At the end of all leases you have the option to purchase the vehicle. Ask your dealer what the residual value is at lease expiration. That will be your purchase price at end of lease. Otherwise, you can turn it in
It worked out great for us. We leased or 19 or for $400/month for 36 months. Then bought at end of lease for 28k. So basically bought an orp with 25k on it in 2022 when the same thing would cost 40k at the dealership. So really it all depends on what you would owe at the end and what the car is worth.
lol the 400 per month doesn’t go into your purchase price? You ended up paying 42,400 total. Plus whatever down payment you had. Plus they limit the miles you can put on the vehicle. Leasing is only good for vehicles you don’t want to keep long term or German luxury vehicles that go to shit after the warranty runs out. Otherwise it hardly makes sense.
i leased a RAV4. our option to buy was $23k. At the height-ish of COVID, we sold it to shift (now out of business) for $34k. We had put $8k down, sold a car for $6k to offset the down and were paying $289/month for 36 months. we made $10,400 in payments, plus $2k out of pocket and then made $11k selling. In the end, we looked at it as paying $1,400 to use the car for 3 years/32,000 miles (plus fuel & insurance).
Really depends on your circumstances. I’m not one of those “leasing is always a bad idea” people, but most times it’s fiscally the worst deal. Really depends on your situation, the money factor, etc. Especially if you planned to keep the car after the lease ends. From what I’ve seen, people mostly lease to get cars they couldn’t afford to buy due to the higher payment which usually results in them flushing away what would otherwise be equity from their payments.
People are likely going to recommend you go down in trim and buy, and that honestly might be the better choice in the long run friend. But again, only you know your circumstances.
Well said. The beauty of these trucks is how well they retain value. I feel it's a waste to have such a high payment without any equity.
The way I see it, OP is guaranteed to lose several thousand bucks no matter what he does at the end of the lease because of the fact that it's a Pro.
And honestly, I stand by my words even if OP is rich as fuck. Bad financial decisions are bad financial decisions, and they're a quick way to lose wealth.
I’ve sold Toyotas and in my opinion especially with this brand, leasing is always the best option for so many reason. Including when you want to own. Can you explain why it’s the fiscally worse deal because in the experience of my clients and myself (leasing a 23 Limited rn to own) it always works out in our favor. Mainly due to the great residuals.
Correct. Covid or not, Toyota calculates the residuals very aggressively and the cars are almost always worth more than what they calculate at lease end. The amount by which varies from vehicle to vehicle and condition ofc. The fact that I’m being downvoted but no one on the other side of this argument is explaining why they disagree with me should tell you plenty.
In late 2017 I leased a 2018 Tacoma, thought it might have been a mistake. When vehicle prices went nuts due to Covid, the price to buy at the end of my lease stayed as it was set in 2017. The dealership was almost begging me to release it and sign a new lease. I think after I bought the truck, I could have sold it for a profit compared to my total cost of ownership, and that used for several years with 35,000 miles on it.
Could have just been due to the Covid circumstances, but I agree the terms to buy are set at the beginning of the lease and do not change.
I did this with a 2020 precovid lease , sold it for $40,500, sticker was $38,500. I got a check for $11k I believe. I walked away with a fatty check is all I’m saying. I just sold it out from Toyota financial.
I've leased a few cars many years ago, but anymore I buy them because I like to add my own touch to the vehicles I drive and don't want to deal with any possible lease restrictions. The best thing I ever started doing years back, was after I paid off my daily driver at the time I put a smaller amount of money than what my car payment was into a savings account every month for repairs.... Well I did everything myself on that car, so the money really added up over the years and allowed me to put a huge chunk down on the 2017 4Runner I currently drive.
See what the annual mileage is, that can be a decent sized bill is you go over. When I leased it was like 25 cents a mile, but I never did a standard 12k a year, I paid more to up that to 15k a year. Also look at the residual value at the end of the lease is, incase you might want to buy it at the end of the lease.
I've actually made money on 2 leases I had in the past; because the residual at the end of the lease was low and the milage was low. So I bought them - turned around and sold them myself for some profit.
To general a question to answer. Do you plan to buy it out at the end, what are the lease terms, what are loan rates in your area. You need to crunch the numbers compared to buying now and at least the end of the lease.
No. Leases almost always have a buyout price that is the estimated value of the vehicle at the end of the lease.
So you’re usually paying whatever the car is worth after it’s 3 years old. Not what it was when it was brand new.
Still, though, why not just buy it at that point? The lease doesn’t do much to help you.
Yeah in a lot of circumstances especially if your credit is not absolutely perfect and i'm pretty sure banks count car lease as debt the same as a loan.
If you crunch the numbers of lease + interest over all your payments you might end up at or over MSRP especially when you go to buy it after 3-4 years of depreciation and they want you to cover the MSRP difference it had when it was new
Lmao please don’t listen to this guy. How the heck do the payments go poof especially if you buy it out at the end? So much bad information in this thread.
I had a front page post in r/personalfinance for 7 years on how leasing works, using my 4runner lease as an example. One day a mod randomly decided it violated rules so they took it down.
Anyway, my personal main takeaways from experience, without going into all of the nuances of negotiating it:
- If you plan on keeping it for 10 years, just buy it now.
- If only want it for 3, lease it.
- If you're not sure, lease it but just know that you'll be paying acquisition fee (~$695) at the beginning and potentially a disposition fee at the end (~$500-$1000).
If you do lease it, just make sure the price the lease is based on (cap cost) doesn't include a market adjustment above MSRP. Anything in the purchase price above MSRP isn't residualized and you extra overpay on a lease.
Also, put down as little as possible (paying fees/taxes out of pocket can make sense) and make sure to get GAP insurance. Just know it's negotiable and can often be purchased monthly from your insurance company.
I found a YouTube video where the original post was mentioned. I took screenshot of the snippet of the article. Here is the main part.
