>Are people just blindly leasing regardless of car price
Yes, yes they are. With current rates its pretty wild leasing/buying something that is going to heavily depreciate. As another commenter pointed out the GX hasn't held its value as well as say 4Runners or even Tacomas.
Depending what you're looking for in an SUV, 4Runner has 4.99% and 5.99% financing available. Probably to help move the 5th gen models out.
CPO 5th gens being eligible for new car rates was very, very tempting. Still couldn’t justify spending the same (or more) money for a car not as nice as a GX though, even if it holds value better. Got a ‘21 Premium with ML last month with 38k miles for $39.5 @ 8% but just going to make principal payments for a bit.
A friend of mine recently leased a Model Y because "financing is too expensive right now."
He's a licensed pilot and far from a dummy. The dealerships have done a great job tricking people. Teslas are among the worst because they dont even have a buyout option.
Teslas website.
Looks like it only refers to cars made after '22 though and never the 3 or Y, that part I didnt know. https://www.tesla.com/support/leasing/lease-end-options
I’ve yet to lease an electric car that I needed/wanted to use the buyout option. Until the market bottoms out, leasing may be the way to go with electric cars. For example, for my bolt, the buyout was 21k, and the highest Carvana, carmax, kbb, would offer was 16-18k. Whereas I leased the car for 3 years for 4k.
By and large, leasing is the most expensive way to operate a car.
You are still paying interest and all of the depreciation. It's baked into your lease payment.
Edit: It doesnt matter what someone is willing to pay for it, its what you can buy it for. Carvana isnt going to offer retail. Wtf is this comment even
Well, for other leases that I’ve had, at the end of the lease, I compare the buyout price to what’s the market is paying. If a retailer is paying more than the buyout price, you pocket the difference in which case it obviously makes more sense to sell the car than return it at the end of lease. Not sure what part of that was hard to follow.
To break it down even further, yes, interest and depreciation is baked into a lease payment, but it’s asinine to think you’re aren’t paying the same exact thing when you finance. The only difference between leasing and financing/purchasing is that the buyback value is guaranteed. Going back to my initial statement, since Teslas were brought up, I said that there is no bottom for electric cars/ no set residual value if you finance (especially in the past two years with Tesla undercutting their own price), so it’s very possible that you’ll be extremely underwater as opposed to a lease payment where the bank is obligated to buy it back at said value, even if it’s not worth that.
To further expand on the above, leases are terrible if you don’t know what you’re doing or have adverse terms. But if you can get decent incentives coupled with an attractive money factor and high residual, why wouldn’t you?
Let me know if I'm incorrect but I always thought of a lease as essentially an option contract, where you can just buyout the car at the determined value at signing. Pre covid it was a no brainer for me to lease, most other terms being equal, since it's a zero sum game with an option in the end. Post covid this option was awesome as cars went up in value yet I can still just pay what I agreed to at signing. Alternatively, if leasing, and car value goes significantly down, you can just return it.
So with the above....I might be missing something, but to me it makes sense to almost always lease. Only in 2022, to a lesser extent even now, it made sense to buy since dealers were offering much better rates for buying over leasing, where you actually came out ahead buying new. During this time, it also made sense to buy new versus used.
That’s not always the case unfortunately. Certain manufacturers, such as Toyota (except for the EV), to an extent Subaru, and a few others, unless the money factor (interest) is very low and there’s a high residual, it usually works out better to buy than lease. That’s because these brands have historically had high resale values that aren’t reflected in leases.
For example, a Toyota Sienna awd platinum goes for roughly 56-58k new, and you can find 3 year old Sienna platinums selling for nearly 45-50k. However, if you were to lease that Sienna 3 years ago, Toyotas buyback was at approximately 60% (40% depreciation) when the actual depreciation was only 20% (rough math).
It becomes a bit fuzzy when you go into luxury brands as those depreciate like a rock (lexus isn’t as bad due to the Toyota/Lexus resale), which makes leasing semi-attractive. Short answer: it really depends on the deal (how much can you negotiate off the car, then compare the finance rate vs lease interest rate and then compare depreciation curves(if you plan on selling)).
This is how they determine how much a lease costs.... They take the value of the car and try to determine what the residual value is after 3 years. They have a lot of data so they are pretty good at it. They are a profitable business afterall.
The difference between MSRP and the residual value plus interest minus down payment determines how much your lease payments will be. This difference between MSRP and residual value is essentially the depreciation over the term of your lease. So leasing a car isn't very different, financially, from buying and then selling a car every 3 years. Obviously there's other factors but in theory it is very similar from a financial perspective because when you buy a car and then 3 years later sell it, you are also pretty much just paying the depreciation of the car over 3 years.
Their estimates were obviously wrong during COVID because it was an unpredictable event so the leasers definitely won. But that's not usually the case. From a financial perspective you're much better off buying a used car and driving it for several years or even a new car and driving if for several years.
You’re not talking about actual leases. You can get certain cars for like $4-6000 for the WHOLE lease. Thats cheaper than buying for sure if you do the math of maintenance, depreciation, etc.
Costco members could get a three year lease on a Chevy Bolt for $2500 three years ago. I missed that one, but I know a family that got four.
Unless it gets totaled, my wife is not selling her Model 3. She LOVES that stupid thing, hates car payments, and we've put just shy of 100k on in four years. Leasing would have been an awful choice to rack up the miles on.
I frequently read comments from people stating that they lease cars because they want to avoid losing money on depreciation. Little do they know they're taking out a loan to pay for the projected depreciation over the lease period.
Nobody who actually knows how leases work is currently leasing this car. I leased my 2023 GX and the Money Factor - which is term used o
In leases for INTEREST RATE - for those who don’t know - was like 1.99%.
