Lease extension - what do my payments go towards?


I am thinking about extending my Toyota lease until (hopefully) the 2020 Highlander hype dips a bit into the fall.

Part of the reason my current monthly payment is so high is because of the negative equity I stupidly (before I visited this site every day) rolled into the lease, and I’m sure the MF is marked up.

That negative equity is “paid off” over the course of the lease term (36mo).

If I do extend, what is my monthly payment going towards (sans MA tax)? The residual at the end of the lease is 23k… do they just adjust the residual? Does my payment hack away at anything? Or would I just be paying the same $ amount for another 6 months with that “additional” money not really going towards anything?

I had a pretty good experience with Vroom when I sold my leased Impreza to them so I could get a Volvo through a broker here. They are currently offering about $500 less than the buyout on the Toyota, but I’m hesitant to jump on it so quickly since we would need to replace the Toyota basically in the same few days and the new Highlander deals are, well, not the most enticing!

Thanks for any advice!

The depreciation portion of the payment goes towards the residual. I had a Hyundai with a roughly $16,300 residual that I extended for 6 months @ $280/mo. At the end of the extension, the residual was around $15,000. Roughly $64 of my monthly payment went towards tax and rent charge.

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Payment will go toward the same thing it is now. A portion to knock down the principal owed, a portion toward rent (interest), and the rest toward tax. Same as it’s doing currently. Without knowing your original deal and seeing your original paperwork, only you and the captive can calculate out what is going toward what.

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Could it sometimes be advantageous to extend your lease 6 months if you’re planning to buy it after? I’d think it could be if your interest rate is lower on the lease than what it would be on financing.

This is a lender-specific question. You need to say who the lender is.

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Don’t forget you have a $350 disposition fee (assuming you are leasing thru Toyota Financial.) Not sure if that changes the offer from Vroom.

Yes it’s going towards the residual or buyout amount. When leasing you’re basically paying for the portion of the car you used so a bank will determine the future value when you turn it in 2,3 years down the road with miles on it. I’m assuming you’re with Toyota Financial if you’re looking into month to month extension. Whatever you pay in payments in an extension will lower the buyout accordingly whenever you turn in.

However it doesn’t seem like you have any intention of purchasing it so really it’s really “going” towards you having a car to use each month, the same as all your previous lease payments. lol. With 2020’s there are definitely good deals to be had right now especially when applying msd’s just depends on who you’re working with…let me know if you need any help!

Disposition fee does not apply if buying the car outright, which Vroom would be doing.

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Thanks for all the responses! I really love this community.

It is through TMFS.

I think I understand now. My payment is $549/mo. So if I were to extend the lease the full 6 months, the buyout should be:
23,081 - (6*(549-tax/interest))

Does that sound right?

Others may know for sure but I’d call TFS and ask.

I had a 24 month Ford lease where I buried some negative (about $200/mo on payment), and considered extending for a few months. When I called and spoke to them, I could add additional months at the same payment, add prorated miles (so a 12,000 mile lease got another 1,000 for every month extended) but my payoff did NOT go down.

Even though the negative was burned off, the payment was the same, and even though I was giving them more $$$ the residual value of the car didn’t change (actuarially it was worth what it was worth at disposition). But that was a Ford a few years ago.

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Email them and get it in writing. Your own assumptions or assumptions supposedly verified by others on the internet are not worth much.

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