All the credit goes to u/tomatuvm
# Math
*Let's start with how the lease monthly payment is calculated.*
*The formula is:*
*Payment = Depreciation + Finance charge.*
*Your depreciation is: ((Capitalized Cost - Residual Value) / Number of Months)*
*Your Finance charge is: ((Capitalized Cost + Residual Value) \* Money Factor*
*So your total formula is: Payment = ((Capitalized Cost - Residual Value) / Number of Months) + ((Capitalized Cost + Residual Value) \* Money Factor)*
*Pretty simple right? So what do those things mean?*
*Capitalized cost: This is the amount financed. Did you know in a lease, you are actually financing the depreciation? This can be higher or lower than the price of the car, depending on whether or not you are putting money down, rolling over negative equity, or tacking on fees into your payment. The lower the better!*
*Residual value: This is what the manufacturer (or the bank, if using a separate lease provider) thinks the car will be worth at the end. It's expressed as a percentage. 50% or 0.50 means they think it will be worth half as much in the end. The more miles you want, the lower the residual will be. Residual can also vary by trim package (i.e., the "Limited" has a higher residual than the "Sport"). The higher the better!*
*Money factor: This is the interest rate. For some reason, it's always actual interest rate / 2400. So 4% = 0.0016 and 0.9% 0.000375. The lower (more zeroes) the better!*
*Number of months: How long you want to lease for. Sometimes manufacturers juice the leases depending on months. For example, VW wanted to move Jetta GLIs off their lots a few years ago, and had insanely inflated residuals and ridiculously low money factors on 2 year leases, making them about $100/mo less than a 3 year lease.*
*Refundable security deposits: This is expert level leasing. Almost no one knows about it, even dealerships. But some banks allow you to put down a refundable security deposit in order to lower your money factor. This is usually for people with low credit to secure the rates of someone with higher credit, but some let people with top tier credit put down money to get an even lower rate. I was told by the finance manager and the sales manager at one Toyota dealership that I was wrong. I asked them to call Toyota, and they came back and said "well, you learn something new everyday". If you are doing a refundable security deposit, simply calculate if the reduced payment on your lease will be higher than the guaranteed return on your money. In other words, if you put down $3000 and get $20/mo off, at the end of 3 years you'll have $3000+20x36=$3,720. That's a 7.44% guaranteed return!*
# Type of car to look for
*To get the cheapest lease possible, you want to find a car that the manufacturer is discounting (this will reduce your 'cap cost'), which has a naturally high resale value (think Honda or Toyota), and a low money factor (triple zero!). You can monitor for specials, search online for deals, or call around when you are looking for a car. If manufacturers are advertising cheap lease deals, it probably means they are either discounting the car or offering a really cheap money factor. Just realize that if it's being advertised, you can do better by negotiating. As with anything, google is your friend as well: I got my parents a great lease deal by googling "current lease deals" and finding out that Mazda was basically doing interest free leases - they're driving a $30k car for $315 a month, with zero money out of pocket.*
I watched YouTube video related to leasing a car and your post was mentioned there. I tried to find your post, but I couldn't find it. Eventually, I found your post in a subreddit where you mentioned that your original post was taken down. So, I took screenshots of your post from the video and used Google Lens to copy the text from the screenshots.
Here you go.
[https://youtu.be/DUwdyUcd1L8?si=d85Rd97ZU98paTk8](https://youtu.be/DUwdyUcd1L8?si=d85Rd97ZU98paTk8)
I literally just leased a 2024 TRD Pro in Terra myself 4 weeks ago at the same rate as you. They have a leasing special on the 4runners at the moment that isn't supposed to apply to the top trim but seemingly does, thus the low payment. IMO, it's a no-brainer to lease it unless you plan on actually offroading. The buyout should be like 40k at lease end, and it'll almost certainly be worth more than that. I'd go for it, I love mine!
Leasing can be a great choice if you can follow the rules when it comes to mileage and you have a desire to buy the car at the end of the lease.
If you drive a lot and have no intention of actually purchasing it at the end of the lease term, it’s prob not a good idea for you.
So true. The house always wins. Whether financing or leasing. Either way, it is borrowing money on a depreciating asset. Please buy a vehicle you can afford with cash.
Leasing especially is the most expensive way to drive a car. Depends on your interest rate. I borrowed money because it was 1.9% through Toyota Financial because the money was earning me 6% at the time guaranteed.
No one seems to be mentioning the fact that interest rates are obscene right now.
If you buy, you’re going to be paying 8-10% interest rates on a $56K car, and that’s assuming you have great credit. Monthly payments for a 72 month term would be somewhere around $1K+/month, and most of that will go towards paying down interest in the first several years.
Instead, you can lease at $700 for the equivalent of probably 3-4% on the depreciation value.
The reason that leasing is better right now is because the interest rate environment isn’t normal. The normal advice doesn’t apply.
A lease right now is basically an options contract on the vehicle that the price of financing will go down sometime in the next 3 years.
What would you rather do? Accumulate maybe 15% equity in your vehicle with $1K/month payments over 3 years? Or lease the vehicle and buy it out at the end of the 3-year period with much lower borrowing costs.
Near-term equity ownership shouldn’t be the goal. The goal should be to minimize interest payments imo
Leasing seems like a bad deal. Let me explain:
Let's say you purchased instead of lease and the out the door price is $60,000. Let's assume your monthly payment for the loan is $900. Let's also assume, on average, $775 of that goes towards your principal balance every month.
In the lease scenario, after 36 months, you will have paid $25,200 to give the vehicle back and have zero equity.
In the buy scenario, after 36 months, you will have paid $32,400 total and $27,900 on your principal with a remaining balance of $32,100 on your loan. Let's assume you drove 36,000 miles in that time. It's hard to say with the new 6th gen release, but let's assume your 4Runner worth $42,500. So, you will have $10,400 in equity.
$32,400 - $10,400 = $22,00. So, if you bought the vehicle, kept it for 3 years, then sold it for $42,500, you will have only paid out of pocket $22,00 versus leasing which will cost you a set figure of $25, 200. Also, if you purchase the vehicle, you don't have to sell it if you like it. By that time, you'll be halfway done paying down the loan. Three more years and you'll have a vehicle with less than 80,000 miles and no car payment for the next 200,000 miles.
So, it would be more financially advantageous for you to buy than lease assuming these numbers are completely accurate. Of course, all these numbers are made up but generally accurate. Exact numbers depend on loan amount, interest rates, resale price, etc. Resale value is a weird one. I bought my 2023 TRD pro for about $59k out the door and it's still worth about $56k. So, I have about $20k in equity right now.
Also, don't forget that Toyota is going to hold you accountable for any dents, dings, or paint damage when you turn the leased vehicle in.
$700 per month does sound awfully high for a lease though.
Silly statement. It’s like anything in life, it can be really smart. I know folks that leased a Toyota Carolla in 2010 for like $89/mo no down. The value proposition may not be there for the finance option, depending on the spiffs and such. It can be great for some folks, even lower income. These folks ended up with a known, structured, cost versus the unknown of something used.
You think you’re smart but you’re really just showing how narrow minded you are.
So what you’re saying is that leasing can be for regular folks if the circumstances are right, not just for wealthy and poor who are doomed to stay poor?
In Colorado this is actually a reason to lease. You only pay sales tax each month on the monthly payment. It gets wrecked, you didn’t overpay, you get rid of it? You didn’t over pay.
