Car Leasing 101: Do You Have to Put Money Down? PLUS end of lease options

Should you put money down when you lease a new car? I answer this question plus more leasing questions and answers. I hope this helps.

Leasing tips and action what’s up everyone i’m jeff teague i’m out of raleigh north carolina and today i’m continuing my endless quest helping people buy new cars whether it’s new a pre-owned one whether it’s in north carolina or anywhere else in the country of the world i’m going to give you helpful practical advice on car buying today we’re going to talk about

Leasing this came from one of our viewers who wanted to know do i need to put money down when i lease and you know what this is a really good question it’s a really popular question because i’ve gotten this quite a bit in the past few months or years it comes up because people want to know do i have to put it down or why would i put money down and that’s really two

Different things do i have to put money down do i want to put should i put money down can i put money down well leasing first of all is just one other way to finance your cars and generally when people buy cars they’re going to finance it with traditional monthly loan payments they might write a check for the whole darn thing or they might lease it but leasing and

Financing it are really just other ways to buy a car so here it is the main reason pretty much almost the primary reason why people would have to put money down is because you want to tweak those monthly payments show me the money it’s all about the dollars follow the money trail well here’s where it is because if you put no money down versus a thousand dollars

Down in a lease versus 2 000 really what’s going to be affected is that monthly payment i’m going to show you a couple different scenarios i’ve picked out a forerunner and i’ve picked out a camry two different classes of vehicles so you can see monthly payments and how they are adjusted for your budget based on money down one thing that people want to know when

They say do i need to put money down maybe what about if my credit is a little bit lower in other words you know it’s not excellent you know it’s not above average but it might be fair or average or below average and you’re concerned can i lease maybe i need to put money down well this is a little bit different when you lease because generally there’s going

To be a bottom credit score not sure if it’s going to be from equifax or maybe experian or transunion but there’s going to be a bottom we’ll just call it fico for right now and what that means is if your score shows up and it’s let’s say your manufacturer whether it’s ford or gm or it’s a subaru or toyota or honda let’s say this particular manufacturer will

Call it xyz says that if your score is below 600 you just can’t lease no amount of money down is going to help you with that even though you might have more limited credit or worse credit we’ll call it if you’re below that level you just can’t lease so leasing is going to be a yes or guess what i’m going to write or i know so it’s either going to be yes or

No if you’re above it yeah you can lease and it might be at a higher leasing rate in other words you’ll probably have a higher payment it’s similar to if you finance and you have a lower credit score the bank is probably going to assign you a higher interest rate you’ll get approved but it’s going to be about higher interest rate than i mean a higher monthly

Payment so that’s where leasing and financing are a little bit different because if you finance that means that you could still get approved below this level like a 580 maybe a 560 under the right circumstances you can still get approved for a car loan whether it’s new or used but it’s going to be higher interest rate leasing you just might be out based on the

Manufacturer’s rules and the bank that they use this is the greatest show well this show is going to be about a camry s e lease i just made a generic lease i ran a scenario with a sell price of around 24 842 that was with that four 4 000 discount just to kind of give you a baseline so a selling price of 24 8 i wrote down on my sheet here so let’s take a look

At a 36 month lease and as you can see imagine this is 320 imagine this is 260. now if you put no money down at all you might get around a 320 payment or 319. put a thousand dollars down though 290. maybe that’s more attractive but you do have to put a thousand dollars down and if you put 2000 look it goes another 30 or so generally with leasing it’s going to

Be and you know of course they’re going to be other situations or factors that might affect this but around 30 dollars per thousand so gosh imagine if you put five thousand dollars down that would be another 230 200 170 a month with five thousand dollars down wow but you’re putting five thousand dollars down we interrupt today’s broadcast to tell you to please

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4runner trd offroad we’re going to use the same parameters here 36 three year lease and different amounts of money down what i did with this particular one i got a sheet here is i took a two thousand dollar discount selling price of forty thousand four forty six with no money down we’re at about 5 65 with a thousand dollars down we’re about 534 and this one’s

Gonna be about 503 i’m not a very good writer on the board but anyway that’s what two thousand dollars down so again no money at all out of pocket you’re going to have a higher payment and look it’s around 30 565 535 505. give or take a dollar or two you might get a swing either way now here’s what we got we got to put the air quotes 100 billion dollars should

You put money down should we put it down yes you’re going to get lower payments that’s a huge benefit that’s the main reason why people are asking this question now the one thing is at the end of the lease it’s not like that money that you put down let’s say you put two thousand dollars down it’s not like you’re going to get that two thousand dollars down at

The beginning of your next lease that was used to lower your payments over those three years those 36 payments so it’s not like you’ve got two thousand dollars going into the next lease or anything along those lines the other thing gap insurance most leases you’ll find come with or require you to have gap insurance what that means is since you don’t technically

Own the car you’re leasing it that means that let’s say you got in a car accident and your car is total there’s going to be a difference between what it’s worth actually let me do this there’s going to be a difference between what you owe and what your car is now worth there’s a gap there so if there’s a gap between what you owe and what it’s worth oh man sweet

