Howdy, Stranger!

It looks like you're new here. If you want to get involved, click one of these buttons!





General Questions about Leasing Vehicles

1246717

Comments

  • kyfdxkyfdx Posts: 29,835
    A lot of it depends on the leasing company (or bank) that owns the car.

    But, just about every bank will allow the car to be traded-in to a licensed dealer. Your leased car has a payoff amount, just like any financed vehicle.

    Some leasing companies have different payoffs, depending on who is buying the car. This seems unfair, but when you sell the car before the contract is up, they do have the power to call the shots (according to the contract).

    Many leasing institutions will not allow you to sell your leased car to another individual, without purchasing it yourself.

    I've traded in two Hondas and an Acura before the lease was up. All leased through Honda Finance. They are pretty straightforward.

    regards,
    kyfdx
    visiting host

    MODERATOR
    Prices Paid, Lease Questions, SUVs

  • avljmaxavljmax Posts: 10
    Thank you for your response, kyfdx! That makes sense. I think I'll call American Honda Finance Corp tomorrow just to make sure that it's legit for me to trade in to a dealership other than Honda. I really want to try to get the equity out of it, rather than just giving it back to AHFC.

    Did you trade in your Hondas and Acura for another Honda/Acura? Or did you trade them into a different car company?
  • m6_2005m6_2005 Posts: 9
    Hi -

    I am trying to lease a demo vehicle--a 2007 Nissan Maxima SL. The odometer reads 5008 miles.

    My question is: How is the residual values for demo cars determined for various lease terms? How would I determine the depreciated portion of this vehicle?

    How exactly is this applied to the lease calculation?

    Also, in leasing, what are some important factors in leasing a demo car vs. a new car to keep in mind?

    THANK YOU in advance.
  • kyfdxkyfdx Posts: 29,835
    All three were traded in on new Honda Accord leases. The Acura was over-mileage, and being my first lease, I was worried about end-of-lease charges. I traded it for the payoff value.

    Lease #2 was traded in after 24 months of a 30 month lease. I was already 9K miles over my total allowance with 6 months to go. I took a hit, but less than I would have if I had kept it, and moved into a lease with a much higher mileage allowance. I estimated about a $900 savings over taking the lease to term.

    Lease #3 was traded in afer 24 months of a 36 month lease. It cost $250 to payoff the negative equity of the old lease, but the current lease deals were better, so I dropped my payment by $10/mo, even after rolling in the negative equity, and moved into a new 36 month lease on a new Accord. Plus, I was on a 3yr/54K lease, so my warrranty was up.

    I've never been able to trade a lease in and generate positive equity. Usually, if you can do that, then you've paid for more mileage than you needed. Most really good lease deals will have you in a negative equity position all the way through. That means you won!!

    Good luck,
    kyfdx

    MODERATOR
    Prices Paid, Lease Questions, SUVs

  • kyfdxkyfdx Posts: 29,835
    I doubt every finance company figures a demo lease the same way. But, in my experience, the residual is reduced by a set amount per mileage. Something like $0.10 per mile would be typical.

    However, the bank may have a special money factor or residual for demo vehicles. If not, you should certainly be able to negotiate a reduction in selling price, equivalent to the reduction in residual, at the very least.

    Also, be aware that a typical lease may put you out of the warranty period on a demo, where it may not on a new vehicle.

    Some demos just don't lease very well. Be sure to compare the price to leasing the same car, brand-new.

    regards,
    kyfdx

    MODERATOR
    Prices Paid, Lease Questions, SUVs

  • m6_2005m6_2005 Posts: 9
    I really, really appreciate your quick and great response.

    Thanks for the tip on the warranty!!

    Thanks for the help! :)
  • rudi2rudi2 Posts: 17
    I have two more months to go on my acura lease and I am already over my mileage allowance by 12,000 miles.Can I get out of the lease now?If so, what will I owe?is it possible for me to have any positive equity in the lease?If so, how would I know?Should I try to roll any end of lease charges for excess mileage into another lease?Please help!
  • cccompsoncccompson Posts: 2,388
    What's your per mile overage charge?

    What's the buyout?