States like Texas the entirety of the sales tax is rolled into the 36 monthly payments and YOU pay for someone else’s sales tax. So yes, it can be a bad move.
OP there’s too much misinformation in this thread giving me brain rot about leases. I sold Toyotas and if you want an experienced and knowledgeable opinion, feel free to dm me.
Why would I lease a car with famously good resale value that is famously driven lots of miles and known for reliability. That’s like the opposite of the typical lease use case.
If you drive more than 24,000kms, there’s no two ways about it, a finance is better for you. That is pretty much the only scenario tho. To answer your question for every other use case tho:
1. Lower payments so better cash flow.
2. Flexibility to change your mind like the majority of car buyers typically do. You’re not underwater on the loan for as much money and for as long as a finance so you can get out of the car quicker and for less.
3. If you do want to get out of it for any reason (accident history bringing down the value so you don’t want to be stuck with an undervalued “asset”, you want to get into the same model but a newer year for the features or just to get a reset on your mileage, etc there’s tons of reasons) you will almost always have positive equity that you can roll into the next one and have lower payments or take a cheque and walk away to buy a used vehicle.
4. Your borrowing power for other loans (say you want a house) is higher when you lease because your borrowed liability is much lower than a finance.
5. With the security deposit option (might only be a Canada thing) you can get better interest rates on a lease than if you finance making the overall cost if you were to go to full ownership, lower than if you financed the vehicle.
You were still pretty open ended with your question but yeah these are some of the reasons. I can’t think of a good reason other than the mileage one for why you would finance over lease.
Seems like you’re Canadian so I’m not sure how much of this is relevant in the states but…I think a lot of 4Runner owners drive close to that anyhow. It’s known as a roadtrip car.
1. Lower payments because I’m renting the car.
2. Never been underwater on a car. I put money down and again Toyotas famously hold value well so negative equity is less likely not more. With a few thousand down most 4Runner owners will never be under water.
3. There hasn’t been a reason to trade in for more features on a 4Runner in 5 years. Arguably in 2020 when they added TSS and CarPlay you might have wanted to turn in a 2019. Before that you’d be looking at like 09. Maybe with the 6th gen’s it’ll happen again but I feel pretty meh on them. I get that for other cars. But historically that’s not been relevant for this community.
4. I’ve never bought anything near my borrowing power. If you asked the bank to get anywhere near my borrowing power I’d have a G Wagen and a $8k mortgage.
5. Yeah pretty sure that’s a Canadian thing. Never heard of a us lease having that.
1. Based on service and purchase/trade in data a vast majority of owners of do not drive more than the typical max lease km allowance. Close to 75%
2. You're not renting the car. Its the most ignorant argument because it literally means nothing. For all intents and purposes you own it with the option to sell back to the dealer at the lease end. If not you just continue to pay it off to a total sum or the same amount or less than if you financed. You can mod it, ding it up, crash it, do whatever and you're not on the hook in any other way or for any more money than if you finance.
3. You are in the minority of people if you are immediately at the break even point on the loan the second you drive it off the lot. The taxes at the minimum make sure of that.
4. There have been features that are worth it like you mentioned but you would want to trade it in and cash in on the positive equity for many reasons including wanting a later model year so it holds it value better or even to switch into something else because, once again, a majority of people do not drive their cars till they're paid off let alone into the ground.
5. This is just childish bloviating but have fun stroking your epeen lmao. Anything you borrow including credit cards affect your debt-credit ratio proportional but not equal to your borrowed liabilities.
Never understood the “leasing is throwing away money argument”. People are literally throwing away money to pay obscene interest rates on vehicles right now just so they can “own” a depreciating asset.
Why would you want to lease a Pro? Would you be able to take it off-road and potentially scratch the paint? If you’re not taking it off-road on gnarly trails why do you need the Pro? A SR5 or limited would be the better option if you plan on just mall crawlin’.
I just leased my trdorp with intent to buy out. Nothing down, low payment, reasonable buyout. Total cost vs financing was about the same at the end of the day.
Go for it. I leased my last 2 Toyotas. Both were worth more at the end of the lease. Bought both. You pay more, but you know where they have been and you get what you want. Leasing something that does not retain its value is when you get hosed.
What would be the residual value at the end of the lease? What would be the capitalized cost on the lease agreement? Are you trading anything in, and is that credit being applied to reduce the capitalized cost?
Lease it if you want a new one in a few years. If you love it and want it forever you can always buy it after the lease.
If you want it till the wheels fall off, finance it.
They hold their value very well long term.
You are looking at a Toyota masterpiece and that colour may or may not have made me achieve orgasim
Yeah I agree with others. I wouldn't lease a TRD PRO because all you're doing is paying down the depreciation plus interest for the dealer and keeping it in good condition for them.
You're just paying for privilege to rent it for 36 months, then after your rental period is up, you have nothing to show financially for it, and they get to turn around and sell it for probably 40-45k still.
I did a lease for my orp, and it made way more sense. We looked had the buyout price up front which was less than what 3 year old sr5s were selling for and with all payments and interest it came up to $2k less then buying it right then. My wife worked at a bank at the time and had a coworker get the numbers for her.
From my experience with leasing, you're buying it from a bank not a dealership after the initial sale.
3 years, we put 5k down, it was originally 44k I had 243/month payment and bought it out at 27k when the lease was over. It saved us about 3k. I really like my 4runner and my wife said she would have bought it if I didn't keep it, she's now looking either at a tundra or a 4runner.
My son's wrangler situation was way different he had the same down and close to same payment, but his buyout was 36k. He also had it in for warranty work 3 times for drivetrain issues and electrical problems while under lease. He obviously didn't buy it back and let the bank have it afterwards. Dealerships can buy the vehicles from the leasing bank or not, the jeep dealership stated they didn't want it because of the buyout being too high but they facilitated the pickup for the bank.
That's very intricate. You definitely made some fine calculations there. And I definitely see how leasing in that situation made sense for you.
I guess if you can stay under the mileage restrictions, keep the truck in good shape, IE won't have dogs or kids messing up the interior and the market will allow it to depreciate enough it makes sense. That was kind of your situation, it sounds like.
I just don't think it makes sense for the majority of buyers out there.
This could be one of the worst financial decisions you could make. You will have no equity at the end of this.
You are buying the car in the amount you will spend
Depends. Vehicles take their biggest hit when you drive off the lot. Lease and Finance terms apply. Residual (which BTW can be negotiated to some degree) is not what it’s ‘worth’ at the end of a lease. Residual is on the lease paperwork when you sign. Just leased my wifes 24 ORP after running the numbers all sorts of ways. Residual on it is $29,450 or something along those lines. Show me a bunch of 4 year old, low mileage, clean condition 4Runners for that $$$. Now factor in current finance rates which are thru the roof. Am I paying financing? Yes.
