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Purchasing at the End of Your Lease

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Comments

  • kyfdxkyfdx Posts: 133,873
    I think they call it "Owner's Choice".

    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • danf1danf1 Posts: 935
    In order to get specific information you should post your location or provide it in your profile. My response was for general knowledge only, not specific to your situation.
  • erberb Posts: 1
    I'm considering purchasing my 2001 Toyota Corolla at the end of my lease (June 2005). Any advice appreciated:

    - The car is under mileage (25k) and in outstanding condition
    - Continually maintained & regularly driven
    - The buyout amount is $7k

    For my western PA zip code:
    - NADA value: Avg Trade-in: $8,025; Avg Retail $9,775
    - Edmunds TMV: $8,200; $9,510; $10,923
    - Kelly Blue Book: Trade: $6,475; Private party: $8,270

    I've read that I should try and negotiate the price with my lending institution, and indeed, they even advertise that they "may be able to offer [me] a savings of $1,000 or more off the NADA Retail value!*" Since my buyout is less than that, that isn't ostensibly a deal, but hopefully it at least indicates a desire on their part to negotiate? If so, what the heck do I offer?

    I've seen it's not a good idea to tell them you're over mileage, is the same also true of being well under mileage?

    I saw a few comments with extended warranty offers, but my financing isn't through Toyota; would that be the only way to get such an offer?

    I feel fairly good about buying it at 7k, but I guess there's no reason not to ask for a better price if it's possible to get it! Again, any tips or advice appreciated; I've read the articles on this site, but most seem to apply to over-mileage vehicles.
  • kyfdxkyfdx Posts: 133,873
    1) Definitely do NOT tell them you are significantly under mileage.. This raises the value of the car.. giving them less incentive to cut the price.. If they ask, tell them you are just under the limit..

    2) If this is not TFS, but a private bank, it raises the likelihood that they will bargain on the buyout price.. You need to speak to a "regional manager" or someone that has the power to make decisions...

    3) The time to call is in May.. about six weeks before your lease is up.. that way they have current auction reports, and can judge what they will receive for the car..

    4) Not knowing the trim level or options on your Corolla, it is hard to get a good read on the price.. but, just about any '01 Corolla with 25K miles in good shape is worth $7K.. I doubt you can go wrong at that price..

    And, you are right.. nothing lost by trying to get it cheaper!!

    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • bodble2bodble2 Posts: 4,519
    if the residual turns out to be significantly less than current market value, does conventional wisdom say that you should buy it out, since a low residual means overestimated depreciation which you've already paid for thru your lease payments? So, you may as well buy it to get the benefit of what you've paid for, or at least buy it and flip it to get some of your money back. Anything off-base with that logic?
  • kyfdxkyfdx Posts: 133,873
    Perfect logic...

    Rarely happens in the real-world, though..

    Usually, paying the sales tax when you buy the car out will eat up any profits, if you happen to be "right side up".

    I've done five leases.. Only once has the car been worth the residual at lease end... One other time, the residual was less than I would pay at the dealer for a similar car, but still not worth it to me..

    The key to a really good lease payment is a residual that is too optimistic, which pretty much precludes it from being a good buyout deal..

    If the residual is lower than actual value at lease end, you got a bad lease deal..

    regards,
    kyfdx

    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • bodble2bodble2 Posts: 4,519
    Good point re sales taxes.

    Also, from examining various lease deals via internet, I have yet to find one where the residual is at or above what I estimate to be market value. They are always less, only question is by how much. Are you aware of any model that has high residuals?

    I should clarify that I use strictly a non-scientific, personal anecdotal approach to estimate market value. My experience is that if you keep a car for 3+ years, assuming no accident or any other catastrophy, the car would average out at a depreciation rate of around 8 - 9 % per year (if you were to sell it privately). Whereas if I take the difference between MSRP and residual on posted lease deals, the best I have come across is a BMW X3 at less than 12% per annum. Even most of the popular Honda and Toyota models seem to come in at around 13 - 15% per annum. This leads me to conclude that the manufacturer would have to miscalculate big-time to offer a residual higher than probable market value at lease-end. I have not investigated lease deals for the really high-end stuff like MB S-Class, 7-Series Bimmer, Porsches, etc. So perhaps residuals are higher on those models?

