Insane lease deal for 2018 Advanced Prime

May I suggest a better version of your plan? Make the biggest payment you can on the loan with the highest interest rate. Pay that off first, then work your way down your interest rate ladder of accounts you owe. Be sure to pay the minimum on every other loan...late fees and default rates are killers. Don't worry about loans with low balances yet, just pay their minimum until you pay off the highest rate loans. Eventually you can use the same plan to make additional principal payments on a home mortgage--early payments are like investments that are absolutely free of risk. All of us living in paid-off homes know the financial and emotional freedom of no mortgage payment.

 

If your home mortgage rate is greater than say 5.5% then sure. Otherwise you're lighting money on fire paying down a guaranteed low interest debt with cash versus using it elsewhere. Even at 6%-8% you can usually do better elsewhere. Warm and fuzzy feelings are nice, but there is a cost to it.

 

As my Pappy once said: "Don't buy crap you don't need with money you don't have."

 

+1000!!
According to the window sticker that came with my 2013 PiP, it sold new for $33k and change. I bought it in Dec, 2016 for $12,995. From a dealer who naturally marked it up from his price.

 

That would reduce the amount of interest you pay. It's called the avalanche method.

What I recommend is the snowball method. It is easier to stick with because you get positive feedback sooner as the bills start to disappear. Wikipedia describes it well. When you make the first bill go away and start being able to make a bigger payment on the next one, it's really encouraging. And then the next one is even better. If you start with the highest interest debt and it takes a long time to pay off, it's harder to keep from getting discouraged.

Dave Ramsey does a really good job of explaining how it works and the psychology involved.

Here's his example:

• Credit card 1: $500 at 13% with a monthly payment of $25
• Credit card 2: $1,000 at 19% with a monthly payment of $50
• Car loan: $6,000 at 4% over four years with a monthly payment of $135
• Student loan: $15,000 at 5% over 10 years with a monthly payment of $159

If you pay the minimums on everything and add an extra $100 to the smallest credit card payment, you’ll pay it off in four months. Then you can attack the second credit card to the tune of $175 per month ($100 plus the newly freed-up $25, plus the $50 payment you’re already making). That one will be gone in five months. Now you have $310 a month ($175 plus $135) to put toward the car! At that rate, the car loan will hit the road in 15 months! By the time you get to the student loan, you’ll be paying $469 on it each month! You’ll wave goodbye to Sallie Mae in another 24 months and be totally out of debt.​

 

What happens if you're 18 mos into a 36 month lease and you get t-boned by some idiot and the car is totaled and based on the car's black/yellow/blue(?) book value the insurance company writes you a check for 50% of what you still owe on the lease?

 

Easy yes, an easy way to go bankrupt, or an easy way for someone to lose money that they can't afford to lose. Happens all the time to people who leverage real estate investments or who use debt to make investments in the stock market, and then there is a market downturn. Made worse if they have a sudden loss of income or major expense during that time and have to start selling things at a loss to pay their bills. That's the risk.

Again I am not talking about you and your investments, which may be relatively low risk and even if they did tank you aren't depending on that income. You are making a valid point that with a good interest rate, certainly your 1.99% example, it could in some cases be better to invest the money elsewhere. But a high percentage of our population has grown up in a world where you purchase everything via credit, it's just normal to them, and their entire world view consists of "what are my monthly payments?" The advice being offered by others in this post is an encouragement to take a longer view of what financing everything in their life is costing them.

 

Indeed. Also why it is prudent to have at least "a few months of savings". If something terrible happens and everyone is out of work and huge expenses pile up be able to live on zero or negative income for months without changing anything. If when the time comes you know it is much longer term, you can change your lifestyle and stretch the savings or use the savings to start divesting and downsizing appropriately.

