Question on 4runner lease
- Thread starter tdbrph
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tdbrph said:Interested in leasing a new 4runner as the wife can no longer stand the minivan. Currently there is $1750 cash back on purchase but what happens to that money on a lease ? Any input would be appreciated.
Triston
Any and all factory rebates should apply. They did when I leased mine. I also think here in the Southwest we have 2250 in rebates, something to check out. You can also negotiate the price of the vehicle just as if you were purchasing it. For some reason not everyone knows that. Also, check around for lease rates at different places. Alot of companies are doing leases and offer better rates than the motor credit divisions. Even some credit unions now offer lease financing. Just my 2 pennies...
There are three big variables on a lease: capitialized cost (or "cap cost"), money factor, and residual value.
Like tomhaney1 said, not enough people realize that negotiating the price you pay for the car is the same whether you buy/finance or lease. Most people who lease start with a payment in mind, and then negotiate based solely on the payment. But that's bad!
Fundamentally, a lease is a car loan on only the amount of money that is expected to be lost as depreciation over the term of the lease (usually 3 years). But at the end of the lease, the bank owns the car, not you.
The cap cost is whatever you set as the purchase price for the new car. If you trade something in or put money down, that's often known as a "cap cost reduction". Anything you read on the forum here about actual sale prices being near invoice or even lower with rebates still applies to leasing. So start by getting the best purchase price you can!!
The money factor is lease-speak for the finance rate, like the APR on a loan. The money factor is always 1/24 of the APR, regardless of the number of months in the lease. So, for example, 5.9% APR comes out to a money factor of .00246.
The residual value is what the car will be worth at the end of the lease. The dealer can keep the car, or you can buy it out for this price at that time. Too many people think that a low residual value is good, because it will be a "good deal" to buy it at the end of the lease. But that's not true - since your lease payment is roughly based on the (cap cost minus residual value) divided by the lease months, then the lower the residual value, the higher the lease payments. You're paying for that "good deal" over the term of the lease.
Of course, dealers and banks make money on leasing, or they wouldn't incur all of the administration, overhead, and liability of owning cars that other people drive around for 3 years. Where they do that is in the residual value. In order to avoid getting "stuck" at the end with a vehicle worth less than they planned, they often set pretty low residual values. For example, Toyota Financial's standard residual is 53% of MSRP after 3 years with 12K miles/year. I think you can argue that any well-maintained Toyota will be worth more than that in 3 years. So, they're making money when you turn the car back in. If the car is worth 58%, they've immediately made 5% without lifting a finger. So that's the "catch" with leasing. Because of the risk involved to the bank, the residual value is often not negotiable, although you can try to find alternate banks/credit unions that might use a more favorable residual number.
To figure out your lease payments, there's a calculator at
Edmunds.
Like tomhaney1 said, not enough people realize that negotiating the price you pay for the car is the same whether you buy/finance or lease. Most people who lease start with a payment in mind, and then negotiate based solely on the payment. But that's bad!
Fundamentally, a lease is a car loan on only the amount of money that is expected to be lost as depreciation over the term of the lease (usually 3 years). But at the end of the lease, the bank owns the car, not you.
The cap cost is whatever you set as the purchase price for the new car. If you trade something in or put money down, that's often known as a "cap cost reduction". Anything you read on the forum here about actual sale prices being near invoice or even lower with rebates still applies to leasing. So start by getting the best purchase price you can!!
The money factor is lease-speak for the finance rate, like the APR on a loan. The money factor is always 1/24 of the APR, regardless of the number of months in the lease. So, for example, 5.9% APR comes out to a money factor of .00246.
The residual value is what the car will be worth at the end of the lease. The dealer can keep the car, or you can buy it out for this price at that time. Too many people think that a low residual value is good, because it will be a "good deal" to buy it at the end of the lease. But that's not true - since your lease payment is roughly based on the (cap cost minus residual value) divided by the lease months, then the lower the residual value, the higher the lease payments. You're paying for that "good deal" over the term of the lease.
