Toyota Lease Payment: The Loophole Dealers DON'T Want You to Know!

[@afshintaghipoor2115]

Example Calculation: Let's calculate the lease payment for a Toyota RAV4 Hybrid XLE, using the following details from the video: Car Price (Negotiated Selling Price): $36,000 Residual Value: 60% of Car Price (for a 36-month lease) Lease Term: 36 months Money Factor: 0.028 (equivalent to 6.72% APR) Sales Tax: Assume 6% (varies by location) First, we need to calculate the Depreciation and Finance Fees: Depreciation Fee: Residual Value = 60% of $36,000 = $21,600 Depreciation Fee = ($36,000 - $21,600) / 36 = $400 per month Finance Fee: Finance Fee = ($36,000 + $21,600) x 0.028 = $1,616.8 per year or $134.73 per month Now, let's calculate the monthly lease payment: Monthly Lease Payment (before tax): $400 (Depreciation Fee) + $134.73 (Finance Fee) = $534.73 With Tax: $534.73 x 1.06 (including 6% tax) = $567.21 per month So, the monthly lease payment for the Toyota RAV4 Hybrid XLE, under these conditions, would be approximately $567.21. Remember, this is a simplified calculation and actual lease terms may include additional fees or charges

[@donnyinsley5304]

Thank you! I used this two days ago to lease a 2024 Corolla Hatchback se plus in Ontario. Did math and saved a couple thousand. I also was able to negotiate and go even lower. This is my first new car. This really saved me im not a math guy haha.

[@negotiationguides]

🫡🫡🫡

[@saggeedt9036]

Bro, I went to high school with this guy and I viewed him as the BMW expert at the time 😂, but a car enthusiast nonetheless. Stumbled upon this video this morning and so glad to see he’s doing what he’s been passionate about for over 2 decades now! Keep it up Ari! Happy for you and proud of you coming from our small town 🫡

[@Blvck0ne]

I've been looking at leasing a 2024 4Runner TRD Pro and was prepared to drop $4500 as a down payment. Glad I saw this video before I did that. I wasn't aware of MSD, will definitely have to look into this.

[@Steve_in_NJ]

Great information for me, as Toyota is one of the two car brands I'm researching for my next lease. Specifically, a Corolla Cross Hybrid XSE. Right now, nobody has them to test drive, but hopefully that will change by June. If not, well, I'm back to leasing another Hyundai Kona Limited!!

[@DP-be6ny]

You should've added the risks for MSD. If you are behind on payment and finance company repossesses your vehicle, the MSD is gone. They won't use MSD to make payments you're behind. If you are involved in car accident that results in total loss and the value of car is less than what you owe, the lender will use MSD to make up the difference and pay you the rest if any of it is reft EVEN IF you have GAP Insurance (which is secondary to MSD).

[@davida8052]

I guess my only thought is that if you took that $4,500 deposit and invested it in a money market fund currently earning 5% you would earn $709 in interest over the three years (and you would have access to your cash if needed.) The savings would be around $290 in this example.

[@itguru2037]

Correct. Never put money down on a lease. If you total the car you lose all that cash 💰. Invest it

[@jml9550]

Dang, I just wrote a $52k on my wife’s car. Could’ve made 5% on that $52k, that $2.5k a year, $200 a month before tax. 😊

[@jimmykhokhar9092]

MSDs are great and you get that money back. Not a lot of people do that and dealers don't talk much about this anymore. Great video!!

[@theoptimistictraveler3558]

This doesn’t make any sense to me though because you could just put that money in a basic index fund or qqq/spy and have way more than you saved after a 3 year lease.

[@joeyg283]

I never knew this! Great information Ari, thank you for sharing! Does this technique also work with other brands?

[@afshintaghipoor2115]

Lease Formula Explanation: Depreciation Fee: This represents how much value the car loses over the lease term. It is calculated as: Depreciation Fee=(Car Price - Residual Value)/ Lease Term Car Price: The negotiated selling price of the car. Residual Value: The estimated value of the car at the end of the lease. Lease Term: The number of months you are leasing the car. ​ Finance Fee: This is the interest you pay on the lease. It is calculated as: Finance Fee=(Car Price + Residual Value)×Money Factor Money Factor: The interest rate, expressed differently for a lease. To convert Money Factor to traditional APR, multiply by 2,400. Monthly Lease Payment: The sum of the Depreciation Fee and Finance Fee, plus tax: Monthly Lease Payment=(Depreciation Fee + Finance Fee)+Tax Tax: Calculated based on your local sales tax rate.

[@ladha99]

I still do not understand how to calculate the money factor example 0.028 how is that calculated to get the APR?

