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General Questions about Leasing Vehicles



  • sebring95sebring95 Posts: 3,238
    Sure. The car has a fair market value and the lease has a buyout amount. You can call the finance company and get that buy-out amount at any time. It's usually a combination of the stated residual/buy-out plus remaining payments, less some finance charges, plus a few fees. It varies greatly from company to company but regardless there is a "buy-out" amount. If the buyout is less than the fair market have equity.

    The easiest way to capitalize on the equity is to trade the vehicle in on something else. You could also take it to a dealer that will buy them without trading (Carmax for example). In either case, they will basically buy the vehicle from the leasing company for the stated buy-out amount. Equity can be applied to your trade or refunded to you.

    Another option is to buy the vehicle out early yourself. This usually requires you to pay sales tax on it and by that point you may not be able to get enough on a private sale to make any money. But with enough equity it's certainly possible.
  • Thanks for that explanation. I thought that's how "equity" was figured but I was sure.

    I called Ally last week or so and got the buy-out because I didn't want to go to a dealer without having this figure. Unfortunately, we don't have any equity in our vehicles. We have 8 months left on the leases and with the buy-out plus the remainder of payments left ($2000 on each) dealers don't want them right now because they're not going to make any money on them.

    We've pretty much realized that we need to fulfill our leases and then get something else.
  • sebring95sebring95 Posts: 3,238
    Some GM's are very tough to get out of early, even with low miles. They seem to set the residuals above reality in most cases. Makes for a cheap lease but more difficult to get out of. I thought you had an Acura but looked back at your posts and realized it was an Equinox. Very tough to keep a decent resale value on a vehicle that's so popular on the fleet side.
  • Using your info to see if we have any equity, which we don't, I'm concerned about what happens in 8 months when the leases are up. Will we be in the hole on these???

    Currently, the buyouts are approx. $20,000 each, which includes what we still owe. The current TMV is $18,400 each. In 8 months that TMV will be how much less?? Who knows? According to our lease the residual will be $13,241.80 and $13,377.20.

    Now, I'm back to my original question....should we lease again???...or should we purchase a vehicle??

    When we got the Equinox's they were selling like hotcakes and you couldn't find them any where. We were going to order one with the upgraded package (leather, etc.) but it would have been months before we got one so we took what he could get in. Anyway, they are all over the place now and I fear their value has gone down. Although the dealers around here are asking $21,000 for 2011's like ours.

    This was our first experience with a lease and it was an easy deal. Our friend has a dealership and I had used the lease formula before we went so I knew what we SHOULD pay. He came within a few cents of what I had figured and I hadn't even told him my "goal" payment. He was very fair with us. Maybe we'll have to go see him about a car again :)
  • sebring95sebring95 Posts: 3,238
    The vehicles value at the end of the lease makes no difference. You turn it in and walk away.

    I'm not sure your numbers sound correct unless they have some sort of massive buy-out penalty (possible with Ally). The other possibility is that a dealer could have a different buy-out amount than you. I have seen that with GMAC (ally's predecessor) where a GM dealer would have much more preferential buy-out amount.

    I say the numbers don't add up because if you take $20k less the residual of $13k and divide by 8 months....that would sound like your payments are somewhere around $800/month. Surely you're not paying anywhere near that for an Equinox. You may need to actually go to a dealer and have them check on a dealer buy-out.
  • Holy Moly!!!...$800/month for an Equinox??? No way!! I could lease an Escalade for that..ha. We're paying $255 and $278.

    I said $20,000 because when I called for the buyouts it was $17913 and $18013. One dealer told us they would have to buy them for $20,000 each. He said they would have to add the remainder of the lease payments ($2000 on each) to the buyout figures and that would be the $20,000.

    Could Ally be tacking on a penalty for early buyout? Is that why it's so high?
  • sebring95sebring95 Posts: 3,238
    edited August 2013
    Perhaps the dealer was confused that the buy-out number you gave him was the lease-end number and not TODAY. If Ally gave you those numbers as today's buy-out....that should be it. It sounds like you're closer than you think...with only 8 months left you shouldn't be too far off even for something with mediocre resale value.

    Also, with the lease payments you mentioned it sounds like you put money down. I would recommend to NEVER put anything down on a lease. They may tell you you can't do that, or it's not part of the "promotion" but this is just math and they can make it happen. Yes your payment will be incrementally higher but it's still a good practice.
  • Actually, the dealer called Ally while we sat in front of him. I didn't give him any figures I already had. That was at a Ford dealer. Maybe they didn't want 2 Chevrolet's..ha.

