lease

IMO leases are like time shares. Hard to get out of ‘em.

 

I think that in just 2-3 years, you'll be facing a similar situation as today. The bar will have moved higher, but will still be moving at about the same rate, and you will be facing the same lease-or-buy decision as now.

But it seems likely that Toyota's tax credits will be phased out by then.

 

Toyota for an unknown reason do not incentivize lease programs like Honda, Nissan or Hyundai does. I have not found very good lease deals on Prime, but to be honest, I did not look very hard. The best lease deal I have seen recently was the Hyundai on Ioniq EV for no money down $99/mo 3 year lease. The problem was, they didn't have any Ioniq EV in stock anywhere I looked.

If you can find a lease program with the total payments including down payments and fees less than 1/3 of MSRP for a 3-year rental, then it is not a bad deal as long as your annual mileage does not exceed 10K. I use to drive ~15K miles/yr before COVID, so lease did not work for me. But now, I am driving less than 200 miles/mo, I can live with 10Kmiles/year limit.

 

I cannot say that I would recommend a lease.

You can finance a Prime and take advantage of the tax rebate (at least $4,500 or more if there are state rebates as well). You can purchase a new Prime and net out at around the same the price as a standard Prius L Eco.

Any additional discounts or rebates go on top of that. It is utterly feasible to break even or have positive equity within the first 12-24 months - most certainly 36. You would be in a much better position financially (IMO) to purchase, wait two or three years, and see what the market provides. In that time frame you are just as likely to break even (or come out ahead). Just take the tax rebate and throw it directly back into the principal of the car and you won’t have any problems.

From what I can find on a standard 36/12 lease, residuals are at 55%. Rough math for my particular situation is as follows:

+$29,000 purchase price
-$15,950 end of lease value
———————
$13,050 paid during life of the lease

Alternatively, if you finance you gain the benefit of a $4,500 rebate (minimum). You also have the possibility of rebates, discounts, etc. that can add to that. For the purposes of this, let us assume that you only get the $4,500 tax rebate and apply it directly to the principal:

+$29,000 purchase price
-$4,500 tax rebate
-$13,050 what you would have paid on lease
————————-
$11,450 difference

In order to break even, you would need to be contributing only $318.05 every month towards the principal (net effective).

If you finance the full amount at $29,000 and spread it out over 72 months (assuming 0% interest), you would be applying $402.78 every month directly towards the principal.

Simple math shows that at those numbers, you will break even with residual of the 36 month lease in 28 months of finance at 72 months (positive equity). The shorter your finance terms, the faster you will obviously reach that point.

Financially speaking, I see little reason to lease. You will find yourself in a better position in a shorter period of time by financing if you are responsible and the residuals hold.

 

There is not a federal tax deduction for electric cars. The Prime has a $4,502 federal tax credit to the original owner that is not refundable...if your total federal income tax in the year you buy the Prime is less that $4,502, you only get the amount of your tax. The original owner in the case of a lease is the lessor...the bank or finance outfit. Unless you see that this tax credit has been deducted from your capitalized cost, then you're giving the lessor a $4,502 gift in addition to your regular lease payments.

I agree with Rando. Check state tax benefits from your state as well.

 

it's a simple mathematical calculation. tech isn't advancing as rapidly as you think. prime resale value is the same as any toyota.
simply deduct the kbb value from a 2017 purchase in the prime pricing thread, and compare it to the best lease deal you can find.
the only people getting hurt on resale are thosewho paid too much to begin with, or didn't qualify for the tax credit.

 

Lease or own is really subjective, but Toyota has been known to hold out for a long time on things that become standard on other cars and then all of a sudden add them. So if you wanted to try out a Prime and have tech in mind that maybe isn't available on them yet, then I say go for it. I traded in my 2019 4Runner and the forums were always buzzing about the eventual big update/new platform for it as it had grown long in the tooth (part of the charm IMO but I digress).

 

Any meaningful analysis always looks at the total final financial implications of any potential strategy. So let's compare a lease and a purchase in terms of total net cost at the end of the transaction. I used toyota.com's "Build and Price" tool to compare available options on the least expensive Prime, the LE.

LEASE

With Toyota's current lease offers, you can lease a Prime LE for $289 per month with $1999 due at signing. Total lease payments + due at signing = $12,403. The net of your total payments, due at signing, no federal rebate, and no sale proceeds would be ($12,403).

BUY

MSRP: $28,855 0% APR for 36 months

To make the comparison equal, let's say you make a $1,999 down payment to match the "due at signing" amount for the lease. You would have 36 payments of $746. Because it's 0% APR your total payments + down payment would be $28,855. At the end of 36 months and 36,000 miles your LE would be worth approximately $19,000 (based on KBB for a 2017 with 36,000 miles). So the net of your total payments, down payment, federal rebate, and proceeds from sale would be ($5,353).

At the end of the day the lease costs you an extra $7,050, or $195.83 per month for those 36 months.

 

and that's if you pay msrp.

in your lease example, how do you get the federal rebate?

 

Ooops. That's California's rebate that applies to leases as well. I'll edit. You'd think Toyota would have the decency to kick down some of the rebate to the customer in the form of lower payments, but they don't. If they were willing to take the same margin on a lease as a sale the lease payments would be around $95 per month with $1999 down.