    What's the vehicle worth?
  • Reply
    Has anyone ever traded a lease? There are several web sites that will help you take over someones lease prior lease end (Swapalease, leasetrader).

    For example, Joe has a 07 car with a lease payment of $350/m with only 6K miles. So I would take over his lease payment and have 30K miles left to use over the next 26 months. At the end of the 26 months I turn it in. In some cases the current leasor will give a cash incentive to take over the lease. If you look hard enough you can find people who put money down for lower lease payment, OR if they got in on a manufacture incentive deal. So in some cases you can get a very good lease payment. In other cases people got ripped off and are paying more for a lease then they should or the lease is already out of miles. It sounds like a way to save money, it your carefull. But I am concerned that it may be too good to be true.

    HELP!
  • jisraeljisrael Posts: 4
    Background: We leased, and paid 100% of the lease up front, on a 2006 Trailblazer in fall of 2005. It turned out to be a lemon and after fighting GM they replaced it in Jan 2006 with another 2006 Trailblazer. A few months ago we moved to another state and are getting ready to turn in the Trailblazer this fall.

    Today when my wife goes to get her new plates on the Trailblazer we find out that the Chevy dealer made a mistake and put the title of the replacement Trailblazer in our name, not GMAC, and has was marked as a purchase not lease. We have the title in our name and in our possession that should have gone to GMAC. GMAC has the Trailblazer listed as leased but they do not have any copies of the title. My wife called the dealer and the lady from the title dept told her that the replaced Trailblazer is listed as a purchase not a lease. The dealership asked my wife to mail the title to them they would fix it and get the new title to GMAC.

    After everything we went through with this dealer and the lemon I do not trust anyone that works at that place. I am not going to send it in yet. I am thinking about holding out to see what they do... after all I do have the title in my possession and in my name. Thoughts?

    Thanks
  • dtownfbdtownfb Posts: 2,915
    I'll keep it simple. Make a copy of the title and send the original to the dealer so he can fix it. Please do not try to do anything else. The car is the property of GMAC. You are simply renting it for xx months.

    While the title is in your name (by accident), the signed contract (remember that little thing) indicates that it is a lease. And GMAC will be contacting you about it at the end of your contract.
  • kyfdxkyfdx Posts: 29,835
    Ditto... that sounds like good advice..

    They made a mistake, now they want to fix it. What else would you have them do?

    MODERATOR
    Prices Paid, Lease Questions, SUVs

  • joel0622joel0622 Posts: 3,302
    I would bet my bottom dollar there is a lien recorded on that title. Even if there isn't what you are trying to get some one here to say is an "OK" thing to do is not.
  • bodble2bodble2 Posts: 4,519
    When you make a down payment on a lease, is sales tax applicable on the down payment? (I suspect it is, or else that would be a loophole to circumvent sales tax).
  • kyfdxkyfdx Posts: 29,835
    Tax laws vary from state to state... but, mostly the answer is yes.. for the very reason you stated.

    regards,
    kyfdx
    visiting host

    MODERATOR
    Prices Paid, Lease Questions, SUVs

  • Kirstie_HKirstie_H Posts: 10,897
    Otherwise, you'd see a ridiculous number of folks with cash looking to lease. They'd just make a "downpayment" equal to the cost of the entire term of the lease and bingo! No sales tax.

    MODERATOR
    Need help navigating? kirstie_h@edmunds.com - or send a private message by clicking on my name.
    Share your vehicle reviews

  • bodble2bodble2 Posts: 4,519
    I did think it was too good to be true! :cry:
  • bodble2bodble2 Posts: 4,519
    By the same token, though, if one were to use a trade-in as down payment on a lease, should sales tax be exempt on the value of the trade-in, to mirror the tax treatment applicable if he had used the trade-in on a purchase transaction?
  • kyfdxkyfdx Posts: 29,835
    You can't get a standard answer to this question. Many states don't offer a trade-in credit on taxes. Some that do, don't offer the credit on leases, because the bank is buying the new leased car, but you own the trade-in.

    Some other states allow the credit, no matter if buying or leasing.

    Good luck on this one...

