Pay Off An Auto Lease - Good or Bad idea?

[Chocaholic]

I leased a 2019 Toyota Avalon Touring last November.

Gross Capitalized Cost: 40734
Adjusted Capitalized Cst: 38852 (1882 down, 1st mo pmt, tax, etc, 2625 total dn)
Rent charge: 2837
Duration: 36 mos
Residual Value: 23691
Mileage limit: 15k/yr (more than adequate)
Mo pmt: 499/mo (0.00126% APR)
Disposition fee at turn-in: $350

This is all the info I have.

So, I've had the car 4 months...and really like it. Can't say if I'd keep it forever or flip it in a few years but would probably keep it beyond the lease term. Happen to have the cash sitting in a checking account paying almost zero interest.

Current payoff is $37,675.53. So, would it make sense to pay it off? I realize a lot depends on the actual value vs residual in a few years, but Avalon's tend to hold value pretty well and it's the new body style, so not expecting significant changes at least for a couple years.

WWYD? Can't help but feel I'd have done better had I just negotiated the best price and paid cash to begin with but...can't turn the clock back. Appreciate guidance from those who are more lease-savvy than I am.

[pwd72s]

Well, a plus is that Toyotas do better than average in depreciation...but no way to get around the fact that you'll be overpaying on a 2019 car. Personally, I'd never lease a car.

So, if you really plan on keeping it for a long spell? Yeah..pay the sucker off.

(edit) And consider it a price paid for a lesson learned.

[stomachmonkey]

Originally Posted by pwd72s

Well, a plus is that Toyotas do better than average in depreciation...but no way to get around the fact that you'll be overpaying on a 2019 car. Personally, I'd never lease a car.

So, if you really plan on keeping it for a long spell? Yeah..pay the sucker off.

(edit) And consider it a price paid for a lesson learned.

Yeah, the only way lease numbers have ever worked out for me is buying that CPO lease return at deep discount.

My last one, had 5k on the clock and paid $20k less than sticker for the same exact optioned truck new.

Plus GMC CPO doubles the factory warranty.

[Seahawk]

No.

Ride the lease out: I am assuming 32 months remaining at $499 a month: 16k more or less.

Make up your mind then...don't fall in love with a $37k sedan buy out after 4 months.

Invest the other monies as well.

Did your parents have any children that lived

[wilnj]

Originally Posted by Chocaholic

I leased a 2019 Toyota Avalon Touring last November.



Gross Capitalized Cost: 40734

Adjusted Capitalized Cst: 38852 (1882 down, 1st mo pmt, tax, etc, 2625 total dn)

Rent charge: 2837

Duration: 36 mos

Residual Value: 23691

Mileage limit: 15k/yr (more than adequate)

Mo pmt: 499/mo (0.00126% APR)

Disposition fee at turn-in: $350



This is all the info I have.



So, I've had the car 4 months...and really like it. Can't say if I'd keep it forever or flip it in a few years but would probably keep it beyond the lease term. Happen to have the cash sitting in a checking account paying almost zero interest.



Current payoff is $37,675.53. So, would it make sense to pay it off? I realize a lot depends on the actual value vs residual in a few years, but Avalon's tend to hold value pretty well and it's the new body style, so not expecting significant changes at least for a couple years.



WWYD? Can't help but feel I'd have done better had I just negotiated the best price and paid cash to begin with but...can't turn the clock back. Appreciate guidance from those who are more lease-savvy than I am.

You have no incentive to paying off the lease early. Your still paying the same in financing costs.

If the cash is burning a hole in your pocket, you’d be better off putting the 37k in a 24 month CD.


Sent from my iPhone using Tapatalk

[Sooner or later]

No

[Chocaholic]

Thanks...that makes sense. And knowing how fickle I am with cars...probably makes sense to ride out the lease as I’ll likely be jonsing for something else by then. I receive a car allowance from work that covers the monthly nut...part of the reason I lease. If paid off, that would add to income.

In any case, will stick with the plan. And Seahawk...you bought a used car from me! Peas of a pod.

[Seahawk]

Originally Posted by Chocaholic

In any case, will stick with the plan. And Seahawk...you bought a used car from me! Peas of a pod.

Still have it. Every time I think of selling it I drive it and the desire to sell disappears.

I will probably sell the 82 Targa first since I only do one weekender at a time.

Weird world but there it is!

My wife and I were working the "next vehicle" equation this weekend. Her 4Runner has almost 300k on the clock, still runs great and is a local commuter.

My son got the '13 FJ with now 50k and he is off the books.

My daughter left us her 2007 FJ we bought her ten years ago. 200K. She is in NYC and will need another car which she will buy after I buy her out of the '07 FJ. Runs gret. I drive it locally three days a week.

My '15 Tundra, 100k. Long haul machine.

All are paid for.

We'll see!

[VincentVega]

Let me know if you have something to move!

If the current trends continue more folks will buy suv's. In a few years you might find screaming deals on cars since they are out of fashion. Might not, but I think I'd wait it out on the Avalon.

[gtc]

For whatever reason, the Avalon doesn't seem to hold it's value as well as the Camry or Corrola.

My friend has an '07 Avalon that I am slowly fixing some body damage on, and the blue book is about $4800 vs $5000 for the same year Camry.
Kind of surprising to me, since it really moves with the 3.5L V6, whereas the 4 cylinder Camrys seem to have trouble getting out of their own way.

[Alan A]

No.
Look at the APR.

Invest the $.
Pay it off in 32 months if you still like it.

[Steve Carlton]

I think your money factor is 0.00126, not the APR. Times 2,400 = 3.024% APR equivalent.

Pro pay off lease
- stop paying 3% interest, which close to $2,700 remains to be paid. You'd probably need to earn 4-5% on an investment to break even on the Toyota lease

Con pay off lease
- you've already paid the upfront fee and will be obligated to pay the $350 disposition fee. Toyota might waive the $350 later on if you get another.
- they're might be gap insurance included in your lease, which will cover a shortfall. Example- it's totaled next week and the insurance says it's worth $35K
- you'll need to pay tax on the pay off if it wasn't paid up front.
- if it's worth less than $23,691 in Nov 2021 it'll be a loss to you (maybe just on paper).
- if it's damaged in an accident and fixed properly, the diminished value won't be your problem.
- if you sell it before the lease is over, you'll probably have paid less tax. Does $499/mo include tax?

I'd say invest the money and be more liquid.