Hello everyone! New poster here. Stumbled upon these forums on my crazy internet travels. Anyway, I've done quite a bit of searching on leases and loans and although I am pretty sure I know what I am doing, I still wanted the opinion of some experts. I basically just signed a lease with some money down for the lower payments. I am aware that I will probably have to pay the same size payments on a residual loan after the lease is over, and I know about money factor and all that stuff. The finance guy was a personal friend of mine. Anywho... the main question I want to ask, is if your intention is to own the vehicle in the end: Which way saves money overall? After doing some math it looks like my lease would... but is that just because of how it looks right now?
How long was your lease? If you have a three year lease and then get a loan for the residual and your payments are essentially the same you've really done nothing more than worked yourself a longer loan with lower payments. Of course you do have to factor in the interest and normally the longer the loan period the more interest you pay (with the exception of 0% loans). The other gamble is what interest rates will be available two to three years from now. Currently they are pretty low, there is a good chance they will stay that way because it will probably take longer than two to three years for the economy to recover. But it's still an unknown...
In general it costs more to lease if you intend to keep a vehicle. However, there are all sorts of special incentives and giveaways that can skew the results, so it's impossible to make a blanket statement. You will need to give us the details. Tom
I understand. What specifics do you need? I have the lease agreement here but I don't know which information is applicable. I put 4500 down and the cars risidual is 15857 after 35 months with a payment of 315.69 a month. The cars value on the agreement is a little inaccurate but that's only because of how much extra stuff I had added and such. The only part that concerns me is it looks as if they broke down my downpayment to pay some fees (license, california tire, etc) making a much smaller amount going into the capitalized cost reduction... plus there is some 600 dollar acquisition fee which the dealer said was mandatory by Toyota and not them.
Oh, also, I can't find the MF on the form but I know it was something like 0.00175. I remember making a big deal out of it. I also got the 2 year maintenence plan for free.
In my opinion, buy a used car with cash. No interest, no worries about a first scratch or a dent. Much better solution to transportation problem if you want to save. I saw several ads for 1-year old 2010 Pius for $18-17k on Craigslist, if you want a new model. Thanks, - Alex
At the moment everyone is getting the 2 yr maintenace plan for free, so don't even consider that in your deal. The $600 acquisition fee is suspect, never heard of that, and if it's actually the dealer documentation fee, then that amount is set by the dealership. Here in GA is varies anywhere from $400 - $600, other states it can be as low as $99.00, but it's not set by Toyota! Given the numbers you've provided: Down Payment: $4,500 Total Lease Payments: $11,049.15 Residual: $15,857 (3 yr @ 3.99% = Payment of $468.09 = $16,851) Total: $31,406.15 (If you paid cash for the residual at the end of the lease; $32,400.69 if financed) In order to compare this to what you would have paid if you got a loan, you'd have to plug in the total amount financed at the interest rate you would have qualified for into a simple interest loan calculator, then add your $4500 down payment and see which would have been less. Again, this will only tell you the total amount you'd have paid at the end of the lease/loan if you keep it the entire term. Other factors do play into the equasion, is your lease payment less than what a car payment would have been (figuring a 6 year loan being compared to a 3 yr Lease/3 yr Loan). Could you have afforded a larger payment? Prices in CA seem to be higher than anywhere else in the country, so it's not fair comparing what you paid (or will pay if you keep it after the end of your lease) and what I paid here in GA, so you have to be comfortable with the purchase and the payments, but it seems to me you could have saved about $6K by paying MSRP and taking the 0% interest...
Snake, I leased a III w/o nav W/lited sills/rocker moulding.For 339.00mo the only money I came up is the Lic fee,and they payed the first payment.The AQ fee was 650.00,Also got gap 695.00 That was included it the payment.Like you I discovered this site after I leased mine.It sounds to me the dealer to go to is Matthan Beach Toyota and to see Ann W.