    MODERATOR
    Prices Paid, Lease Questions, SUVs

  • volvomaxvolvomax Posts: 5,274
    most states charge tax on the lease payment,so there is no tax credit for a trade.
    Trade equity isn't taxed like a cash downpayment however.
  • bodble2bodble2 Posts: 4,519
    "Trade equity isn't taxed like a cash downpayment however."

    How do you mean?
  • volvomaxvolvomax Posts: 5,274
    In most states, a cash downpayment on lease(called de-cap) is taxed at the regular tax rate.
    In AZ for example,if you put a $2000 downpayment down on a lease you have to pay $159 in taxes on that amount.
    So that $2,000 in essence becomes $1841

    If you have a trade w/ $2,000 equity,that $2000 equity can be applied to the lease without taking the tax out.
  • bodble2bodble2 Posts: 4,519
    Thanks for the explanation. (So, in essence, you do get a sales tax benefit by using a trade-in as down payment, at lease in AZ)
  • mb789mb789 Posts: 89
    Is anyone here familiar with Ohio Tax lease laws -- I read that in Ohio when you lease a vehicle you have to pay the tax upfront; that it is not part of the monthly payment. I would like to get clarification on this and what it would mean if I decide to lease a Wrangler -- does this mean I have to spend several hundred more dollars upfront at the start of the lease? Thanks.
  • mb789mb789 Posts: 89
    I bought a car 16 months ago. I am thinking of trading it in and leasing a vehicle. There may be some small negative equity. In a lease, would this get added to the selling price of the new vehicle? Where would it get figured into the equation? I know doing this sounds stupid, but I am just curious.

    I could try to sell my current car, and the estimated private party values are within payoff, but I am very cautious about doing this. There is nothing wrong with the car, so I wouldn't feel bad about selling it; I am just too nervous about other people driving my car.
  • casolorzcasolorz Posts: 87
    I am looking to lease a small or midsize SUV. Currently I like the outlander, rav4, rdx, xc90, cx-7, tribeca, etc. With so many choices I am having a hard time making up my mind. I want to keep my payments somewhat low but I also want comfort. I am looking at paying between 300 to 500 a month, 0 down. I would really like to have power seats with memory, bluetooth, automatic AC/lights/wipers, I will also get the tow package so enough power for that will be necessary.
    I am basically looking for the perfect balance of price vs comfort. I am also considering buying used, probably CPO but leasing looks more attractive to me since I tend to change cars every 2 years or so.
    Thanks for any advice.
  • bodble2bodble2 Posts: 4,519
    I would consider something from BMW (ie. X3?), since BMW tends to have the best lease deals, and would meet most, if not all of the your feature requirements. You can probably rule out the RAV4 and CX-7.
  • Kirstie_HKirstie_H Posts: 10,897
    No questions are "stupid," unless you count the multiple posts by a single person who keeps asking whether it's a good idea to trade in a 2-month-old vehicle, and won't take "no, absolutely not" as sound advice :)

    On a lease, you negotiate the purchase price just like you would if you were buying. This means that the negative equity from your trade would be rolled in to the purchase price. Your monthly payment would reflect this negative equity, just like your monthly payment would if you were financing a purchase. It's really no different.

    You should pop over to our Real World Trade-in Values discussion and post details on your current vehicle. Several members who are in the biz can tell you what to reasonably expect to get on trade-in.

    MODERATOR
    Need help navigating? kirstie_h@edmunds.com - or send a private message by clicking on my name.
    Share your vehicle reviews

  • kyfdxkyfdx Posts: 29,835
    In Ohio, the tax is paid upfront to the state. That doesn't mean that you have to pay it upfront, however.

    You can just add it on to your CAP cost and pay it over the lease term. That is the best way to do it. You do have some small increase in the finance charges, but if something happens to your car, early in the lease term, you haven't lost all of that tax money.

    regards,
    kyfdx
    visiting host

    MODERATOR
    Prices Paid, Lease Questions, SUVs

  • bodble2bodble2 Posts: 4,519
    Somewhat off-topic here, but is "negative equity" not a good thing? Negative equity means market value is less than pay-out (residual) amount, correct? Does that not mean you've been paying less on the lease than you should, since your lease payments, in part, is payment for depreciation?
Sign In or Register to comment.