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If there’s anything that this pandemic has taught us, it’s that nothing in life is certain. Of death and taxes: even taxes took a temporary reprieve. In the Philippine automotive scene, there is one thing that is close to certain: the resale value of a Toyota. The strong reputation of the brand—for build quality, and ease of parts and service—has made it the undisputed king of resale value. 

Toyota Motor Philippines (TMP) is banking on this high resale value with its new lease program called Balloon Payment Plus. Typically, there were two paths to car ownership under financing schemes: one is a high down payment with low monthly payment, the second a low down payment with high monthly payment. Balloon payment schemes added a third option, by allowing low down payment and low monthly payment. The caveat is that the bulk of the payment will come (or balloon) at the end. 

Now, Toyota is adding its own formula to the mix. Under Toyota’s Balloon Payment Plus, the customer has the option to make the ballon payment at the end, thus taking ownership of the vehicle. Or—and this is the innovative part—he can opt to trade in his now used vehicle at a guaranteed resale value towards the purchase or lease of a new Toyota.

TMP feels that the Balloon Payment Plus will make the lease of a brand-new car attractive to more buyers. No longer will a car purchase have to hinge so much on an anticipated increase in income—say, due to a promotion, or projected profitability of one’s business. Buyers will be more comfortable with signing on the dotted line of the lease, knowing that there is an another option: that of trading in the car at the end of the term. 

Toyota is making some of its most popular vehicles available under this scheme: Vios, Corolla Cross Hybrid, Hilux, and Fortuner. Downpayment will be 20-30 % of the vehicle price. Monthly installment can stretch from 24 to 60 months. Lump sum at the end of the lease term ranges from 30-60% of the vehicle price. The interesting part is the “Guaranteed Great Resale Value.” At the end of the term, Toyota will guarantee from 40-70% of the vehicle price as a trade-in value towards a brand new Toyota—it will be considered as a down payment on a new car. An illustration follows:

For Toyota, the main advantage is that a customer will tend to be locked into the brand, as he will get a guaranteed value for his used car towards the purchase of a new one. For the customer, it makes the ownership proposal much more predictable, and potentially more affordable. To sweeten the deal, Toyota will be including periodic maintenance service for the full term of the lease in the monthly payments—nothing additional to pay for periodic maintenance. This added value can be considerable, as maintenance costs tend to increase as the vehicle ages. Thanks to new schemes like Balloon Payment Plus, we can probably chalk up another near-term inevitability: Toyota will keep and probably gain market share in these difficult market conditions. 

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