Any end of lease advice?

First off, I'm not a fan of leases. We've done it a couple times over the years and all but one time felt we got screwed.

Our last lease, we leased an Avalon and at the end of the lease we were able to negotiate a lower buy-out because we didn't really want to keep the car, and were going to just turn it in (fed up with the whole lease process). Toyota did not want it because they had a glut of used cars (lease returns) and didn't want another. So, we ended up buying it for about $2000 less than the residual and then sold it out right for $2000 more than residual and made about $4000 that we used for a down payment on the purchase of a new car. We've never leased since! The times we did trade at the end of our lease, we were never offered more than the residual.

You may want to contact Toyota financial and see what your options are. The closer to the end of the lease you are, the more willing they are to negotiate.

 

Is your lease through Toyota?

 

lease's are tricky if you want a better deal at the end than the one you negotiated in the beginning.

that is, the dealer is less likely to come down on price with the original lease holder (as a buy-out), than some "Joe" who walks on the lot an hour later and makes an offer on that car.

let's face it...the reason why a lease looks good up front, the reason that payments are so low, is because the "residual value" (the price at the end of the lease) is higher than one would normally find for the same vehicle on a dealer's lot.

so, after you turn it in and don't purchase it, the dealer is likely to sell for less than the pre-negotiated price at the beginning of the lease.

 

Buy it out. There is always a lot of money left in a leased car when the lease expires. Especially when you are undermiled (is that a word ). Compare the interest rates between the companies you may get a loan from. I don't think TFS will loan money for a used car anyway. That was what I was told when I purchased a used Toyota a few weeks ago.

 

Toyota doesn't like to negotiate on residuals at the end of a lease. They want you in a new car, and want to resell your car. I know someone that had a Tundra that they leased. When the lease was up, the residual was high and Toyota would not negotiate. He ended up making a deal where he returned the truck to a dealership, the dealership negotiated a purchase price with Toyota, and resold him his old truck. He saved alot of money. He was friends with the fleet manager, so it worked out for him. Otherwise, the residual was just too high to purchase.

What is your residual and how does it compare to market value? Demand and prices on used Prius on on their way up. Due to the current gas prices, it may make sense. It may even make sense to trade it in as opposed to just returning it if you decide to purchase a new one.

 

Yeah it also has been my experience that Toyota is completely unwilling to negotiate the buy-out on a lease...

TFS will absolutely lend money on used cars....but bear in mind...if you lease, then buy and finance you should have just bought it in the first place. Leasing, then buying and financing it for 5 more years is going to cost way more in interest than just buying it originally.

Also, if you live in a state like MD where you have to pay sales tax on the vehicle price whether you lease or buy, when you buy out a lease you have to pay sales tax AGAIN, and pay taxes and tags AGAIN, despite the fact you paid them when you leased the car. Too late now, but just food for thought for next time.

 

I saw in another post that someone negotiated a price, but in all my years of owning cars, I have never heard of anyone being able to negotiate with Toyota. With other manufacturers, they will often start calling a few months ahead of the leases end to negotiate a price. Toyota never does this. They would much rather you buy a new one.

 

Thats been my experience as well...is the above poster who negotiated with Toyota sure his lease was with TFS?

 

Yes, but this was quite a while ago, late 90's, so things may have been different then. We had already purchased another car (non-Toyota) and were going to just drop this one off at the dealership and turn in the keys, but we were over mileage. My wife (who works in the banking industry) was able to negotiate a deal where we bought it out for less than the residual (probably based on actual value). Don't recall all the details, but we did save some money and sold it a couple months later for more than what the residual was, so in this one isolated case, we actually didn't get screwed as bad as we had on previous leases! We have purchased and either paid cash or paid the car off early on every one since.

 

I'm also interested in how you felt you got screwed on your previous leases...

 

Perhaps the wording matters:

"I am returning this car, thank you."
"After the paperwork is done, I might be interested in a used Toyota Prius just like the one I am returning. If you have any available, let me know."

We are getting ahead of ourselves a little. How much is the residual ?

 

Something that hasn't been mentioned is that you know the history of this vehicle and are apparently comfortable with it. Would you rather pay the same amount for a used vehicle that is a complete unknown? I wouldn't.

 

but the point here is...you will pay less for the exact same vehicle because the way that they write the lease (low payments=high residual), the end of lease price is higher (sometimes 10%) than a similar vehicle on the lot.

and as previously stated, the minute you deny the buy-out at the end of the lease, your prius goes onto the lot for a lesser price than your pre-lease negotiated price.

 

Gonna have to question the contention that prices are always lower than lease residuals in general. My 2008 Prius lease ends in June and the residual is $14,200. A cursory look online yielded no asking prices under $16,000. Can always negotiate...but...

 

It really depends.

Take my Lexus for example. New it was like $41,000 (negotiated price was like $36,000), the residual is $20,500 after three years, 18k per year so 54,000 miles.

So look for a nice 2008 ES350 with no more than 55,000 miles with navigation and see what you find for prices.

Here's one with nav for $30,000 (a stupid price) thats certified:
Lexus : ES - eBay (item 320662576903 end time Mar-27-11 03:20:16 PDT)

Here's one with nav thats not certified for $22,480 at a non-Lexus dealer:
Lexus : ES - eBay (item 190513541927 end time Mar-28-11 17:39:59 PDT)

One in excellent shape like mine will be would be sold by a dealer as certified for $26k or so is my guess. What would you be able to buy the car for? I mean...$6k is a lot to come off the price.

So if this is still the climate when my lease is up, it might be a good buy for me at $20,500 assuming I was going to buy another similarly priced car.

BUT, overall should I do that I would have been better off to have bought it in the first place.

 

you make an excellent point!

i now stand corrected about something that i previously said...the fact that lot prices are generally lower than lease residuals.

i made that statement before an act from GOD (earthquake and tsunami in Japan).

i would now guess that a lease residual will be a better price on a Prius due to the fact that parts and new vehicles will be scarce. and the fact that the price of gas is $1.50 more/gallon than when the lease was negotiated two+ years ago.

 

It may have been anyways. In my scenario above you see prices may very well be higher than the residual, and there hasn't been much of a change in the value of Lexus ES350s. I know, I watch them.