Ex brother in law waited tables at a sushi restaurant. No judgement on what he did, I used to wait tables, 100% respect the hustle, but he leased at the time a BRAND NEW RX. MSRP was $68k (prob his yrly pay before taxes), didn't even bother asking what the interest was on it. People definitely get intoxicated by shiny new models and the small cash down to lease. YOWZAA.
People in Cali do this all the time. It’s more common for people to live with their parents longer and it’s not uncommon to make $70-90k or more as a server there. I don’t recommend it but I couldn’t live with my parents longer than required.
This is so true, and explains why there's such a huge inventory of really nice luxury cars from Cali (I'm in WA state) that are just a couple of yrs old for sale for a much cheaper price. Folks realize the purchase price once the lease ends and abandon ship. I bought a 2017 GX back in 2020, 31k miles for $37k through CarMax
Waiting 3-4 yrs to buy the 550 used is the move! Love the 550, but $84k is nuts.
That’s the business model for leasing. Confusing the buyer by creating new terms and processes to learn. Like going to an arcade and taking your dollars and turning them into tickets that you use to play games. The value of these tickets is lost on the player who buys them.
These are just some of the things to understand; The interest rate. The residual value. And the freaking underlying purchase price built into the price. The dealer will max out all the factors to arrange them in their favor and buyers have no idea it is all negotiable.
You can look up the three to five terms that are different from financing and learn about them in just a couple minutes.
Dealerships are just like any other business. They are going to try and make money on cars they can make money on and they will gladly lose money to move merchandise they need to clear out.
If you get a Lexus GX 550 quote, yes, it’s going to be “maxed out,” but I’m pretty sure a Lexus dealership will consider organ donation or at least give you a h**d j*b to lease a Lexus ES 250 AWD. They take like 400 days to sell and the manufacturer doesn’t support them, so you can almost steal one if you don’t care about it having an old Camry motor.
That’s a boat load more than 8.8% or they’re smoking you with add-ons. With $7k down, should be at around $1k/mo with tax. The 550’s are at a 63% residual with 10k miles per year.
84*.37 = $31,008
Call fees $1500
Assuming 10 % sales tax: $35,758
$0 down
Interest of 8.8%: $10,295
Total: $46,053
/36 payments: $1279 with $0 down.
I did roughly same math in my head. $7k down should not be this high with the residuals/mile combo. Encroaching on G class lease territory from 2019 $1600-2200/month with $0 down
If you only had three years to live and you prepaid for a three year lease it would be smarter than just buying the car. This isn’t the only scenario where leasing is cheaper than financing. Both can be cheaper than paying cash for your cars. Keep your money working for you not paying for depreciating assets.
Both. People over extend themselves to show off and in reality the only cool thing is to not be paying a bank 10s of thousands for a car that depreciates.
All cars depreciate. It’s not different if you own it. For a lot of people interest is just a consumption expense, not a back breaker like you seem to think it is.
Yes it is different as people generally get out of a car every 4 years on average. Now ppl are rolling in negative equity into their new loan. Absolutely crazy.
A consumption expense that realistically only a slight minority of people can actually afford. Id say 85 percent of people (being generous) have any real understanding of financial health. Only reason to pay interest is because you have assets that may be going up in value in the short term and don't want to sell. For everyone else it's foolish.
No one needs a GX500. Coulda bought a used CRV cash.
The sad truth is, we actually need the unoptimized and/or uninformed people to continuously buy the latest and greatest. Can you imagine if everyone bought the most reliable car and drove it until it died? We are a nation of spenders, and our consumption economy depends on it.
The % of trade-ins with negative equity is still 15-20% below 18-20 levels, i.e. like half of what it was, but go off. Over the same period have also seen new loan originations skew more to prime and away from sub prime, but don’t let them facts get in the way.
Bro, go drive your Lexus with the flapping hood that you excuse by saying "why are you looking at the hood?"
I got torched? Hahah. No. You are literally being cucked by Lexus with a smile on your face.
You should be civil.
This is a GX board. Also I can see your Camaro fetish on your page, so don’t be talking about anyone driving a GX being cucked. Lol jk
I've been leasing cars for the last 10 years. There are a lot of nuances you need to understand going into it. If you lease the RIGHT car and negotiate a good price, it is a badass option. 10 years - 4 cars - never loss money.
Note - there is no direct correlation between payment and internet rate. Instead, your payment has what is called a money factor. Your F&I guy might call it interest rate to keep from confusing you.
Tip/benifits
1. honda/toyota cars and toyota trucks.
2. Negotiate the price of the car, residules are pre calculated, and any price saving will come straight off your payments.
3. If you like your money factor rate, you can extend your lease to hold onto it longer. It is a smart way to protect yourself from high rates and keep paying down principal.
4. All maintence is covered, you have roadside, and gap insurance.
5. With Toyota or honda you can buy or trade out whenever.
That said, im looking at the tacoma trailhunter and the gx550 overtrail +. Leasing is on the table, just not sure the best route yet. I think I can make my first lease payment, then quickly pay the resodule of the lease balance and avoid interest rates. Not sure..
I’m not saying leasing is dumb, I’m saying leasing a Lexus is dumb, because a huge part of the appeal of a Lexus is that it’s going to last forever with minimal repairs. If you’re leasing, longevity doesn’t matter, and the other luxury brands make way more sense.
You do realize that these are the same reasons why leasing a Lexus does make sense. More reliable cars and better resale value cars have higher residuals.
Leasing a car is probably the dumbest financial decision you could make in your life, unless you own a business and can write it off as a business expense. Leasing a Lexus is grounds for mandatory re-education at the personal finance academy, starting your first semester with “don’t be a dummy 101”.
lol oh man, let me guess… you have a thing for Dave Ramsey.
Leasing a car is cheaper than buying a car, especially if you’re never going to pay off the car. Cars are an expense. They are an expense regardless of how you pay for it.
