Car Leasing 101: Do You Have to Put Money Down? PLUS end of lease options

Should you put money down when you lease a new car? I answer this question plus more leasing questions and answers. I hope this helps.
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[@mhlittleton6493]

Very fair, reasonable, and balanced explanation of leasing, Jeff! It gets a bad rap, and it's definitely not for everybody. But for someone in the right set of circumstances, it's a great option!

[@valentinemcintosh6006]

Thanks Jeff, this is the video in my research on leasing that mentions credit score importance.

[@cohall46]

Very interesting, informative, and helpful. Thanks for sharing

[@DGYtown]

Hey now! You really hit em with the hein on that one. Thanks for the info. I’m gonna buy my leased 2018 Acura MDX . Thanks Jeff

[@ChristopherKayser88]

Thank you for posting this!

[@elizabethwonders]

Excellent advice! So helpful! Thank you! 👍

[@crystalsteed641]

This was a very informative video. Im thinking about leasing and it was straight to the point & answered many questions. Thank You!!

[@diodorusb]

I enjoy your videos!

[@teresaradlinskakuzmanovic988]

You are very entertaining...and of course helpful...Good video...!!!

[@ChipSpencer123]

Great info😊

[@PJH4101]

Great video

[@Tony-jb8ue]

Hey Jeff thanks for sharing this video on leasing. I love to lease vehicles and it works out really well for me to do it. Right now I am on my 4th lease. All the vehicles I have leased have been Rav4. My first lease was a black 2012 LE Rav4. Just something plain to start out with that I could afford at the time and had no plans on getting something brand new at the time and thought I was going to get something used but it worked out really nice so I could lease which I did not know anything about at the time or how it worked. Then my second lease was a little bit of an up grade to a silver 2015 XLE. My third lease I upgraded to an all black 2018 Adventure model that had the black rims on it. Now currently I am on my 4th lease and back in August got the 2020 RAv4 XSE Hybrid in the Silver and black color. On my 4th lease back in August I was given an extra $1000 on my vehicle I was trading in and they gave me an extra $500 for being a loyal customer. So each lease I have done I have been able to upgrade a bit on the models which has been really nice to do. For me leasing works really well cause I hardly put much for miles on in three years. All of my leases have been 3 year/36,000 miles except my current lease which they now have a 3 year / 30,000 mile. Most of my driving is mainly in town so I hardly put much for miles on. After my first three leases were up I only had around 20,000 miles I put on which is crazy. Also each time I have leased a new vehicle I have had the opinion of getting out of my lease three months early if I wanted to as a loyal customer and have taken advantage of doing that each time. I like the idea of in 3 years when your lease is up you can get into another new vehicle if you want which I like to do because of the new styles/changes they might have now. What I don't really like so much is having to put that money down up front each time you lease and you don't get it back. Also I wish they would give you some kind of incentive for being way under your total amount of miles you can put on like I have been where I have around 20,000 miles. It's hard to believe how much better my XSE model is I have now compared to the 2018 adventure model I had. SO in three years when my current lease is up it will be really interesting to see what improvements they will have made by then.

[@jimmulderig743]

Thanks

[@MustaphaBCham]

@Toyotajeff in Raleigh, can there be instances where one can be given a discount off the residual at the lease or offers like vehicle being eligible for low APR?

[@inmotion6238]

The down payment you put down for the car you are renting for 3 years goes straight into someone’s pockets🤫. Also, when you return the car make sure you returned it without any blemishes. No rips on the seats, no dents, no scratches or scuffed rims, no damages on the bumpers etc… take care of all the damages, other wise the dealership is going to bend you over the same desk the bend you over the day you signed that rental loan and stick it to you one more time.

[@tonyramirez1112]

How did you get your numbers for the 4Runner? I’m trying to calculate a lease for a rav4 xle awd and the hybrid version for 3 years, 12-15k

[@TheOzthewiz]

One thing that was not mentioned in this video. Sales tax is not paid on the ENTIRE car price. You only pay tax on the DEPRECIATED amount of the car while you are leasing it, in monthly payments added to the lease payment.

[@subtainfarooq]

Loved all the dad jokes.

[@jessesymons4335]

Dont see a point in putting $ down unless you are financing. Great video as always 👊

[@jerrylundegaard2592]

If you are not financing but paying cash the down payment is the price of the vehicle.

