jjbodean

12 and 15 are 50 and 48 for 36 months right now

jjbodean

finance is just one of the depts i am over, so yes, i know whats going on with lfs at all times, at least here in the SE. actually, rates and terms can vary even between different branches within the same region. for example, i am serviced out of the atlanta branch, where just north of me they are out of the nashville branch, even though we are both in the lexus southern region. lfs has many more branches to deal with.

moolman

[QUOTE=rkb43;3358915]You lose the 18K if you total the car.

What spiralynth said is not a good financial idea for that reason, it's the same reason why you never, ever put any money down/capital reduction on a lease because if your car is stolen or totalled, kiss that money good bye.

The best thing for a lease is to use the Mulitple Security Deposits, that are refundable at the end of lease. Each MSD reduces your MF, look for a post I did in another thread that explains it more indepth. Basically it saves you money every month since your MF is lower and you get it back at the end of the lease.

His idea about leasing first to pay less interest is spot on and it's what I'm probably going to do. With the MSD's I got a MF that is the equivalent to 2.7% APR instead of the 4.9% to 5.5% available at my credit union. Rates have dropped recently though since December when I bought my car. So I leased my car at the low MF and basically when my lease is up in 3 years, I paid less interest than if had financed the car. Now this only saves you money, if you have the full cash at end of lease to pay the residual value of the car without again financing it at a higher used car APR. Which I hope you do if you bought at GS. A good thing is if you decide you don't want the car at 3 years, you can just walk away from the lease, no hassles of trying to find a buyer, you didn't pay sales tax on a $50k car, just on the lease payment, (at least in California). I decided to go this route because I can find investments that can give me at least 3% after taxes, so I figure with time value of money, worst case I break even and with inflation in 3 years I save even more.

jjbodean

well, not exactly. its like if you put that same $18k down on a purchase. the insurance company figures what they will pay, and if there is extra left over once the account balance is satisfied it goes to the owner/lessee.

spiralynth

What spiralynth said is a GREAT financial idea (too bad he can't take credit for it because it was some finance manager's idea ).

What moolman said is FALSE. Flat-out WRONG. YOU DO NOT LOSE THE $18.5k !!!

Seriously moolman, why the f make such a baseless, misleading and patently false comment? And with such conviction no less. Did you put any research into your answer whatsoever? Were you mislead by someone else yourself? Does it make sense to you that somone would just plum lose out on $18k just like that ... vanished, gone, poof? Ever heard of insurance? Do you think that officials at Toyota and Lexus dealers all over this country would tell their cash customers things like " ... this is possibly the best deal we offer ... " when it comes to the upfront lease, all the while snickering behind their back " ... another sucker, that dude's in a world of pain if something happens to that car in 3 years ..." Unreal.

Anyway, jjbodean's answer basically covers the original question. If your car is totalled, stolen ... whatever ... the insurance company:
1) pays the bank up to the $25k first
2) pays you the remaining value of the car up to $18.5k less deductible

In other words, if bad things happened to your car within, say 2 to 3 weeks of purchase, your insurance company will likely pay the full value of the car -- $25k to the bank and $18.5k to you. You lose NOTHING aside from your deductible. If it happens 2 months later -- $25k to the bank and probably $18k to you ... whatever the value of the car is at the time. The beauty of this is that, because it's a lease, if the car is damaged you can just walk away in 3 years, or pay the residual and get the car for cheaper than you could on any cash deal or even the best loan out there today ... as long as you invest your money. And Lexus loves this deal too, because they think they can take that $18.5k and do things with it too. Total win-win for everyone.

The MSD is an OK option, certainly better than a traditional lease, but if you crunch out the numbers, all factors equal, it's NOT as good as the upfront lease. That's mainly because the most amount of money you can lend Toyota is capped at a 9x factor. Unless your monthly payments are stupidly high, you can't beat the return on a comparable upfront lease. Of course every very deal is different and you'd need to crunch the numbers, but ask any finance manager he'll tell you that the upfront lease is basically the best thing Toyota and Lexus offer.

borg1of2

Out of curiousity, what is the equity being used for your e-loan? 4% is a very good rate and I'd love to pay off the LFS loan I just got and have a loan with 4%.

Thanks

moolman

Alright, it was an exaggeration but you will not get close to the 18.5K that you put down if the car is lost or stolen. I think I heard of one insurance company that will give you full new value of the car, if it gets totalled or stolen within a certain amount. The rest of the insurance companies will pay you and LFS, the depricated fair blue book value of the car. If you total the car outside the dealership as you are leaving, you're not going to get a check for 18.5K, even if the car had 10 miles on it. Let's say you leased a 50k car, you put down the 18.5k, the insurance value on the car let's be generous and say 45k. I really think it's less because we're talking about insurance value, not retail used car value. So the insurance company pays LFS, 45k and then I guess you get a check for 13.5K, minus the money LFS didn't get. And I believe GAP insurance doesn't cover this kind of thing because you paid up front and there isn't a gap between what the car is worth and what is owed. Same senario, but the person puts nothing down, just pays 1st month, tax and title, totals the car as he drives out of the dealership. He owes nothing and just lost 1st month, tax and title, not $5k, like the other person. LFS give free gap insurance on every lease.

If I'm mistaken, please correct me. Of course this is all what ifs and buts but IMO because of this reason, it's better to do the MSD to reduce your payments rather than a all up front lease. If you calculate the MSD's it comes out to a rate of return of about 5-7% depending on your lease, it's not a bad return tax free especially if the money was just sitting in a savings account.

jjbodean

youre mistaken. most insurance companies will give you full nada retail value for the vehicle, plus the taxes you are out since you cant trade the vehicle in on another one and get your tax credit. if it is a new vehicle that is not in the book yet they will typically use msrp of the same model brand new.

moolman

So insurance companies pay full MSRP when determining payout and full nada retail value when settling a claim. I want your policy.

jjbodean

well, in my personal experience, yes. best example i can give is the people who lost their cars in katrina got paid exactly what i said, more specifically my father and brother both. dad got the check for his 2002 es300 and gave me that check and another check for only $6k more for a brand new 2006 es330. their policy was with state farm, since you asked.