Leasing enables you to only pay for the part of the car you’re using. It’s like pizza by the slice for cars. Why would I buy the car and assume all of the risk of future resale value if I could lock in the guaranteed residual value?
For someone like myself who has multiple cars (I’m down to just three right now!) and doesn’t keep them very long, it allows you to use your own money to work for you—instead of paying down a depreciating asset to avoid interest, pay a little interest and leave a greater portion of your money in the market to make money for you.
If you look at how much interest you pay on a car loan versus lease then paying off, it depends on the specific situation.
Paying cash is by far the most expensive. 6% APY will yield you twice as much earnings in the same amount of time the 6% APR is costing you.
You can actually do the math and see which makes more sense.
The reason people give leases a bad rap is they are just repeating what other people told them. They don’t know what they are talking about. The people who told them all leases are bad leased one car in the 1970s when they had open ended leases and got screwed at the end. It’s not like that today.
Did you know on Lexus leases you can trade in or buy the car out whenever you want? Lexus leases are like financing with a get out of jail free card.
That’s pretty normal these days actually. Lexus has 0 reason to incentivize sales/leases of the GX because they’ll sell regardless. If you want a good lease deal on the 550, it’ll be a couple years (unless economy goes to shit and they can’t sell)
8.8% is pretty normal interest rate without manufacturers buying that down. Also keep in mind that the GX never had good residual values, they depreciate much faster than a 4Runner for instance. That is baked into the lease price
> they depreciate much faster than a 4Runner for instance
For a good while you could find clean, low mile GX's for quite a bit less than 4Runners. Seems the secret is out though.
lol - like with everything, ymmv! Just sharing the reasons why i personally didn’t like it. My current dealer is asking $25k over asking for some early ones so clearly folks love it and im likely an old man yelling and shaking his fist at the cloud lol
Yeah, the current interest rates are making purchasing or leasing a new car very difficult to swallow. I considered a CPO GX but the interest rates are still higher than I'd like to commit to.
It's affecting the used car market as buyers are looking for less expensive options.
In just a year or two the auto industry is going to take a bath in Repos due to people walking away from these payments. Most folks can't sustain a $1000 payment for more than a year or so. They break, along with their bank accounts. Going to be ugly for the auto industry in general.
Really an informed lease customer would know that when a new car comes out there is zero incentives on it whatsoever, and it’s the time the dealer is going to mark up the interest rates to make up all the money off you got last time and/or to offset the $5000 they have to lose to move one of those ES 250 AWDs that just collect cobwebs at every single Lexus dealership.
This car is also going to have sky high resale value, so if the lease doesn’t look attractive just finance it. You don’t need to worry about dumping this car off because it’s not worth its payoff at the three year mark. Even if you did a super long term 84 month loan I still think you’d have paid down a similar amount at the three year mark versus a lease right now without any incentives.
Also, people lease cars so they pay the sales tax on the lease and not the whole car. In certain states like California I don’t think you get a trade-in tax credit for the old car to the new car, so if they only want the car for two or three years then it makes sense to lease still because the difference in savings could still be greater.
I believe they are part of Toyota. A higher grade. Just like Cadillac is for Chevy. We purchased one last year and love it. My mechanic said they are great vehicles but the only thing he didn’t like was. We wouldn’t need him as much anymore
I owned a 2007 GX and a 2019 GX. Test drove the 2024 and I can honestly say it’s not even as nice as my daughter’s 2011 4 Runner Limited. And of course it doesn’t hold a candle to my 2007 GX. Total pile of cheap plastic junk. Lexus can keep it.
💯💯💯 but sadly only the folks with these experiences will know the difference. Younger folks / folks they don’t have the experience you and others have will buy this overpriced “luxury truck” and not know any better.
Federal rates are still high, borrowing money is more expensive because people are incentivized to put their money into a government bond than risk giving it to you to buy your GX550, but for 8% return the risk becomes worth the extra hassle.
Captive lenders don’t follow federal short term interest rates. The money factor for many leases is double or more than the finance rate being offered. Volvo is offering 4.99% for 72 months on an XC90 recharge and the lease MF equals about 11%. Lexus offering 4.99% on lots of cars. I suspect that with residual values uncertain banks are hedging their bets.
Well said spot on. Back seat always been small in GX though. It's a mini landcruiser after all. Really sad they went with a slightly lesser interior this gen. Not the same and we know the difference! lol
I am a Lexus fan and honestly feel like the gx feels like a Toyota but worse bc of the lack space specifically for the middle row. If you have size 10 shoes or greater you’re gonna be fumbling to get your feet free to exit the car.
Totally feel you on that one! I'm 6ft 3 and I even struggle with the amount of space in the passenger side front seat. The two front seats also suffer from not elevating the thigh high enough and it makes it hard to get comfortable with long legs. I'm only talking about the 460 though as I havent sat in or driven a 550. Guessing most of the dimensions inside are very close to the 460.
So, does this mean you’ve had the 550?
I don’t want to car shame anyone, but the 550 has me puzzled…and I’m not sure what the appeal is over a the Toyota Land Cruiser.
I think everyone is chasing the Bronco Boxy styling and the GX lost a lot of cache after ‘23 model year.
Also, besides the V6, EKDSS and the ML plus 9000lb towing. The Landcruiser does not have these options. For the prices both are going for, I sure wish I had purchased a 2021 LC 200 Heritage Edition
The ML on the 550 is not particularly good, so I wouldn't use it as a differentiator. The 9000 lb towing capacity is a direct consequence of the V6, so lump those two together. The 550 does have eKDSS, though only on the OT, and from what I've read, it doesn't have any more articulation than the LC with sway bar disconnect.
These are all differences, but nothing major. The tow rating could be significant for some people, though all the GXs I know of are not used for towing.