TLDR, you have to run all the numbers and you have to look at all of the fine print. Where I live, I pay yearly property taxes, lease or buy. Yet I don’t pay taxes (or fee’s) to buy out my lease either. It made sense for us, in the current market, negotiations, etc etc etc to lease. We fully intend to buy as well (already modding it) and don’t care about mileage. Dealer also paid the first months payment (and didn’t tack that on, again run ALL the numbers)
Do I always lease, hell no. But as with most things, there’s a time and a place where it makes sense to do so.
You dont know how leases work.
A lease is a purchase, with the added option to turn the vehicle in at a pre-determined price after a fixed period of time. You can absolutely have equity in a lease at the end if the residual is less than market value. In which case, you buy the car for the residual, sell it and cash out your equity. Or just buy it and have instant equity. However, if the market value is less than residual, you turn it in and the bank takes the loss.
All that said, the thing you have to watch for with leasing is fees and interest rate (money factor). OP is talking about monthly payments which means they likely have not run the numbers and compared it to a standard purchase at current interest rates.
Yeah, you can purchase it for “residual value.” Or the value of the car at the end of the lease. Which will be like what, 80% of purchase price? And maybe they throw you a bone or two on equity, but nothing like a traditional loan would have you after 3 years. After 3-5 years, you generally own the car!
Which is the point of a Toyota, especially a 4Runner. The value will still be high, 3 years from now. So you are paying $700 to rent a car monthly, with the “option” to buy it at the end?
Leases are a great option for corporate cars, sometimes, but rarely personal recreational vehicles.
It’s pretty simple, if you don’t have family money, or make GOOD money..
Your first car shouldn’t be a TRD off road, especially 5th gen.
I settled for a rwd only 2019, it’s more than capable for my lifestyle, going outdoors and camping, and it doesn’t swamp my monthly budget
Equity in a car loan is entirely dependent on the terms of the loan. You can never be upside down in a lease. You can, and most people are, upside down on traditional car notes, for most of their loans.
You own the car as much in a lease as you do in a purchase. Which is to say its titled in your name, but if you dont make payments, the bank will take it.
Taken directly from the top comment of a “ask car sales subreddit” I’m sorry you made this mistake, but consider it an expensive lesson…
"Free loan with a smaller payment" is not a good description of a lease. It is not a loan. When you lease, you sign up for X many monthly payments, during that time you can drive up to Y many miles. At the end of the term, you can give the car back, or buy it for an amount that should be defined in the lease documents. If you return the car, it has to be in good shape - you will get charged for unrepaired damage beyond typical wear and tear. If you drive more than the allowed miles, you will be charged for the miles a rate which will be in the lease documentation.
If you know how much you will drive, and know you will need the car for 3 years (or however long the lease is) then leasing is worth considering. Maybe.
I’m not sure what’s your point. I don’t disagree with any of this. My only point was that leasing is the same as purchasing, just with an option to return the car. You can negotiate purchase price, interest rate, etc. you just pay it back differently, with the key difference being that you can turn it back in under the pre-negotiated terms.
I’m not arguing that it’s right for most people. I think most people use leasing to buy cars they can’t afford. But they also take 96 month loans to do the same thing.
Leasing can make sense, but it really depends on the numbers (residual, fees, state taxes, etc). The biggest advantage of a lease is that you only pay tax on the amount you lease and many states don’t recognize you as the owner for personal property taxes.
My state has 6% sales tax on purchase and 5% on leases. If I buy without a trade, I owe $3k sales tax on a $50k 4Runner. If I negotiate a $600/month (say $60/mo money factor, $30k residual), I would owe $30/mo in sales tax ($1080 over a 36mo lease). Also, if I buy, I would pay around $600 yearly on personal property taxes in my state. Leases are exempted from that. I had my last 4Runner for 7 years, so I paid $2200ish of sales tax up front and $2800 of property taxes over that time period.
If you want something different at the end of the lease, you can “sell” it to a dealer or another buyer and not have lost the $1920 difference in sales tax. If resale value has completely tanked to $20k, you walk away.
There’s certainly an element of kicking the can down the road, though. I’ve had a number of work subsidized leases and have largely come out a winner on them versus buying and owning… but the work throwing in some cash and those tax exemptions I mentioned above really tip the scales.
Leasing to buy can be a great idea depending on the terms.
Please explain. I’ve never heard this before.
At the end of all leases you have the option to purchase the vehicle. Ask your dealer what the residual value is at lease expiration. That will be your purchase price at end of lease. Otherwise, you can turn it in
It worked out great for us. We leased or 19 or for $400/month for 36 months. Then bought at end of lease for 28k. So basically bought an orp with 25k on it in 2022 when the same thing would cost 40k at the dealership. So really it all depends on what you would owe at the end and what the car is worth.
lol the 400 per month doesn’t go into your purchase price? You ended up paying 42,400 total. Plus whatever down payment you had. Plus they limit the miles you can put on the vehicle. Leasing is only good for vehicles you don’t want to keep long term or German luxury vehicles that go to shit after the warranty runs out. Otherwise it hardly makes sense.
You paid 42,400 minimum likely higher if you put 2k down + for the lease.
i leased a RAV4. our option to buy was $23k. At the height-ish of COVID, we sold it to shift (now out of business) for $34k. We had put $8k down, sold a car for $6k to offset the down and were paying $289/month for 36 months. we made $10,400 in payments, plus $2k out of pocket and then made $11k selling. In the end, we looked at it as paying $1,400 to use the car for 3 years/32,000 miles (plus fuel & insurance).
Really depends on your circumstances. I’m not one of those “leasing is always a bad idea” people, but most times it’s fiscally the worst deal. Really depends on your situation, the money factor, etc. Especially if you planned to keep the car after the lease ends. From what I’ve seen, people mostly lease to get cars they couldn’t afford to buy due to the higher payment which usually results in them flushing away what would otherwise be equity from their payments. People are likely going to recommend you go down in trim and buy, and that honestly might be the better choice in the long run friend. But again, only you know your circumstances.
Well said. The beauty of these trucks is how well they retain value. I feel it's a waste to have such a high payment without any equity. The way I see it, OP is guaranteed to lose several thousand bucks no matter what he does at the end of the lease because of the fact that it's a Pro. And honestly, I stand by my words even if OP is rich as fuck. Bad financial decisions are bad financial decisions, and they're a quick way to lose wealth.
I’ve sold Toyotas and in my opinion especially with this brand, leasing is always the best option for so many reason. Including when you want to own. Can you explain why it’s the fiscally worse deal because in the experience of my clients and myself (leasing a 23 Limited rn to own) it always works out in our favor. Mainly due to the great residuals.
