New vehicle dilemma!

[Jeremy airjer W]

Well I finally started shopping for a 4 door Tundra and ran into these problems.

1. I was originally intending on purchasing a used 2004 until the sales guys starting running the numbers. It appears that these trucks are holding there resale quite well. So going with a brand new 2006 with the manufacturer rebate would only be about $2,500 more. The problem is I don’t want to increase my payments to cover the extra but I don’t necessarily want to cough up an extra $2,500 to cover it. But it doesn’t really make sense to purchase used with a great deal on a new model.

2. Here’s the problem I’m really having trouble with. Payments on a 2006 would be in the $550 range, However Toyota is currently offering a three year – 36,000 mile lease for around $800 down and $269 a month. It’s an unbelievable deal on a 06 Tundra SR5 4x4 with the cold weather package, towing package, 17” wheel upgrade, upgraded trim package, running boards, bed liner, upgraded stereo package, power rear window, and fender flares to name a few.

I have never leased and know very little about it. Any pros and cons that you can think of will definitely help my decision.

Thanks for your help!

[caseymcq]

The biggest potential con of leasing depends on the miles you plan to put on the truck. If you sign a lease for 3 years and agree to 12,000 miles a year you could get a hefty penalty when you turn it in if you go over. I leased a truck once and the penalty was I think somewhere aroun 15 cents a mile. It doesn't sound too bad on the surface until you think of how easily you could put on 15,000 miles a year if you plan to travel with it. That extra 3,000 miles a year would end up costing you $1,350 when you turned the truck in at lease end.

If you don't put on that many miles or work it into the lease contract you would be fine.

A big pro would be that every three years you could be driving a new truck. You wouldn't be tied down to a truck.

Con - the monthly payment is basically a rental fee, you aren't paying to own the truck.

Pro - low monthly payment.

There are a few dealers that have a short online questionare that would help you decide whether a lease would be right for you or if you are better of buying.

[Northlander]

I will never lease after all the bad stories I have heard from friends who did.

Over $500 for a Toyota? Man you can get into a FULL size Ford, Dodge or Chev/GMC for less. No thanks on the rice burner.

[Animal]

That sounds like a sweet deal on a lease. If you can live with the mileage all the better. If not, it is still is a pretty good deal unless you are doing over 15 to 20k per year. You have to caculate the cost per year to lease vs to own. The only downside to a lease is that you have to get something else in 3 years and are subject to market conditions. If it is a Toyota lease I wouldn't worry about getting ripped, but be prudent and read the whole thing and ask questions about anything you don't understand. The Toyota Trunda is a nice ride and gets the highest rating for full sized trucks by Consumer Reports.

[TSCTSC]

My only advice to you which I suggest you take seriously is to go to the toyota website and get internet quotes on what you are looking for. Some of the larger dealers have a internet/fleet department that will sell the trucks to you 2-4K cheaper than MSRP and sometimes near invoice prices or even below.

As for getting used, it ain't worth getting 1-2 year used toyotas from dealers cos they cost nearly the same as new after taking the rebates off the new.

I had the same problem earlier this year trying to get a used tundra but the pricing did not make sense to get 1-2 year used.

[Powerstroke]

I leased 2 trucks before I purchased the next 2.

For me leasing was a bad deal cause I put on lots of miles hunting and fishing and I also like to upgrade my vehicle to suit my needs. Any upgrades you make to your leased vehicle either get left on the vehicle when you return it and you lose your money or you have to return it to stock.

I got socked for an extra $900 penalty for over mileage on my last leased vehicle. You also get no money or trade in value on your vehicle when its due back. You also get hit for any body damage, paint and glass chips.

[DTro]

not sure what your price range is Airjer, but I know where you can get a "new" '05 four door for 23.7k.

at 3.9 and 60 mos that is $436

[jweitgen]

You'll love the Tundra. There are many calculators on the internet that deal with this situation. Don't forget about the tax and license fees which you may have to pay on the lease too. I too would suggest getting quotes online. I got the quotes from various places and then asked the local dealer to match it.

[upnorth]

One thing to keep in mind, you get a better interest rate on a new truck over a used one. That will drop your payment a bit. And they may stretch the financing abit longer too.

[blue_healer_guy]

Never will lease again. Didn't have problems with the mileage, but didn't like the fact that you will always "rent" that truck. The buyout on the back end was ridiculous. And like another poster said, any upgrades will be a waste of money unless you take them off.

[jltimm]

You mentioned the buyout at the end of the lease.I was wondering about that,thinking if all went well with the lease and you wanted to buy the truck,what the cost would be to purchase the vehicle?