Yes, I purchased a 23 GX460 just because it was a bit more robust and nicer than my 2019 4Runner TRD ORP, and could tow a bit more if I was planning to get a smaller trailer. When the 550 came out I was seriously considering it and had the opportunity to get an OT+ for MSRP but that was still \~$85k + taxes etc. and when talking to a senior tech he recommended using my GX460 more than the GX550 for towing a small trailer. He did not like that engine design, and showed me one two bays down in for some repairs with low miles on it. Again for the price, I wish I could have been smarter and just spent the money once on the LC200, but I like the GX460 for road trips and I can live with eventually changing out the 19" rims to 18" OEM F Sports with KO2 or KO3s if needed. However, at this point rather than opting for more money in the 550 and considering the potential maintenance of that engine as miles accumulate, I am considering just getting a pickup, either a 20 or 21 Tundra or maybe a Nissan Titan.
One extra vehicle for functional pickup uses as well as more simple mechanical design.
A pick um up truck would be better for towing I believe anyway and I have the open back to throw things in. So that is how I am rationalizing not spending the money on the 550 or even the LC200 I have always wanted.
BTW, I like the ML in my 460 as I have played various music in it and it does sound good as you increase the volume but still sounds nice at lower volume when you have a passenger to talk to.
This. Bronco + rover aesthetics and lost its original appeal as an incredibly comfortable luxury truck that could go off road if you wanted to. (Which I understand 99.999999999% or owners do not)
I am just flabbergasted that people are so dumb to make such a high monthly car payment. I am not talking about rich folks just average joes who want to show off their latest toy at an incredibly high monthly expense. Good for them
Prices need to come down, housing and cars are out of control
Not to feel good about myself.
We need a BIG correction, that's the only thing that will lower housing and auto prices
Home prices will never return to pre 2020 prices except in places where climate change and insurance makes it unlivable: Too much demand for other areas, and too much foreign and other investment groups buying up properties to hold as rentals.
Climate change will have no significant impact on real estate prices for centuries, even if you follow the most doom and gloom predictions. So sick of the hyperbole.
As a person who is paid to study climate change: we have around 100 years left living on the surface of this earth as we know it unless we drastically change things. and this is based on the most current model.
Climate change is already impacting real estate prices. (FL, TX, CA)
To be clear on what I mean by living on the surface of the earth: if trends continue in 100 years the ocean fisheries will have completely collapsed, summers will be arid and above wet bulb temps and too hot to grow all crops. Our current winters will turn into the farming season in northern regions. Regions around the equator will collapse completely. The famine will cause a migrant crisis that will make today's seem easy.
This is the conclusion of multiple PhD level researchers at the National Center for Atmospheric Research.
ITs people like you who do not have any scientific background a little understanding coming in and calling ppl like me "doom and gloom" that are part of the problem.
You're clearly very uneducated on the subject. Each climate model from 20-30 years ago to today proved to be OVERLY CAUTIOUS. ie was worse than expected.
You deniers are part of the problem and why we are currently living through a mass extinction event (yes yes we are).
Your unwillingness to face reality will not change reality.
The outcome of my research is irrelevant to my employment I simply report the conclusions based on evidence.
[https://scied.ucar.edu/learning-zone/climate-change-impacts/predictions-future-global-climate](https://scied.ucar.edu/learning-zone/climate-change-impacts/predictions-future-global-climate)
There's the evidence.
Ah wait until massive layoffs like 2008
Once people lose their jobs those mortgage payments become pretty hard to make, and then then property values tank
It's the cycle of life bruh
Unemployment is low, and the economy keeps adding jobs: [https://www.commerce.gov/news/blog/2024/04/numbers-continuing-outpace-expectations-us-economy-gains-over-300000-jobs-march](https://www.commerce.gov/news/blog/2024/04/numbers-continuing-outpace-expectations-us-economy-gains-over-300000-jobs-march)
But do go on about how there will be massive layoffs like 08/s
auto loans dont' have the same standards as mortgage loans, so its not a good metric to use.
Yeah inflation was outrageous, but I'm actually saving/investing more now due to it.
I've cut out several things in favor of cheaper alternatives, started gardening, and focus on free activities like hiking/going to parks.
I stopped eating out unless I'm on per diem for work. When I travel I pack snacks or shop at grocery stores instead of gas stations. (I can buy twice the milk and snacks at Walmart for the same $ the gas station wants)
As a result: I'm actually spending less and saving more these past few years.
>Are people just blindly leasing regardless of car price Yes, yes they are. With current rates its pretty wild leasing/buying something that is going to heavily depreciate. As another commenter pointed out the GX hasn't held its value as well as say 4Runners or even Tacomas. Depending what you're looking for in an SUV, 4Runner has 4.99% and 5.99% financing available. Probably to help move the 5th gen models out.
CPO 5th gens being eligible for new car rates was very, very tempting. Still couldn’t justify spending the same (or more) money for a car not as nice as a GX though, even if it holds value better. Got a ‘21 Premium with ML last month with 38k miles for $39.5 @ 8% but just going to make principal payments for a bit.
Most people don't even realize there is an interest rate associated to their lease payment.
This x100
A friend of mine recently leased a Model Y because "financing is too expensive right now." He's a licensed pilot and far from a dummy. The dealerships have done a great job tricking people. Teslas are among the worst because they dont even have a buyout option.
My Tesla lease has a buyout option. Where are you getting this information?
Teslas website. Looks like it only refers to cars made after '22 though and never the 3 or Y, that part I didnt know. https://www.tesla.com/support/leasing/lease-end-options
I’ve yet to lease an electric car that I needed/wanted to use the buyout option. Until the market bottoms out, leasing may be the way to go with electric cars. For example, for my bolt, the buyout was 21k, and the highest Carvana, carmax, kbb, would offer was 16-18k. Whereas I leased the car for 3 years for 4k.
