Immediate Lease Buyout vs Holding

Ask the Hackrs Buy/Finance
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1

I am set on a 2025 Lexus 450h+ and will certainly lease it to capture the $7500 tax credit. My toss up is between leasing and doing an immediate buyout (60 month loan 8.99%) or holding the lease to term (36 month, 10k miles). The reason for the hold up relates to the APR on a loan vs the MF on a lease. If the MF (when converted) is lower than the APR (roughly quoted 8.99%) would it not be cheaper to hold the lease for the 36 months and then buyout the lease via finance afterwards?

If i did an immediate lease buyout I would do a 60 month loan so i was thinking it would make sense, if i kept the lease the full 36 month then when the lease ends, take out a loan for 24 months to buyout the rest (also hoping rates go down by then too).

Also, since I know from the start i will be buying out the lease regardless, does it matter if i put some cash down now to lower the monthly payment? Mentally, I would just prefer to have a lower monthly lease.

Thank for the help!

2

PA charge additional 3% on top of the sales tax on lease monthly payment. You will need to add that to your calculation.

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3

So the lower my monthly lease payment is, the less PA tax i pay?

4

I’d imagine you can find a better rate?

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5

I haven’t truly inquired about a rate yet, that was just what the dealer mocked up in a finance quote. Looking at my local credit union rates are “as low as” 5.99% for a used car loan which this would be in this case

6

I was under the impression that my own local CU could apply new car rates if the car were still relatively new (as in the case of an immediate buyout). Might be worth asking.

I think Lexus and Toyota generally have pretty high MFs. When I looked it up, I think the RX450+ MF is effectively 7+% this month?

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7

It all depends on the bank or credit union. My credit union breaks the rates out by model year, whether the car is new or used doesn’t matter.

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8

Sounds like I can beat that MF with a loan from a CU but I’ll see if the Lexus dealer will tell me. If not I guess I can calculate it.

9

What are you hoping the dealer will tell you? If you tell them about your plans for the immediate buyout, they will try to recoup the lost commission, so they have strong motivation to provide misinformation.

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10

I’d like to know the money factor

11

You dont need the dealer to tell you the money factor available.

Ratefindr is your friend.

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12

I was told the “Payoff” is the remaining lease payments plus residual value ( so I’d have to pay all “interest”?) but the payoff amount is quite a bit less than the sum of remaining payments and residual. Can someone explain?

13

Whomever told you that was wrong

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