[@TheOzthewiz]

Exactly! It would REDUCE your lease payment to put money down. But, you would have to plan ahead of time to have that money set aside for your next lease!

[@Co-je3lf]

Great job Jeff !! When you say zero down, did you mean tax/registration/1st payment? or completely zero down?

[@ralogisticsroyalashley9864]

lol love it thank you

[@renardmills718]

Thank You for the videos and watch and subscribe to your channel

[@KeithWilmo]

Very good information I’m just waiting till something happens with my car but when you releasing, do you really have to have a lot of money to lease because you’re cars are more expensive or less are your insurance gonna be higher?

[@turborsx5740]

Thank you for the very informative video! What do you think about leasing a full electric vehicle? The reason I ask is because electric vehicle's batteries degrade over time and would not last longer than regular cars do. What do you think? I have a 2020 4runner TRD offroad premium that I love but I need something for work and back.

[@Teee_777]

What if someone have a lower credit score, but have a cosigner and would like to lease. Would they still get approved?

[@Steve_in_NJ]

I've been leasing for decades. I think my first lease was way back in 1993. Learned over the last year, negotiate OTD price BEFORE talking about lease rates and down payments. My current 2022 Hyundai Kona lease is under $400/month, but my partner's 2023 Camry XLE AWD lease is over $500/month!!! Now in 2024, dealers have no reason to sell for above MSRP, or even AT MSRP, yet I am finding many dealers still doing so (and most of them Toyota dealers). Of course, I want to lease a hybrid Corolla Cross, and they are not too many in stock so far.

[@KeithWilmo]

$29 minus out of the payments so from 1000 is 290 is $29 from 319 from 290 to 261 is $29 but if you look at zero from $2058

[@1991windsor]

I would never put money down on a lease. I would just put the money I was going to put down in a savings account and put it towards my monthly payment. That way, if something happens to the vehicle, you still have money in your account.

[@waelabdelmageed]

The 1st viewer for the 2nd time..go on you are the best 👌

[@waelabdelmageed]

😔 oh not the 1st😇

[@Toyotajeff]

I’m so glad you’re here!!!!

[@KeithWilmo]

I like your videos

[@Toyotajeff]

Thanks Keith!

[@KeithWilmo]

Question, do you always go with the cheapest car sarah lease payments are low or do you just get what you want are your pain payments gonna be higher on an expensive vehicle which I think you demonstrated ?

[@gabrielspiropol9418]

Nice job on the leasing break down! Hi Jeff, on my 3rd lease with Toyota, ‘15 Camry XSE, ‘18 Camry XSE and now ‘21 Venza XLE, all 3 in Ruby Flare Pearl. First 2 no money down, but this Hybrid and all its virtues ups the anti, so I had saved my shekels and dropped 4K down. I’m certain this will be a keeper and with the 10yr, 150K mile warranty on the battery I feel this will be a high mileage stud in our stable. Japan manufacturing on top of that gives me a good feeling overall. Now if they could get some of those Harrier accessories over here in the USA all will be good. No fog lights, mud flaps, visors etc. Canada has em! What’s up with that?🤔

[@kevs2good133]

Japan manufacturing 🤣 there’s a 2022 Corolla with 50 miles on the odometer in my VW showroom parked next to a 2008 R32 and tell me how that 14 year old Golf is better built than that Corolla.

[@darrenmontez564]

You just gain another subscriber.

[@Toyotajeff]

Thanks so much Darren! Feel free to let me know any video ideas you have :)

[@gregtwogood9442]

Is the 4runer a new model?

[@tyhend88]

I have always had used cars but recently starting leasing. I love it so much! I would be paying down my used car and then bam it would need a repair or brakes or timing chain or whatever! Now I know what my payment is going to be. I put gas in it and go! My wife has the 2020 Rav 4 Hybrid and I have a 2020 Tundra CM. I have always been a GM person until it got too expensive to maintain them. We switched to Toyota and I'm never looking back! Any inside news on the 2022 Tundra? ;)

[@Toyotajeff]

Great story! lol ummm yes I have plenty of new Tundra news!!! Sigh I just cannot share a bit of it yet

[@tyhend88]

@@Toyotajeff I'm hyped and hoping something happens soon. I was hoping they would have snuck in ad in the super bowl but maybe they have something else up their sleeves :)

[@warrenwhite8896]

Jeff, please explain the amount due at signing that most dealers seem to require when you lease. Thanks.

