Oak Lawn Toyota

Should I Lease or Finance?

What is Leasing?

Leasing is a purchase option. In this option, you agree to use a vehicle for a set term of months and miles.  For this example, lets say you agree to use a vehicle for 2 years and have 12,000 miles per year. The bank will use an index and make an educated guess as to what the vehicle will be worth after 2 years and 12,000 miles.  You only pay for what you use.  To simplify it, you pay the sale price minus the future value.  Your monthly payment is that number divided 12.  You can reduce your payments by putting more money down, you can even make one payment and not have any recurring payments due.


In effect, you get the same car for a lower monthly payment than you would for example financing the vehicle over 5 years.


There are a lot of benefits to leasing, and most of the perceived cons are actually myths or misunderstood concepts.

Is leasing a car right for you?


Short answer: 99% of shoppers should strongly consider leasing!


Long Answer: 

Great New Tax Rates for Illinois Lessees!

As of January 1, 2015, Illinois Lease Tax Structure took a major step forward giving customers a break on taxes by as much as 50%.  You only pay taxes on what you use. You pay sales tax based on your address, not our dealership. 


Myth: "I don't want to lease. I drive too many miles."

We can adjust your lease terms upfront to account for expected mileage overages at $0.10 per mile.  To put it simply, when you own a car and put a lot of miles on it, it loses value at about $0.25 per mile.  Yes, you pay a "Penalty" as opposed to losing value to "depreciation."  But in reality, you are saving a lot more money by leasing.  You might be right, but you will be surprised.  It doesn't hurt to ask us. The better informed you are the more confident you are in your purchase decision!


People who buy and lease new cars LOVE that moment when they drive out onto 95th street in their brand new car.  The smile on their face is enourmous.  That's because new cars are AWESOME. Shiny. Clean. Flawless. New Car Smell! 


People love leasing cars because every two or three years they get a new car! That same smile and feeling of owning a new car comes back!


People who finance cars are usually stuck in negative equity looking at their three or four year old car with dents, dings, dirt, scratches, rips, tears wishing they could drive another brand new car.


It's About Perspective

We know what you're thinking.  "But won't I always have a car payment then?"  The answer is Yes.  It can feel like a burden is lifted when you finish paying off a loan after 5 or 6 years.  "Yay! No car payments! " But you need new tires, new brakes, and other maintenance adds up to thousands of dollars just to maintain your vehicle.  Don't you hate the idea of spending thousands of dollars to keep a 5 year old vehicle that you take for granted in good shape?  Wouldn't you rather spend a couple hundred dollars and enjoy a brand new vehicle with nothing to worry about?


That's where ToyotaCare comes in big.  ToyotaCare is Toyota's exclusive ownership program that gives every new Toyota owner no-cost maintenance for the first 2 years or 25k miles, whichever comes first.  So your oil changes, air filters, tire rotations, and all inspections cost you absolutely nothing for 2 years!


So if you lease a vehicle for 2 years, the only thing you have to pay is your monthly payment!  2 years from now you lease another car, same thing! You never have to worry about brakes, tires, etc...all while enjoying state-of-the-art technology and creature comforts!


I'm still not sure, I bet this is some way for you to make even more money without me knowing!  It's some kind of car sales voodoo! Isn't it!

NO! We would be happy to customize a spreadsheet to show you the overall cost of ownership between leasing and financing a vehicle.  We are certain that once you see how much money you save over 6 years of leasing vs. 5 years of financing and 1 year of "no car payments" you will wonder why anyone would ever finance.  Ask Joe Mallet, our Internet Sales Manager and Leasing Expert to help you weigh the benefits.  Call 708.423.5200 or email jmallet@oaklawntoyota.com.


Toyota Financial Services offers 0% financing for up to 60 months on select vehicles, isn't that pretty much unbeatable?

You will find thatany car Toyota offers 0% APR for also offers the lowest possible lease rate (0.00001).  With Toyota's amazing resale value you will be amazed at how low your payments will go!  "Zero" just doesn't plug into a lease formula, so we came up with the number 0.00001 which adds up to less than a dollar per month in "finance fees."


Consider This

When you finance the car, compared to leasing, you roll the dice a little bit with it's resale value.  When you lease a vehicle, Toyota Financial (Our lessor) guarantees the future value of your vehicle.  If you get in an accident that would decrease the value of the vehicle, oh well, that's the banks problem, not yours.  Now if you "own" that vehicle and are still making payments, your value decreases and when you go to trade the vehicle in the appraisor sees the Carfax and tells you that your car is worth thousands less than expected.  Other factors can reduce the value of your vehicle without you doing anything.  Whenever the manufacturer offers rebates on a new vehicle, it lowers the value of recent model years because customers shopping will say "I could get a new one for just a few hundred more since they have rebates!"


But I want to OWN! I don't want to "rent" a car!