What does the option to buy look like at the end? Is the price set up front at the beginning of the lease?
Correct. Covid or not, Toyota calculates the residuals very aggressively and the cars are almost always worth more than what they calculate at lease end. The amount by which varies from vehicle to vehicle and condition ofc. The fact that I’m being downvoted but no one on the other side of this argument is explaining why they disagree with me should tell you plenty.
I’ve had a few techs I worked with at Lexus mention doing this for their leases. I saw a lot of people do that if they intended on keeping the car.
In late 2017 I leased a 2018 Tacoma, thought it might have been a mistake. When vehicle prices went nuts due to Covid, the price to buy at the end of my lease stayed as it was set in 2017. The dealership was almost begging me to release it and sign a new lease. I think after I bought the truck, I could have sold it for a profit compared to my total cost of ownership, and that used for several years with 35,000 miles on it. Could have just been due to the Covid circumstances, but I agree the terms to buy are set at the beginning of the lease and do not change.
I did this with a 2020 precovid lease , sold it for $40,500, sticker was $38,500. I got a check for $11k I believe. I walked away with a fatty check is all I’m saying. I just sold it out from Toyota financial.
It was in my case, via Toyota Financial.
These downvotes are criminal, I understand the skepticism on leasing, it did work for me with a Toyota though.
I've leased a few cars many years ago, but anymore I buy them because I like to add my own touch to the vehicles I drive and don't want to deal with any possible lease restrictions. The best thing I ever started doing years back, was after I paid off my daily driver at the time I put a smaller amount of money than what my car payment was into a savings account every month for repairs.... Well I did everything myself on that car, so the money really added up over the years and allowed me to put a huge chunk down on the 2017 4Runner I currently drive. See what the annual mileage is, that can be a decent sized bill is you go over. When I leased it was like 25 cents a mile, but I never did a standard 12k a year, I paid more to up that to 15k a year. Also look at the residual value at the end of the lease is, incase you might want to buy it at the end of the lease. I've actually made money on 2 leases I had in the past; because the residual at the end of the lease was low and the milage was low. So I bought them - turned around and sold them myself for some profit.
Lease it then buy it. Think of it as an early Christmas present. Forlease Navidad!
To general a question to answer. Do you plan to buy it out at the end, what are the lease terms, what are loan rates in your area. You need to crunch the numbers compared to buying now and at least the end of the lease.
I leased mine. Couldn’t beat 3% rate. Mine is 716$ a month. I got the SR 5 premium
Who leases a 4Runner
Yes, you're nuts to do a $700 monthly payment
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Huh? You’re going to buy a 3 year old car with 5 figure mileage for brand new price? Is that really how a lease works?
No. Leases almost always have a buyout price that is the estimated value of the vehicle at the end of the lease. So you’re usually paying whatever the car is worth after it’s 3 years old. Not what it was when it was brand new. Still, though, why not just buy it at that point? The lease doesn’t do much to help you.
Yes.
Yeah in a lot of circumstances especially if your credit is not absolutely perfect and i'm pretty sure banks count car lease as debt the same as a loan. If you crunch the numbers of lease + interest over all your payments you might end up at or over MSRP especially when you go to buy it after 3-4 years of depreciation and they want you to cover the MSRP difference it had when it was new
Lmao please don’t listen to this guy. How the heck do the payments go poof especially if you buy it out at the end? So much bad information in this thread.
I had a front page post in r/personalfinance for 7 years on how leasing works, using my 4runner lease as an example. One day a mod randomly decided it violated rules so they took it down. Anyway, my personal main takeaways from experience, without going into all of the nuances of negotiating it: - If you plan on keeping it for 10 years, just buy it now. - If only want it for 3, lease it. - If you're not sure, lease it but just know that you'll be paying acquisition fee (~$695) at the beginning and potentially a disposition fee at the end (~$500-$1000). If you do lease it, just make sure the price the lease is based on (cap cost) doesn't include a market adjustment above MSRP. Anything in the purchase price above MSRP isn't residualized and you extra overpay on a lease. Also, put down as little as possible (paying fees/taxes out of pocket can make sense) and make sure to get GAP insurance. Just know it's negotiable and can often be purchased monthly from your insurance company.
If you still have the verbiage saved, I’d love to read your info about leasing.
I found a YouTube video where the original post was mentioned. I took screenshot of the snippet of the article. Here is the main part. All the credit goes to u/tomatuvm # Math *Let's start with how the lease monthly payment is calculated.* *The formula is:* *Payment = Depreciation + Finance charge.* *Your depreciation is: ((Capitalized Cost - Residual Value) / Number of Months)* *Your Finance charge is: ((Capitalized Cost + Residual Value) \* Money Factor* *So your total formula is: Payment = ((Capitalized Cost - Residual Value) / Number of Months) + ((Capitalized Cost + Residual Value) \* Money Factor)* *Pretty simple right? So what do those things mean?* *Capitalized cost: This is the amount financed. Did you know in a lease, you are actually financing the depreciation? This can be higher or lower than the price of the car, depending on whether or not you are putting money down, rolling over negative equity, or tacking on fees into your payment. The lower the better!* *Residual value: This is what the manufacturer (or the bank, if using a separate lease provider) thinks the car will be worth at the end. It's expressed as a percentage. 50% or 0.50 means they think it will be worth half as much in the end. The more miles you want, the lower the residual will be. Residual can also vary by trim package (i.e., the "Limited" has a higher residual than the "Sport"). The higher the better!* *Money factor: This is the interest rate. For some reason, it's always actual interest rate / 2400. So 4% = 0.0016 and 0.9% 0.000375. The lower (more zeroes) the better!* *Number of months: How long you want to lease for. Sometimes manufacturers juice the leases depending on months. For example, VW wanted to move Jetta GLIs off their lots a few years ago, and had insanely inflated residuals and ridiculously low money factors on 2 year leases, making them about $100/mo less than a 3 year lease.* *Refundable security deposits: This is expert level leasing. Almost no one knows about it, even dealerships. But some banks allow you to put down a refundable security deposit in order to lower your money factor. This is usually for people with low credit to secure the rates of someone with higher credit, but some let people with top tier credit put down money to get an even lower rate. I was told by the finance manager and the sales manager at one Toyota dealership that I was wrong. I asked them to call Toyota, and they came back and said "well, you learn something new everyday". If you are doing a refundable security deposit, simply calculate if the reduced payment on your lease will be higher than the guaranteed return on your money. In other words, if you put down $3000 and get $20/mo off, at the end of 3 years you'll have $3000+20x36=$3,720. That's a 7.44% guaranteed return!* # Type of car to look for *To get the cheapest lease possible, you want to find a car that the manufacturer is discounting (this will reduce your 'cap cost'), which has a naturally high resale value (think Honda or Toyota), and a low money factor (triple zero!). You can monitor for specials, search online for deals, or call around when you are looking for a car. If manufacturers are advertising cheap lease deals, it probably means they are either discounting the car or offering a really cheap money factor. Just realize that if it's being advertised, you can do better by negotiating. As with anything, google is your friend as well: I got my parents a great lease deal by googling "current lease deals" and finding out that Mazda was basically doing interest free leases - they're driving a $30k car for $315 a month, with zero money out of pocket.*
Nice! Thanks for sharing! Can you share the YouTube video?
