QuestionJeremy;
I am presently leasing a Toyota Highlander ('06#. My lease was actually up in July, I had no idea what I wanted to do, asked Toyota if I could extend the lease. So it's been extended until Jan. 2010. I went to the same dealership that I leased the vehicle from #my third from this dealer mind you) and told them I wasn't sure if I wanted to purchase it, lease something else, or buy something else. I think I've "rented" this vehicle long enough and don't think buying it makes much financial sense. Buy out in Jan will be approx. $12,500. They showed me another Highlander (of course it was a loaded '09) and although I told them I did not want a payment any higher than I currently have, the one they presented was much higher. Then they asked me how much I was willing to put down. Here's my question. They're going to be able to turn around and sell my lease vehicle for somewhere in the $18-20K range (low mileage, good condition), and make a nice profit on it. Because of this, I think they should be working with me and not requiring a down payment on a new lease. Am I wrong? What is my best option here. I would actually like a lower monthly payment if possible and the fact is, I really don't have much to put down. Should I negotiate with them on a new lease? Should I buy my current vehicle? Should I look at purchasing a used vehicle? Can you give me any negotiating tips? And last question, do I have to turn my vehicle in to this specific Toyota dealership, any Toyota dealership, or can I turn it in just about anywhere that will work with me on a deal? I've always turned them into to this specific dealership because times were different and I turned one in, drove away in another.
Any help you can offer is GREATLY appreciated. Thanks.
AnswerKris,
Thanks for your question. Well, you have several options on your table here. First and foremost, you do NOT have to turn the vehicle in to that specific dealership. You DO however, have to turn the vehicle in to a TOYOTA dealership. It can't be any other manufacture or a used car lot. It has to be a Toyota dealership. Secondly - Realize that the prices of Highlanders went up with the new body style. They are very highly coveted vehicles in that segment. So to ask to get the same payment may be a little unreasonable, but it all depends on the equipment. If the "loaded" version is not important to you as far as the optional equipment it may have on it, then step down to a less loaded out model, and that may help you a bit. Leases are very difficult these days, as you indicated. Most manufactures, including Toyota have taken a big hit on leases because they set the residuals so high in order to offer low payments. No mind you, most of the low advertised payments required a large sum of money down to get to that advertised payment. If your credit is good enough, and I am assuming that it is, you are not "required" to put any money down, with the exception of your first monthly payment - which by the way most dealerships will eat if you don't have it to put down. Most dealerships these days are VERY willing to work with you, within the bounds that they have to work with. But understand that what they sell your lease turn in vehicle for has NOTHING to do with negotiating the new car deal. Those are two completely separate things, and have nothing to do with each other.
In order to negotiate a good deal, be willing be to be flexible, but expect them to be flexible. Now what I mean by flexible is maybe on the type of vehicle that you are looking at, or on the mileage allowed, or the term. If you know your budget, stick to it. Don't get caught in that trap. If the dealership can get to your payment terms, then they will - without requiring them to loose money! If they can't then they can't and then you have to look at other options. One thing that you can do, is go to Toyota.com and configure a vehicle that you would like to have. Once you get to the end, it will ask you if you want to figure payments on a retail purchase or a lease, or both. It will ask you how much money you have to put down. Put $0, and see what the payments come to. Now understand that will only figure you a payment based on MSRP. So if you are in the neighborhood of the payment range that you want to be in, then understand that you can negotiate a lower payment because the dealership won't charge you MSRP, they will try, but don't let them. Let them make money, but don't let them gouge you.
You have a lot of options at your fingertips. You can trade your vehicle in, instead of turn it in - which might result in you getting more than your payoff for it - which would help your payments. You can buy your lease out, and let Toyota Financial finance it for you for a determined amount of payments - which may not be a bad idea if you are looking to lower your payments. It should lower your payments, because the balance isn't that much. And if you are in good shape in financing a vehicle for lets say $12,500, that is actually worth the $18 - $20 range as you say, then you are in an instant equity position that will help you a year or two down the line when you want to trade it in and get something else - because you will have plenty of equity in your vehicle.
I hope this all makes sense and helps you out. If you have any follow up questions, please don't hesitate to ask.
Thanks - JB