    Personally I may be willing to accept a 2 - 3% difference as a cost of reduced stress from actual ownership, but I would have to think hard about a spread of more than 5% per annum. I suppose if it enables me to lease a car I normally would not be able to afford to buy, then maybe it would be an option, but the prudent side of me precludes going down that road anyway.
  • steine13steine13 Posts: 2,715
    "Are you aware of any model that has high residuals? "

    Pontiac Vibe, base, 5sp, pwr package.
    $12k residual after 24 months.
    Won't be worth $10 in the real world.
    -Mathias
  • bodble2bodble2 Posts: 4,519
    How about after 36 or 48 months?

    Actually I've never checked out American cars --- maybe the American manufacturers all have over-inflated optimism for the market value of their cars.
  • kyfdxkyfdx Posts: 133,873
    Anywhere between 55-60% after 3yr/45K is a strong residual..

    Depending on the model, you'll see Hondas, BMWs, and Lexi in this range...

    Many people will look in the paper and see '02 Honda Accords with asking prices of $17K and think that their '02 Accord LX is a great buy at only $12K residual.. Not taking into account that the one in the paper is the V6 with leather and navigation, and that the real-world selling price is probably going to be under $15K...

    Some residuals may be less than what you can buy the car at the dealer, but in my experience, they are usually overly optimistic... which is what makes for a good lease deal...

    American cars usually get their low lease payments from cash incentives on the front end.. Their residuals are usually low, but with good reason.. I don't follow them much, because I don't desire any of their cars..

    The Vibe would be an exception, because it is really a re-badged Toyota...

    regards,
    kyfdx

    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • tm01tm01 Posts: 14
    Has anyone dealt with GMAC at a lease end. Are they willing to negotiate on the residual? As far as sales tax goes I live in New Jersey, does anyone know how you are taxed if you decide to buy? capitalized cost or residual? One last question. Can you negotiate the price of a vehicle before signing the lease? Thanks
  • I am so glad I found this forum because I haven't been able to find any guidance about this anywhere else.

    I want to know whether it's worthwhile to try and flip a profit when my lease ends since my mileage is quite low, and if so, how exactly to go about it. Here are the details:

    2001 Acura 3.2 CL, 30,000 miles, clean condition, gold color, zip code 91604. Lease residual: $14,515.

    Now here's my first point of confusion. According to Edmunds, the private party price should be about $14,983. But running the same query on Kelly's (using "Good" condition, which seems to be the equivalent of "Clean") brings a private party price of $15,905. Why such a big disparity?

    I've got a bunch more questions but I'll wait to hear your initial thoughts.
  • kyfdxkyfdx Posts: 133,873
    Post details about your car here:

    jginbama, "Real-World Trade-In Values" #25282, 28 Feb 2005 11:02 am

    I think you'll find that flipping your car will not make you any money..

    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • Maybe I should have been clearer -- I'm talking about a private party sale, not a trade-in. So should I still post my details in that section?
  • kyfdxkyfdx Posts: 133,873
    Sure.. just explain what info that you need... Terry will tell you what you can get in trade, and what would be a fair private party price, as well...

    Just follow the template in red at the bottom of the discussion, and give him as much info as you can about the car..

    regards,
    kyfdx

    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • deangelideangeli Posts: 1
    The lease on my Q45 is about up. I called Infiniti Financial Services and asked them it they would sell me the car for less than the stated residual. They said they don't deal and that I should just go see the dealer if I want to buy the car.

    Has anyone gotten IFS to deal? Would love to know.

    Thanks,

    Dean Mixon
  • bodble2bodble2 Posts: 4,519
    Hmm...I had thought that it IS the finance people that you should deal with (and not the dealer) if you want to negotiate on buying at lease end.
  • stkntrafficstkntraffic Posts: 172
    Hi,
    I leased a 02 Maxima, and now have less than 30 days left on the lease. The buyout is $14.5K + tax. Calling around to dealers, nobody offered more than $12.5 for the car. So to me, that's really what the vehicle is worth. The lease is thru SouthTrust, and when I spoke to them a month ago, they wouldn't deal.