I have also seen people with fully paid off houses lose them. A $200K house lost because they couldn't pay the $2K in property tax. Or even with estates. When an estate's house is fully paid off you are paying taxes and insurance directly. When a death certificate comes it may take a while to transfer the assets into the name of the estate, it isn't automatic. In that time, things could be lost. Also seen that happen. Money willing to be spent, nobody will take it because the names on the paperwork don't match. Or even worse they're "counting on" the estate's money to pay the estate's taxes but that takes time and if they have nothing, then it gets taken before they get anything (seen that happen too). If you're faceless-ly paying a mortgage company, just keep doing so and they will take your money or anyone elses and distribute it properly. Then after the estate is setup and all the paperwork ready, you "do the switch" in a single payment cycle and all is well.

Yes and unfortunately it is beyond most people to realize how much an interest rate is on a monthly payment when it is on credit. I've rescued a few less-than-intelligent-financially friends from such situations with personal loans after they come back with a new car financed at 28% or in one instance 33.5%! That's when I learned the usury rates in Colorado are at 45% when contracted. Basically if you and I agree in a contract, I can charge you 44.9% interest all day long perfectly legally. So I pay off their loan that month they then pay me monthly with a more reasonable rate that no bank would ever give them due to credit issues and voila. Although you do have to learn to accept a few missed payments here or there, but such is life. Never loan any money you aren't willing to burn in a fire in the first place. That way any repayment is just icing on the cake and not expected.

 

This a loan shark deal. Skip a payment lose a leg. F you pay me.

Posted via the PriusChat mobile app.

 

I think there is 'gap insurance' but still a good idea to pay minimum down payment on a lease. Zero down is best.
It will cost about $300 extra in interest payment over 3 yrs.
Simba

 

Financial literacy is critically important... That's all I've got to say about that...

 

Read both your lease agreement and your insurance policy carefully. See what each says about this. See if gap insurance is included in your lease payment. Stay current on the lease payments while you work this out. Try to negotiate the value with the lessor. Expect to write a big check to the lessor if you do not have gap insurance.

If you weren't offered gap insurance by your insurance agent, get a new agent. Gap insurance covers the gap in value between what you owe and what the car is worth, i.e., its market value. Usually the best price for gap insurance is from your auto insurer. The gap coverage offered by the dealer is usually the most expensive.

 

On a lease, sure it is best to put zero down but it also depends on what you want as a payment too, right? And, it depends on what you are going to do after the lease is up? Are you going to purchase or just release an updated vehicle for the payment always depends on money going in.

Gap insurance....get it. Wth a lease, if you don't have gap insurance than you do stand to lose quite a bit if your car gets totaled. I know I went thru the dealer ($11 a month),.... either way, cheap insurance over a 3 year period for peace of mind.

 

Here's the thing -- with a $30K vehicle and a $4500 federal tax credit, in the aftermarket (and in residual value) you lose $4500 driving it off the lot. If you buy it, at least you get that $4500 back, but if you lease, you don't.

 

And...check the market value of the car as time goes on vs. the amount you owe on it. When they're close, cancel the gap insurance and save money.

 

So what is a good lease price for the Prime? How much money down? % ..... dealer region taken into account etc...

Is there such a thing as the best option for a lease price?

 

I consider no money down, total payments equal to 33% or less of MSRP in 3 years/36K miles to be a good lease. For $30K MSRP car, if you can get 3 year lease with 12K miles/year limit at total payment of $10K or less including tax and fees, which comes out to be $277/mo, that's excellent. It's fairly easy to get this kind of lease offer for most of Toyota vehicles including regular Prius and other hybrids, but I would think it would be very difficult to get this number for PRIME. Current Toyota lease offer for PRIME is $3K down with $327/mo for 3 year or total payment of $14772 for MSRP $28303 Prime Plus. However, this offer does not include tax and fee, so total is more depending on your state tax and fees. That more than 50% of the value of car in 3 year rental. Not very attractive IMO.

 

You didn’t even subtract the $4500 tax credit. That’s another $125/mo for a 36mo lease.

 

You can't get the tax credit if you lease PRIME. That's why leasing is not good option for PRIME or any PHEV/BEV other than Tesla or GM. For any other vehicle, 33% of MSRP for 3 years is a good lease, IMO.

 

From what I remember when the Leaf first came out Nissan applied federal and state tax credits to the lease which is why all of a sudden there were so many Leafs on the road, most of them leased. I don't know if they are still doing that.