[rundrave]

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Over $500 for a Toyota? Man you can get into a FULL size Ford, Dodge or Chev/GMC for less. No thanks on the rice burner.

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sorry to say along with the Tacoma, they are both made in the USA.

[New Yankee]

JT - the buy out on most leases these days is set at the inception. Residual values on vehicles that hold their values well usually equal lower lease payments, because in a 'pure' sense, the lease costs will be the original price minus residual value (value of the vehicle at the end of the lease term) divided by the number of months in the lease. Unless one has a business or other way to write off the rental costs (lease payment), it usually doesn't make economic sense to lease.

However, that being said, a lease is attractive to many who want to drive late model vehicles and not go through the hassle of trading every two or three years. There is a cost associated with this convienence as you can imagine. Somethimes a manufacturer will subsidize a lease to aid in inventory reductions, etc. But the bottom line is figure out what you'll be out on the lease - in this case Jeremy will spend just shy of 11K over the term, then have to give the vehicle back, or buy it out at prices he's already found to be high when looking at 2-3 year old vehicles today. Then, should he be hit with an excess mileage charge (5 to 10 cents a mile usually) the costs get even worse. For most individuals, renting the vehicle doesn't make economic sense, but may be a cost they wish to bear.

Personally, while I appreciate the vehicles are made in the USA, providing a living for many here, the profits still go overseas. December 7, 1941 was 21 years before my time, but......

[CodyDawg]

Here is the way I look at a lease. Since the manufacturer sets all the criteria, and since they are the ones that came up with the lease idea in the first place, it will benefit them and not the consumer. They certainly aren't going to do it at a loss....I am not a lease fan at all. If you buy it, it is yours. Put add-ons on or not. Put miles on or not. Sell it in 3 years or 12 years. All your decision with no hidden pitfalls when you own it.

[FullTilt]

Regarding the buy out at the end of the lease, this should be predetermined before you sign the lease papers. Usually the buy out at the end is the same price you'd pay for a used vehicle with the same miles and same year. I'm leasing my first vehicle right now. It's a 2005 4 door F150 on a two year lease.

At the end of two years the buy out is $21,500. I'd probably take out a 5 year loan on $21,500 in two years if I decided to buy it after the lease. This would mean I'd be driving the same vehicle for 7 years, no thanks. Or, I could buy it out, take the 5 year loan, get sick of it two years later (have now owned it for 4 years), try to trade it in and owe $3,000 on the loan.

On the other hand, in two years I will owe zero on the vehicle and get a new one. I could lease three trucks in the next 6 years and have the same monthly payment as leasing one truck for two years and then making loan payments on it for the next 5 years. Typically with a 5 year loan it's almost impossible to owe zero on a trade-in in less than three years.

I don't usually like to own a truck for more than three years, new or used. This being the case the lease option is great for not coming in upside down every three years. Also, this truck should be maintenance free for the next two years. Other than changing the oil and the wiper blades, I don't plan to touch the thing. My wife is the primary driver because she puts significantly less miles on it going to work. We do drive it to International Falls a few times a year and use it to fish and hunt locally. We have 12,500 miler per year and we are right on after 4 months with one 800 mile trip to I Falls under the belt.

The miles are the kicker, if you can stay under and want a new truck every two years it's a great deal. One other thing, the shorter the lease the better. We would have gained only 12 bucks a month if we'd have leased for three years instead of two, and actually lost about 12 bucks a month for a 4 year lease. I finally came to terms with the fact that I'll probably always have a truck payment, it might as well be a new one.

[Jeremy airjer W]

I appreciate all the replies so far.

"northlander" some day you will understand. I will more than happily pay a little more up front to get a dependible well built vehicle. I guess you just prefer to pay alot more in the long run for all the maintenance and repairs on your "domestic" imports (i guess we could call them tequilla burners or goose burners, thats the best I could do for the canadian built vehicles!)

[beer batter]

Someone said it in a previous thread, Leasing is like renting. You can't gain any equity renting, much like you won't gain any equity leasing a vehicle. In the very opening thread Airjer stated these vehicles hold their value very well. Seems like that's a vehicle that would be worth purchasing to build your equity into the vehicle instead of giving the dealership the equity of the vehicle by leasing it.

[FullTilt]

The kicker with vehicles is that they are a terrible investment and should not be looked at in terms of equity. The only time a vehicle has equity is when the value of the vehicle is more than you owe. Even if you pay cash for a vehicle, new or used, you will lose equity from the day you buy it. A vehicle will never increase in value, unless it's '53 corvette, and from what I've heard they get terrible gas mileage pulling a boat.

