Dealer says it’s not worth to go through TFS with MSD’s as Credit Union giving Better rate

Toyota dealer is saying that the lease I’m interested in getting into is better to go through a Credit Union as they have better rates. Stating that it’s not “worth it” to go through TFS with MSD’s.


Supply is low and demand is high and with the vehicle I’m interested in is currently in transit and I would have to reserve it now so that I don’t have to worry about having it go to another buyer as the dealer states.

Is the dealer stating this so they don’t have to bother with processing MSD’s or due to them not budging with lowering the MSRP, they want to take full advantage by going through a Credit Union?

Anyone who has dealt with MSD’s at a Toyota dealership can provide some clarity? Should I push harder to have it go through TFS, go along with their narrative or jump ship?

Interested in getting into a 2021 Toyota Highlander XSE 12k/36 mo. The lease option they offered was $3k down payment for $469.96+tax, if that helps. MSRP is currently at $46,271.


If the other lessor is giving much better rates than TFS, then yeah, you should lease without MSDs.
The point of MSDs is to get the rates to come down, so. I think it’d make sense to do it without it, if the rates are better.

How would we know? Get the CU numbers from the dealer, get TFS numbers for the same terms from Edmunds and post calculators.

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The rates for TFS is 0.00160. Just get to CU’s number. It’s probably around 0.00115 or something

You can’t just compare MF. What if the RV is much lower?


What about RV? Important too, kind of.


Funny enough, I just read something along the lines of this subject on a broker’s thread:


RV on TFS is definitely higher and it usually levels with CU’s MF and RV.

Yeah, but then when the market returns to normal in about a year or two, they can’t charge market value anymore.

Interesting, good to know. I’m going to the dealership tomorrow so I’ll be able to add a few wrinkles to my smooth brain.

I will have to ask when I go in tomorrow, thanks.

Can you elaborate more?

Usually, the lessor will charge the payoff as sales price + MF. Now, what the banks like USBank and Ally is doing are they are making the payoff as the current market value of the vehicle. If the car you bought is at MSRP - Rebate - whatever downpayment that you put + MF, that will be your payoff on TFS. For USBank and Ally, they manipulate their payoff, so that they can make more money. So for them, if you bought the car at MSRP - Rebate - whatever downpayment that you put + MF, they will add the gap between the current auction value of the vehicle - the MSRP - rebate. In another words, if you bought your car at $37,855 - $500 and the current auction value is at $39,000. They will charge $1,145 more for it, just because they can. Now, if the market was to normalize, it will be like TFS payoff, no doubt.


Got it, thanks!

Ok none of that made any sense, starting with this.

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So are you saying that 3rd party leasing companies can stipulate an open end lease contract ?

Unlike a captive leasing bank that offers closed end lease contracts with a fixed RV??

I believe what he is saying is that Ally/USBank charge market rate for 3rd party buyouts currently as compared to TFS that allows 3rd party buy outs at the 1st party amount. They’re still closed end as far as 1st party buyouts. Note that TFS could at any time start charging market rate to 3rd party buyouts or stop them all together if they pleased.

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It’s pretty common that the CU leases are cheaper than TFS with MSD. @RVguy made it hard on TFS


You’re probably right about CU’s but I am not sure since we don’t use any here. In regards to banks like Ally and US Bank Toyota recently tested and released enhanced MF’s and let us combine them with rebates which made the lease payment with TFS + MSD’s lower then those other banks mentioned. Also, TFS here in GST is doing some interesting things here regarding MF and tax credits. Outside lenders versus TFS with MSD’s isn’t always the cheapest route lately. Plus, with TFS it’s easier to get qualified, your residual will not fluctuate, you can buy or sell to 3rd party at anytime and you can avoid the disposition fee at the end of the lease which is $350-$450+ just right there.

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Just to be sure we’re not being misleading, as there was a question before, the RV doesn’t vary with the other banks, the 3rd party buy out does.