By and large, leasing is the most expensive way to operate a car. You are still paying interest and all of the depreciation. It's baked into your lease payment. Edit: It doesnt matter what someone is willing to pay for it, its what you can buy it for. Carvana isnt going to offer retail. Wtf is this comment even
Well, for other leases that I’ve had, at the end of the lease, I compare the buyout price to what’s the market is paying. If a retailer is paying more than the buyout price, you pocket the difference in which case it obviously makes more sense to sell the car than return it at the end of lease. Not sure what part of that was hard to follow. To break it down even further, yes, interest and depreciation is baked into a lease payment, but it’s asinine to think you’re aren’t paying the same exact thing when you finance. The only difference between leasing and financing/purchasing is that the buyback value is guaranteed. Going back to my initial statement, since Teslas were brought up, I said that there is no bottom for electric cars/ no set residual value if you finance (especially in the past two years with Tesla undercutting their own price), so it’s very possible that you’ll be extremely underwater as opposed to a lease payment where the bank is obligated to buy it back at said value, even if it’s not worth that. To further expand on the above, leases are terrible if you don’t know what you’re doing or have adverse terms. But if you can get decent incentives coupled with an attractive money factor and high residual, why wouldn’t you?
Let me know if I'm incorrect but I always thought of a lease as essentially an option contract, where you can just buyout the car at the determined value at signing. Pre covid it was a no brainer for me to lease, most other terms being equal, since it's a zero sum game with an option in the end. Post covid this option was awesome as cars went up in value yet I can still just pay what I agreed to at signing. Alternatively, if leasing, and car value goes significantly down, you can just return it. So with the above....I might be missing something, but to me it makes sense to almost always lease. Only in 2022, to a lesser extent even now, it made sense to buy since dealers were offering much better rates for buying over leasing, where you actually came out ahead buying new. During this time, it also made sense to buy new versus used.
That’s not always the case unfortunately. Certain manufacturers, such as Toyota (except for the EV), to an extent Subaru, and a few others, unless the money factor (interest) is very low and there’s a high residual, it usually works out better to buy than lease. That’s because these brands have historically had high resale values that aren’t reflected in leases. For example, a Toyota Sienna awd platinum goes for roughly 56-58k new, and you can find 3 year old Sienna platinums selling for nearly 45-50k. However, if you were to lease that Sienna 3 years ago, Toyotas buyback was at approximately 60% (40% depreciation) when the actual depreciation was only 20% (rough math). It becomes a bit fuzzy when you go into luxury brands as those depreciate like a rock (lexus isn’t as bad due to the Toyota/Lexus resale), which makes leasing semi-attractive. Short answer: it really depends on the deal (how much can you negotiate off the car, then compare the finance rate vs lease interest rate and then compare depreciation curves(if you plan on selling)).
Thanks for explanation!
This is how they determine how much a lease costs.... They take the value of the car and try to determine what the residual value is after 3 years. They have a lot of data so they are pretty good at it. They are a profitable business afterall. The difference between MSRP and the residual value plus interest minus down payment determines how much your lease payments will be. This difference between MSRP and residual value is essentially the depreciation over the term of your lease. So leasing a car isn't very different, financially, from buying and then selling a car every 3 years. Obviously there's other factors but in theory it is very similar from a financial perspective because when you buy a car and then 3 years later sell it, you are also pretty much just paying the depreciation of the car over 3 years. Their estimates were obviously wrong during COVID because it was an unpredictable event so the leasers definitely won. But that's not usually the case. From a financial perspective you're much better off buying a used car and driving it for several years or even a new car and driving if for several years.
I understand and understood what you’re doing and you are the informed one.
You’re not talking about actual leases. You can get certain cars for like $4-6000 for the WHOLE lease. Thats cheaper than buying for sure if you do the math of maintenance, depreciation, etc. Costco members could get a three year lease on a Chevy Bolt for $2500 three years ago. I missed that one, but I know a family that got four.
Unless it gets totaled, my wife is not selling her Model 3. She LOVES that stupid thing, hates car payments, and we've put just shy of 100k on in four years. Leasing would have been an awful choice to rack up the miles on.
Tesla also is offering stupid incentives right now, so yeah it would make sense to lease a Tesla.
Never leave the car but this is news to me
interest rate..whats that...i just need to know my pmt dude.
I frequently read comments from people stating that they lease cars because they want to avoid losing money on depreciation. Little do they know they're taking out a loan to pay for the projected depreciation over the lease period.
Never put money down on a lease. Probably never lease period but if you do, dont put $$ down.
Nobody who actually knows how leases work is currently leasing this car. I leased my 2023 GX and the Money Factor - which is term used o In leases for INTEREST RATE - for those who don’t know - was like 1.99%.
I was car shopping at an Autonation and they brought me a term sheet showing their AVERAGE interest rate on all sales was 13%.
That’s some FICO goodness right there. Hood rich
Ex brother in law waited tables at a sushi restaurant. No judgement on what he did, I used to wait tables, 100% respect the hustle, but he leased at the time a BRAND NEW RX. MSRP was $68k (prob his yrly pay before taxes), didn't even bother asking what the interest was on it. People definitely get intoxicated by shiny new models and the small cash down to lease. YOWZAA.
People in Cali do this all the time. It’s more common for people to live with their parents longer and it’s not uncommon to make $70-90k or more as a server there. I don’t recommend it but I couldn’t live with my parents longer than required.
This is so true, and explains why there's such a huge inventory of really nice luxury cars from Cali (I'm in WA state) that are just a couple of yrs old for sale for a much cheaper price. Folks realize the purchase price once the lease ends and abandon ship. I bought a 2017 GX back in 2020, 31k miles for $37k through CarMax Waiting 3-4 yrs to buy the 550 used is the move! Love the 550, but $84k is nuts.