    The car is flawless, and I'm just under the mileage. Do you think the closer it comes to the end of the lease, the more SouthTrust will be willing to deal? I'm kind of hoping they take a firm stance, I'd really like to lease a new BMW, but the wife wants me to keep the Max if the price is right.
  • rroyce10rroyce10 Posts: 9,359
    ...... South trust will negotiate (properly done) .. I also need a complete description of your vehicle, model, miles, options, color, location and condition -- you can drop that over at Real World Trade-in Values ....



    Terry.
  • aprilhaprilh Posts: 2
    2003 Forester lease ends in July - We're at 56K - well over the 36K! The lease-end price on the contract is $11,300. What is the best strategy for our end of lease negotiation? This had been a great car for our Vermont winters, and we wouldn't mind buying at the end if we have to. Thanks, April
  • darthkendarthken Posts: 29
    2002 CRV EX AWD, lease ending in August. Buyout price is low: $13,000. Edmunds estimated trade-in value is $15,200 (low mileage on the car, great condition). So in theory I have around $2,200 in "equity" in the car. Lease is through Bank One, not AHFC.

    I'd like to take it to a dealer and use it as a "trade-in" on a new Odyssey. Was told by a salesperson that it's no problem, they do this all the time, they will take it as a trade-in and credit me the difference between the trade-in price they offer (obviously to be negotiated) and the buyout price.

    Any special tricks to watch out for? Any fees, taxes, etc that would eat up my $2,200?

    Sounds almost too easy ... if true, I would just have to post over on the "trade-in values" board to get a good estimate from Terry, and I'd be all set.

    Thanks!
  • kyfdxkyfdx Posts: 133,873
    Edmunds trade-in is probably a little high.. So, figure closer to $14K.. and.. August is three months away.. figure another $1000 depreciation by then..

    If you want to trade now, you have to call the bank for the current payoff.. they'll want more than what the residual value is, in August..

    In theory, this will work.... but in practice, it usually doesn't.. Actual trade-in values are notoriously lower than what is published on Edmunds or KBB, etc..

    It could happen... but, I doubt it.. And, I also have an '02 CR-V EX..

    regards,
    kyfdx

    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • darthkendarthken Posts: 29
    Thanks - so really, there's no trick, it just comes down to "what's your trade-in worth?"

    Still, it's frustrating, because '02 CRVs with low mileage in my area are listed on AutoTrader at $18,000 ... and up (from dealers). Even if they take $16k for them, that's $3k above my buyout price. Seems like a lot of $ to leave on the table!
  • kyfdxkyfdx Posts: 133,873
    Well.. the car dealer has to make money on a used car... he can't pay you what they sell it for....

    If you could sell it yourself for what they do, then you would be set.. But, they provide financing, etc, that you just can't do.. (Selling a used car for $16K is a tough market). Plus, if you buy it to re-sell yourself, then you have to pay sales tax on it first, eating up any potential profit..

    Don't be frustrated... you rented a car for a specified period of time for a reasonable price.. You really aren't leaving any money on the table... it just appears that way... unless you want to be in the car business..

    regards,
    kyfdx

    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • darthkendarthken Posts: 29
    Thanks for all the help. It's no big deal, although now I can't shake the feeling that the original buyout was too low, thus I was effectively "overpaying" every month on the lease. Ah well.

    Now just have to decide whether to get another lease on the Odyssey, or buy it this time. Better get over to the lease v. buy boards ...

    Cheers,
    darthken
  • isellhondasisellhondas Issaquah WashingtonPosts: 20,225
    If you think the residual is so low, you should think seriously about just buying it and keeping it! Probably a very smart thing to do.
  • darthkendarthken Posts: 29
    You're right - and I'd love to. But with child # 2 on the way in July, we will be seriously short of room in the CRV!
  • rroyce10rroyce10 Posts: 9,359
    ...... I don't know your miles or the location, but Isell is right ... ya gotta kinda forgive Kyfdx though, he's got Bimmer brain .. after a few trips to the service department he'll come out of his coma ..l.o.l...