To Paul: Yea those numbers seem accurate. I'm just confused on where the extra couple thousand came from to get it above 30 grand... but I'm thinking tax or other fees that are going to be applied when I finance after the 3 years (although I was going to attempt to pay cash). You are correct in your assessment, I would not have been able to afford the payments at the full price, well over 400 with what I got. Again I think I'm a little confused, but can you explain where the 6,000 thosuand difference would come from? Thanks very much for your help. To 914: Yeeeaaa... I wish I would have been able to ask some experts first. One of the things that bothers me the nost is the total price of the car on the lease agreement seems to be more than the price I agreed upon.
To Paul: Yea those numbers seem accurate. I'm just confused on where the extra couple thousand came from to get it above 30 grand... but I'm thinking tax or other fees that are going to be applied when I finance after the 3 years (although I was going to attempt to pay cash). You are correct in your assessment, I would not have been able to afford the payments at the full price, well over 400 with what I got. Again I think I'm a little confused, but can you explain where the 6,000 thosuand difference would come from? Thanks very much for your help. To 914: Yeeeaaa... I wish I would have been able to ask some experts first. One of the things that bothers me the nost is the total price of the car on the lease agreement seems to be more than the price I agreed upon.
Snake, The $6K would be the difference between the amount financed at MSRP + down payment if you got 0% financing and the total amount that could be paid figuring the total amount of your lease payments + the total amount of your loan payments @ 3.99% ($32,400) if you ended up financing the residual. In reality, it would probably be closer to $4K because you'd have to figure TTL and Doc Fees into the equasion, and I was just figuring on a MSRP of approximately $26,400. Did you have a trade? That would have had a bearing as well, i.e. was anything owed? Tax advantage, etc...
There are times that leasing is better and there are times when a purchase with financing is better. Since Toyota moves their goalposts for incentives and rates every 4 weeks, or at odd times, 6 weeks, what's good for a goose in March or earlier varies for the gander in Nov or Dec. Knowing the specifics of the deal usually answers the question, because no one here knows what rate you qualified for in a lease or a buy - and mileage, or options... it's not complicated when we have specifics.
Might be a good idea to talk to the business manager (the guy that makes you sign all the paperwork after the salesperson is done with you) before you close the deal. He offered me a very low finance rate (1.99%, no prepayment or additional payment penalties, 36 months) from Toyota Financial. I was able to keep my $1000 cashback (which they trade for 0% financing) which meant I pocketed about $600 on the deal. It also kept me from paying cash cause I can make better than 2% on my money just about anywhere. I'm not sure if the leasing deal is better but I definitely don't have to limit my miles/year as most leases require.
So what I did was went to http://www.fool.com/calcs/calculators.htm#auto And provided the following inputs into "Should I finance or pay cash for a vehicle? " Purchase Price $16,700 Down Payment $2000 Interest Rate: 1.99% Years I will own the vehicle: 3 Savings Interest Rate 5% State and Federal Taxes: 21% I got "Paying cash for a vehicle will cost you $430 more than financing over 36 months." Keep in mind also that since I did not take 0% financing I got the $1000 cashback too. So, clearly it is beneficial under these circumstances to take the loan if you can save the cash and make 5% interest. Now, I know we can't predict the future, but for example, if I look at a conservative 5 star bond fund like the Pimco Total Return Class D fund (PTTDX), there is a $2500 initial investment no sales charge and no withdrawal fee. It's total return annualized over the last 5 years is 6.51% per year. So it's not hard to find a place to park your money as you are paying down your loan that will earn you 5% Hope this helps.
I wanted to thanks everyone for their help and responses. At this point I've already signed the lease so I can't go back and change it, but with the amount I saved on MSRP plus the additional money I got taken off with haggling I think I'm doing just as well as with a loan. The interest on the first 36 months is only around 400 dollars. My ideal goal would be to pay cash for the residual after 36 months. Hopefully I can do that. Oh and I did have a trade in, but I factored that into the amount above (4500 down). I made my purchase at Frontier Toyota in Valencia.
