07 Camry LE V6 lease deal advise

[DDL24]

MSRP 26009 (LE v6 with JBL and stability control)
Price 23209
Residual 13918
36 month, 15k/year
MF .0092
Acq Fee, 550
MD tax 5% + 220tag fee
dealer processing 99

Nothing down, all rolled into the lease. Monthly lease payement $350. Just pay the first month lease and drive off.

I have never leased before but it seems the MF is very good, about 2.4% APR. I thought the residual value is a bit low, aobut 54% of MSRP after 3yr and 45k or is that pretty standard. I am assuming the leasing company(toyota finance)set the residual value. How do you expert think about this deal? I can pay the car with cash but with 2.4% APR, why not put the cash in the bank and earn 5%. Would you do the same? Did I miss something? thanks.

[peterlola]

The deal will be sweet if the residual value is in the $11000 range. Good luck

[fat_bastard]

Leases are a bad idea from the beginning. You spend $12600 and have nothing to show for it. You are almost guaranteed to get that much money back if you bought it outright then sold it 3 years from now. Camry's retain enough value that the lease does not make sense. Leasing is just a bad idea IM(and many other's)O

[DDL24]

Originally Posted by fat_bastard

Leases are a bad idea from the beginning. You spend $12600 and have nothing to show for it. You are almost guaranteed to get that much money back if you bought it outright then sold it 3 years from now. Camry's retain enough value that the lease does not make sense. Leasing is just a bad idea IM(and many other's)O

Thanks fat_bastard for you opinion.

Not trying to be argumentative here but le'ts go thru the math

Lease, 350*36= $12,600 out of pocket and if i want to buy the car for 13918 after 3 yrs, total 26518 but since I put the $23k in the bank at 5% for 3 yrs, that comes to about $3450 interest income,so the net cost of the car to me is aobut 26518-3450=23068. which is about the same if i buy the car today withou paying tax (tax was already rolled into the leaase payment).

In addition, I have the option to either walk away or buy the car depends on the used camry market then. Selling a used car is not fun as I am going thru it right now. I know the most economical way is to drive the car for long time, but at least i have an option to do that with this lease deal without paying for that option....

[wireless]

Neither the Web nor a quick visit to the local car dealer will provide all of the necessary information. Complex lease contracts combined with hidden costs complicate the decision to lease or buy. For example, leases usually do not explicitly state the interest/discount rate; purchase contracts do. The lessor knows these rates, but they are usually not negotiable to any significant extent. On the other hand, residual value (the amount the dealer is willing to accept for the vehicle at the end of the lease) typically is negotiable. A dealer who is motivated to complete a lease transaction and “close the deal,” may be willing to negotiate the auto’s residual value to a higher level than its historic resale value, thus reducing the lessee’s monthly payment.

A lessee who returns the auto in good condition at the end of the lease will have no further obligations, except perhaps a small disposition fee. A high residual value is the primary reason why many luxury auto manufacturers are able to offer unexpectedly low monthly lease payments. An awareness of these factors can help one negotiate a more favorable lease.

If you could guarantee 5% compounded over 3 years you would reap about $2050 on $13k savings. Account for that, and guarantee you keep the mileage below the limit, and will absolutely walk away from the car at 36 months, then it may be worthwhile. Also bear in mind that you need to account for the interest you are paying on the lease, and what it costs to do that. It isn't like comparing $13k to save or finance...not that simple.

[carlo$]

i would never lease a car unless it was a business expense.

[JMSinMD]

Originally Posted by wireless

1. For example, leases usually do not explicitly state the interest/discount rate; purchase contracts do.

2.On the other hand, residual value (the amount the dealer is willing to accept for the vehicle at the end of the lease) typically is negotiable.

3.A lessee who returns the auto in good condition at the end of the lease will have no further obligations, except perhaps a small disposition fee.

1. Wrong, lease rates are referred to as money factors, simple calculation turns money factor to lease rate. A lot of time lease rates are lower than finance rates for the same period of time, i.e. 3y/36 pay

2. Wrong, residual value is set by the manufacturer based on the term of the lease and the mileage of the lease. It is not negotiable, before you take the lease or after you take the lease. The only thing negotiable on a lease is the capitalized cost, i.e. sales price and the discount you can get on it, i.e. capitalized cost reduction.

3. Wrong, in most states, "wear and tear" covers up to $1500 in reconditioning costs on a typical lease, beyond that, the consumer is responsible for the difference, the dealership benefits by having you satisfied and either leasing again or purchasing from them, taking you over the coals for wear and tear wouldn't go too far towards this. There is also no 'disposition fee' at the end of a lease.

I used to sell Toyota's myself and before taking delivery of our newest vehicle I decided to do as much research as possible on leasing. A great website I ran across was leaseguide.com as well as reading multiple books about it.

Leasing isn't for everyone, if someone likes to keep a car and run it into the ground for 10-15 years, leasing is never a good option. For someone (the average consumer keeps a car for 3-4 years) that likes to trade out of cars, you will loose a lot less picking in appropriate lease than being upside down or even rightside up in your financing.

In our case, taking out 2, 3 year leases, broke even with the cost of purchasing/financing a car and keeping it for 6 years. It broke even without including the cost of maintenance necessary beyond the 3y/36m time period. That's why I went for it. I'm not going to tie up my money in a depreciating asset. To me a good example is this, if I were to come to you and ask you to invest $25,000 with me and in 3 years I'll give you $12,500 back, would you invest with me? That's what financing a car is.

People incorrectly use the term equity when referring to cars and call their cars assets. An asset is something you can afford to give up to gain liquidity, a car (at least the cars we all drive), is not an asset but necessity. Leasing is not right for everyone, but neither is buying. It's a choice. A lot of people are ignorant about leases and therefore assume there bad because they don't understand them. A lot of people are sold into leases, attracted by the low monthly payments, i.e. luxury cars, etc. These people are going to wind up disappointed in the lease process.

If you intend on buying out your car after the lease is over, leasing isn't right for you. It's not black and white, but truly gray and is dependent on what people are looking for exactly.

Sorry for the long response but buy vs. lease posts always get me going.

[CharmCityES]

jon knows his stuff!

i agree. leasing isnt for everyone....you make payments and never really own the vehicle....on the upside you dont take such a loss in terms of depreciation....another good thing is that you can buy out the car when it comes off lease and pay off the depreciated value of the vehicle...which is great cause youll be buying a car that you personally took care of, so youll know its good to go
its a toss up...really depends on the buyer

my big issue with leasing is milage...you have to really read the fine print and see what the milage limit is....if you exceed this, you have to pay per mile....my dad exceeded the lease milage on his 36month lease on a 2003 acura TL and ended up paying like 400 bucks in overages

toyota is hooking up good lease deals on the camrys ive heard....now is the time to lease a camry if youre looking to....be careful and know what youre getting into first

[wireless]

Jon: My stuff was copy/paste from a business accounting CPA firm's website.

I disagree about the asset defition. It's an asset, but a depreciating one. An asset is defined as a : an item of value owned b plural : the items on a balance sheet showing the book value of property owned

You car (assuming you aren't upside down on the debt incurred for purchase) is an asset and technically your 'equity' in said asset is the amount of market value above your cost to acquire (including any debt) said asset. The definition of an asset has nothing to do with liquidity of the asset, that is another issue altogether (Econ 101). I agree that a car is not a liquid asset for most people as it isn't something they can do without in lieu of the cash they could receive for selling it (liquidating).