Assume this Lease?

[Melbosa]

Hey guys,

So I am investigating this lease take over and was wondering what you guys think.  Those of you who really know my history, this is a bold move for me and a vehicle.

Here is the lease itself: http://www.leasebusters.com/en/details.asp?ID=125126

I really am impressed with the Toyota Venza, and would love to own one with a family coming someday.  Taking over this lease would save me the lot-loss in value from buying brand-new, which I have a hard time stomaching.

Thoughts?

[Lazybones]

Lease expiry date    04/27/2014  (M/D/Y)

Monthly payment, before taxes    $518.66 x 24 months remaining
Purchase Option at end of lease    $15,867.00 <- I assume this is before taxes thus why I use the monthly before taxes
=28314.84 before tax
Brand new 2012 AWD MSR 30 875 to $32 365 before tax
Used 2010 ARD 28,000 to 34,000 in Alberta (according to carpoint)

So this doesn't sound like too bad a price, however it also doesn't sound like a bargain...

Interest rates are still low from the banks, so purchasing used isn't even that bad using bank financing, purchasing new on the other hand has the benefit of many 0% financing options, however you have to own the vehicle for a long time to make up the depreciation.

I personally don't like the idea of assuming a lease, I would instead look at purchasing a lease return... but that is my personal biased... I would rather have financing I can pay out at any time or change than a fixed payment schedule with the "option" to purchase.

[Melbosa]

Brand new 2012 AWD MSR 30 875 to $32 365 before tax

Actually brand-new 2012 Toyota Venza with the Package this one has and extended warranty is $39,890 at Kingsway Toyota, Edmonton, AB (and on website before taxes is $36,580 - http://www.toyota.ca/toyota/en/vehicles/venza/options-accessory-pricing/option_packages).  Just to be clear.

Yeah I'm not sure assuming the lease is a great idea, just an idea I had, and wanted to see what you guys thought.  I should have said I was looking into this...

[Thorin]

I buy used, two to three years old because it saves a ton in depreciation.  Most of my used cars have had something wrong, though.  Generally this has been fixed under the extended warranty (main warranty was expired).  Remember that used cars are more likely to have problems, because problem cars are more likely to be put up for sale.  For instance, this Venza might be up for lease assumption due to the current lessee having been told there's already sludge building up and that the motor will blow within three years.  Or the lessee might have lost their job and is looking to cut costs.  Who knows.

Money-wise, you're looking at $11,929.18 in payments (not including tax) plus $15,867 buyout in April 2014 = $27,796.18 total price (again, not including taxes).  Toyota.ca says a 2012 Venza V6 AWD with Premium package is $36,580.  So you're saving about $9k (or 25%) buying a two-year-old car with 34k on the odometer (which is low-to-mid kms).

Of course, the money calculation there assumes you'll be buying out the vehicle after the lease is done.  That means that while paying $518.66 plus taxes every month, you'll also need to sock away $689.87 every month for the buyout at the end.  Or in 22 months, talk to the bank and negotiate a loan for that amount.

Leasing is usually used by people who want more car than they can afford.  I dunno your situation, but I don't think you fall in that boat.  I think you'll be just fine with the payments as well as socking away the extra cash for the eventual buyout (or getting a loan for said buyout).  I do recommend you buy out the car at the end of the lease, as otherwise you'll have thrown nearly $12k away for nothing - UNLESS IT'S A LEMON.

Anyway, 25% is not a huge discount on a two-year-old car more than halfway through it's original warranty (and god knows what done on the back seat!), but if it's a car you like then it's not a terrible deal.

As for a Venza, well, it's really just a big, non-minivan-looking station wagon.  If you like station wagons it's one of the nicer looking ones (keep in mind that I have a Volvo station wagon and a Suburban which is basically a station wagon, too).

[Lazybones]

Ya I didn't detail out the options however the extended warranty doesn't add value over new, the lease is only for two more years and the listing states "Extended warranty for the term of the lease".

Looking at the specs the car comes with a 3 year general and 5 year drive train, so purchasing today the brand new car would have a longer warranty.

Please note I am not encouraging purchasing new, the depreciation is a huge hit, just putting it in perspective.

One of the main reasons I purchased a used ALMOST new was to get better base features in the vehicle I wanted, however the Venza seems to have been unchanged between 2010 and 2012 so that isn't an issue.

[Melbosa]

Yeah the Used Car market is not foreign to me at all.  The leasing is a bit foreign, and this was suggested to me by a friend (the website and concept).

You are correct that I would want to buy out the Lease.  Can you buy it out early?

Otherwise, is there an easy way to search for Lease Returns or Used Cars on dealer lots?  Otherwise Kijiji and Autotrader here I go.

[Lazybones]

If you tell a dealer you are looking for a lease return, they will be more than happy to call you back most of the time...

Also remember there is often more negotiation room on use vehicles depending on the motivation of the seller, NEW Toyota and Honda's rarely have room to move outside factory sales.

[Thorin]

I don't know if leases have an early buyout clause these days.  I assume that if there is one, the buyout cost will be adjusted to make up for the lost revenue from lease payments.

The extended warranty will most likely remain in effect if you buy out the car at the end of the lease, thus giving you a total 7 years / 160,000km warranty.  Extended warranties sometimes are not transferrable to a new owner, but this is an extended warranty on a lease, so the owner isn't changing, just the lessee.  Also, this appears to be a Toyota extended warranty, who I can't imagine not transferring ir.

Leases can also have hidden costs, the most common being for going over the mileage limit and the second most common for returning the car in less-than-near-perfect condition.  If there is wear and tear that reduces the value of the vehicle, they'll try to make you pay for the repairs.

As a personal choice, I prefer the flexibility of open-ended vehicle purchase loans - being able to pay it down anytime is worth it to me.  That said, I've seen a few leases on LeaseBusters over the last couple of years that seemed too good to be true - low buyout, only six months remaining, low mileage car, owner claiming to have lost their job / going back to school / whatever.

EMDA might have used cars?  http://www.emdacars.com/  I generally look on AutoTrader, though, as I'm sure you do.

[Thorin]

Lazy, what do you drive these days that was used ALMOST new?

[Lazybones]

Lazy, what do you drive these days that was used ALMOST new?

2012 Mazda5 (base model) 6mo old / 30,000 k
- 2012 model added ABS, Traction control and Climate control / A/C standard in the base model.

[Thorin]

Oh yes, now I remember you telling me.  Still likin' it?  I imagine the smaller form factor is nice in Vancouver, as compared to, say, a big ol' SUV.

[Lazybones]

Oh yes, now I remember you telling me.  Still likin' it?  I imagine the smaller form factor is nice in Vancouver, as compared to, say, a big ol' SUV.

It drives and parks like a car, it is even easy to park in the smallest spot (sliding doors make it easy to access kids)... However it is REALLY a 4 passenger wagon with  nice cargo space, with the option to seat 6 with near 0 cargo (unless you put a roof rack on, which I plan to and is very common).

Of interest I was really unhappy with my real world fuel economy to start, then I replaced the air filter (guessing it had never been replaced) got back about 1 or 2 L/100KM which is significant for such a simple maintenance item.