    Yes...we did put money down on both leases. I didn't know this tidbit before we went or I could have had $$$ in my pocket!

    Well, we'll see what happens in a few more months. Maybe my son has the right idea. He never buys a new car and always pays cash.

    Let's face it...buying or leasing is never a win-win situation for the buyer/lessee.
  • sebring95sebring95 Posts: 3,238
    Leasing is generally the most expensive option as well. It's a convenience (sometimes) and basically an easy way to lock in expenses over a period of time. Many folks use it because it's the cheapest payment...but that doesn't usually mean the cheapest.

    I have done quite well over the years doing lease assumptions. Basically someone else puts down money and drives very few miles for a period of time and then for various reasons has to get out of the lease. There's very few good deals like that out there to find though...most people trying to get out of leases are in up to their eyeballs and are stuck because nobody wants to take over a crappy lease.

    I would typically say cash is also the cheapest option, although given the super low interest rates I'm willing to risk 1% or so and invest the cash elsewhere.
  • ghstudioghstudio Posts: 970
    Leasing is not always the most expensive option. If you can find a 0% lease (and I've done that on an infinity), it's better than financing. If there is dealer cash available, sometimes a lease can be really inexpensive. I'm driving a 2011 MB E350 diesel, fully loaded...a $60K car and I put no money down (no trade in either) monthly bill is just over $500 a month for 12K a year. Why? It had a 77% residual.

    You really have to look at all the options available. You have to understand leasing and things like multiple security deposits, residualizing maintenance and so on. I've lease my last 5 cars for 24 months each. I get a new car every two years with no trade in troubles. It's been a great way to own cars.
  • kyfdxkyfdx Posts: 66,807
    I was so close to doing an E350 diesel lease in 2011.. Similar numbers..


    Prices Paid, Lease Questions, SUVs

  • sebring95sebring95 Posts: 3,238
    That's why I said generally. I've found some ok deals at times...usually models they're trying to ditch and/or something I don't want. Pretty rare to find an example that doesn't work without investing cash savings and be able to use the extra tax deduction on some luxury vehicles. Try it on a non-luxury vehicle and the probability is very close to zero.
  • That's what my husband and I were just saying...just try to find those kind of deals with a non-luxury vehicle. Dealer don't want to give the buyer any more breaks than they have to.
  • Recently leased a 2013 Tiguan SE 4Motion w/ sunroof and navi. Original deal was $2500 out of pocket, and $325/month for 36 months. I wanted to pay more upfront, so final (actual) deal was $3000 out of pocket, and $315/month for 36 months. Basically, I paid $500 more today, and ended up losing approx. $140 NET/overall.

    I don't know why I didn't run the math in my head before signing, but does this even make sense??? I feel like a dum-dum, and cheated. I spoke with a manager at the dealership, and he said that the math was right. And that nothing could be done.

    What should I do???
  • sebring95sebring95 Posts: 3,238
    edited August 2013
    Nope. Your payment should have decreased by MORE than $500. How much would depend on the interest rate. For future reference, putting money down (any money) is a bad idea on a lease and should be avoided at all cost.'s the problem: How far along was this "original deal"? Do you have paperwork to backup this offer of was it just a number circled on a piece of paper? I say that because without some sort of proof to compare the two sounds like you've been bamboozled and don't have a leg to stand on to get out of the deal. Ultimately you signed the deal you have.
  • Did my first lease yesterday. 12k per year for 3 years. At the dealership I thought it was a good fit for me because on my other car I did a little over that BUT drove from NJ to FL twice which I do not plan on doing again.
    I was up all night thinking about it and I think I made a mistake. I think 15k would fit me better.
    I just signed YESTERDAY, today is Sunday so I can't call till tomorrow. Can I change my terms? I realize I will probably have to pay more monthly but I think it might be worth it not to go over the mileage AND or be stressed about driving far for 3 years!!

    My husband bought a truck a few months back (no lease) and he had 3 days to change his mind. I'm hoping it's the same way with a lease.
    Any input?? THANKS!
    Its a 2013 Sonata
  • kyfdxkyfdx Posts: 66,807
    Have you taken delivery? If not, then it's very easy to have them change the terms, as the deal isn't done until you do..

    But, even if you have taken delivery, I'd just show up at opening time on Monday, ask for the finance person or sales manager, and just tell them that you really need 12K/yr, rather than 10K.. It's doubtful that there is anything keeping them from making that change (other than just not wanting to do the work)..