    These CRV's still do some stupid money ... trade side, the 05 SE's are doing the super tall $23's with short miles - and the super clean 02 Ex's with miles in the 35ish range are seeing the super tall $14's low/mid $15's .. I'm guessing, but they probably will be doing the light side of $14 come fall ..... at least you have something to think about .... good vehicles.!

    Terry.
  • kyfdxkyfdx Posts: 133,873
    I might have "bimmer brain"... but I also own the same exact car that he is leasing... An '02 CR-V EX ... (you can find it right in my bio).

    And, I have a long memory... I was basing my estimate on one of yours from 4 months ago...

    rroyce10, "Real-World Trade-In Values" #24309, 12 Jan 2005 6:45 pm

    Also, my point wasn't that the buyout price wouldn't be a good deal.. Just that it would be hard for an individual to make money on the car, taking into account selling expenses and taxes... or even trading it, for that matter.. He says he doesn't want the car... I doubt he'll make money trying to flip it.

    I learned everything I know from you.... ;)

    regards,
    kyfdx

    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • rroyce10rroyce10 Posts: 9,359
    .. **I learned everything I know from you.... ** ....l.o.l....

    I knew that would get a rise out of ya, I just didn't know how long it would take, and yes I do remember your CRV ...

    I may forget birthdays, paperwork, dentist appointments, where my keys are, but I never forget a vehicle ... ......... it depends on the dealer (and the time of the year) but if they will show it as a trade it might work out for him ....

    Terry.
  • isellhondasisellhondas Issaquah WashingtonPosts: 20,225
    I don't understand. Why would you not have enough room for two adults, two kids and a bunch of stuff?
  • darthkendarthken Posts: 29
    It's the lack of a third row that hurts, since the whole 2nd row will be taken up by our 2 car seats. Say my wife wants to take her friend and the friend's child somewhere. You have 2 adults and 3 car seats - not really possible in a CRV. Or say the grandparents are in town and we all want to go somewhere - need the 3rd row of seats.
  • isellhondasisellhondas Issaquah WashingtonPosts: 20,225
    Sounds like you need three rows of seats!
  • Hello,
    I have a lease on a 2002 Ford Winstar that comes due on June 8, 2005. I have a relative that is interested in purchasing this vehicle. Generally, what is the process and what are the fees that are involved. Also, would you know if there's any negotiation room in the contracted buy-out price with Ford?
    Many thanks.
  • danf1danf1 Posts: 935
    In order to buy it you must contact the bank. Check your original contract to see if they have any purchase option fees. You can buy it at the end for your residual plus any purchase option fees that are on your contract, plus tax and tag. Make sure thet it is worth more than the purchase price before you buy it. As far as negotioating your price, it can't hurt to try. I would guess that the residual was set high at the time of lease inception, so it probably isn't worth what your residual is. If that is true then they should definitely be willing to negotiate.
  • HELP!! I have a leased 2003 Honda Accord EX. The lease will end in August/September. I have already been to a dealership and my credit union for quotes on rates if I should purchase or lease another vehicle. The main reason I considered buying is because I do not want to get stuck in the leasing cycle, I want to own my car. On the other hand, I considered leasing again because my husband has been out of work for a year now and all of the bills fall on me now(mortage note, utility bills, etc.) I also considered downgrading to a Honda Civic, BUT I LOVE THE SPACE THE ACCORD OFFERS compared to the Civic!! My main priority is a lower monthly car note, but I don't want to give up the space of the Accord. Since I've had this vehicle, it's been hit twice in the rear (once in the front, which was caused by being hit one of the times in the rear), but no engine damage (The car has been repaired every time). The car is in very good condition with the exception of normal wear and tear (dings, scratches, etc.) I get regularly scheduled oil changes and maintenance, but I drive an average of 46 miles/day to work and back home. I have a 3 year lease plan with 15,000 miles per year. Currently, there is a total of approximately 42,300 miles on my car. I would get a better deal buying if I go through my credit union (to buy - 5 yrs. ($300, 0 down with a 4.75% interest) the dealership is telling me with a buying plan of 5 years it would cost $330/month with an extended warranty costing $1600 or $1700. I have to find out if there are extra fees included, not sure.

