2020 Prius Prime - Leasing a New Prime?

Discussion in 'Prime Main Forum (2017-Current)' started by baumgrenze, Mar 25, 2020.

  1. baumgrenze

    baumgrenze Junior Member

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    Forgive me if I 'cut to the chase.' I just celebrated my 80th birthday on Sunday. I transferred my 2004 Gen 2 (77,000 genuine miles) to my son as I moved, a week ago, from Palo Alto, CA after 49 years to take up residence in Charlottesville, VA. We paid cash for the '04, and for a '12 Nissan Leaf which quickly became our 'normal' car locally. We are naive about leasing and pricing and would much appreciate guidance from this online community. We are 'quarantined' from our new CCRC community (WCBR) so we can't even reach out our 400 new 'neighbors' for another week. We rented a Nissan Sentra for 2 weeks earlier this week, so it is time to get moving on our new 'wheels.'

    I will only have limited internet access until sometime next week, making web searching difficult, hence my request for guidance.

    The little i remember being told about leasing cars is that you make a down payment. We can afford whatever makes the most economic sense. Then we make monthly lease payments. At the end we have the option of returning it to the dealer or making a final payment and then it is ours.

    What I've gathered is that my request for this car is 'unusual' for my location as they are 'only being marketed in CA and MD. I tried to explore the Honda Clarity but is is even more geographically restricted. How do these manufacturers ever expect to develop a market?

    I hope this request 'makes sense' to the community.

    thanks,
    baumgrenze
     
  2. pghyndman

    pghyndman Active Member

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    Not to kibbitz, but...

    You may want to consider purchase over leasing, as Toyota Primes are still eligible for $4502 federal tax credit (many states also offer additional tax incentives ) but only to purchasers not to those who lease the vehicle.
     
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  3. CarlB

    CarlB Junior Member

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    Makes sense. Lease or buy? Lease tends to cost a bit more, but leaves you with an "out" should you want it.

    For leasing Prime, make sure the dealer is crediting the tax incentive to you via a discount on the lease. Dealer I'm working with said that was on option. I guess the benefit there is you get the discount right away.

    I decided to buy recently. I just didn't like the notion of driving a car that wasn't really mine. Felt a bit odd.

    My two-cents, worth every penny.
     
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  4. PT Guy

    PT Guy Active Member

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    In general a lease is the most expensive way to acquire a vehicle. It can work well for a car one really wants but is so unreliable you wouldn't want to own it. Toyotas are not in that group.

    I know you said you have limited internet access. Unfortunately there are way too many traps to catch you for a brief summary. Can you talk on the phone with someone with good access? Here's a glossary of terms used by leasing: https://www.cars.com/articles/glossary-of-car-leasing-terms-1420681115413/
    More good info: How to Lease a New Car and Avoid Dealer Scams | CarBuyingTips.com

    When leasing, you are the lessee. You lease from the Lessor. The lessor owns the car. They get the tax credit. You want the tax credit applied to reduce the price so the lease payment is reduced. The lessor wants to pocket the credit (or sell it to others). This is not a refundable credit. If you buy the car and claim the credit, it offsets whatever your total income tax is for that tax year. If your total federal income tax is less than $4502 you lose the difference. I think (not sure) that the lease requires you to make all the specified payments for the specified term. If you trade the car in early your remaining payments will be added to the price of the next car. This is done so smoothly that your head is still spinning when they get your signature.

    The dealership people make more money if they get you to pay more. A potential lessee needs to negotiate the lowest possible purchase price then tell them you will lease it at that price (now called the capitalized cost). You need to negotiate the lowest possible money factor (which is a confusing term for the interest rate). You need to negotiate for the mileage you expect to use. Be wary of the condition you turn the car in--you'll be charged for every bit of damage. The inception fees when you start the lease can be breath taking. Good luck.
     
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  5. PT Guy

    PT Guy Active Member

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    In general a lease is the most expensive way to acquire a vehicle. It can work well for a car one really wants but is so unreliable you wouldn't want to own it. Toyotas are not in that group.

    I know you said you have limited internet access. Unfortunately there are way too many traps to catch you for a brief summary. Can you talk on the phone with someone with good access? Here's a glossary of terms used by leasing: https://www.cars.com/articles/glossary-of-car-leasing-terms-1420681115413/
    More good info: How to Lease a New Car and Avoid Dealer Scams | CarBuyingTips.com

    When leasing, you are the lessee. You lease from the Lessor. The lessor owns the car. They get the tax credit. You want the tax credit applied to reduce the price so the lease payment is reduced. The lessor wants to pocket the credit (or sell it to others). This is not a refundable credit. If you buy the car and claim the credit, it offsets whatever your total income tax is for that tax year. If your total federal income tax is less than $4502 you lose the difference. I think (not sure) that the lease requires you to make all the specified payments for the specified term. If you trade the car in early your remaining payments will be added to the price of the next car. This is done so smoothly that your head is still spinning when they get your signature.