[@jerrylundegaard2592]

Dealers do not set the required payments for a lease. That includes the initial payment and the monthly payment. To lease the initial payment will be any required down payment, required security deposit and first monthly payment. The dealer will almost assuredly try to include some FAKE fee or fees in the capitalized cost. Just as they do with a purchase. That includes those FAKE document fees. To the dealer a lease is a sale. A sale to the leasing company at the price you negotiate. Essentially, the car dealer is merely working as an agent of the leasing company. As with a finance purchase, it is the finance company (leasing company) which sets the requirements for a down payment, security deposit and monthly payment. You will also need to pay the registration and possible sales tax depending on the state. These can be paid as a separate amount or included i in the capitalized cost. As with any vehicle finance option, the customer's credit profile (credit score, income, etc) will be used by the finance company as the determining factor regarding a down payment or a security deposit. Personally, I leased many vehicles and I have never been required to make a down payment or a security deposit. A key to leasing well is an understanding of how a monthly lease payment is computed. It is very simple and is as follows (2 parts): Part 1: (Capitalized cost less residual value) divided by number of months. Part 2: (Capitalized cost plus residual value) multiplied by the money factor. Add the two amounts to arrive at the monthly lease payment. Note, the money factor is essentially the interest rate divided by 2,400. So a 4 percent interest rate is a money factor of .00167 (4/2,400).

[@swpsacs1]

Jeff, I love your videos but you skipped over the most important part, which is how you get the lease payment amount. You showed numbers, touched a bit on interest rate (MF) but didn't explain residuals and how the payment is determined and other options such as MSDs to lower your payment. Keep up the good work and keep the informative and entertaining videos coming.

[@jerrylundegaard2592]

The residual value is set by the manufacturer as a percentage of MSRP. It does not change if the price is negotiated. The lease payment is computed as follows: Part 1: (capitalized cost less residual value) divided by number of months. Part 2: (capitalized cost plus residual value) multiplied by the money factor. Add the two amounts for the monthly payment. Some leasing companies permit the lessor to make some MSD. Each MSD, generally a fixed amount per thousand dollar of capitalized cost, reduces the money factor. A lower money factor reduces the monthly payment. The MSD are retained by the leasing company and returned to the lessor at lease end.

[@josecolon6584]

Can I negotiate the residual value of my truck lease? Thanks

[@jerrylundegaard2592]

No, the residual value is set by the leasing company as a percentage of MSRP and is not negotiable.

[@Spanluver]

4:02 when you say $24842 with a $4000 discount, is that dealer invoice pricing? If you don’t have any trade in, cash down payment, or dealer/O incentives…it’s very hard to get them to discount MSRP that much, right?

[@debbiwallace4842]

Hi Jeff. I always see “due at signing”. Is this different than or in addition to a down payment?

[@kevs2good133]

In addition too. For example at VW, it’s included in the contract that first month payment and tag is required when leasing a car.

[@terryannunique1026]

Great content.....new subscriber here 👍👍

[@Toyotajeff]

I’m so glad you’re here! I hope you enjoy :)

[@terryannunique1026]

@@Toyotajeff thanks much

[@Ryan-cf6lc]

Can you use multiple security deposits?

[@jerrylundegaard2592]

Yes. Most manufactures limit the number to 7 MSD.

[@TheOzthewiz]

The PROBLEM is, if you have a "fair" credit score (640), are you going to get a lease with "0" down?

[@USArmy91222]

can anyone comment on the advantages and disadvantages of a 2yr vs 3yr lease?

[@TheOzthewiz]

The 3yr lease will have lower monthly payments with more miles allowed. The 2yr lease gets you a new car sooner, but payments are higher with fewer miles allowed.

[@ryanmoan9394]

so if you go over the mileage limit but trade in the vehicle for another lease or buy it with a loan you don't have to pay the penalty for going over the mileage???? is this true on every lease????

[@TheOzthewiz]

If you decide to BUY the vehicle, you would not pay a penalty. If you TRADED for another lease, you would PROBABLY have to pay up front or roll the cost into the next lease! If the overage is small, some dealers will allow it if you go for another lease!

