I don’t mind seeing my competition losing big because it means eventually they will reduce their RVs and increase their rates at some point.
These types of leases are short lived phenomenons like several past examples found here since the site was created. The deals are so strong that when they end, the lender is so risk adverse that the vehicles are garbage leases after the party ends.
It’s like the kid in high school that throws the rager of the decade. The pristine carpet is ruined, the one-of-a-kind vase gets broken and then the parents never leave that kid home alone again. But at the reunion, people still talk about that one party…
I am a huge proponent of sustainable leasing where the deals are good/great but not insanely great. That is the only way it can work to ensure the lenders stay in the leasing business long term.
Based on my history of leasing Tacomas, this trim should lease for around 250-275/mo for at least 36mo to cover taxes, realistic depreciation and allow the lender to make a little profit. A lease shorter than 36mo needs to lease for about $50 more per month to cover the steeper depreciation rates. This type of deal is still a good deal on a great truck and will guarantee that this level of lease deal is sustainable multiple cycles for the lender.
Don’t you guys get it yet in this brave new world of banking…
Losses=Gains
They are rewarded for their loose standards because it keeps the consumption machine going. There’s no way usbank doesn’t have analysts that know the true depreciation of Toyota pickups. And if they do mess up, they will get bailed out anyway.
Every dollar they take in they can lend out ten and charge 30% interest on all 10. Effectively tripling their money each year through fractional reserve banking.
They got 7 billion in bailout money in 2008. Next time it’ll be 5-10xs as much. And their ceo will still get his $30 mill a year.
