Dianne's OCTOBER Rock-tober 2010 deals on leasing and buying!

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10/8 to 10/10 Prius specials with me!

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Just as I stated earlier, in comparison to my son's car in 3 years, the guy most likely to have equity at lease end is the person leasing right now, with low residuals. I didn't say there was anything particularly wonderful about having a higher payment, but if rates were higher (like the .00235 folks were paying a year ago, or even the .00075 folks were paying in March) then the higher money amount would be interest going to Toyota Financial. Not hitting the car's depreciation. In that way, it's a plus. It's just math.
I have way too many buyers from 2.5 and 3 years ago that have equity in their cars when they trade them. I always encourage folks to see what their "lease return" is worth as a trade.
Dianne

 

Of course you can.
At the very end of the lease, there's a residual amount you can buy the car for. When you turn the car in at lease end, you would have paid it down to a specific amount that the financing bank (in this case, the TFS folks) deemed the car would be worth TO THEM when you end the lease. It's pretty much a given that TFS isn't making much with the subvented rates. At .00025 on tier 1+, they make their bank fee of 650, and then an average of 10-12 a month interest. For 36 months time, that's not very much! It's logical to assess the plans they have towards the end of the lease. They allow the dealer it was dropped at to buy it, but they set the pricing regardless of what the residual was. Then, we pay an additional $500 to certify it, of course, because if it isn't certified it doesn't sell as well. They also will charge the dealership the prevailing market rate. On certain cars, it's often higher than someone's residual. On other cars, it's better because the market may have been in a slump.

A couple years ago, I wouldn't have wanted to be Toyota with their Tundras and Sequoias coming in off lease in droves, and no one wanting them at all. Not with gas at $4-5 a gallon.

I seldom allow my clients to just drop a car without seeing if they have equity. It happens a lot. And, if there is equity, you are entitled to it. I have a customer - a family, actually - who leases all their cars thru me and even though they drive 10K to 12K a year, they write the leases for 15K just to have a lower residual so at the end, they always DO have extra - always more than enough for the drive offs on the next car.

I'm sure Toyota Financial wishes that everyone would just turn their cars in... because that's how they make up the difference in revenue at lease end.

It's less likely that a car like a Tundra or Sequoia will retain much chance at extra value with the fuel pricing being so volatile when it blows up sky high, as no one can control it, but they CAN control inventory and availability of the possible problem products and create a demand for them used, thus helping to rid everyone of the late model lease returns. It's highly likely that someone at the end of their 3-yr lease right now will have some $$ left in their cars. It really depends on the current market for that car and the availability of the competition to it.

I hope that makes sense. I can sure cite plenty of examples... but I am also happy to answer any questions!

Dianne

 

By the way, Toyota doesn't negotiate at the end. They never have. Other banks might because they are in the money business. But, Toyota says either buy at residual or bring it on in... I think it's because they have such careful penciling of the car's values and while a market here might be weak, or there where you are, it's usually better elsewhere.

 

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These cars have GOT to go - grab one fast before they are sizzling out of here.

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LEASES of the day changing

 

Back by popular demand, requests for the Leases of the Day!

 

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changing things up

 

NEW Dianne's OCTOBER Rock-tober 2010 deals on leasing and buying!

Changing things -- be baaaaaaaaack with more specials soon!

 

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There is no $500 rebate here.