    A change from 10K/yr to 12K/yr decreases the residual by 1%, in almost all cases. If your Sonata has an MSRP of $30K, that will add $300 to your depreciation (but, decrease your finance charge, slightly).. At most, that should add $8.34/mo. + tax to your lease payment. It should actually be slightly less than that.. Also, a corresponding amount added to your due at signing (for the higher 1st month payment).

    If they say okay, but it's a lot higher than that, then they are trying to take advantage of your situation...



    Prices Paid, Lease Questions, SUVs

  • Thank you for your reply. I'm actually wanting to change from 12k to 15k.
    I will go first thing tomorrow.
  • stickguystickguy Posts: 25,736
    do the math first. Not sure what your over miles charge is per mile, but if the charge for 9k (3k/year) is roughly what you will lock in, I would not do it.

    While yes, you are locking in the extra miles, you are also committing to them. And unlike going over, if you are under, they don't give the $ back!

    let's see, at $.15/mile, 9K = $1,350. divide by 36, and you get $37.50/month. So if your new payment is close to or more than that, it does not make sense.

    2018 Hyundai Elantra Sport (mine), 2013 Acura RDX AWD (wife's) and 2015 Jetta Sport (daughter's)

  • stickguystickguy Posts: 25,736
    If you signed the contract and took the car, nothing you can do. And yes, sometimes the terms don't make sense, especially on subsidized programs.

    I always look at the ads when they list options (payments based on various 4/down), and sometimes it really does end up that you pay more in total putting $ down. it is simple to divide the DP/term and see if it makes more sense to put the money in the bank (though IMO when leasing, you should always do that anyway and put nothing down)

    2018 Hyundai Elantra Sport (mine), 2013 Acura RDX AWD (wife's) and 2015 Jetta Sport (daughter's)

  • kyfdxkyfdx Posts: 66,807
    When you go from 12K to 15K, you don't pay per mile... Depending on the make, the residual reduces by either 1% or 2%... Either way, the extra miles are cheap..

    I'm pretty sure that Hyundai is like Kia, and the residual reduction is 2%... the numbers from my previous post would be doubled.. Still cheap. Under $0.07/mile...


    Prices Paid, Lease Questions, SUVs

  • I've found this webpage Fighting Change on leasing a car. Author claims that I should go with an authorized dealer (as I understand him) as opposed to a third party since the dealer will always get me a better deal since there is no middleman. I take it to understand that if I got to my local 'authorized' Honda dealer and the salesman will be able to meet and possibly give me a better deal?

    In my case it's civic lx 2013 199/month, 1500$ insurance from Honda, no disposition fee for 36/month. I would have to pay first month fee+bank fees+dmv fees. Basically 1100 down +200 each month. Do you think that's a good deal or can I do better?

  • sebring95sebring95 Posts: 3,238
    What is $1500 insurance? Regardless, $200/month is in the ballpark for the numbers you've listed. Not sure how the $1,500 insurance plays into this because if that's extra $200/month doesn't make sense.
  • eclipse2eclipse2 Posts: 64
    edited September 2013
    a 2013 G37x MSRP $48,695
    for 24 months no money down
    got him down to $41,840
    MF 0033 res $33,599
    $474.85 a month NJ tax added
  • $1500 allowance for "wear and tear" at Lease-end
  • sebring95sebring95 Posts: 3,238
    edited September 2013
    OK gotcha. I recommend putting zero down on a lease whenever possible. Honda is advertising a zero down deal on an LX for $210. That actually seems a little better than the deal you're getting but if your credit is not top-notch you may not qualify for that payment. But if you can get zero down with a payment under $225 you're probably better off.
  • my credit is probably top notch so that won't be a problem. I'm wondering how is 210 deal better than 199/month? Is it because I need to do first month+bank+fee+dmv fee with the dealer?

    thank you for the help with this.
  • sebring95sebring95 Posts: 3,238
    Yes the advertised $210 with zero down has fewer up front fees. So $11/month more x 36 = $396 compared to $800-$900 you're likely paying in fees (deducting first payment and estimated DMV fees). The main problem with downpayments/fees is that if you wreck and total the vehicle, you're pretty much screwed out of that money.
  • Never put anything down other then first months payment and tags.
    Gap insurance only covers whats owed..Look at Porsche most of those deals want 10k down.If that car is stolen next day they are out 10k
  • Do yourself a HUGE Favor! Don't buy the Infiniti QX56. Google the steering, suspension, bump steer, and issues it has. Infiniti refuses to do anything about it and says its a 'normal characteristic' of the car. It's an unsafe driving experience and it all starts kicking in about 15k miles into ownership.

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