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My son leased a 2014 RAV4 Limited for 2 years a few weeks ago and I got to see the numbers. Toyota is currently running a lease promotion. I did some search before we went in and couldn't find any on the web so I thought to post these.
Gross Cap Cost:$30,710(under MSRP)
Rebate:$750
Cash down: $3,620
Net Cap Cost: $26,565
Residual:68.3%
Payment:$225/mo(1st month and tax included)
The dollar figure for the residual comes out to $21.6K. I think this is low, which means a good opportunity to buy it at the end of the lease. I am sure the dealer can put this back on the lot for $25K. Based on these figures I think it is a good deal even if you decide to keep it.
So in other words if he decides to keep it he will pay $29,994.93 for a car that stickered at 30,710? That's not a very good deal. With the rebate added on that the total price is $30744.93.
well i guess its okay because it include TTL the first time around.. He will have to pay that again when he buys it at the end of the lease if he chooses to.
So in other words if he decides to keep it he will pay $29,994.93 for a car that stickered at 30,710?
What about the 2 years that he drove it? He seems to come out even, and we are not even counting the repairs on his 16 year old car that were sure to surface.
So in other words if he decides to keep it he will pay $29,994.93 for a car that stickered at 30,710?
In the future, please refrain from using logic in support of your argument, it's un-American!
Besides, under the best of circumstances he will pay $30k, in reality they will charge him big time for going over the miles, and for every little micro-scratch that's on the car. In addition, people who lease new cars do so because they have no money, no budget, and no sense. People like that won't come up with the cash to buy the leased vehicle after 2 years, which means more financing, yet higher cost.
Regardless, I fail to see how paying $9,000 in car rental fees (that's what leasing really is) over 2 years is a good deal. At least if you buy a $9,000 car and drive it for 2 years you can still sell it for 5-7k. With leasing you simply tossed 9k out the window.
Regardless, I fail to see how paying $9,000 in car rental fees (that's what leasing really is) over 2 years is a good deal. At least if you buy a $9,000 car and drive it for 2 years you can still sell it for 5-7k. With leasing you simply tossed 9k out the window.
A 2012 RAV4 sells for $25K today. In 2016, he can buy his 2014 RAV4 for $21K. That's +$4K. He will have spent $9K altogether by 2016 on the lease so he is out $5K in two years of driving. His 16 year old car had a transmission failure. Do you spend $3K fixing it and drive a clunker worrying everyday if it is going to die? What if there is another $3K repair around the corner? And then there is the intangible. The joy of driving a brand new car with all the bells and whistles. But as they ay YMMV.
A 2012 RAV4 sells for $25K today. In 2016, he can buy his 2014 RAV4 for $21K. That's +$4K. He will have spent $9K altogether by 2016 on the lease so he is out $5K in two years of driving.
But let's just be realistic, he won't be able to drop $21K cash, so he will have to finance that $21K.
21K at 4% (not an unrealistic rate for a used car and less than perfect credit) over 5 years (!) bumps the total cost for the loan to 23.2K. More importantly, it bumps the monthly loan payment to $390.
Will he be able to afford $390 every month for five years straight? Is it more likely that he will put down another 4K to keep the monthly lease payment closer to $200 to enter into another lease?
Also, if I look at the Internet I see a bunch of 2012 RAV4s sell for 13-15K at ~50k miles. They may not be local to you, but buyers can easily buy out of state, pay 1k to have it shipped, and still don't pay more than 16K.
At 16K true resell value that 21K he will have to pay looks a lot less attractive.
Quote:
Originally Posted by HappyRider
His 16 year old car had a transmission failure. Do you spend $3K fixing it and drive a clunker worrying everyday if it is going to die?
You'll get no argument from me, or anyone else who's at least half-way reasonable, that a 16 year old car is often just too much hassle. But let's just say he had put the 3.5K toward a 2012 RAV4, and let's say he had picked one that's about 18K, so that's 14.5K that needed to be financed.
14.5K at 4% for 60 months would be $260/month (not that much more than the current $225 lease). Then, when the vehicle is 7 years old and paid off, he could still sell it for ~6K (price of a 2007 RAV4 today), and use that 3.5K of that 6K as downpayment for another used car, and put 1.5K in the bank.
What's done is done and can't be undone. He's stuck in the current lease and that's that. Hopefully that will give him some time to think about the whole thing and run the numbers the next time. I very much think that the "I WANT A NEW CAR NOW" got the best of him. There's no shame in buying a slightly used car, in fact, that's what nearly all rich people do, they buy used and let someone else take the initial depreciation hit.
Thanks RR for a very helpful insight. As is often the case there was also the pressure of having transportation in very short order. Finding the right used car is not that speedy. But you are right, many a new car has been sold to people who got the whiff of that new car smell.
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