[@StuckOnStupid22]

Is that including the car insurance or no

[@TheOzthewiz]

NO! The car insurance is extra.

[@renardmills718]

You are doing exactly what I want to do with a venza

[@mikeg5839]

How about equity in the lease

[@TheOzthewiz]

There is NO equity in a lease! It is like RENTING a car long term.

[@stephanlevesque7632]

How about if you decide to sell your leased car?

[@Toyotajeff]

That is the 4th possible scenario but it’s so complicated and hard to do

[@roxxigirl1320]

It is complicated. My husband purchased a lease vehicle and it was a pain in the butt for him so I can’t imagine what it was like for the seller.

[@saman-iw9tx]

Why did u delete the new camry video

[@Toyotajeff]

Hi what Camry video do you mean? I put a Camry XSE video on Fred Anderson Toyota KZbin channel yesterday. Is that the one you’re thinking of?

[@kevs2good133]

With bad credit and no co-signer, it’s a requirement from the bank to have a chance at getting approved

[@TheNovice305]

I wanna lease but I’m still financing another vehicle.

[@christophercruz8116]

Jeff Please use mic in all of your videos

[@renardmills718]

What about taxes and fess with leasing

[@TheOzthewiz]

You are taxed only on the DEPRECIATION paid monthly.

[@blk04ram]

If I have a trade in with 10k in equity and plan on getting a lease, will that 10k affect the vehicle price later on if I decide to keep the vehicle?

[@TheOzthewiz]

No. But, your payments will be a LOT lower.

[@FloridaSoundsGood]

Why no toys for tots update? What did my donation do?

[@sloultrarunner]

So I am under $20k miles on my lease that is ending in 5 months. I want a new car. But if I go back to the dealership they may low ball me and not give my equity.

[@TheOzthewiz]

You NEVER have equity with a lease, you are renting a car long term!

[@redciroc1211]

I'm currently leasing through Nissan my credit shot but their still willing to put me in a new car because I have excellent payment history with their company

[@TheOzthewiz]

Yeah, most folks don't know that there is a CAR FICO score which shows how well you manage car payments. Only the dealers have access to THIS FICO. The Nissan dealer obviously cared MORE about your CAR FICO score vs the regular FICO.

[@redciroc1211]

@@TheOzthewiz yessss sir 💯

[@Yousian]

You are awesome! Too bad you are far away :(

[@Hybrids4meok]

Down payment on a lease is idiotic. If you put $5k down and the next day your car is totaled, you don't get your down payment back since your technically renting (paying depreciation).

[@TheOzthewiz]

True. But, if you take your lease to term (without totaling your car), you will have paid LESS for your lease! If you put $5k down vs "0" down, at the end of the lease (36mo), you will have saved $5400!

[@Hybrids4meok]

@@TheOzthewizrarely the case as you'll get dinged for wear and tear, excess mileage and it depends on the vehicle

[@andrewkim7700]

6:21 when people ask me how much I make a year.

[@TheOzthewiz]

I tell THEM that I am SO broke, I can't even pay attention!

[@SpencerBloomenthal-we4rb]

Jeff i really want a key

[@Toyotajeff]

Can you check with your local dealership? It would be easier to get one locally for you probably

[@SpencerBloomenthal-we4rb]

@@Toyotajeff Yeah they gave me some but I really want the one with the thing on the back it says the name of the car

[@Toyotajeff]

Those are super expensive. That’s why I suggest asking your local dealer again :)

[@made2modifyy]

Wait, I'm confused on end of lease options. You can trade it in and the mileage doesnt matter?? Im getting ready to drive my kid's clunker cuz im close to 36k and my Rav's lease isn't up until October 😳 please explain👍🏻Im looking into leasing the new XSE Highlander ❤ Thanks for all you do Jeff!

[@Jag-leaper]

If you are going to trade it in to the dealer and get a new car ( lease) from the dealer...it does not matter the mileage ..only if you turn it and walk away

[@TtheGr8]

If you trade the car in to lease another car, or if you choose to keep the car and start financing it, then the mileage does not matter and you won’t be penalized. So in your case, you should be fine to continue driving your Rav until your next lease.

[@made2modifyy]

@@TtheGr8 perfect, thank you for explaining!

[@made2modifyy]

@@Jag-leaper perfect, thank you for explaining!

