Car Leasing Question

[craigster59]

The Wife has a 2017 Toyota Camry LE (LE stands for "low end model). We got a great lease deal on it when they were blowing out the 2017's to make room for the new body style 2018's. Lease was $199 a month for 36 months.

The time has come to make a decision. Lease is up in August. She doesn't drive much, just over 12k miles on a 3 year old car. She's not crazy about the car and would like something newer/different.

I'm thinking another Toyota, she called the dealer to find out the residual/buyout and they are salivating at the low mileage, want her to bring it in for evaluation, etc.

The other factor is the film biz is down right now and I won't be back to work until mid August. She is still working (Gov't/ Homeland Sec) but is looking at a possible 1 month furlough in August unless Congress votes to give them a loan to cover a budget shortfall.

My question is: I've never done a lease turn in with mileage this low. Will it work as a negotiating point? Would it be better to buy it out, wait until September/October and use it as a trade in and pocket some $$$?

We are good money wise, Credit is top notch and I have an LLC I could lease through. Just wondering what the best plan of attack is before I go swim with the sharks. Thanks guys and gals!

[Rick Lee]

I turned in my leased Mazda early. At the time I was still under the mileage limit, but I was trending toward vastly exceeding it by lease end. Around here (probably the same out there), all the dealers know each other and will take each other's leased cars in trade deals or pay them off or sell them. So I made a deal with the BMW dealer to pay off my Mazda lease as part of my buying the new BMW. I think it was around $900 all in. I just handed the Mazda back to the Mazda dealer and BMW paid them for me. I'm sure you can work out a deal, but you'd want to find the car you want first and not just walk in with your Toyota and ask what they can do with it for you.

[mgatepi]

If you are trading on another Toyota, it will be much easier to negotiate the equity from a lower mile vehicle. Yes I am saying equity. I have done this in the past with Toyota. Do some research and know the value of your car with low miles versus higher miles. My feeling is with having such a low payment, the car may already have a higher residual value set. Toyota had to do something to give you that low payment.
Bottom line is know the cars value and compare to the residual. If its within a couple of grand.....not much to negotiate with. 5 or 6K yes!
Good luck

[john70t]

I've never understood the concept of leasing a car (i.e. renting) and playing the credit game.
It's nice to drive a new car...but the lessee still pays for repairs ins etc.

$200 x 36mo is $7,200 paid to keep someone else's investment clean.

For $25,000 you can buy a 2020 Prius, drive it for ten years at about the same rate, and then sell it.
2010 Prius' sell for $4-13k now on carsdotcom.
Rust free car and not many miles would equal about half that price back.

[Steve Carlton]

First thing to evaluate is your equity position with the Camry. You (or your wife, if she's the only one on the lease) can call Toyota to find out 1) what the residual and purchase option is (it's on the lease contract, of course), 2) what the payoff is to a Toyota AND non-Toyota dealer NOT INCLUDING tax (sometimes they're different), 3) go online with Carvana, Vroom, and Shift to get their bids on the car. Those bids will likely be strong and probably make it not worth selling yourself. If she can break even or see some money back, she can get out now if she wants. She's paid for the car until the due date of the next payment. If there's negative equity in it, she can return it to Toyota and let them take the loss. She'll have to pay a disposition fee and for any excess wear and tear unless she bought a wear and tear policy.

If the payoff is $15K (as an example) and the dealer thinks it's worth more, they will try to get it for its payoff unless you know better. They probably won't match a bid from the places I mentioned above.

If gets another Toyota, there could be a loyalty bonus. Toyota should be willing to extend her lease under these circumstance, but she will need to renew the registration and I'd be curious if the payoff on the extended lease goes down with the additional payments. If she leases something new now, the lender will probably give her a 2-3 month furlough on payments due to the COVID situation.

The elephant in the room is a new Volvo lease, of course...

[Chocaholic]

New Volvo lease? Why?

[Brando]

Craig, you are in a good position right now for a couple reasons:

1. Dealers are fighting for inventory.
2. You have very good residual equity on your lease.

You should use both of these to your advantage if turning in the lease and upgrading. If you want to convert to financing the vehicle that residual equity will end up with a higher financing price.

[craigster59]

Thanks for the replies! After a little research it seems the low lease payment = larger residual at lease end.

We’ve been Toyota fans for years and I can write off the lease through my business. I just wanted to get a jump on it. We have Frontier Toyota here in SCV but Longo further south is a bigger dealer.

First I have to see if she likes a RAV4 or Highlander. Used mostly for shopping and around town. With her power and handling mean nothing. She doesn’t even like to get on the freeway.

[Tobra]

My daughter really likes her RAV4. Mom has a Lexus hybrid SUV that is very nice. It was the same color as her cell phone case so she had to buy it, seriously.

[911boost]

The new Rav4's are nice and I am not really a fan of them in general so that is saying something (from my perspective at least). I would look strongly at them.

