residual value implications for lease buy-out

beggmanbeggman Member Posts: 1
edited July 2018 in General
I have 2 questions re: the residual value of a lease:

1) Is the residual value stated in the lease the price which the dealership is required to sell the car to you, if you choose to purchase the car at the end of the lease? (minus taxes, fees, etc., of course).

2) The residual value on a vehicle I'm leasing appears to have been underestimated by the dealership. The lease ends in 2 months, and assuming the answer to 1) above is yes, I'm thinking of purchasing the car since the residual value is such a good price. However, a family member of mine is interested in purchasing the car and I'd like to allow them to purchase it at the same price. Is there a relatively straight-forward way to do this? Can the family member simply buy it directly from the dealership at the residual value price? Or, do I need to purchase it first and then turn around and sell it to my family member?
Thanks.
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  • kyfdxkyfdx Moderator Posts: 197,932
    beggman said:

    I have 2 questions re: the residual value of a lease:

    1) Is the residual value stated in the lease the price which the dealership is required to sell the car to you, if you choose to purchase the car at the end of the lease? (minus taxes, fees, etc., of course).

    2) The residual value on a vehicle I'm leasing appears to have been underestimated by the dealership. The lease ends in 2 months, and assuming the answer to 1) above is yes, I'm thinking of purchasing the car since the residual value is such a good price. However, a family member of mine is interested in purchasing the car and I'd like to allow them to purchase it at the same price. Is there a relatively straight-forward way to do this? Can the family member simply buy it directly from the dealership at the residual value price? Or, do I need to purchase it first and then turn around and sell it to my family member?
    Thanks.

    1) The dealer doesn't have anything to do with your car, once you lease it. The leasing bank owns it, and that's who you buy it from (even if they use the dealer to facilitate the process). Besides the residual amount, some lease contracts have an additional purchase option fee. I've seen $150-$300, depending on the bank. This would be in your lease contract.

    2) The bank set the residual amount, and they own your car. You are correct, if the car is worth more than the residual, then it could be a good buy.

    Generally, you can't substitute someone else to buy the car for your contract option. You have to buy it, then re-sell it to that person. (meaning, you might have to pay sales tax, and so will they). In some states, you can transfer a car to an immediate family member without sales tax, but you should check your local rules.

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