[@MB-gd6be]

It's insane how people say it's a great idea to keep leasing. It's a guaranteed expense. You Always eventually want Out of car payments and take the money instead to invest in your retirement.

[@marilynm9100]

Its so funny that the dealer wants me to trade my vehicle with the lease. Wrong! That would be money down. Sheesh

[@blueeye681]

Thank you for the video but leasing is not a good think.

[@kevs2good133]

Says who

[@TheOzthewiz]

It works, IF you can stay within the mileage allowance, take good care of the vehicle, and are able to lease the next vehicle with "0" down! The MAIN upside is, you always have a "bumper to bumper" warranty. Late model cars are INSANELY expensive to fix and "extended warranties" CAN BE a scam!

[@garynapoli3042]

The doing $4,000 off a 2021 Camry

[@micagarrison3670]

If you lease an electric vehicle, you get a $7500 tax credit. That's enticing 🧐

[@robward155]

You didn’t say if you get mileage money back if you don’t use all miles you leased the car for only amount you would pay if you were over.

[@roxxigirl1320]

You don’t get that back

[@TheOzthewiz]

NO WAY!

[@SpencerBloomenthal-we4rb]

First

[@Toyotajeff]

Woohoo nice hearing from you again!

[@tomslick2058]

You never put money down on a lease...............

[@josecolon6584]

You don't say anything about signing start the lease.

[@koofdome]

Work in corporate finance. Went to a dealership just for very very leisurely looking one day last week. Had like, a 3/10 chance of walking out with a car because I am not eager at all right now. Was more for fun and to see what these salesmen try. Don't worry, I was there only roughly 15 minutes. Zero waste of my time to mess with them and pretend I'm interested (only I knew that). Anyway. Visit a Chevy dealer just to look around at a cheap Equinox (solely commuting 5 miles to work and back). They wanted $9k down, $299x36mo with Tier 1 credit (822 FICO). The moment I mentioned cap cost, RV%, money factor, etc. they changed their tone. Offered $6k 229/m I looked the GM straight in the face and said kiss my ass. And immediately left. They tried chasing me down. Kept walking. INSANE how these dealers will rip people off. *UPDATE* 2022 Kia Forte GT manual - paid MSRP ;) that's how you do it. Zero markups or hidden fees

[@TheOzthewiz]

A Kia (any) AT MSRP is a total ripoff!

[@spursdynasty7378]

My dad always said leasing a car is like making a deal with the devil !! He always bought his cars with cash. Never had a payment in his life. He's 78.. .. Sorry Jeff !

[@kjake1011]

Unless he had a terrible credit score his entire life, paying a vehicle off with cash rather than financing at a rate near 0% is not very smart and is an example of extremely poor money management.

[@serious_in_seattle6917]

A fool and their money are soon parted. Continually leasing vehicles is a great way to waste tons of money.

[@roxxigirl1320]

So isn’t renting a place to live, but thousands do it, because either they can’t afford to buy or they don’t want to pay for the up keep of a house. Same thing in my opinion.

[@TheOzthewiz]

"Never ending car payments", until you DIE!

[@bohan9957]

Dave Ramsey never recommended leasing a vehicle.

[@TheOzthewiz]

Yeah, Dave Ramsey also believes in $1000 "beaters" for the general public. He has ALWAYS managed to buy beaters that run fine with NO repairs needed. I, also believe in the "tooth fairy"! LOL

[@shahji0001]

reduce the bloat bud! This is too much talking.

[@TheOzthewiz]

The longer the video runs, the more YT ads =$$$$$$$$$$ for YT!

[@timdaugherty5921]

Don’t lease

[@toronado455]

The reason people are confused by leases is because they are designed to confuse consumers. The dealers want to make it as confusing as possible so that people will just stay in a payment forever, never questioning if it makes financial sense to do so.

[@Nostromo_1]

I have leased for many years and never put money down. A lease works for me because I get a new vehicle every 3 years.

[@TheOzthewiz]

Unless you HAVE to!

[@lisaflores2016]

FYI ..... You never put money down for at least vehicle towards the value of the car

[@KeithWilmo]

Question, do you always go with the cheapest car sarah lease payments are low or do you just get what you want are your pain payments gonna be higher on an expensive vehicle which I think you demonstrated ?