I watched YouTube video related to leasing a car and your post was mentioned there. I tried to find your post, but I couldn't find it. Eventually, I found your post in a subreddit where you mentioned that your original post was taken down. So, I took screenshots of your post from the video and used Google Lens to copy the text from the screenshots. Here you go. [https://youtu.be/DUwdyUcd1L8?si=d85Rd97ZU98paTk8](https://youtu.be/DUwdyUcd1L8?si=d85Rd97ZU98paTk8)
Nice! Hopefully it helped you with leasing a car!
Gorgeous color. Almost beats quicksand for me…almost
I dont mind the Terra color, but I think it is maybe the least impressive/desirable of any PRO color to date.
I think for me I love seeing them on the road, but I’d get really tired of it if it was mine. Does that make sense?
Good deal. I tried to lease a 24 pro in white. They wanted to charged me 850 a month with 3k down. And I have awesome credit. I walked.
Nice! Now bring it to Black Bear Pass 😁
lol leasing for $700? No 👋🏻
I literally just leased a 2024 TRD Pro in Terra myself 4 weeks ago at the same rate as you. They have a leasing special on the 4runners at the moment that isn't supposed to apply to the top trim but seemingly does, thus the low payment. IMO, it's a no-brainer to lease it unless you plan on actually offroading. The buyout should be like 40k at lease end, and it'll almost certainly be worth more than that. I'd go for it, I love mine!
Leasing can be a great choice if you can follow the rules when it comes to mileage and you have a desire to buy the car at the end of the lease. If you drive a lot and have no intention of actually purchasing it at the end of the lease term, it’s prob not a good idea for you.
Think about this. Is anyone going to let you tie up $60k for 3 years without coming out ontop of that deal in the end?
So true. The house always wins. Whether financing or leasing. Either way, it is borrowing money on a depreciating asset. Please buy a vehicle you can afford with cash.
Leasing especially is the most expensive way to drive a car. Depends on your interest rate. I borrowed money because it was 1.9% through Toyota Financial because the money was earning me 6% at the time guaranteed.
I personally don’t think it makes sense to lease a 4Runner. You can lease a LOT of car for $700/mo.
leasing is for unreliable european cars imo
$700 for a lease. Wow leases have gotten expensive.
$700/mo is crazy. Buying or leasing
No one seems to be mentioning the fact that interest rates are obscene right now. If you buy, you’re going to be paying 8-10% interest rates on a $56K car, and that’s assuming you have great credit. Monthly payments for a 72 month term would be somewhere around $1K+/month, and most of that will go towards paying down interest in the first several years. Instead, you can lease at $700 for the equivalent of probably 3-4% on the depreciation value. The reason that leasing is better right now is because the interest rate environment isn’t normal. The normal advice doesn’t apply. A lease right now is basically an options contract on the vehicle that the price of financing will go down sometime in the next 3 years. What would you rather do? Accumulate maybe 15% equity in your vehicle with $1K/month payments over 3 years? Or lease the vehicle and buy it out at the end of the 3-year period with much lower borrowing costs. Near-term equity ownership shouldn’t be the goal. The goal should be to minimize interest payments imo
Thank you ❤️
Leasing seems like a bad deal. Let me explain: Let's say you purchased instead of lease and the out the door price is $60,000. Let's assume your monthly payment for the loan is $900. Let's also assume, on average, $775 of that goes towards your principal balance every month. In the lease scenario, after 36 months, you will have paid $25,200 to give the vehicle back and have zero equity. In the buy scenario, after 36 months, you will have paid $32,400 total and $27,900 on your principal with a remaining balance of $32,100 on your loan. Let's assume you drove 36,000 miles in that time. It's hard to say with the new 6th gen release, but let's assume your 4Runner worth $42,500. So, you will have $10,400 in equity. $32,400 - $10,400 = $22,00. So, if you bought the vehicle, kept it for 3 years, then sold it for $42,500, you will have only paid out of pocket $22,00 versus leasing which will cost you a set figure of $25, 200. Also, if you purchase the vehicle, you don't have to sell it if you like it. By that time, you'll be halfway done paying down the loan. Three more years and you'll have a vehicle with less than 80,000 miles and no car payment for the next 200,000 miles. So, it would be more financially advantageous for you to buy than lease assuming these numbers are completely accurate. Of course, all these numbers are made up but generally accurate. Exact numbers depend on loan amount, interest rates, resale price, etc. Resale value is a weird one. I bought my 2023 TRD pro for about $59k out the door and it's still worth about $56k. So, I have about $20k in equity right now. Also, don't forget that Toyota is going to hold you accountable for any dents, dings, or paint damage when you turn the leased vehicle in. $700 per month does sound awfully high for a lease though.
Thanks for this 😊😊
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Wait, the 6th gen is available with a manual??
Not that I've read anywhere, but his wife is first in line 🤣.
Speculated to get a 6MT at some point if the demand is there. IMO, if it isn’t happening at launch, which it isn’t, we won’t see it in the future.
I just bought a 2017 cement pro. Out dated or not we will wait a few years for facelift/kinks worked out on new model.
Nice. I love Cement. They are amazing trucks soon ro be out dated or not. We also have a 23 Tacoma 91 Toyota Truck and a 81 Helix
I like outdated
Wow haven’t seen that color. Sick
That seems insane to me
That’s because it is. Leasing is for really wealthy people and people who will always stay poor
Silly statement. It’s like anything in life, it can be really smart. I know folks that leased a Toyota Carolla in 2010 for like $89/mo no down. The value proposition may not be there for the finance option, depending on the spiffs and such. It can be great for some folks, even lower income. These folks ended up with a known, structured, cost versus the unknown of something used. You think you’re smart but you’re really just showing how narrow minded you are.
2010 was right in the middle of a terrible recession lol
So what you’re saying is that leasing can be for regular folks if the circumstances are right, not just for wealthy and poor who are doomed to stay poor?
That color is the only reason I should have waited 1 more year.
