Question for those who have bought out their lease

I am about 3 weeks away from my lease maturity date, and am just looking for some feedback from people who have leased to own. I started my lease back in 2019 because that was the one way that I could afford monthly payments on the truck that I wanted. Toyota’s lease terms were very fair, and my buyout is 27-28k, so so far so good!
the plan from the outset was to lease for three years, ignore the mileage cap, and treat the truck as if it is my own. Plan followed. So now it’s time to buy her out.

To those who have bought out their leases, what worked well for you and what would you have done differently? Who here is happy with their result? Has anyone here made mistakes that I should avoid? Does anybody have recommendations for good lenders/credit unions who offer competitive lease buyout loans?

because any thread is useless without pics…

 

Following. Interested as this is my plan in 2.5 years from now.

Don't quote me but I remember reading somewhere that you can extend the Lease one more year and thus keeping the same payment and by the time you're buying your truck it'll be even cheaper to buy her out.

 

Your basically just creating a new car loan. Shop around for whoever has the best rate. As long as you don't have high miles a 28k buyout is a great deal. Your local dealer may try to convince you to return in back to them but don't. The truck is worth way more than 28k(unless you have high miles).

 

Just curious of the math on your lease deal? I don't have experience leasing a vehicle myself, but everyone I know that has leased has complained about it. They also exited the lease early so maybe that was partially the reason.

 

In today's market that residual value is probably significantly lower than the truck's actual market value, so it makes total sense to buy it. It also avoids the "nickel and dime you to death" lease turn-in process where they look at every ding and every little piece of "excess wear". As @fourfourone said above, you are basically financing a used vehicle so most any auto lender will finance your buyout. Shop your credit union and other lenders and see what kind of rate you can get.

A few years back we bought out the lease on my wife's Ford Fiesta. The lease expiration and the cash we had coming for the buyout were about 3 months apart. Ford Motor Credit extended the lease for 4 months without an issue, and it was an easy process. Be prepared for the dealer completing your buyout to tack on a few hundred for processing the paperwork and doing the title/registration. Some leases also add an acquisition fee if you buy the vehicle, but you'd have to check your paperwork to know for sure.

 

I bought out my lease in the second year as it was still possible to qualify for a new car loan interest rate. The process was simple. Just contacted TFS and requested a buyout. Never talked to the originating dealer. My credit union did the rest.

 

"buyout is 27-28k" after three years of payments... but then, still below market value !

 

I'd buy your Tacoma too ... as said the value is probably higher!

I've done one lease and I did buy the car. I just went through my credit union, being generally the best rate. It was simple and they took care of the paperwork.

 

^This

since you leased your truck before the pandemic and the resulting inventory crunch, you definitely should buy the truck, even if you end up deciding to move to a different vehicle. Any lease signed before covid would be a gift to the dealer if turned in. Your truck is likely worth several thousand more than the buyout.

Like others said, shop around for a car loan with a competitive rate. Nothing more to it.

 

I signed up here just to reply to this thread as I'm in the same situation. I leased in 2019 (off-road 4dr short bed) and was planning on buying out my lease as my truck had extremely low miles and I knew equity was high. My buyout price was about 29k.

I walked into the dealership planning to buy, but after the credit application the sales manager came over to make a counter offer. They valued the truck as a trade in at 36k, and said they would apply the difference to a new 2022 lease that they had coming in for an extremely low monthly.

I'm sure they're probably making our better than me, but the convenience and new truck is worth it to me.

 

I just got some emails from the dealer attempting to buy back my truck and replace it with the same but one year newer, for $20 less a month. It would take so long to remove the stuff I’ve added and some of it isn’t coming off. So there’s no way. Maybe you could buy the leases one, sell it to them and get a new truck? Don’t know if this feasible and reasonable.

 

Let me try to rattle off how it worked, as I had never leased before and was previously against the idea.
My truck, new, had a sticker price of about 38k. The dealer had it marked down just below 33 iirc. Monthly payments on a 6 year loan would have been 5-600 bucks, maybe more, don’t remember exactly but it was more than I could comfortably afford to pay each month. I signed a three year 36k mile lease, during which time the truck was expected to depreciate to a value of almost 28k (Residual Value). The monthly payments toward the lease(36 of them at roughly 350 each, totaling about $12,000) are intended to make up the difference between the MSRP and the residual value, so that the dealer can resell it when the lease is up without losing money.

So the very quick math is this:
Lease payments — 12,000
Residual value —— 28,000
Total paid————— 40,000
(-) MSRP ——————38,000
Total paid over MSRP = 2,000
*not accounting for money factor / interest rate because the lease’s money factor and buyout interest rate should be similar in my case, and for simplicity’s sake.

Now, I get to buy a used 3 year old Tacoma with 52k on it that is the exact trim level, bed/cab config, and color that I wanted, with the mods that I wanted, and from a first owner who I know and trust (myself) for 28k, which I will have to finance but can manage the payments.

The story was very different for a new Wrangler Rubicon that my fiancée inquired about in August 2019. I don’t remember all of the numbers exactly, but at the end of a 3 year lease, and assuming she’d buy out in cash (which she wouldn’t) she would have paid almost 12k over MSRP, even more in the real world with a loan for the vehicle and interest rate accounted for. So leases do make better sense in certain cases and from certain manufacturers than they do others.