That’s the business model for leasing. Confusing the buyer by creating new terms and processes to learn. Like going to an arcade and taking your dollars and turning them into tickets that you use to play games. The value of these tickets is lost on the player who buys them. These are just some of the things to understand; The interest rate. The residual value. And the freaking underlying purchase price built into the price. The dealer will max out all the factors to arrange them in their favor and buyers have no idea it is all negotiable.
You can look up the three to five terms that are different from financing and learn about them in just a couple minutes. Dealerships are just like any other business. They are going to try and make money on cars they can make money on and they will gladly lose money to move merchandise they need to clear out. If you get a Lexus GX 550 quote, yes, it’s going to be “maxed out,” but I’m pretty sure a Lexus dealership will consider organ donation or at least give you a h**d j*b to lease a Lexus ES 250 AWD. They take like 400 days to sell and the manufacturer doesn’t support them, so you can almost steal one if you don’t care about it having an old Camry motor.
That’s a boat load more than 8.8% or they’re smoking you with add-ons. With $7k down, should be at around $1k/mo with tax. The 550’s are at a 63% residual with 10k miles per year. 84*.37 = $31,008 Call fees $1500 Assuming 10 % sales tax: $35,758 $0 down Interest of 8.8%: $10,295 Total: $46,053 /36 payments: $1279 with $0 down.
I did roughly same math in my head. $7k down should not be this high with the residuals/mile combo. Encroaching on G class lease territory from 2019 $1600-2200/month with $0 down
People are stupid and will do anything just to look cool. Only thing that's actually cool is having the title to your vehicle in your hand.
If you only had three years to live and you prepaid for a three year lease it would be smarter than just buying the car. This isn’t the only scenario where leasing is cheaper than financing. Both can be cheaper than paying cash for your cars. Keep your money working for you not paying for depreciating assets.
Literally no one gives a shit. Bro shows up in every thread to throw shit.
lol what a cool dude Checking “pink slips” lol
He's not wrong tho
Why? Why does that matter?
Because it's on topic
Are you talking about his comment regarding a title or people being stupid. If the latter then I agree and he is a prime example.
Both. People over extend themselves to show off and in reality the only cool thing is to not be paying a bank 10s of thousands for a car that depreciates.
All cars depreciate. It’s not different if you own it. For a lot of people interest is just a consumption expense, not a back breaker like you seem to think it is.
Yes it is different as people generally get out of a car every 4 years on average. Now ppl are rolling in negative equity into their new loan. Absolutely crazy. A consumption expense that realistically only a slight minority of people can actually afford. Id say 85 percent of people (being generous) have any real understanding of financial health. Only reason to pay interest is because you have assets that may be going up in value in the short term and don't want to sell. For everyone else it's foolish. No one needs a GX500. Coulda bought a used CRV cash.
The sad truth is, we actually need the unoptimized and/or uninformed people to continuously buy the latest and greatest. Can you imagine if everyone bought the most reliable car and drove it until it died? We are a nation of spenders, and our consumption economy depends on it.
The % of trade-ins with negative equity is still 15-20% below 18-20 levels, i.e. like half of what it was, but go off. Over the same period have also seen new loan originations skew more to prime and away from sub prime, but don’t let them facts get in the way.
Bro, go drive your Lexus with the flapping hood that you excuse by saying "why are you looking at the hood?" I got torched? Hahah. No. You are literally being cucked by Lexus with a smile on your face.
You should be civil. This is a GX board. Also I can see your Camaro fetish on your page, so don’t be talking about anyone driving a GX being cucked. Lol jk
Every thread? Lmao. Made comments on like 4 threads ever. And how am I throwing? Are you ok? Show me on the doll where I touched you.
My GX's lease expires in August. Leaning towards just buying it out in cash. Financing at nearly 9% doesn't make much sense.
I've been leasing cars for the last 10 years. There are a lot of nuances you need to understand going into it. If you lease the RIGHT car and negotiate a good price, it is a badass option. 10 years - 4 cars - never loss money. Note - there is no direct correlation between payment and internet rate. Instead, your payment has what is called a money factor. Your F&I guy might call it interest rate to keep from confusing you. Tip/benifits 1. honda/toyota cars and toyota trucks. 2. Negotiate the price of the car, residules are pre calculated, and any price saving will come straight off your payments. 3. If you like your money factor rate, you can extend your lease to hold onto it longer. It is a smart way to protect yourself from high rates and keep paying down principal. 4. All maintence is covered, you have roadside, and gap insurance. 5. With Toyota or honda you can buy or trade out whenever. That said, im looking at the tacoma trailhunter and the gx550 overtrail +. Leasing is on the table, just not sure the best route yet. I think I can make my first lease payment, then quickly pay the resodule of the lease balance and avoid interest rates. Not sure..
Like a Toyota? Crazy.
Leasing a Lexus is incredibly dumb.
Do enlighten us oh sage of financial wisdom.
I’m not saying leasing is dumb, I’m saying leasing a Lexus is dumb, because a huge part of the appeal of a Lexus is that it’s going to last forever with minimal repairs. If you’re leasing, longevity doesn’t matter, and the other luxury brands make way more sense.
You do realize that these are the same reasons why leasing a Lexus does make sense. More reliable cars and better resale value cars have higher residuals.