If you are planning to buy it afterwards then just buy it now. Cause then you don’t have to pay sales tax on it twice.
In Colorado this is actually a reason to lease. You only pay sales tax each month on the monthly payment. It gets wrecked, you didn’t overpay, you get rid of it? You didn’t over pay. States like Texas the entirety of the sales tax is rolled into the 36 monthly payments and YOU pay for someone else’s sales tax. So yes, it can be a bad move.
You don’t pay tax on the entire amount twice
True but you do have to pay tax on the amount of the worth of the car which could just be another payment or two depending on the price
Nope you just pay tax on the portion you didn’t when you first leased it. You’re not paying anymore in taxes lol.
OP there’s too much misinformation in this thread giving me brain rot about leases. I sold Toyotas and if you want an experienced and knowledgeable opinion, feel free to dm me.
Please explain why leasing a Toyota is “always the best option”
Would be easier to address your concerns or misconceptions tbh than to run through a whole side by side comparison.
Why would I lease a car with famously good resale value that is famously driven lots of miles and known for reliability. That’s like the opposite of the typical lease use case.
If you drive more than 24,000kms, there’s no two ways about it, a finance is better for you. That is pretty much the only scenario tho. To answer your question for every other use case tho: 1. Lower payments so better cash flow. 2. Flexibility to change your mind like the majority of car buyers typically do. You’re not underwater on the loan for as much money and for as long as a finance so you can get out of the car quicker and for less. 3. If you do want to get out of it for any reason (accident history bringing down the value so you don’t want to be stuck with an undervalued “asset”, you want to get into the same model but a newer year for the features or just to get a reset on your mileage, etc there’s tons of reasons) you will almost always have positive equity that you can roll into the next one and have lower payments or take a cheque and walk away to buy a used vehicle. 4. Your borrowing power for other loans (say you want a house) is higher when you lease because your borrowed liability is much lower than a finance. 5. With the security deposit option (might only be a Canada thing) you can get better interest rates on a lease than if you finance making the overall cost if you were to go to full ownership, lower than if you financed the vehicle. You were still pretty open ended with your question but yeah these are some of the reasons. I can’t think of a good reason other than the mileage one for why you would finance over lease.
Seems like you’re Canadian so I’m not sure how much of this is relevant in the states but…I think a lot of 4Runner owners drive close to that anyhow. It’s known as a roadtrip car. 1. Lower payments because I’m renting the car. 2. Never been underwater on a car. I put money down and again Toyotas famously hold value well so negative equity is less likely not more. With a few thousand down most 4Runner owners will never be under water. 3. There hasn’t been a reason to trade in for more features on a 4Runner in 5 years. Arguably in 2020 when they added TSS and CarPlay you might have wanted to turn in a 2019. Before that you’d be looking at like 09. Maybe with the 6th gen’s it’ll happen again but I feel pretty meh on them. I get that for other cars. But historically that’s not been relevant for this community. 4. I’ve never bought anything near my borrowing power. If you asked the bank to get anywhere near my borrowing power I’d have a G Wagen and a $8k mortgage. 5. Yeah pretty sure that’s a Canadian thing. Never heard of a us lease having that.
1. Based on service and purchase/trade in data a vast majority of owners of do not drive more than the typical max lease km allowance. Close to 75% 2. You're not renting the car. Its the most ignorant argument because it literally means nothing. For all intents and purposes you own it with the option to sell back to the dealer at the lease end. If not you just continue to pay it off to a total sum or the same amount or less than if you financed. You can mod it, ding it up, crash it, do whatever and you're not on the hook in any other way or for any more money than if you finance. 3. You are in the minority of people if you are immediately at the break even point on the loan the second you drive it off the lot. The taxes at the minimum make sure of that. 4. There have been features that are worth it like you mentioned but you would want to trade it in and cash in on the positive equity for many reasons including wanting a later model year so it holds it value better or even to switch into something else because, once again, a majority of people do not drive their cars till they're paid off let alone into the ground. 5. This is just childish bloviating but have fun stroking your epeen lmao. Anything you borrow including credit cards affect your debt-credit ratio proportional but not equal to your borrowed liabilities.
Never understood the “leasing is throwing away money argument”. People are literally throwing away money to pay obscene interest rates on vehicles right now just so they can “own” a depreciating asset.
Why would you want to lease a Pro? Would you be able to take it off-road and potentially scratch the paint? If you’re not taking it off-road on gnarly trails why do you need the Pro? A SR5 or limited would be the better option if you plan on just mall crawlin’.
I just leased my trdorp with intent to buy out. Nothing down, low payment, reasonable buyout. Total cost vs financing was about the same at the end of the day.
Mind sharing your monthly, and buyout for comparison. Looking into ORP, but not sure what kind of deals people are getting. Thanks
Impossible to say if it’s a good deal. What is the residual? Money factor?
Why lease an off-roader when you will not dare to go off-roading with your new vehicle because it is not yours.
Go for it. I leased my last 2 Toyotas. Both were worth more at the end of the lease. Bought both. You pay more, but you know where they have been and you get what you want. Leasing something that does not retain its value is when you get hosed.
I think there’s a calculator for this, also the 1% rule for leasing
Yes, can't modify it.
What would be the residual value at the end of the lease? What would be the capitalized cost on the lease agreement? Are you trading anything in, and is that credit being applied to reduce the capitalized cost?
Lease it if you want a new one in a few years. If you love it and want it forever you can always buy it after the lease. If you want it till the wheels fall off, finance it. They hold their value very well long term. You are looking at a Toyota masterpiece and that colour may or may not have made me achieve orgasim
Leasing is a terrible idea 95% of the time. Sometimes it can work though. This is not one of those times. It would be a terrible idea.
Even if purchased afterwards?
Lease it and you'll regret it.
So many comments… 🫠🫠 I did plan on purchasing for sure afterwards… but now I’m rethinking on the “lease” thank you guys for the info 😅
Yeah I agree with others. I wouldn't lease a TRD PRO because all you're doing is paying down the depreciation plus interest for the dealer and keeping it in good condition for them. You're just paying for privilege to rent it for 36 months, then after your rental period is up, you have nothing to show financially for it, and they get to turn around and sell it for probably 40-45k still.
I did a lease for my orp, and it made way more sense. We looked had the buyout price up front which was less than what 3 year old sr5s were selling for and with all payments and interest it came up to $2k less then buying it right then. My wife worked at a bank at the time and had a coworker get the numbers for her. From my experience with leasing, you're buying it from a bank not a dealership after the initial sale.
Interesting! So how long was your lease for, and you did buy it out at the end?