[asphaltgambler]

Not to be a Debbie Downer on this but just wait until the dealer SAYS what the value is. Ultimately they have the upper hand in what that is no matter how well researched and prepared you are. Also everyone knows car leases are where the lessee is essentially 'buying' a payment. Lots of fees and charges along with that. Further I challenge anyone to find d a leased car that wasn't based on full retail........plus. That's including the dealer 'ribbon' placed over the Mahoney window sticker pricing information.

Borrowed money is cheap currently and may even get cheaper, leases for personal use = expensive

[mgatepi]

You can always go to a different dealer...if the dealer you are speaking with will not recognize the value of your trade...walk away.

Also I have leased probably 30+ cars in my life and I have never leased a car that was not discounted from the sticker price. I work for a company that has 4 - 6 cars on a lease constantly for the past 20 years. Unfortunately, I get stuck doing most of the negotiating for our executives with leased cars do not speak good english.

I have had the best luck working with Toyota dealers trading Toyotas.

[mgatepi]

A quick tip;
Never wait until the lease is over before beginning to negotiate. I usually go out for bids with about 5 weeks left on the lease. You want time on your side, not the dealers.

[pwd72s]

Leasing never made "pencil out" sense to me. But then, no biz tax write off for me, so it might make sense in Craig's case. Only a CPA would know for sure.

Craig's wife sounds like Cindy..her '16 Toyota LE, bought new when the 17's were arriving. now has a hair over 11,000 on it's odo. Definitely an appliance car, but it does have air, power windows & seats, things only seen on luxury cars not all that many years ago. Easy to drive & park, large trunk, room for four. A damned well thought out sedan design. Think the check was under $20,000, licensed & out the door.

It's been a very serviceable appliance, with zero problems...too bad Craig's wife doesn't like it...probably the best financial move would be to buy it at lease end and keep driving it.

[mgatepi]

pwd,
For business it is an expense, to be written off. For the individual, it is a tax liability for you must claim a % of personal use of the vehicle. It goes right onto your income.

[craigster59]

Well I looked at the contract and residual is $12.5k and KBB is $15.5 private party and $17.5 dealer retail. Trade in value is $13.5.

She's not completely opposed to buying the car but I think we'll check the RAV4 this weekend and go from there.

[dad911]

Originally Posted by 911boost

The new Rav4's are nice and I am not really a fan of them in general so that is saying something (from my perspective at least). I would look strongly at them.

My wife bought the rav4 hybrid.

I drive it whenever possible.

[mgatepi]

Originally Posted by craigster59

Well I looked at the contract and residual is $12.5k and KBB is $15.5 private party and $17.5 dealer retail. Trade in value is $13.5.

She's not completely opposed to buying the car but I think we'll check the RAV4 this weekend and go from there.

If the car is in exceptional condition, you have something to work with! I would ask for $3000 onto the lease of a new car or towards the down payment on a purchase. You have equity. This is assuming you are in the last month or so of the lease. If you still have a few months, this should allow you to at least get out of those payments+
Enjoy

[sammyg2]

Originally Posted by john70t

I've never understood the concept of leasing a car (i.e. renting) and playing the credit game.
It's nice to drive a new car...but the lessee still pays for repairs ins etc.

$200 x 36mo is $7,200 paid to keep someone else's investment clean.

For $25,000 you can buy a 2020 Prius, drive it for ten years at about the same rate, and then sell it.
2010 Prius' sell for $4-13k now on carsdotcom.
Rust free car and not many miles would equal about half that price back.

LOL, I did the maths:

25k purchase price, average $5500 resale (asking price) after 10 years based on los angeles craigslist ads i perused.
effective purchase cost of $19.5k, plus interest.
So lets assume the buyer has good credit and only had to pay another $3500 in interest on a 5 year loan.
That works out to have an effective purchase cost of almost $200 per month. To drive a prius that is 10 years old at the end.
In your post you suggest a prius lease is $200 per month, i'll take yer word for it. i dunno.
But if so, the price to lease is about the same as the price to buy in that scenario
And if you were one of them folks that BUYS new car every 4 or 5 years, a lease would be a whole lot cheaper than the 10- year deal.

it never made sense for me because I used to put too many miles on my vehicles for a lease, and as I got older tended to keep the vehicles longer. but for some people a lease is a much smarter way to go.

[sammyg2]

Originally Posted by craigster59

Well I looked at the contract and residual is $12.5k and KBB is $15.5 private party and $17.5 dealer retail. Trade in value is $13.5.

She's not completely opposed to buying the car but I think we'll check the RAV4 this weekend and go from there.

The wife just bought a new RAV4, good car, even better than the last generation.
The only thing I don't like about it is it got smaller inside so I don't fit as comfortably.
And I bang my head getting in the darn thing 'cause the roof is too darn low thanks to the dumb gubmint side impact tests.