Of course, dealers and banks make money on leasing, or they wouldn't incur all of the administration, overhead, and liability of owning cars that other people drive around for 3 years. Where they do that is in the residual value. In order to avoid getting "stuck" at the end with a vehicle worth less than they planned, they often set pretty low residual values. For example, Toyota Financial's standard residual is 53% of MSRP after 3 years with 12K miles/year. I think you can argue that any well-maintained Toyota will be worth more than that in 3 years. So, they're making money when you turn the car back in. If the car is worth 58%, they've immediately made 5% without lifting a finger. So that's the "catch" with leasing. Because of the risk involved to the bank, the residual value is often not negotiable, although you can try to find alternate banks/credit unions that might use a more favorable residual number.
To figure out your lease payments, there's a calculator at
Edmunds.
BassMiesterNJ
New member
All good suggestions above. Since I just leased a 2007 SE 4runner I'll chime in with my real world experience.
The lease calculator at Edmunds came in real handy for me when I was getting preliminary lease numbers from dealers via email.
First I would recommend staying with a Toyota lease. The Money factor (rate) is .00181 which is around 4%. They have 15k miles pear year and have one of the lowest "over mile" penalties I could find.
The key for me was to know what a reasonable price was going in (invoice, etc). I had a range of monthly payments and "out of pocket cost" I could live with. It was very important to negotiate the payment I wanted while at the same time pushing for the lowest "out of pocket" the dealer would stand for. There is ultimately a lot of room on the out of pocket cost, so don't be afraid to ask them to go lower.
I'm very happy with the deal I got and had two dealers bidding to get my business. The key was taking a car on the lot.
My deal:
2007 SE 4runner: MSRP $34,864.00 (sun roof, 6CD, spoiler, tow package, mats)
MF: .00181
36 months/ 15k miles
Payment: $429 before taxes
Total "out of pocket: $1,500 (includes all dmv, bank fees, doc, first month)
Residual: $19,405.00
The lease calculator at Edmunds came in real handy for me when I was getting preliminary lease numbers from dealers via email.
First I would recommend staying with a Toyota lease. The Money factor (rate) is .00181 which is around 4%. They have 15k miles pear year and have one of the lowest "over mile" penalties I could find.
The key for me was to know what a reasonable price was going in (invoice, etc). I had a range of monthly payments and "out of pocket cost" I could live with. It was very important to negotiate the payment I wanted while at the same time pushing for the lowest "out of pocket" the dealer would stand for. There is ultimately a lot of room on the out of pocket cost, so don't be afraid to ask them to go lower.
I'm very happy with the deal I got and had two dealers bidding to get my business. The key was taking a car on the lot.
My deal:
2007 SE 4runner: MSRP $34,864.00 (sun roof, 6CD, spoiler, tow package, mats)
MF: .00181
36 months/ 15k miles
Payment: $429 before taxes
Total "out of pocket: $1,500 (includes all dmv, bank fees, doc, first month)
Residual: $19,405.00
Hey guys thanks for taking the time to reply !! All of you had great information. While I am no expert I do understand the factors involved in leasing. Currently I am leasing a 58k BMW 530i for under 500/month. That being said Toyota seems to have some of the most difficult lease scenarios I have encountered they seem to residualize options differently to the point they send dealers templates to figure it out. The bottom line question is should I push the $1750 rebate question. It seems to me that the dealer would get the $1750 no matter what method they move the vehicle. Thanks for all of the responses !
Triston
Triston
toto said:
While that is true for the basic price before incentives, there can be differences. If you lease or purchase through the manufacturers financing arm (as most do) they can offer separate incentives between leasing and purchasing. They're not always the same. It is possible a rebate may only be applicable for purchase financing, for example... and say a 0 down option for leasing. Or, sometimes they may apply it to both. There is no rule that they have to offer equal incentives to purchasing AND leasing.
