2017 Toyota Rav4 Hybrid

MSRP: $37,392
SP: $35,622
Res: $23,183
MF: 0.00086
Drive offs $600
With GAP $493.52

Does this not see really high for a Rav4?

High- it fails the 1% rule first off and Toyota offers MSD which the employees there are completely oblivious about.

They say the APR is a promotional one and thus can’t be used in conjunction with an MSD. Sounds like rubbish to me.

I’m getting that w Toyota too… It’s untrue… I’ve got a dealer in nj (after 5 failed) that would do it… Also $31/mo for gap on a 36 mo lease (1116!!!) seemes like robbery! On the highlander it’s 14… The whole thing sounds a bit off

1 Like

Agreed, the GAP insurance is a joke. What sort of payment are you getting for the lease?

The highlander???

I am getting gap insurance for 695 or 20/month. Does that make sense. I am reading online that it should be like 400.

I have no idea what GAP insurance is- unless it’s something required in your state (in this case outside of CA). But I would not recommend purchasing insurance since Toyota care is included for 2 years free of charge…

GAP covers you for the depreciation on the car. Leases tend to be loaded up front with interest so when you make your payments you are just paying interest at first and not reducing the capital you are supposed to be paying off. Say you totaled your car 6 months after getting it, you may well still owe the exact same amount to the finance house as you did when you got the car but your insurance will only pay out what the car is currently worth, which sill be a lot less than a new one. GAP insurance will pay the extra needed in order to get your payout back to invoice and thus not leaving you out of pocket.

What? Aren’t all leases now are “closed-end” and include GAP?

They certainly don’t all include GAP, no. Toyota famously don’t.

That’s not really how it works. You pay the same amount of interest, depreciation, and tax on every payment. You don’t just pay interest for the first few payments, then move on to the depreciation.

The reason for GAP insurance is because the total cost of depreciation is divided into equal amounts for the payments, but the car’s actual value depreciates much more quickly in the first few months. If the depreciation cost of the lease is $300/mo, that doesn’t mean the car is only worth $300 less in that second month. It’s probably worth a few thousand less.

1 Like

I agree with all you say except for them being front loaded. Some leases are front loaded and you pay a higher percentage of the interest up front and then more of the capital towards the end.

Car leases are not mortgages :slight_smile: They work as @jmac63 said.

1 Like

How would that work on leases with a very low mf?

My current lease has a very low mf, and the total amount of interest in the contract is $56.

It would just mean your interest is paid off very quickly. I’m not saying all leases work this way, but some financial institution do it that way.

The rent charges and depreciation charges are calculated separately and billed in equal increments. So in that case, a lease is not like a mortgage but a rent (on amount loaned) plus depreciation.

The rent charge is calculated on the (MF * [residual + sales]) and the depreciation is [sales price - minus residual] divided by term.

I know, I was trying to point out why his explanation wasn’t correct.

This is correct in my region. You can’t do MSD and get lower than the Subvented Rates. The MSD will work if using Standard Rate but still can’t go below that of the Special Rate. (At least in CA)

Good to know, Cody.

Seems like MSDs are a regional thing. Folks have been able to use them on subvented rates in Nevada and Wisconsin, for example.

Is any rate below .00200 considered subvented?