    The dealership people make more money if they get you to pay more. A potential lessee needs to negotiate the lowest possible purchase price then tell them you will lease it at that price (now called the capitalized cost). You need to negotiate the lowest possible money factor (which is a confusing term for the interest rate). You need to negotiate for the mileage you expect to use. Be wary of the condition you turn the car in--you'll be charged for every bit of damage. The inception fees when you start the lease can be breath taking. Good luck.
     
  6. Mendel Leisk

    Mendel Leisk 'Orrible Oracle

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    @baumgrenze if you don't mind, what are your reasons for leasing?
     
  7. FuelMiser

    FuelMiser Senior Member

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    There are three ways to "purchase" a car: pay cash up front, take a loan for the cash it would take to buy the car, lease the car. A lot of people don't have the cash to pay up front, so they are faced with financing options. You can finance the entire purchase price, resulting in higher monthly payments, or you can lease with lower monthly payments than a loan for the same car. The way I look at a lease is you are financing the predicted depreciation over the term of the lease. Let's say you sign a two-year lease. At the end, the car is generally given back to the lessor and they now have a used car that they still want to get more money out of. They generally market the car as a used or certified used car, often selling it at auction. What you have done is finance the depreciation the lessor will have to take to unload the car after you return it. To me, the "cheapest" way to purchase a car is to find a recent lease return vehicle from a reputable secondary car marketer, such as CarMax. Dealerships will also sell you a returned lease vehicle, but they are looking to make much more profit than a CarMax, for example, because CarMax is a nationwide reseller and do a huge volume of car sales. My two cents...
     
  8. PT Guy

    PT Guy Active Member

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    About acquiring only a new car...with the lease payments you have no equity in the car when you return it to the lessor. With a purchase, unless you foolishly finance for too many years, too high an interest rate, and too little down payment, you will have equity to spend toward your next car.

    Sub-prime auto loans will be the next shady finance bubble to burst. It won't be a major blow to the economy like the housing bubble that started crashing in 2006; the total amount isn't that big.
     
  9. Salamander_King

    Salamander_King Senior Member

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    I have not seen a great deal on the PRIME lease program. Toyota seems to be incentivizing purchases more than leasing. Leasing works well for people who want to spend less monthly cost on new(er) car and switch cars every 3 years and driving habit is such that you will not go over the mileage limit (usually 10K-12Kmiles/year). Rule of the thumb I have used in the past is if the total payment (including down payment, fees, and all monthly payments) for 3 years lease is less than 1/3 of MSRP, it makes sense to lease. There were some great deals in the past on Honda Clarity Plug-in (no money down $139/mo) or Hyundai Ioniq EV (no money down $79/mo), but availability was very limited.
     
    #9 Salamander_King, Mar 28, 2020
    Last edited: Mar 28, 2020
  10. Mendel Leisk

    Mendel Leisk 'Orrible Oracle

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    My take, anytime you're leaving the lot with a shiney new car and have so far only handed over paltry few dollars, you're gonna get screwed.
     
  11. Salamander_King

    Salamander_King Senior Member

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    Purchasing a car and keeping it for a long time is usually more economical, but lease makes perfect sense for someone always driving new(er) cars. It is similar to the comparison of purchasing or renting a house. Both have pros and cons. I've leased a car 4 times in the past. That's 12 years of driving new(er) cars. If I did that with purchase and trade, I'm not sure I'd saved much.

    Nissan dealer in a small market is testing a subscription-based car driving experience. If I am in the market for a new car, I would try that over leasing.
    Nissan launches a subscription service starting at $699 a month - The Verge
     
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  12. smyles

    smyles Active Member

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    Leasing vs. buying topic has been beaten to death and there's nothing new to be said; it all comes down to numbers, and with Prime's credits and rebates and local deals, individual results may vary greatly depending on location, income, etc.
     
  13. NSXT

    NSXT Member

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    Here is a good site for Finance vs Lease: Buy vs Lease: Lexus RX 350 - Cartelligent

    Certain leasing have a great equity near end of lease. My wife's 2016 Lexus NX200t end of 39 months lease got $4k in equity and now driving a 2020 NX300h. My situation is safety features and the only way to achieve that is by leasing. Finance is a bigger monthly burden vs Lease.

    In my experience, never ever put any down payment in a lease, always zero down, in case it is total-loss, you wont get those back. It lowers the monthly payment but the better way is to put down some security deposit which will be returned at end of lease and it will lower the lease interest rate.

    Electronics are not cheap to be fixed this day including Prime :cry:
     
  14. thymara

    thymara Junior Member

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    This is what my dealer suggested, your better way is the better way
     
  15. bisco

    bisco cookie crumbler

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    baumgrenze
     
  16. Mendel Leisk

    Mendel Leisk 'Orrible Oracle

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