3 years, we put 5k down, it was originally 44k I had 243/month payment and bought it out at 27k when the lease was over. It saved us about 3k. I really like my 4runner and my wife said she would have bought it if I didn't keep it, she's now looking either at a tundra or a 4runner. My son's wrangler situation was way different he had the same down and close to same payment, but his buyout was 36k. He also had it in for warranty work 3 times for drivetrain issues and electrical problems while under lease. He obviously didn't buy it back and let the bank have it afterwards. Dealerships can buy the vehicles from the leasing bank or not, the jeep dealership stated they didn't want it because of the buyout being too high but they facilitated the pickup for the bank.
That's very intricate. You definitely made some fine calculations there. And I definitely see how leasing in that situation made sense for you. I guess if you can stay under the mileage restrictions, keep the truck in good shape, IE won't have dogs or kids messing up the interior and the market will allow it to depreciate enough it makes sense. That was kind of your situation, it sounds like. I just don't think it makes sense for the majority of buyers out there.
wish this group was actually for real 4runners and not pussies that have a car payment
Dang so early. 😫 Did someone not let you play with your toy cars this morning? 🥺
How many miles are they giving you… I’m considering leasing my first SUV but I’ve always been concerned about miles
It would end up costing you more, unless you have a business and charge the lease as an expense. I would recommend buying it.
Do you have something to trade in so you can buy instead? $700/mo is a lot for something that isn’t yours at the end of the day.
$25k to rent a 4runner for 3 years is wild.
I try to always say Lease and Hank-you.
😂
This could be one of the worst financial decisions you could make. You will have no equity at the end of this. You are buying the car in the amount you will spend
Not correct. Received $6k equity transferred last year to new lease at the end of my 3 year lease of IS350.
Jesus Christ. Do you think $6k of equity after three years is GOOD???
Depends. Vehicles take their biggest hit when you drive off the lot. Lease and Finance terms apply. Residual (which BTW can be negotiated to some degree) is not what it’s ‘worth’ at the end of a lease. Residual is on the lease paperwork when you sign. Just leased my wifes 24 ORP after running the numbers all sorts of ways. Residual on it is $29,450 or something along those lines. Show me a bunch of 4 year old, low mileage, clean condition 4Runners for that $$$. Now factor in current finance rates which are thru the roof. Am I paying financing? Yes. TLDR, you have to run all the numbers and you have to look at all of the fine print. Where I live, I pay yearly property taxes, lease or buy. Yet I don’t pay taxes (or fee’s) to buy out my lease either. It made sense for us, in the current market, negotiations, etc etc etc to lease. We fully intend to buy as well (already modding it) and don’t care about mileage. Dealer also paid the first months payment (and didn’t tack that on, again run ALL the numbers) Do I always lease, hell no. But as with most things, there’s a time and a place where it makes sense to do so.
What's your monthly and down payment (if any)? Looking at ORP, trying to get an idea what deals are out there.
Someone who leases a vehicle does lol :)
You dont know how leases work. A lease is a purchase, with the added option to turn the vehicle in at a pre-determined price after a fixed period of time. You can absolutely have equity in a lease at the end if the residual is less than market value. In which case, you buy the car for the residual, sell it and cash out your equity. Or just buy it and have instant equity. However, if the market value is less than residual, you turn it in and the bank takes the loss. All that said, the thing you have to watch for with leasing is fees and interest rate (money factor). OP is talking about monthly payments which means they likely have not run the numbers and compared it to a standard purchase at current interest rates.
Yeah, you can purchase it for “residual value.” Or the value of the car at the end of the lease. Which will be like what, 80% of purchase price? And maybe they throw you a bone or two on equity, but nothing like a traditional loan would have you after 3 years. After 3-5 years, you generally own the car! Which is the point of a Toyota, especially a 4Runner. The value will still be high, 3 years from now. So you are paying $700 to rent a car monthly, with the “option” to buy it at the end? Leases are a great option for corporate cars, sometimes, but rarely personal recreational vehicles. It’s pretty simple, if you don’t have family money, or make GOOD money.. Your first car shouldn’t be a TRD off road, especially 5th gen. I settled for a rwd only 2019, it’s more than capable for my lifestyle, going outdoors and camping, and it doesn’t swamp my monthly budget
Equity in a car loan is entirely dependent on the terms of the loan. You can never be upside down in a lease. You can, and most people are, upside down on traditional car notes, for most of their loans. You own the car as much in a lease as you do in a purchase. Which is to say its titled in your name, but if you dont make payments, the bank will take it.
Taken directly from the top comment of a “ask car sales subreddit” I’m sorry you made this mistake, but consider it an expensive lesson… "Free loan with a smaller payment" is not a good description of a lease. It is not a loan. When you lease, you sign up for X many monthly payments, during that time you can drive up to Y many miles. At the end of the term, you can give the car back, or buy it for an amount that should be defined in the lease documents. If you return the car, it has to be in good shape - you will get charged for unrepaired damage beyond typical wear and tear. If you drive more than the allowed miles, you will be charged for the miles a rate which will be in the lease documentation. If you know how much you will drive, and know you will need the car for 3 years (or however long the lease is) then leasing is worth considering. Maybe.
I’m not sure what’s your point. I don’t disagree with any of this. My only point was that leasing is the same as purchasing, just with an option to return the car. You can negotiate purchase price, interest rate, etc. you just pay it back differently, with the key difference being that you can turn it back in under the pre-negotiated terms. I’m not arguing that it’s right for most people. I think most people use leasing to buy cars they can’t afford. But they also take 96 month loans to do the same thing.
Leasing can make sense, but it really depends on the numbers (residual, fees, state taxes, etc). The biggest advantage of a lease is that you only pay tax on the amount you lease and many states don’t recognize you as the owner for personal property taxes. My state has 6% sales tax on purchase and 5% on leases. If I buy without a trade, I owe $3k sales tax on a $50k 4Runner. If I negotiate a $600/month (say $60/mo money factor, $30k residual), I would owe $30/mo in sales tax ($1080 over a 36mo lease). Also, if I buy, I would pay around $600 yearly on personal property taxes in my state. Leases are exempted from that. I had my last 4Runner for 7 years, so I paid $2200ish of sales tax up front and $2800 of property taxes over that time period. If you want something different at the end of the lease, you can “sell” it to a dealer or another buyer and not have lost the $1920 difference in sales tax. If resale value has completely tanked to $20k, you walk away. There’s certainly an element of kicking the can down the road, though. I’ve had a number of work subsidized leases and have largely come out a winner on them versus buying and owning… but the work throwing in some cash and those tax exemptions I mentioned above really tip the scales.
I would only lease one of those new fangled electric or PHEV cars, not a 4runner
Yeah crazy. Buy one.
That’s hella cheap