Want To Lease A Toyota Highlander? Here’s Everything You Need To Know


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White Toyota Highlander outside

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You’ve decided that your next vehicle will be a Toyota Highlander. It’s a solid choice and one that’s been duplicated by countless families. But, unlike financing the car with a loan, you want to lease a Toyota Highlander. According to Statista, about one in four new vehicles are leased, so going this route with your new Toyota isn’t unusual. 

But what’s involved with leasing? Let’s dive into the details. To begin with, we’ll be solely looking at a new vehicle lease offered through Toyota Financial Services (TFS), the brand’s official financing arm. Some Toyota dealers may offer leasing through third-party sources or leasing on used vehicles, situations that won’t be covered here.

What Is A Car Lease?

Unlike the outright purchase of a car (which may include a loan), a car lease is best thought of as a long-term rental. In this case, you don’t own the vehicle (TFS does) but agree to pay TFS a set amount in exchange for the right to drive the car for a certain period.

The length of a lease can vary, but most contracts last for three years. However, it’s not uncommon to find agreements covering two or four years. Importantly, always ask the dealer how a shorter or longer term affects the payment. 


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By The Numbers: Lease a Toyota Highlander

Unlike a car loan with a clear interest rate, a lease involves more complex calculations to determine the monthly payment. 

The vehicle lease formula includes “depreciation” and “residual value.” Depreciation is how much the value of the car will drop during the lease term. Residual value is what the vehicle will be worth when the lease is over. TFS charges a money factor (the equivalent of an interest rate) on depreciation and residual value. 

A TFS lease will also include “capitalized cost,” the bottom-line price you’re paying for the Highlander. A capitalized cost reduction (similar to a down payment) or a trade-in may reduce the capitalized cost. 

Let’s check out an example of a Highlander lease. We’ll assume there are no discounts or markups to keep it simple. But other charges, which we’ll review, can impact your costs. Notably, any offer your receive to lease a Toyota Highlander may be substantially different.

2022 Highlander XLE with all-wheel drive

MSRP: $43,220

Lease Term: 36 months/36,000 miles

Depreciation: $15,560 (MSRP minus residual value)

Residual Value: $27,660 (64% of MSRP)

Interest Rate/Money Factor: 4.8% (shown as 0.002 for lease purposes)

Step 1: Monthly Depreciation 

(Capitalized Cost – Residual Value) / Months = Monthly Depreciation

     ($43,220 - $27,660) / 36 = $433.22 monthly depreciation

Step 2: Monthly Finance Charge

(Capitalized Cost + Residual Value) X Money Factor = Monthly Finance Charge

     ($43,220 + $27,660) X 0.002 = $141.76 monthly finance charge

Step 3: Monthly Payment

Monthly Deprecation + Monthly Finance Charge

     $433.22 + $141.76 = $574.98 monthly payment

So, the monthly cost to lease a Toyota Highlander would be $574.98, assuming there are no other costs or a capitalized cost reduction.

TFS determines the residual value, which can vary depending on lease length, mileage allowance, model year, drivetrain, or trim. Just as the lease length can affect monthly payment, so can residual value. If you’re flexible with features and equipment, determine how going up or down a trim level affects pricing.  

TFS also sets the money factor (or interest rate), and some dealers may choose to markup up this amount. The money factor in the above example is a standard rate that Toyota charges for customers with top-tier credit. Leasing with mediocre or poor credit will substantially add to the monthly payment. To put the money factor in simpler terms, multiply the number by 24 to calculate the interest rate equivalent. For instance, multiplying the 0.002 money factor used in the example by 24 (0.002 X 24) works out to 4.8%.


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Other Lease Costs

Our Highlander lease example doesn’t reflect other costs or the first month’s payment, usually due at the start of the lease. 

  • Sales Tax: Leasing a car doesn’t escape state sales tax. But, how it’s calculated on a lease may be different. It depends on where the vehicle is registered. Several states, including Georgia, Illinois, Minnesota, New York, Ohio, Texas, and Virginia, require tax to be collected upfront on the capitalized cost. While other states only tax the monthly payment. So, in Texas, a surcharge of $2,701.25 ($43.220 X 6.25%) would be due at the commencement of the Highlander lease example. On the other hand, New Jersey’s seven percent levy is charged only against the monthly payment. That means an additional $40.25 ($574.98 X 7%) would be due with each monthly lease payment.
  • Acquisition Fee: TFS imposes a non-negotiable fee, usually $650, to start a lease.
  • Security Deposit: TFS will collect a security deposit equivalent to the monthly payment amount in most cases. However, the deposit may be waived in some instances. The funds are returned at the end of the lease minus any fees or charges.
  • Disposition Fee: While not collected initially, TFS charges a disposition fee (usually $350) at the conclusion of the lease. Often, this fee is waived if you lease another Toyota.
  • GAP Insurance: While not a requirement, Toyota offers GAP (Guaranteed Auto Protection) coverage that pays for any insurance shortfall that may arise if the leased car is stolen or totaled. This isn’t available in every state, and some insurance companies may offer a less-expensive alternative.
  • Dealer Fees and Other Costs: Other charges can include dealer processing charges, registration fees, and any add-ons, like additional warranties.

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Lease Vs. Loan. How Does the Toyota Highlander Add Up?

Now that we’ve covered all the details when you lease a Toyota Highlander, how does the math compare against a traditional car loan? While we could write exhaustively on this option, we’ll wrap up with one straightforward example that uses the same Highlander XLE with a sticker price of $43,220. Again, we’ll skip any down payments, discounts, markups, or other costs.

Assuming an interest rate of four percent and loan length of five years, the monthly payment would be $796 (almost 40 percent higher than the lease). Of course, the Highlander would be yours free and clear at the end of the loan.



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