Fancy moses how are you going to come up with that money your car’s been crashed or something like that well gap insurance might pay i say may because there are extenuating circumstances like if you rob a bank and your car gets totaled to something they’re not going to pay that but if there is a gap okay the bank might pay or may pay that difference so that you’re

Not in the hook for that gap of money but now what happens is let’s say your car’s totaled well you’re going to need another car so if you get another lease and you put we use 2 000 again let’s say you put 2 000 down originally that money does not go into the next lease so now you got to come up with money to put down interesting and speaking of the next lease

We’ll talk about it as if it was your first lease you’ve ever done or maybe your fifth one because you’re a repeat offender a repeat lisa i lease i love leasing it’s great my wife leased i’ve got a 2021 venza right now she has a 2021 highlander for us it worked out great we get lower monthly payments plus we get a new vehicle every three years so we get it the

Best part of the vehicle’s life it’s pretty much covered under warranty and i get it for the best part of the car’s life and then after three years if i want to trade it in for something else or just give it back that kind of thing we can get a vehicle that has the newest safety and technology or maybe you can get more car for less money so a lot of advantages

For the right person if you’re leasing but i just wanted to show you the timeline this is when you buy your lease this is one year in two years in and three years in and you’ll get a call from your manufacturer or an email or a text when you have about six payments left something like that hey your lease is nearing expiration have you thought about what you want

To do we’ll give you instructions we’ll also encourage you probably to get a new lease because that works out very well for the manufacturer it also works out good it’s sort of a win-win because the customer again i’m the customer i’m getting a new car so i get a brand new one with new technology that wasn’t there three years ago so it’s a win-win but believe

Me the manufacturer would love for you to lease again so you can trade it in for something else and remember if you trade it in for something else the mileage that you got does not matter you’re not going to get a mileage penalty because the manufacturer doesn’t care because you traded it in to the dealership then they’re going to offer it to their pre-owned

Customers they have a three-year-old car that’s a one-owner vehicle advantage advantage and then keep it maybe you decide you just want to keep it and what that means is that means you’re going to keep it but you’re going to extend the term and this will not be a lease anymore but you’re going to finance it for another couple years three years four years something

Like that and most people would want the payment to be the same but this one’s going to be a loan and you’ll talk with your dealership or your manufacturer about that one but the mileage does not matter on that vehicle because well you’re keeping it it doesn’t matter toyota or honda or hyundai they don’t care because they’re not getting the vehicle back or you

Could turn it back in this is the arm where miles do count okay so if you’re over your mileage that you bought whether it was 12k per year that’ll be 36 000 over the course of the loan or the lease if you got 15 000 remember 15 times 3 45 if you got 18 000 that’s going to be more so if you’re over generally it’s going to be so many cents it might be 15 cents over

Per mile over it could be 18 cents it could be another dollar amount you just figure out what that is and please look at your lease terms because you want to know when you buy the vehicle how much that’s going to cost if you’re over because if you decide you want to turn it in you’ll probably have to pay that amount so that’s just sort of like a little tutorial on

What happens at the end of the lease i’ll go into more detail in a future how to buy a new car video now what’s next now here’s a question how much money should you put down that’s really a question only you and your family can answer because it’s up to you it’s up to your budget it’s up to how much you want to put down some people never put money down they say i

Only put zero a goose egg i only put nothing down on a lease and well your payment’s going to be what it is and there are reasons for that i gave you some right there some people want to put some money down a sweet spot would be somewhere like put a thousand dollars down fifteen hundred two thousand dollars down but you’re probably not gonna wanna put many many

Many thousands of dollars down like five thousand ten thousand eight thousand something like that you probably don’t wanna put that much money down because remember you don’t get that back at the end of the term now if you’ve got money floating around under your mattress or you’ve got money to burn baby let it fly we’re going to make it rain today hollow maybe

You want to do that but again i would put somewhere in the sweet spot like i said a thousand to two thousand three thousand somewhere in that range there it’s really up to you i can’t advise you on that one thanks for watching the video if you liked it please hit like subscribe and that notification bell if you hit that bell and you’re not familiar with youtube

All that much it means that you’ll get a notification just a little notice on your cell phone or your desktop say hey toyota jeff and raleigh has a new video out so you can go check it out and then you can be the first one to leave a comment and some people like to write first maybe somebody write first on this video i don’t know but anyway point being ask me

Questions in the comment section and i’ll include that as the next video of how to buy a new car it can be about how to select a vehicle how to select the dealership that you want to work with because some dealerships in town there are three of them there might be two of them there might be four of them so how are you going to know where you’re going to buy your

Vehicle from interesting how you can select the right sales person to work with you know you can do that i’m gonna do a video on that but what about uh picking out a car negotiating uh the finance department the delivery of the vehicle all that kind of stuff so maybe you’ve got questions maybe you have a question from a previous purchase you’re like i didn’t get

That answer that i wanted or it’s going to help you with the research later on let me know leave me a comment you’ll find me on instagram at toyota jeff 1 you’ll find me on facebook at toyota jeff and i write stories for torknews.com toyota and of course you can always leave me a extra comment at toyota jeff.com thanks everyone so much we’ll see you next time

Transcribed from video
Car Leasing 101: Do You Have to Put Money Down? PLUS end of lease options By ToyotaJeff Reviews