[@afshintaghipoor2115]

@@ladha99 Calculation: APR= Money Factor × 2400 APR= 0.028 × 2400 APR= 67.2%

[@seikocitizenwatches]

Majority of Toyota and Lexus owners buy their Lexus or Toyota and keep them for very long time because Toyota and Lexus run so reliable, cheap to keep, easy to fix and maintenance us the lowest among all brands. Toyota and Lexus dealers network, spare parts logistics depots are the best of the best and unparalleled regardless of foreign or domestic brands. I We’re Lexus and Toyota customers for nearly one half century but have never leased one. Every Toyota or Lexus we’ve owned since 1976 has driven past 200K miles without having to replace engine, transmission, AC, suspension, paint or upholstery. There were times we purchased used Toyota vehicles at 100K-150K for our high school kids and the kids still driving them after college with good paying jobs because they said their Toyota vehicles are still running great at well over 200k miles why need to buy new and stuck with car payments for 4 years? The topic of Leasing should be the topic for other brands only.

[@Steve_in_NJ]

I would lease nowadays only because technology is evolving and since my 2024 lease would be due in 2027, the entire EV industry could be using solid state batteries instead of the now lithium ion versions. I say solid state because Toyota is developing them for future EV power supplies.

[@jml9550]

Same here. 3 Lexuses in my household. My 2017 ES350 42k miles, wife’s new 24 NX350h and my teenage son’s 08 RX350 with 160k miles on her. Always bought in cash and keep them until they fall apart. in 1.5 years my daughter will get her license and she will take the RX, son will take my ES and I will be in the market on a new ES hybrid or a 4YO low mileage LC hybrid. We won’t buy any other brand, except a 911 when retire, hopefully 8 years later when I turn 60. 😊

[@jml9550]

@@Steve_in_NJI really doubt SS battery will scale to such large production by 2027. That’s only 3 years away. I hope you are right though, SS battery will be a game changer for EV. Safer, much faster charging time and best of all, longer range and lighter.

[@seikocitizenwatches]

@@jml9550 Smart 👍

[@jml9550]

@@seikocitizenwatches I can assure you that i ain’t that smart. Do have some common sense though :)

[@martin3534]

Just left Toyota dealership in NY. Ny is excluded from the multiple security deposit

[@uptoolayte1]

Would this be beneficial with a supra? Or even possible?

[@BB-xn1rw]

Can you do the Honda civic sport ? Our 2021 with 4 months left on the lease got totaled smh… anyway, we had $1000 down that included first payment and some other fees… paid $252 a month @ 3yrs 10k miles… think we talked the price down to 22 from 24.5k… we know we will never get that same deal with prices up and rates stinking… but can we ever come close that again? We can wait until may/june/july…. Looked at the trax man do they lease like crap…

[@JNF7790]

Would your deposit be affected if your car is lost due to an accident or if they find damages when you turn your lease?

[@richs9697]

QUESTION--I turned in 2018 CRV Touring/turbo 16K miles 3yr lease on 2021 CRV Touring Hybrid with 14K miles 3 year lease and actually got $4K more in equity. Good deal or not?

[@JustMekEARuh]

Not putting security deposits down to reduce the interest rate, is the dealerships "rent" fee negotiable? Do all car dealerships even charge a rental fee on a leased car?

[@jons7e]

You could also just put the 5K in something as simple as a CD and you'll make about the same money, let alone more aggressive investing

[@emmanuelvega4353]

I been wanting to lease a 2024 tundra limited msrp 67k with a discount of $5500. ($61,500) money factor ar is 6% 36 months 10k miles. $0 down my payment is $870 ish. If I do what you just said it would drop to $705 ish. I been trying to get a payment under $750. I have 2 options now put security deposite of about $8k or wait for next month and hope the money factor drops more. Thank you so much for this great video 🫡

[@lss-jprep4980]

They’re recalling a lot of them. Might check that 1st to be sure

[@Sandiegocruiser]

Can’t u make more than the 2% saving by investing it in a cd

[@Radioghost717]

NY doesn’t allow MSDs just so ppl know

[@jeffreysirkin7120]

that's not a loop hole. that's the way it works..BMW does the same thing etc.

[@Heisenberg.735]

Or pay the whole lease upfront

[@sokratzmmf]

That is risky because you lose your entire payment if the car is in a total loss accident.

[@ToyotaWorld]

We should collaborate on a video

[@lawoman608]

Ok, it's official, I am confused.

[@Jkub101]

Leasing is called renting.

[@seikocitizenwatches]

There are so many restrictions and limitations when leasing.

[@losthighway4840]

“Doing nothing” Thing up $4500 for 3 years

[@camitup]

Google is Watching

[@erickisel8668]

Don't lease... buy with cash

[@Steve_in_NJ]

I lease because I don't have all that cash upfront. It's tied up in investments for the future, where it will grow, whereas cars depreciate in value. Any financial whiz would tell you never to pay cash for a car!

[@Anomize23]

@@Steve_in_NJYeah, toyotas REALLY depreciate. Looking up a used toyota and determined THAT WAS A LIE😂

[@jml9550]

Exactly what I just did. Wrote a $52k on my wife’s 2024 NX350h. No way in hell I will finance a car at 7+%.

[@RealityTrailers]

Deshown The Auto Advisor KZbin channel is helping to educate me on buying or leasing.

[@zahf6484]

Dump a lump sum cash upfront on depreciating asset? No thanks. Find a low financial rate and go with that. They are out there.