[IFallsRon]

How long would a person have to own a vehicle to show a return on the investment, if this is possible?

[FullTilt]

Unless the vehicle becomes a collector item I don't think it is possible to get a monetary return on the investment. I think the return on the investement is how well the vehicle serves you and what you need it to do. Every time I could see the light at the end of the tunnel on my truck payment, the thing started to cost a lot of money on repairs. Considering this is usually the vehicle I use when taking vacation time, reliability is a huge factor.

[McGurk]

We would all like to get money back after driving a vehicle for 5 years, but you will rarely come out ahead. That is why you have to put a price on the actual use of the vehicle. Learn to appreciate the depreciation of your vehicle.

If it sits in the garage, does it depreciate? Yes. If you are having a blast after driving up to your favorite lake while pulling your boat along with your family or freinds, are you depreciating the value of the vehicle? Yes. Just enjoy the time you have with it.

Repairs are where you are going to spend the bulk of your money and time. Pre-emptive maintanence may seem like a waste of money, but it is the best money spent on a vehicle. And no, I do not work for a dealership/service bay, just had a Dad who taught me to save time and money by staying ahead of problems.

If the '04 Tundra is only $2500 less than an '05 Tundra, then there must be satisfied owners to justify it.

My $0.02 Good Luck! McGurk

[Jeremy airjer W]

DTRO, Where where you thinking?

[Duffman]

Hey Northlander, what cha runnin on the back of that Lund of yours???

Also, weren't you spouting off on the resale value of the Lunds?? Doesn't that say somthin about the 'yodas as well??

Just askin.....

[Ole1855]

Well, I'll chime in on the lease deal. I leased a Toyota 4Runner way back in 1991, at that time it was the only way to afford it. Well like so many others here have said, miles are a big factor but there are also many more. It's true you know up front what the residual buy out cost is, if that's what you chose to do. One piece of advice is, check the small print!!! When you bring it back in, they go over it with a fine tooth comb!!! Anything that isn't in near perfect condition will have to be either replaced or fixed and that will either come out of the residual or your pocket. I will never lease another auto again.

[Studer]

FullTilt hit it right on the head!! I do this for a living and see that 99.9% of the population with a lein on their vehicle owes a good chunk of money more than what there vehicle is actually worth. The only place equity in a vehicle comes from is from your back pocket. Take this scenario; Joe Blo walks in to trade his vehicle on a new truck, he owes $18,000 on a truck that is worth about $13,000. When the lease is brought up, he responds, "Heck no, what a waste of money, you pay all of that money and when you bring it back, you got Jack!" (Keep in mind the whole time that he owes $5,000 more than what his truck is worth!) I simply reply with "If I could give you $18,000 for your truck, would we have a deal?" "Heck yes" he says. Well, the $18,000 has to go to the lein holder, so essentially he has nothing!! But unfortunetly he cannot get that!! The whole thought behind a lease (and yes given the mileage factor) is putting less towards a vehicle, never spinning a wrench on it (at least on your checkbook) and always driving a new vehicle. You own a house, which appreciates. Why own something that depreciates. It is virtually impossible to come out ahead when buying one. And frankly, mileage wise, when you buy one and you put all of those miles on, the truck is depreciating that much faster and chances are, the term of the loan was streched out 72 mos. to keep the payment low, then he goes to trade it, rolls over $5,000 - $10,000 in the next truck, comes back three years later to trade that one...see where I am going with this! Those miles can be built into a lease up front at a smaller cost so that you are not penalized at the end. I guess I don't really look at it as a penalty though either but more a cost of driving!! As you can see, I am completely sold on leasing!! And as far as the damage at the end, for one extra payment up front, all excessive wear and tear on the vehicle is taken care of (like insurance) Not everything offered at a dealership is a gimmick folks!!Good Luck and congrats on a new truck!!

[DTro]

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DTRO, Where where you thinking?

