Car deal HELP!

[Trevor Shipman]

I have always leastEd my cars, and looking to lease a new truck. I'm looking at a 2016 Toyota tundra crew cab. Got the payment down to 389 with zero money down. I got cold feet however in the finance office when I saw the residual value of 31,000. I know Toyotas hold their value, and having a high residual is not bad but this seems really high to me. I will definitely go over my miles and will probably put 45 to 47,000 miles on the truck. My question is should I be concerned about this residual value or is this a good deal?

 

[2nazt]

I just want to follow as I know nothing about leasing.

 

[subysti]

High residual value is good to lower your payment but crappy if you plan to purchase at the end of the lease. The big thing to know is the percentage rate which is figured out in the money factor. They are lots of leasing calculators out there to figure it all out. We leased a Silverado last October, I wanted a tundra but the lease rate was over twice as high.

 

[Andy S]

For a point of reference, in February of this year when I bought a new to me 2011 Ford F250 with 74,000 it was at $38k. I also looked at F150 and Tundra and for 2011 with 50-75k miles they were going for $32-36k. So with a residual of 31k after 3 years to me doesn't sound like a bad deal to me.

For another perspective, look at 2013 Tundra's equipped like the one you want to lease and see what they are going for, if they are going for more than your residual then I would think it is a decent deal.

All this info is from someone that was never leased a vehicle, so it might be worthless but if I was to lease the above ideas would be what I used until I hear a better method.

 

[BoaterGuy]

http://www.zerohedge.com/news/2016-03-08/deflation-coming-auto-industry-used-car-prices-drop-lease-deluge-looms

Unrealistically high residual values are unsustainable. IMO there is a giant auto bubble right now. 0% for 72 months and leases with high residuals will lead to a lot of upside down loans and a flood of supply when these record leases sales return in at the end of their term.

Frankly I hope it pops soon because I could really use a car at fire sale prices.

 

[Murf'n'surf]

What's the sticker or agreed sale price?

Leasing it, you'll pay $15,000 over 3 years and be left at the curb with nothing. Why not purchase it and have the ability to possibly sell it for profit later?

 

[Trevor Shipman]

Hahha, exactly what I was afraid of! Split decsion. Errrrg hopeful a good night sleep will steer me in the right direction.

Thanks for the input!

 

[robert843]

Sorry to high jack this thread a little but I have always been curious about what makes someone lease over purchase? I'm the first to admit as others have in this thread I have never leased a car always purchased. Now I'm not against a lease but never really had anyone explain the advantage of a lease over a purchase. I always buy due to the fact my company pays me for my mileage driven on my car so for example right now my car is 4 years old but now paid off by my company basically so its just extra money in my pocket each month. I guess I was just curious what advantage there was to a lease over a purchase I know there maybe none to me but just currious what drives someone that route over a purchase and maybe if it is something I should look at next time around? It will be another 2-3 years for me as I will drive this car into the ground and let my company keep paying for the moment.

 

[tdonoughue]

Basically, lower payments.

Instead of financing the entire price of the vehicle, you are just financing the anticipated depreciation. There are more risks that way, in my view. But sometimes it can be appropriate. For example, I purchase my vehicles (I drive billions of miles). But when we were going to get a vehicle for my high school son, who really only needed one for about 3 years (at which point we do not know if we will need a car for him or not, due to what is going on with his older brother), the fully paid up lease option was perfect. He hardly drives it, so low miles, set cost at the end of the lease if we want to buy it (if that is still a good price then), and the payment was much lower than buying the whole car.

 

[Crlos16]

I personally have leased a sport car before (when I was younger) at the time it was a great deal due to the idea of having a new car every 3 years, very low payments and the option to turn in the keys once the lease was up, or finance the balance and keep the car.
This car (corvette Z06) was my second vehicle so keeping it under 12k miles a year would not be an issue, therefore after the 30th month I had the option to upgrade to a new model and keep same payments or just let the lease run out.
I chose to let the lease term expire and turned in the keys cause insurance was killing me.