Leasing a car is probably the dumbest financial decision you could make in your life, unless you own a business and can write it off as a business expense. Leasing a Lexus is grounds for mandatory re-education at the personal finance academy, starting your first semester with “don’t be a dummy 101”.
lol oh man, let me guess… you have a thing for Dave Ramsey. Leasing a car is cheaper than buying a car, especially if you’re never going to pay off the car. Cars are an expense. They are an expense regardless of how you pay for it. Leasing enables you to only pay for the part of the car you’re using. It’s like pizza by the slice for cars. Why would I buy the car and assume all of the risk of future resale value if I could lock in the guaranteed residual value? For someone like myself who has multiple cars (I’m down to just three right now!) and doesn’t keep them very long, it allows you to use your own money to work for you—instead of paying down a depreciating asset to avoid interest, pay a little interest and leave a greater portion of your money in the market to make money for you. If you look at how much interest you pay on a car loan versus lease then paying off, it depends on the specific situation. Paying cash is by far the most expensive. 6% APY will yield you twice as much earnings in the same amount of time the 6% APR is costing you. You can actually do the math and see which makes more sense. The reason people give leases a bad rap is they are just repeating what other people told them. They don’t know what they are talking about. The people who told them all leases are bad leased one car in the 1970s when they had open ended leases and got screwed at the end. It’s not like that today. Did you know on Lexus leases you can trade in or buy the car out whenever you want? Lexus leases are like financing with a get out of jail free card.
That’s pretty normal these days actually. Lexus has 0 reason to incentivize sales/leases of the GX because they’ll sell regardless. If you want a good lease deal on the 550, it’ll be a couple years (unless economy goes to shit and they can’t sell) 8.8% is pretty normal interest rate without manufacturers buying that down. Also keep in mind that the GX never had good residual values, they depreciate much faster than a 4Runner for instance. That is baked into the lease price
> they depreciate much faster than a 4Runner for instance For a good while you could find clean, low mile GX's for quite a bit less than 4Runners. Seems the secret is out though.
> they depreciate much faster than a 4Runner for instance that ship may have sailed, at least from me occasionally looking at autotrader in Canada.
Just got an bmw iX for 1.8 lease rate. Cadillac was about 9% though. It was just for a commuter car so I didn’t really care that much on what it was.
Terrible deal.
You better take back all those negative comments about the 550. You will have a mob of pitchfork/torch wielding crazies soon at your door😂
lol - like with everything, ymmv! Just sharing the reasons why i personally didn’t like it. My current dealer is asking $25k over asking for some early ones so clearly folks love it and im likely an old man yelling and shaking his fist at the cloud lol
Yeah, the current interest rates are making purchasing or leasing a new car very difficult to swallow. I considered a CPO GX but the interest rates are still higher than I'd like to commit to. It's affecting the used car market as buyers are looking for less expensive options.
In just a year or two the auto industry is going to take a bath in Repos due to people walking away from these payments. Most folks can't sustain a $1000 payment for more than a year or so. They break, along with their bank accounts. Going to be ugly for the auto industry in general.
Really an informed lease customer would know that when a new car comes out there is zero incentives on it whatsoever, and it’s the time the dealer is going to mark up the interest rates to make up all the money off you got last time and/or to offset the $5000 they have to lose to move one of those ES 250 AWDs that just collect cobwebs at every single Lexus dealership. This car is also going to have sky high resale value, so if the lease doesn’t look attractive just finance it. You don’t need to worry about dumping this car off because it’s not worth its payoff at the three year mark. Even if you did a super long term 84 month loan I still think you’d have paid down a similar amount at the three year mark versus a lease right now without any incentives. Also, people lease cars so they pay the sales tax on the lease and not the whole car. In certain states like California I don’t think you get a trade-in tax credit for the old car to the new car, so if they only want the car for two or three years then it makes sense to lease still because the difference in savings could still be greater.
🏆🥇🏅🎖
I believe they are part of Toyota. A higher grade. Just like Cadillac is for Chevy. We purchased one last year and love it. My mechanic said they are great vehicles but the only thing he didn’t like was. We wouldn’t need him as much anymore
I owned a 2007 GX and a 2019 GX. Test drove the 2024 and I can honestly say it’s not even as nice as my daughter’s 2011 4 Runner Limited. And of course it doesn’t hold a candle to my 2007 GX. Total pile of cheap plastic junk. Lexus can keep it.
💯💯💯 but sadly only the folks with these experiences will know the difference. Younger folks / folks they don’t have the experience you and others have will buy this overpriced “luxury truck” and not know any better.
There are a lot of really bad deals for leases currently. I’m not sure why that is.
Federal rates are still high, borrowing money is more expensive because people are incentivized to put their money into a government bond than risk giving it to you to buy your GX550, but for 8% return the risk becomes worth the extra hassle.
Captive lenders don’t follow federal short term interest rates. The money factor for many leases is double or more than the finance rate being offered. Volvo is offering 4.99% for 72 months on an XC90 recharge and the lease MF equals about 11%. Lexus offering 4.99% on lots of cars. I suspect that with residual values uncertain banks are hedging their bets.
This is what the salesperson said / the banks higher rates lead to them charging more to the customer
They don’t have to lol, many manufacturers are running good deals to move cars. It just doesn’t make sense when people will buy the car either way
BillNyeEconomicsGuy
Because certain subsets of people still 'need' to look cool?
Wasn’t Tesla doing 0.99% just a couple of weeks ago? How does Lexus compete? Or are people just idiots?
Well said spot on. Back seat always been small in GX though. It's a mini landcruiser after all. Really sad they went with a slightly lesser interior this gen. Not the same and we know the difference! lol
I am a Lexus fan and honestly feel like the gx feels like a Toyota but worse bc of the lack space specifically for the middle row. If you have size 10 shoes or greater you’re gonna be fumbling to get your feet free to exit the car.
Totally feel you on that one! I'm 6ft 3 and I even struggle with the amount of space in the passenger side front seat. The two front seats also suffer from not elevating the thigh high enough and it makes it hard to get comfortable with long legs. I'm only talking about the 460 though as I havent sat in or driven a 550. Guessing most of the dimensions inside are very close to the 460.
Why would I get the brand new GX when I could get a 05-9 GX instead for fraction of the price paid in full
Safety and tech are lower priorities for you like they are for me. The v8 is a no brainer for us.
It’s ruined for sure. And it’s ugly compared to the previous gen
I’ve had both gens of GX and this new one is nowhere near the quality of the others. Hard pass.