Now the fun part, my truck should be worth around 40k at the end of the lease, which is 13k more than the residual value as it was projected pre-pandemic. That means there is a chance at selling it privately and scoring a decent profit. I don’t see the sense in getting into a new Tacoma, because I don’t think it would be significantly better than my current one and I’d have to start over on mods. So the plan currently is to take advantage of a good price on a used truck that I have already “owned” for three years. But I *might* also look at numbers on buying out and taking advantage of the equity, and trading in on totally different truck. I won’t jump for that deal unless I’d be stupid not to though.

 

That’s where I’m at right now. Requested buyout doc’s from TFS on Thursday that I can submit to credit union(s) for a lease buyout loan application.

 

I have an interesting one going on at work. I leased a Jeep Cherokee Trailhawk for 24 months for a runabout vehicle. Lease is through Ally. Made last payment and it is due to be turned in in 2 weeks. Decided to buy it for the $25k value and maybe sell it in a year. Went to dealership to finalize it. Turns out Ally doesn't have a license to sell vehicles in MN and the only option is for the dealership to take it into their inventory (buy it from Ally) and then I buy it from them. Dealership doesn't really want to do that because they'd rather get it back for $25k and sell it for $36k it is worth in the market right now. We're currently in a bit of a standoff.

 

Good stuff. The Taco is a solid bet, esp after a good bit of time getting to know it.

 

Very solid and easy explanation. I bought a previously leased vehicle in my current truck (not my lease nor did I know the prior owner) and have no complaints.

My mother leased a 2016 Honda CRV and was debating on buying it or getting a new one towards the end. She had just under 10K miles on it. I told her no way you turn that back to the dealer, even if you don't want to keep it long term buy it and then resell it yourself since the thing had shit for mileage. Might have had one single scratch on it but I suspect not. Why let the dealer make that kind of extra money off it?

 

I have never leased a vehicle and normally do not recommend it if the person is planning on keeping the vehicle. But in your case and due to Covid and the impact on the car market, it seems to have worked to your advantage. I would definitely buy it out based on the exact reasons you listed.

 

I bought mine out last year.

It's good that you know what your buyout is ahead of time. My dealer tried to pull a fast one and argue that my buyout was 32 instead of the 27 I knew it was.

Oh, and also be aware that they consider it to be a used car purchase, with used car interest rates. Have your best finance figures shopped out ahead of time and challenge the house to beat the rate you have in hand. I came out pleasantly surprised on that one, the finance desk did give me a better offer and was very pleasant to work with. (My dealer of choice was funky like that - finance and service were both honest and fair, but the sales floor was staffed with snakes. 2 outta 3... )

It's a crap shoot on whether rolling into a new purchase beats buyout, depending on what rate you can get for each, how much odometer you would be buying, and how long you carry the note. For me, the lease buyout won, which was fine by me since I was more attached to the old truck anyhow.

Good luck. Overall it's an easy day of work to go through, it was a little easier than the original signing for me, since the only negotiating points were at the finance desk, (after one quick conversation with sales where I pulled up the lease terms on my phone and said "here's the number in black and white and we aren't negotiating it.")

 

I also leased my truck in 2019 when I couldn't justify the repairs on my 2001 4Runner anymore and didn't want to jump from no payment to a huge one. I got exactly the truck I wanted at a stupid cheap rate. Since then, COVID, supply chain issues, etc etc. So my lease is coming due and there's no vehicles to be found. The odds of getting a vehicle I really am happy with and not getting raked over the coals is very slim so I'm looking at buying my own lease. I'm well under my miles, the residual is less than the book value or my offer from Carvana for it and the used Tacoma values have always been high, even before the current shenanigans so I'm not worried about losing anything.

I went through my bank, PNC and also never dealt with the dealer again. Could I have saved .025% elsewhere? Probably, but the ease or working with a bank I already work through was important. And it was very easy. They do all the legwork, you sign a couple papers with the bank and when you get the title from the old bank, you go to the title bureau and pay your taxes and register, get plates.

*The one big thing you need to know, if you are in a state with sales tax, is that financing on your own means you will need to pay the remainder of the taxes when you title the vehicle.* If you don't have a couple grand lying around, you might want to go through the dealer where it can all be financed together. Usually they will take care of the titling, give you a temp tag and will send you a memorandum title in the mail to get your plates. You do some of that yourself if you financed outside the dealership. I had to get new plates, which are hideous. Some banks will release the current plates to you with a bit of extra paperwork.

I used to sell cars and we had a $250 document fee on any purchase and a $500 fee for lease buyouts. I did talk to my dealer and he said that they did not have an additional fee for it. I don't know what you're local place's policy is but that gives you an idea. It also gives them a chance to sell you an extended warranty. But you can say no and you can get a good rate from your bank and use it as leverage to get a better one from the dealer if you go that route.

Other noteworthy thing; I leased through Ally, which would only extent the lease for 3 more months. The residual value at the end of that did not change from the original, but they allowed extra mileage. If that's helpful at all to you

 

If you decide to buy it out and trade on a different truck, go to a different toyota dealer....