question, is, and I think I got an answer, is that any down payment put in to lower the monthly payment is considered equity, and not just cash to line the dealers pocket. Am I correct in assuming this? We would be selling her current RX while it still has some value and rolling that into the lease, probably putting $5-7k down to keep the 4runner payments under $300/month. Is this a logical assumption, or would we be better off putting a smaller amount down, and investing that cash to draw against for payments, hopefully with a positive return... If its a wash and there's no disadvantage to putting in a larger down payment initially then the decision is down payment and lower payments vs investing it for the 3 years and higher monthly payments....
Normally, I would just be looking to buy her a 5-10 year old 4runner used, but with prices being so out of whack right now, exploring the leasing option seemed like a better bet. I appreciate everyone's input on it, and have some good questions to ask the dealers...

 

Just understand you don’t have to formally buy-out the lease to sell it. Kinda like how when you trade in your old car, the dealer takes care of all the paperwork. Same thing applies to lease buy-out.

So when your lease is almost over- maybe 4 months left- start to see what you can get. My brother did this with his 2 door, white Lexus 350 f sport awd. He hit the back bumper and it cracked about 1 inch. I told him the leasing dealer would destroy him.

He actually listened to me. With 3 months left, he went to GMC for an AT4 in inventory. The dealer bought him out. They paid the final months, paid him like $2500, no penalty for the damage and he got his truck for under sticker.

 

Not every decision in life has to be based upon finances.

 

This is excellent advice. The unhappiest I have ever been is putting a price on every little thing I did.

Do the big things right- usually be ok with a little luck.

 

you ever go to leasehackr.com

 

On a lease, you’re paying the spread between the agreed upon our purchase price and a fixed residual or end of lease value. If you put money down, it’s only lowering the payment not really moving any other metrics. If you can afford the full payment without, I’d always put my money elsewhere. If you put in to the lease, you’re paying down 3% interest instead of potential better returns elsewhere. While small dollars on $5k, I’d rather keep cash.

 

No one is mentioning the cost of money.

If you keep that $50,000 you could have spent on a car and left it invested instead.

Assuming a 10% return on investment, having that money parked in the stock market and not your driveway actually drives down your monthly payment by a few hundred per month (because you’re earning that money back elsewhere).

People lease their cars because it’s the financially prudent thing to do. Of course different deals/cars/scenarios call for different tactics but making a blanket statement that leasing is always a bad idea is just flat out wrong.

 

EXACTLY, and even financing is a smart damn move when it’s 0% or 1.9%- that’s essentially free money and that $30-70k (depending on year and vehicle) is far better used elsewhere. All these old timers and “money smart” folks who think buying a new car cash is smart needs to get with the times. A locked in interest rate that low is a no brainer- invest it in the market, crypto, a second rental house, shit put it in a high yield savings account and make some $$.

 

I am not am old timer but look at the interest paid. It’s a waste in all honesty…interest never makes money. 24xx.xx isn’t a lot of money however it you take what it would have cost monthly and make it disappear into what whatever investment you see fit it will grow much larger because in one day you saved 2.5k. Yes you can hit it big with a hot stock but that is not the norm. Interest is alway a losing proposition IMHO.

**EDIT**
And this is where “they” get you. It cheaper to borrow but when you start to add multiple “free” money loans together: mortgage/vehicle/ATV/outdoor furniture/ETC it adds up to a crazy interest amount…

 

Stock market has averaged a 10-11% return since inception (don’t need a hot stock, just an index tracking etf portfolio).

If a lease lends you money at ~2.5%, you’re still up ~7.5% on your money.

Life always calls for balance, you don’t want to finance everything!! But there are times when leasing a car or truck can be better than buying.

Source: I bought my Tundra and lease my wife’s car. Depends on the specific situation. Edit: And they were both the right move

 

I completely agree about balancing… But the problem is that many people DON’T balance. The stock market is more of long term goals, not a quick flip. And the bottom line here like you stated that everyone’s situation is different which dictates the best actions…

 

I didn’t read every post…but most of the “rich” folks lease and use it as a tax write off on their business.

 

I’m not rich but use my truck for work, receive a taxable vehicle allowance/mileage and claim 95% truck usage for work. Get about 50+% back in income tax. Works for me.

 

Some people don't understand...I plan on buying it out off the lease. I was just curious, if anyone knew where the payments were, but nice to see how nasty some people are. To those that offered good advice thank you, I appreciate it.

 

And to Crunch527 I'm curious how to do that please write off...I do own an electrical business.

 

Check the math on that and see what you pay during the lease and add the residual value, and that can help you see what you are paying. Then compare that to what it would cost to buy.

 

Why I put “rich” in quotes…from what I’ve seen, most leases make more financial sense or there is more of a financial advantage when you can get the tax break through a business. Northern Toyota, your example is exactly where the advantage lies, smart move for you.

Without the tax break, I have not figured out a way for it to make sense for me to lease. I do care about the overall cost and don’t have to have a new vehicle every 2/3 years. I also pay double on my mortgage.

Most leases are set up for the dealer to flip the vehicle in 2-3 years…historically why the residuals are high and this either steers folks into another lease or they tap out.

Most of the time, it doesn’t make sense to lease and then buy after the lease is up. But the market has changed significantly, and it’s probably worth a bit of study and analysis to see where things are today.

Yet if perpetually having a car payment doesn't matter and having a brand new truck every 2-3 years is appealing, then lease one simply due to less monthly payment as compared to buying. In this scenario it’s more of a cash flow focus. It’s also a way for folks to drive a more expensive vehicle they may not want to buy.

So no right or wrong answer…it depends on your situation and preference.