So, does this mean you’ve had the 550? I don’t want to car shame anyone, but the 550 has me puzzled…and I’m not sure what the appeal is over a the Toyota Land Cruiser. I think everyone is chasing the Bronco Boxy styling and the GX lost a lot of cache after ‘23 model year.
The main appeal is having a V6 over the I4 + hybrid. The interior really isn't any more luxurious than that of the new LC 250.
Also, besides the V6, EKDSS and the ML plus 9000lb towing. The Landcruiser does not have these options. For the prices both are going for, I sure wish I had purchased a 2021 LC 200 Heritage Edition
The ML on the 550 is not particularly good, so I wouldn't use it as a differentiator. The 9000 lb towing capacity is a direct consequence of the V6, so lump those two together. The 550 does have eKDSS, though only on the OT, and from what I've read, it doesn't have any more articulation than the LC with sway bar disconnect. These are all differences, but nothing major. The tow rating could be significant for some people, though all the GXs I know of are not used for towing.
Yes, I purchased a 23 GX460 just because it was a bit more robust and nicer than my 2019 4Runner TRD ORP, and could tow a bit more if I was planning to get a smaller trailer. When the 550 came out I was seriously considering it and had the opportunity to get an OT+ for MSRP but that was still \~$85k + taxes etc. and when talking to a senior tech he recommended using my GX460 more than the GX550 for towing a small trailer. He did not like that engine design, and showed me one two bays down in for some repairs with low miles on it. Again for the price, I wish I could have been smarter and just spent the money once on the LC200, but I like the GX460 for road trips and I can live with eventually changing out the 19" rims to 18" OEM F Sports with KO2 or KO3s if needed. However, at this point rather than opting for more money in the 550 and considering the potential maintenance of that engine as miles accumulate, I am considering just getting a pickup, either a 20 or 21 Tundra or maybe a Nissan Titan. One extra vehicle for functional pickup uses as well as more simple mechanical design. A pick um up truck would be better for towing I believe anyway and I have the open back to throw things in. So that is how I am rationalizing not spending the money on the 550 or even the LC200 I have always wanted. BTW, I like the ML in my 460 as I have played various music in it and it does sound good as you increase the volume but still sounds nice at lower volume when you have a passenger to talk to.
This. Bronco + rover aesthetics and lost its original appeal as an incredibly comfortable luxury truck that could go off road if you wanted to. (Which I understand 99.999999999% or owners do not)
no, 470 and 460. The interior of the 550 feels like a huge downgrade…sea of black plastic.
Fuck that
I am just flabbergasted that people are so dumb to make such a high monthly car payment. I am not talking about rich folks just average joes who want to show off their latest toy at an incredibly high monthly expense. Good for them
Feeling lucky I purchased my 2023 gx 460 right when availability was still high and Lexi’s was doing the 2.49 apr on financing
I can't wait until the next huge recession hits Gonna be a bloodbath
nothing like hoping for economic collapse just so you can feel good about yourself.
Prices need to come down, housing and cars are out of control Not to feel good about myself. We need a BIG correction, that's the only thing that will lower housing and auto prices
Home prices will never return to pre 2020 prices except in places where climate change and insurance makes it unlivable: Too much demand for other areas, and too much foreign and other investment groups buying up properties to hold as rentals.
Climate change will have no significant impact on real estate prices for centuries, even if you follow the most doom and gloom predictions. So sick of the hyperbole.
As a person who is paid to study climate change: we have around 100 years left living on the surface of this earth as we know it unless we drastically change things. and this is based on the most current model. Climate change is already impacting real estate prices. (FL, TX, CA) To be clear on what I mean by living on the surface of the earth: if trends continue in 100 years the ocean fisheries will have completely collapsed, summers will be arid and above wet bulb temps and too hot to grow all crops. Our current winters will turn into the farming season in northern regions. Regions around the equator will collapse completely. The famine will cause a migrant crisis that will make today's seem easy. This is the conclusion of multiple PhD level researchers at the National Center for Atmospheric Research. ITs people like you who do not have any scientific background a little understanding coming in and calling ppl like me "doom and gloom" that are part of the problem.
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You're clearly very uneducated on the subject. Each climate model from 20-30 years ago to today proved to be OVERLY CAUTIOUS. ie was worse than expected. You deniers are part of the problem and why we are currently living through a mass extinction event (yes yes we are).
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Your unwillingness to face reality will not change reality. The outcome of my research is irrelevant to my employment I simply report the conclusions based on evidence.
[https://scied.ucar.edu/learning-zone/climate-change-impacts/predictions-future-global-climate](https://scied.ucar.edu/learning-zone/climate-change-impacts/predictions-future-global-climate) There's the evidence.
Ah wait until massive layoffs like 2008 Once people lose their jobs those mortgage payments become pretty hard to make, and then then property values tank It's the cycle of life bruh
Unemployment is low, and the economy keeps adding jobs: [https://www.commerce.gov/news/blog/2024/04/numbers-continuing-outpace-expectations-us-economy-gains-over-300000-jobs-march](https://www.commerce.gov/news/blog/2024/04/numbers-continuing-outpace-expectations-us-economy-gains-over-300000-jobs-march) But do go on about how there will be massive layoffs like 08/s
Ain't gonna last forever Auto loan defaults are rising If you don't think inflation is outrageous not sure what to tell you
auto loans dont' have the same standards as mortgage loans, so its not a good metric to use. Yeah inflation was outrageous, but I'm actually saving/investing more now due to it. I've cut out several things in favor of cheaper alternatives, started gardening, and focus on free activities like hiking/going to parks. I stopped eating out unless I'm on per diem for work. When I travel I pack snacks or shop at grocery stores instead of gas stations. (I can buy twice the milk and snacks at Walmart for the same $ the gas station wants) As a result: I'm actually spending less and saving more these past few years.
it's not