    MY DILEMMA: SHOULD I PURCHASE MY VEHICLE OR LEASE ANOTHER VEHICLE CONSIDERING MY CURRENT SITUATION (HUSBAND BEING OUT OF WORK) AND THE CAR'S CONDITION (WILL IT BE OF MUCH VALUE ONCE I PAY IT OFF AND TRY TO RESELL)?????????? PLEASE HELP!!
  • stickguystickguy Posts: 34,048
    I would try to separate the lease from the equation. That is, figure out what the Accord is worth as a used car. Then look at the residual (what you can buy it for). from that, decide if you want to buy/lease a new car, buy THIS used car, or get another used car.

    One nice thing about leasing (as you will shortly find out) is that accidents don't cost you, if the repairs are done correctly. You turn it in and walk away. However, they can be a big hit when you sell a used car (and should work in your favor if you bu one).

    IMO, I wouldn't touch your car if it was for sale, since it has effectively had 3 serious accidents. Plenty of clean off-lease Acords out there that haven't been smacked.

    Since Accords tend to have a pretty high residual, I highly doubt the buy-out price is going to work in your favor, especially considering that the value has been diminished quite a bit by the accidents.

    You need to figure out your finances, but I would say either get a different used car (maybe something cheaper than an Accord), or lease a new one (there are some great LX deals right now, if you can live without some of the goodies). At least the lease will give you cost certainty (unlike a used car), but you will be stuck with it if your financial situation goes downhill.

    Plus, even a used car will require some amount of $$ down.

    2019 Acura TLX A-spec 4 cyl. (mine), and 2013 Acura RDX AWD (wife's)

  • bjames1bjames1 Posts: 3
    2003 VW passat wagon turbo ( 1.8?)... , purchase price in 2002 was $24500- i paid $ 12000 CASH with residual of $15700. I would like to purchase but dont want to pay more than $12500-13000.( CASH ) Good news is 10,000 miles in 3 years, bad news is fender bender... i have insurance check to pay for damage but wonder if i should fix damage before the end of lease, or if damage might encourage VW to negotiate. ( should i do private repair or go to dealer?) lease is with VW dealer.
    all help appreciated:
    how to negotiate lower purchase price??
    when and where to fix the ( 1400 damage- scrape to passenger front fender)??
    any other input! thank you ??
  • bjames1bjames1 Posts: 3
    when lease is up, how can one avoid dealer and "buy" directly from volkswagon? is this likely to save $$$ thanks, bj
  • I have leased this car for 66 months. Got stuck on a web lease .. Anyway, I have 60000 miles and the want $19,000. to purchase. I have dent in my front bumper and 2 tires are kind of worn on edge (they've been replaced before. The residual on lease was 22,000, but they sold it to bank of West who I negotiated the $19,000 with. I've already paid 34,980 in payments. I love the car, but it seems like a lot to pay for an older car - even a Lexus. They don't even sell 2000's as certified used. I need some opinions. Thanks. My lease ends July 7th. Not much time left.
  • rroyce10rroyce10 Posts: 9,359
    ...... I don't have much of a description here .... 2wd/4wd.?

    If it's a 4wd and depending on where you live - and if it's semi-clean, and if it only needs $700/$900 worth of "stuff" ... then they will probably see $16,5/$17,5 range at the block ...... try (in a nice way) to negotiate with a decision maker and see what they will do ...

    I've seen clean 00 125K 4wd RX300's do the high $10's, low $11's .... they're stronger than the 101st Airborne in a fire fight .......



    Terry ;)
  • kyfdxkyfdx Posts: 133,873
    If $19K is the number, just say no....