Leasing is renting.  You only pay for the part you use.  That's the beauty of it.  Customers tell us they want the lowest possible payment.  We tell them leasing is the solution and they say "Well I don't want it that low!"  


Shoppers have a lot of pride when it comes to owning a vehicle.  That's all it is.  And it's completely silly.  Driving a new car every two years is the dream.  "Owning" a car you have to invest in (tires, brakes, maintenance) is the worst.


How Much Do I Have to Put Down?

With leasing we encourage customers to keep it in their pocket. You're free to put money down to lower your monthly payment, but that's all it does.  In the case your credit history requires you to put a little down, we have an awesome solution!  Instead of a down payment, a lease requires a security deposit.  Just like renting an apartment, you make a few months rent up front.  At the end you get it back, and you don't have to deal with some crazy landlord making up claims and stiffing you on the deposit.  


Another benefit to leasing is that it has less negative impact on your credit.  When you finance a $25,000 car the whole amount owed weighs down your credit.  All $25,000 of that loan shows up on your bureau.  When you lease, only the amount owed (Sale Price minus Guaranteed Value minus down payments).  On average, thats about 50% less debt on your bureau!


Wow, leasing is sounding like a pretty smart idea.  Why did I ever consider financing?

If you plan on driving your Toyota into the ground and breaking some kind of Guinness world record for the most reliable longest lasting vehicle ever, financing is a great plan.


You do a lot of driving.  Seriously, you could drive 25k miles a year in a lease and it will most likely still be advantageous to lease it at $0.10 per mile.  I mean a lot.  If you plan on using it as an UBER, LYFT, or Taxi car, and you want to put a million miles on it, OK, you got us, financing is the right way to go.  And we are a preferred UBER and LYFT dealer and we can help you find affordable financing that suits your career! Ask us about UBER rebates!


You are planning on "souping" it up.  You can uninstall all those special performance and appearance modifcations before you turn it in but we know that can be costly and what's the point?  You're better off financing if you are set out to make a customized furiously fast racer.


You plan on using it as a work vehicle.  Some people beat their cars up.  Leasing is still worth considering.  We offer Wear and Tear Coverage up to $5,000 of the cost of repairing the vehicle to Toyota Certified Standards.  If you're dropping boulders into the bed of a Tundra, lets consider a dump truck instead of a Tundra.


What do I do when my lease is up?

You have three options:

1. Walk Away: You turn your lease in.  We don't recommend this option. You may pay a disposition fee around $350 dollars. Now you don't have a car.  It might be right for you in certain circumstances like a 2 year work visa, or a temporary transplant from another state.  But it's almost always a smarter decision to do option 2 or 3!

2. Trade It!: What? You can trade a lease in?  YES!  You can! Just like financing, you will most likely have positive equity in your lease, even before your lease is up.  A few months before lease end you will be contacted by Toyota and Oak Lawn Toyota to explore your options.  Your car could be worth MORE than your Guaranteed Future Value. In that case you buy it for the Guaranteed Future Value and sell it back to us for more!  Your car could be worth less than the Guaranteed Future Value, oh well, not your proble, we will still offer you Gauranteed Future Value for your vehicle even if the market says your car isn't worth that anymore.  You can apply that equity towards a new lease to reduce monthly payments!

3. Buy It!:  You fell in love and grew attached to it! Great! If you want to pass it down to a child or loved one, it makes a great affordable car to do so.  You have the option to buy the car without paying any disposition fee. At most you will pay the Guaranteed Future Value.  If the market says your vehicle is worth less, you will pay the lower price!


What happens if I total my car?

We offer GAP insurance.  No not the store! GAP insurance covers the amount you owe to the bank after your regular insurance pays you the cars value.  For a low premium you can relax knowing you're covered in the event of an accident.


How long can I lease for?  

We typically lease for 2 or 3 years.  Beyond that, maintenance fees, brakes, tires, and other replacements come up. That's on you!  You CAN lease for up to 5 years but we wouldn't recommend it.


What is a Use Fee?

Some cities and other areas have a tax or "use fee" for vehicles that are leased.  Chicago residents pay 9.5% sales tax AND an additional 9.0% use fee on the Sale Price minus Gauranteed Future Value.  It really throws a wrench in this whole "Leasing is Awesome" thing.  Chicago residents do not have to pay a use fee for vehicles they financed.  Even still, if you live in Chicago, ask our leasing expert to weigh the cost of leasing against financing.  It may still be to your benefit to lease!


 *ToyotaCare Covers normal factory scheduled service. Plan is 2 years or 25K miles, whichever comes first. The new vehicle cannot be part of a rental or commercial fleet, or a livery/taxi vehicle. See participating Toyota dealer for plan details. Valid only in the continental U.S. and Alaska. Roadside assistance does not include parts and fluids, except emergency fuel delivery. Prius Plug-in Hybrid comes with an extra year of roadside assistance, for a total of three (3) years from date of first use.