OK so I’ve been shopping for a used truck for a month now. It just dawned on me today that leasing was also an option. I’ve been reading this great site and a few others trying to learn and now I’ve got questions that I can’t find a clear answer on.
So I’ve been eyeing this used truck:
It’s got 58k miles on it and I think I can get my note down to about 350 a month (putting down about 9,000). I currently pay 380 so getting it down 30 is nice. But I’m concerned about the mileage and putting down that much and would love an even lower note.
So I’m looking into leasing. Seems like the two options are to keeping getting a new truck every three years or buying the lease at the end of the three years.
Option 1 - Leasing a new truck every three years:
Questions and issues -
Although a new truck every three years is attractive, I’m concerned about having to come up with the few thousand down that I’ll need to get the lease payment down where I need to. 2. But then I hear folks advise against paying any cash down for a lease. But then aren’t the monthly lease payment sky high?
Option 2 - Buying the lease after the three years:
Questions and issues -
Honestly this is my preferred option. A chance at a low monthly note for a few years then buy the truck so I don’t have to worry about any damage I did to it or overages on miles. But let’s say the truck I lease is 42,000. Seems like my note even after three years will still skyrocket with that much less to pay.
Does my cash down for the lease go toward the price of the truck? Is it a sort of early down payment toward financing three years later? Or is that money lost?
Also, if I intend to purchase after the lease is up, if I get a really good deal on the lease and don’t pay much per month, aren’t I screwing myself by not paying much off on the truck during the lease and therefore causing myself to owe more/have a much higher note once I want to buy it when the lease is up in three years?
Summary -
Basically I’m wondering if it’s possible or smart for me to lease a 42,000 truck with ultimately purchasing it being the plan. Put several thousand down at lease signing as a down payment toward the purchase financing three years later when the lease is up, and therefore wind up still paying a decent note (not much higher than the lease payment at that time). To do this, should I expect to pay an additional down payment at time of purchase to get the note down lower?
Lots of questions and confusion here. I sincerely appreciate any help I can get.
If your credit is good then you can do a $0 down deal and just pay the drive-offs. Sometimes even the drive-offs can be rolled into the lease payments. And yes when you do this your payment is higher.
Re Option 2:
Buying your expiring lease is almost never a great deal. If you intend to keep it just buy the new vehicle from the start.
After your lease is over the truck will have a (lower) residual value that is less than you could buy a new one for. But it still makes more sense to just buy the new vehicle. In the end it probably makes the most sense to just buy if you intend on keeping it.
If you are thinking about (for example) doing a 3-year lease followed by a 5-year purchase loan. Then it probably makes more sense to look into a 7 or 8 year vehicle loan instead.
Really appreciate the feedback. Do you mean makes more sense in that over all I’m paying less total money? In other words does it still make more sense to just buy from the outset if my main goal is getting as much truck for as low a monthly payment (lease or note) as possible?
If you’re planning on keeping the vehicle long term, buying from the start generally results in a lower total cost, however, this is very dependent on specific incentives, etc
Probably better off buying a used truck with a bunch of miles, since they seem to last longer, but the one in the ad seems a bit too high mileage and price wise.
As you should. How many years is that used car loan? Likely going to need so repairs during the loan term.
Are you of an age (not retired/retiring in term of this hypothetical truck) where you expect to have a vehicle payment for a while?
(Don’t do this, but) Your down payment could pre-pay most of the lease of this truck. What if you could sign your name, make a reasonable payment (~3xx/mo) every month, and get a new truck every three years?
XxHaimBondxX: Interesting. Even for the trim package? And do y’all figure 57k miles is too high for a used purchase? Is that number make/model specific?
jeisensc: I’ve pretty much accepted the fact that I’ll always have a vehicle payment - not a huge deal as long as I get the note low (low 300s). Why do you say (Don’t do this) for paying a large cash down amount to lower my lease payment? I’m happy to pay up to 10k if it gets my lease payment nice and low, but I’m hearing that would be a dumb move huh? Even if I would intend to purchase at the end of the lease?
What a great forum by the way. Well made. Nice features. And very helpful folks. If only the whole internet could be so nice.
What’s your personal opinion of the deal in the link I provided just out of curiosity?
That’s a good looking truck.
If you want to know how good of a deal it is book it out. Where does it stand wrt wholesale ? I (personally) wouldn’t pay more than a couple grand over wholesale. The dealer (of course) expects to sell it for something between private party and dealer asking price. Negotiating is an art. Play really hard to get. really hard. But be nice - don’t insult anyone.
My other suggestion is to find out what a new one (equivalent) goes for. Not the asking price. The hard-fought negotiated price after all the new-car incentives are subtracted. When you do this, the 4-year old used one may not look like quite the deal you initially thought.
First off all, I don’t get fully loaded luxury trucks “with packages”, if I needed a work truck, it would be the most basic one with less things that could break. Thus a higher mileage truck would make sense.
To me, this comes down to what you’re using this truck for. If you’re using it for work (thus mileage and wear and tear could be an issue) I would just be inclined to finance a used truck. It’s simpler and easier. Just get a Tundra and not worry about it.
If its just for personal use and you don’t want to deal with any maintenance issues then I’d just lease and return, lease and return - rinse and repeat.
Putting a lot down will lower your lease payments but will not reduce the residual value at lease end. The residual value (that’s the price you pay to buy your lease return) is set by the OEM or the bank.
The other issue is if the leased vehicle is crashed/totaled then you may be out your down payment.