    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • bjames1bjames1 Posts: 3
    if sold at auction, what is block price for 2003 VW Passat Wagon 1.8 turbo -automatic, power windows, locks etc. perfect condiditon and low mileage? thanks,bjames1
  • kyfdxkyfdx Posts: 133,873
    Post your message here..

    Real World Trade-In Values

    Use the template at the bottom of the page, and give lots of details..

    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • mm67mm67 Posts: 2
    I have a 2003 Audi A4 and the lease is up in Dec '05. My parents would like to buy the car at that time for use during retirement since it's a great car w/ low mileage and the residual is a fair price.

    Audi Financial says that I have to officially buy the car first (even if it's with their money) and then "sell" them the car myself (basically a title transfer). The catch is that my parents need to finance the purchase and I do not have the luxury of possessing gobs of money to act as their lender. I heard from someone that other companies will let the lessee sell the car to another party (even non-family), transfer the title, etc. w/o a problem. Has anyone else heard of this? Can I get Audi to do this?

    The other wrinkle is that the car is currently registered in NY (where I used to live before moving to CA) but I am keeping it now at my parents' house in MA. Should I bother transfering the registration, insurance and stuff to MA in preparation for this transaction? I'd prefer to avoid paying a bunch of different fees 2X if I can help it.
  • steine13steine13 Posts: 2,715
    If your parents can't afford to buy the vehicle for cash, they should not buy it.
    These are not cheap cars to maintain, and as soon as something silly like the automatic climate control computer goes, they will be very sorry.
    It's still going to be a $20 car I'm guessing -- you didn't give any specifics -- and your folks would be much better off spending that kinda money on a new car, with a warranty that lasts (hopefully) until it's paid off. Camry or Accord comes to mind... maybe a loaded-up Corolla... nice car, same size. Mazda3?
    Retirees on a fixed income have no business buying 3-year-old German near-luxos, IMO.

    I don't mean any disrespect, but if you think it over, you may see I have a point. You just enjoyed the three best years of that car's life...

    -Mathias
  • kyfdxkyfdx Posts: 133,873
    I pretty much agree with Mathias.. But, the Audi will have warranty for one more year..

    He hit the nail on the head, though.. This isn't the kind of car you should buy as a retiree... if you don't have the resources to pay for it upfront.. at least temporarily...

    Nothing wrong with getting a loan for it, if that helps you budget... But, if they don't have $20K cash, and they are retired... definitely the wrong car..

    If you decide to go through with this hare-brained scheme.. ( ;) )... then ask the dealer where you are acquiring your next car to assist you... You can trade in the Audi to the dealer, and he can then sell it to your parents... Most dealers will do this for a few hundred over their costs..... (and nothing illegal or unethical about it).

    regards,
    kyfdx

    Did you get a good deal? Be sure to come back and share!

    Edmunds Moderator

  • rroyce10rroyce10 Posts: 9,359
    ........... I gotta agree with these guys ...

    Audi's are nice vehicles .. as a matter of fact my g/f is driving an A8 right now - "but" when she rings up $3/$4,000 miles on that dude I can take her out of it and put her into something else and sell it with the balance of the factory warranty ..... in the meantime, if the air conditioner coughs up a lung or there is an electrical problem with your parents behind the wheel, then your going to look like an assassin and a enemy of the family .....

    Cars like Bimmers Benz's and Audi's can be Veeeery expensive just for "standard" repairs and lets not forget the "k" service .. this doesn't make them bad, it just makes them expensive and not for the "light" of heart (or pocket book) ..... lots of nice vehicles on the road (except Hyun/Kia) so let them look around and get some idea's ...



    Terry :cry:
  • mm67mm67 Posts: 2
    Ok, thanks for the input -- however overwhelmingly negative, but honest.

    I'm a little surprised b/c I thought audi's were better built than what you guys are suggesting. Or at least that there was fairly low risk of serious/expensive problems once the 4yr warranty ran out.

    Just wanted my folks to have a nice car to tool around in, but will rethink that.

    Thanks again
  • isellhondasisellhondas Issaquah WashingtonPosts: 20,225
    I can't think of more anything more troublesome than an Audi as the miles add up!
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