Hi, a neighbour is offering a lease take over of his 2017 Toyota Highlander XLE.
Can someone help me to understand if this is a bad, average, good, or great deal?
2017 Toyota Highlander XLE
12k / 36months (30months left)
$395/month
Already driven 6k miles
Tax rate 9%
No money upfront just have to pay $200 transfer fee.
Its not bad, but you can definitely match it if not beat it with a new 2018 in your choice. I just signed at 15K/36M lease on a 2018 SE AWD with nothing but first payment due for $374, but I used MSDs. I was $399 for 12K/36M or $426 for 15K/36M BEFORE the MSDs, so you can achieve the same payment on a new one if you would like to go that route.
I second @Jmbeebe0722. Unless your neighbor adds some kind of incentive, you can get new one for same price without much fuss. Also, I wouldn’t work such deals with neighbors if in case something goes wrong in future.
DoesNt the XLE cost more? Do you think I can get the XLE around $395 w/ zero down as well?
I live in a large building so this isn’t a close neighbor so I’m not worried about the relationship. I don’t even know the person.
Is there anything I should look out for if I do decide to take it over?
No, the XLE is actually cheaper. My MSRP is $42,940, the exact same optioned XLE is $41,770. The SE leases better with an additional 1% residual.
Interesting I never knew that. Thanks for the info.
Can you give me a breakdown of the numbers for your lease so I can try and get that?
Yup!
MSRP: $42,940
Selling Price: $38,200
Doc Fee: $299
Acq Fee: $650
Cap Cost: $39,149
MF BEFORE MSD: .001 (2.4%)
MF AFTER MSD: .000028 (0.67%) - 9 Deposits of $375 = $3,375 REFUNDABLE
Residual: 66% for 12K Miles or 64% for 15K Miles
Payment BEFORE MSDs: 12K Miles is $399 (9% Tax Included) or 15K Miles is $426 (9% Tax Included)
Payment AFTER MSDs: 12K Miles is $348 (9% Tax Included) or 15K Miles is $374 (9% Tax Included)
ALL NUMBERS ARE WITH FIRST MONTH PAYMENT DUE AT SIGNING. ALL TAXES, FEE…ETC WERE ROLLED IN.
stupid question, what is a MSD? I’ve seen it mentioned a lot but don’t quite understand it.
MSD standards for Multiple Security Deposit. In essence, they are refundable payments made at the beginning of the lease to reduce your risk to the bank, in turn reducing your interest rate.
Each deposit is equivalent to your payment rounded up to the nearest $25. Toyota allows for 9 total MSDs and each deposit reduces the money factor by .000008 for a total of .00072 if all 9 deposits are made. At the end of the lease, all MSDs are refunded. In my case, I paid $3,375 upfront (9 X $375) to lower my money factor to .000028 which effectively lowered my payment $52 a month.
Think of it almost like CD at a bank, you lend the bank money at the beginning of the lease, but rather than paying you interest, they reduce your rate because the extra payment made at the beginning of the lease reduce your risk to lend money. Typically they net a good return, in my case over 50% rate of return in saving if you don’t factor in inflation.