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I can send you the info. I just need an email addy, or just send me a note [email protected]

[DTro]

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FullTilt hit it right on the head!! I do this for a living and see that 99.9% of the population with a lein on their vehicle owes a good chunk of money more than what there vehicle is actually worth. The only place equity in a vehicle comes from is from your back pocket. Take this scenario; Joe Blo walks in to trade his vehicle on a new truck, he owes $18,000 on a truck that is worth about $13,000. When the lease is brought up, he responds, "Heck no, what a waste of money, you pay all of that money and when you bring it back, you got Jack!" (Keep in mind the whole time that he owes $5,000 more than what his truck is worth!) I simply reply with "If I could give you $18,000 for your truck, would we have a deal?" "Heck yes" he says. Well, the $18,000 has to go to the lein holder, so essentially he has nothing!! But unfortunetly he cannot get that!! The whole thought behind a lease (and yes given the mileage factor) is putting less towards a vehicle, never spinning a wrench on it (at least on your checkbook) and always driving a new vehicle. You own a house, which appreciates. Why own something that depreciates. It is virtually impossible to come out ahead when buying one. And frankly, mileage wise, when you buy one and you put all of those miles on, the truck is depreciating that much faster and chances are, the term of the loan was streched out 72 mos. to keep the payment low, then he goes to trade it, rolls over $5,000 - $10,000 in the next truck, comes back three years later to trade that one...see where I am going with this! Those miles can be built into a lease up front at a smaller cost so that you are not penalized at the end. I guess I don't really look at it as a penalty though either but more a cost of driving!! As you can see, I am completely sold on leasing!! And as far as the damage at the end, for one extra payment up front, all excessive wear and tear on the vehicle is taken care of (like insurance) Not everything offered at a dealership is a gimmick folks!!Good Luck and congrats on a new truck!!

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Here's the difference. Now a days, the most popular loans are probably 4-6 years. Let's take 5 yrs. Most vehicles today will go at least double that time. So after 5 years of 500 payments vs 300 payments you have "spent" a total of 30000 vs 18000 (with 0 fees). Say you keep your purchased vehicle 5 more years. You are now up roughly 6000. Let's say you leased 4 vehicles in that 10 yr period. I'm guessing that the average down would be about 1000. That's another 4000.

Let's match that 4000 in misc repair fees on the owned vehicle.

I think it's safe to say that you could be ahead roughly 5000 after those 10 years. Not only that but if you take decent care of it you probably could sell it for a few grand or more.

I am a beliver that if it's value you are looking for, steer clear of that lease. Not saying to doesn't make sense in some scenarios, but when it comes to dollars and cents, buying it is the way to go.

[Northlander]

Duffman judging from your question you know I run a Yamaha. Didnt lease it though. I also believe Toyota doesnt make a true half ton truck. I may be wrong but they looked smaller to me.

Whats your point? I think I know where your going but only assuming and you know what that does.

I drive a ford f-150 and have 170,00 miles on it. Yes I have to make repairs as will anyone who drives a truck the way I drive mine. Its a truck and gets treated as such.

From what I have heard from Toyota owners they are a very reliable vehicle and hold value. Thats cool. I also heard parts are very expensive when you need them. But then again arent they all.

Im old fasioned I guess. FORD F-150

[Valv]

There is no equity in a vehicle, never did and never will.

You pay cash at $ 25,000, drive out of the lot, make a u turn and go back to dealer and it's worth $ 2,000 less (and not because dealer says so).

Only way to build equity is to do like I do, buy repairables.

My example, 1999 Dodge 3500, light damage paid $ 4000, added $ 3000 repairs + upgrades, total $ 7000, truck is worth $ 14000, I can sell it in a blink of an eye for $ 12000. That's where you build your equity.

Stay away from leasing, no matter how good they make it look. You will find it attractive if you lease more than 1 vehicle and split the usage on all of them, but for a daily driver/commuter vehicle, BUY IT.

[Duffman]

Just giving you a little grief Steve, cause I figure you probably spend more time being pushed around by a rice burner out on the river vs time spent in the F150 during the summer.

All the trucks made these days are good units, you just gotta hope you don't get a bad one, some brands just give you better odds against getting stuck with a lemon.

With all of todays trucks being made by multi-national corporations, does it really matter which CEO's pockets we're filling up? I couldn't care less. Toyota is supposedly building a plant down in Texas, and they plan on building truck models to compete with the big boys of Chevy and Ford, that is if those two companies are still around. lol

Just funnin youse guys....

[YukonDew]

Every vehicle owner has different expectaions and plans for their vehicle. It is painting with a broad brush to sudgest to Airjet which way is best to go based on payment terms alone. I am assuming that the goal is to keep the cost of owning a truck as low as possible. A certain amout of clarity comes from knowing if Airjer will keep his truck for 10 years, sell it after he makes the last payment, or trade it in and roll over a loan. Without that, the best we can do is assume Airjer's plan for his truck are the same as ours would be and I think that is too much to assume to give good advice.