I’m trying to avoid getting screwed, so pardon the basicness of some of these questions.
I’m looking at leasing a RAV4 Prime since there’s $6500 in incentives on the hood.
If I trade my current vehicle in (2023 Mazda CX-5 Signature) and use the equity in that as a reduction cost, does that reduce the pay off at the end of the lease? I’m only considering leasing to get the extra money available on the RAV4.
Don’t use your trade-in to reduce anything. Do it as a separate deal and have the dealership cut you a check. If you use your trade-in to bring down the cost of your lease payments and you total the car driving out of the dealership, kiss that money goodbye.
incentives are only one aspect of the deal. look at the deal in whole, including dealer discount, mf/rv, add-ons, etc. use the calculator here to help assess a deal.
The payoff at the end of the lease is fixed the day you sign the lease agreement. It is set by the bank as a % of MSRP. Any money you put down at signing goes to reduce the monthly payments on the lease and the Total Cost of Ownership (TCO). A bigger down payment lowers the amount financed, hence reduces the interest portion of the payments. Toyota charges fairly high Money Factors which is akin to the interest rate on a loan.
Many people say to not put anything down on a lease. You have to look at the MF versus what you can earn of you keep the money in the bank. I think the problem is many people have a monthly maximum lease payment they want to hit, so they put money down to hit that target. The risk is that money could be lost if a leased vehicle is totaled in an accident, but that is a relatively rare occurrence.
Thank you everyone for the help.
I’m not overly concerned with the monthly payment. I’m going to put the difference between the payment and $1200 (what I’ve budgeted) aside to potentially purchase the vehicle at the end. I’m in no rush to replace my car. I’ll probably just sell it to Carvana (or similar) and be done with it.
The Mazda CX-5 is going to be more fun to drive than a Rav4 Prime. Why do you want the Rav4, just because you see the $6500 in incentives and sense a deal? How much equity do you think you have in the 2023 Mazda? You would likely be upside down unless you put a large amount of money down.
This is only a car to lease if you were going to buy it on day one anyways and just used the lease to capture the lease cash.
So lease it if you’re going to finance the buyout within 30 days.
Use your trade equity towards a one-pay lease or take it as a check and use it as a down payment towards your financing when buying it out.
Make sure you negotiate an appropriate discount before incentives as always.
I owe about $13k on it, Carvana (and a few other sites) are buying them for $25-29k. Its a Signature series with about 16k miles on it. I did a 3 year finance at the beginning of 2023, and have been working on paying it off early.
My daily round trip drive is about 35 miles, the Prime has an all electric range of about 40. So I’d be able to most of my driving via electric only. I’ve considered an all electric, but not a fan of the Ioniq 5 sytling, and the Kia dealers near me are horrible. The other one I’m looking at is a Wrangler 4Xe.
I would finance it normally, but the $6500 drops off. Which is why leasing looks like the best way, then buying it at the end of the lease. We don’t need two SUVs so I would just sell the CX-5 either to the dealer or to a place like Carvana.
I’m also looking at a Wrangler 4xe, that one I would just lease and turn it in at the end.
Which is why I wrote lease it and then buy it out within 30 days.
Do the lifecycle math on that. Including financing the buyout at the end with a used car loan.
Vs financing it within 30 days of leasing it with a new car loan.
You dont have to wait until the end
My understanding is though that if you have a 36 month lease and decide to buy it out after one month, you owe the residual PLUS the remaining 35 lease payments.
Your understanding is incorrect
The immediate buyout price the adjusted cap cost + inceptions, termination, and, if applicable, early termination fee?
If you don’t pay the inceptions upfront, theyd be included in your adjusted cap cost already. So in most cases youre looking at roughly the adjusted cap cost + taxes since the depreciation portion of the first month’s payment usually ends up around the cost of the termination fee.
Unless it’s an MB in an area with the extra 4% penalty.
It’s a little less because they take out the interest / rent from the remaining payments and if a Honda or Hyundai they add a buyout fee.
It can be SIGNIFICANTLY less, depending on the mf on the lease
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