Pros:
-No additional payments or penalties once lease is over (if you follow the agreement)
-could of kept this cycle going with a new car every 3 years
-all maintanance was done by dealer (under warranty)

Cons:
-made all those payments and had nothing to show for
-was not allowed to do any upgrades (had to turn vehicle as it left the show room) ( I did but had to put everything back to stock before car was turned in)
-if you go over the 36k miles agreement (12k per year) there would be additional fees to cover for any overages
-if you wreck the vehicle it had to be repaired by the dealer (or GM dealer) with OEM parts

As long as you follow the agreement it's great, I just did not like the fact I would never own the vehicle, and now I like it better not having a car note.

 

[waterboy]

@robert843 I am like you with work paying me to drive. I suspect though you are like me too in that I drive usually 25K-30K miles per year. I believe you can get high mileage leases but you pay more for them too. Because of that, I have never considered a lease. Buy outright and drive it a long time.

I do look around and see lots of Maseratis and Teslas on the road. I am willing to bet most of those are leases...

 

[robert843]

@robert843 I am like you with work paying me to drive. I suspect though you are like me too in that I drive usually 25K-30K miles per year. I believe you can get high mileage leases but you pay more for them too. Because of that, I have never considered a lease. Buy outright and drive it a long time.

I do look around and see lots of Maseratis and Teslas on the road. I am willing to bet most of those are leases...

You are correct I drive 35k to 40k a year and usually willing to drive them till the wheels fall off lol. I figured it wasn't for me due to that aspect.

 

[0627Devildog]

If you KNOW you are going to exceed the mileage by that much leasing isn't the best option. . . . . . You get put in between a rock and a hard place at the end. . . . Pay for the mile overage, or buy the vehicle out at what is likely an above market value.

 

[Murf'n'surf]

This thread reminds me of the saying..... "If it flies, floats or f@@s....lease it!"

 

[2nazt]

Well what was the outcome @Trevor Shipman? I'm looking at upgrading my 12 ram to a new ecodiesel ram so curious how what you decided.

 

[Shuck Water]

Leasing can make good economic sense for those that fit into the "box". If you are one of those that likes a new car every three years, doesn't want to deal with any real maintenance and wants to keep payments lower. Go for it! Why are leases typically only 36 months? Yes, depreciation and economics are a part, but it coincides with the warranty, brakes, and tires. Leasing is like looking at a car payment as a monthly rent with no real spikes up or down, it's consistent. I personally have purchased my car and am leasing one for my wife. I purchased because I drive more than 15k miles per year and because I bought an American car (depreciation sucks). I leased my wife's car because she drives less than 12k miles per year, I don't want her stranded with the kids due to car trouble, the dealership handles all the maintenance including oil changes, and because in 3 years, despite the interior looking "nice" I know that car has had child vomit, spilled milk/food and dog sh*t in it at one point or another. No problem handing the keys back.

 

[ccrayjr]

Buying vs Leasing... I have bought a lot of cars in my life... You can haggle over price on a lease. Is GAP insurance included with the high residual value?? Normally if you lease a car vs purchase... 72 month finance is almost the same payment (depending on how high they set the resid.) When I lease or purchase I look at invoice, see how much dealer holdback is and what incentives there are. You can buy cars under invoice everyday!! I bought my wife's Armada and got 1.6% interest rate b/c of good credit, not a mfg. promo rate and I did my research to see what are the best available rates out there. Good luck!! Let me know if I can help!

 

[2nazt]

Did you get a new tow rig?

 

[Trevor Shipman]

After a nights sleep I ended up walking away. I have till March on my Grand Cherokee so I was a lil upside down in that manner. I think it was a good deal though. Looking as used car numbers for Toyotas they really seem hold their value. I'll probably pull the trigger in March.