Aeromotive

I know the title sounds wrong, but here's the math I did :

I'm considering leasing a 2014 IS350. With the Lexus.ca website I was able to get a rough idea of my payments (not gonna turn this into a "is this a good deal" thread).

With ten MSD's (7500$ total), I'm lowering the interest rate from 2.5% to 1.0%, which saves me around 30$ per month, or 1080$ for a 3 year lease.
Can I (or should I) consider this 7500$ as a 3-year investment which would earn me 1080$? Return would be around 14%, which sounds good.

Any opinions? Any reasons not to do this?
Thanks!

DexRox512

iTrader: (5)

There really isn't a reason NOT to do it...other then you're tying up equity. I wouldn't think of it as $30 a month you're earning, just money you're not spending. I don't like tying up cash in anything I'm renting...but it is money you'll get back in the long run. Your call.

corradoMR2

Aeromotive, it's exactly what I do with the Lexus leases as I see it the same way as you. Basically, if you don't lower the rate with the money locked in, then you're losing the opportunity to save the $1K over the term. Where then are you going to get a zero-risk 14% return these days to compensate?

The nice thing with the contract with Toyota Canada Credit is you can return your car and get the investment back any time within the lease contract (of course subject to any money owed on the lease term). I always have returned my leases well before the term end and because I put such low mileage on my cars (12-15k km /year), the remaining lease buyout is usually very close to the trade-in value of the car.

carderoni

Maximum number of security deposits is 9, at least in the US.

afdavey

Your Bank most likely is not paying an interest rate = to or greater than this in your savings account. Unless your cash strapped - I would opt for lowering the payment...

Aeromotive

Thanks guys, I'll look into this. Glad I had the right reasoning. Lexus.ca says maximum number is 10 but I'll see when time comes (sometime in march or april I should be ordering).

MYIS500

FWIW, I recall buying three new cars with great credit in the early 80's, and the best interest rate I could get was 8%. At that time not all credit unions would take on car loans and the interest rates were better, but not by much. The real good news for those times were certificates of deposit (CD's) were paying 8. 10. and 12 % interest depending on how long you locked it up.

One more crazy foot note, mortgage rates were 8 to 13% back then. Not sustainable by any means. Hopefully current times and rates slow down.

kj07xk

Yup, bought my first house in 1986, and I was paying 13% interest on that mortgage. All these winers about interest rates, have had too easy of a life.

wthrman2

Deleted as i didnt realize how old the original thread was

MoltenDebt

[infinite scroll error, sorry]

jtrue28

wow...this thread was old. what happened