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General Questions about Leasing Vehicles



  • Kirstie_HKirstie_H Posts: 11,042
    Good question - easiest way to explain is
    negative equity = upside down = owe more than it's worth.

    If I have a car that is worth $20,000 as a trade-in (market value), but I still owe $22,000 on the loan, then I have $2,000 negative equity. If I trade it in, the dealer will add that $2,000 to the price of whatever vehicle I purchase, meaning I will be financing $2K more than the new car is worth...
    I can pay off the $2,000 in negative equity myself.

    This applies mainly to purchases. Leases are weirder animals. If you turn in the vehicle at the end of your contracted lease term, there is no equity, negative or postive. You're out. You're done. If you want to turn in the car early, it can get ugly - sometimes you have to pay all of the remaining lease payments PLUS the residual amount in order to be done with the vehicle. Sometimes, if you buy or lease a vehicle from the same manufacturer, you can get a bit of a break on this, but not always.

    If you pay too little on your lease payments, after awhile the finance company will likely do a repo!


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  • bodble2bodble2 Posts: 4,519
    "If you pay too little on your lease payments, after awhile the finance company will likely do a repo!"

    Actually, when I said "you've been paying less on the lease than you should", I didn't mean paying less than the contracted monthly payments. I meant the residual was set too high in relation to actual depreciation. But I understand what you said about "negative equity" applying more to a purchased, rather than leased, vehicle.
  • Kirstie_HKirstie_H Posts: 11,042
    Yeah, if you do all of the things that the contract says you're supposed to do (right payment, under the mileage limit, keep it til the term is up), there's no such thing as negative equity... which is why many people who don't put on a ton of miles and who like to get a brand new vehicle every few years choose leasing instead of purchasing.

    If the residual value (i.e., your purchase price at lease end) is set too high (meaning that when you turn it in, the market value is less than the residual value), then that's someone else's problem, not yours.

    (I realize that you may already understand this, but now the detail is here for anyone else who may have the same question)


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  • kyfdxkyfdx Posts: 70,564
    Negative equity at the end of the lease is a great thing!! Assuming that you are within your contractual limits, that means you made out better by leasing instead of buying!!

    It's not such a good thing, if you are looking to get out of your lease early. If one thinks that they might not be able to fulfill the terms of a lease, then they shouldn't lease.

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  • casolorzcasolorz Posts: 87
    Interesting, I will be sure to check it out. I would love to get an RDX just because the dealer is the same as my jag and the service guy is great. I have often had trouble with service guys in the past so thats pretty important to me.
  • do any of the car companies offer a 1 year lease?
  • What are the best small SUV offers out there right now? I don't really care if its a kia or a bmw, I will endup getting it fairly loaded eitherway and my payments can go as high as 450/month but I do want a fairly good bang for the buck!
  • bodble2bodble2 Posts: 4,519
    Good bang for the buck? Probably something from the Koreans, or perhaps the Mitsubishi Outlander.
  • cccompsoncccompson Posts: 2,388
    You can lease a vehicle for any period but the odds of ever finding a one year lease with remotely favorable terms is very long indeed due to heavy initial depreciation.

    I once stumbled into such a deal - '95 Jeep Grand Cherokee Laredo with an MSRP of $28,xxx for $299/Mo. for 12 months/12,000 miles with $995 out of pocket due at inception. Supposedly, the only reason for the deal was that Chrysler (or the dealer) had already cut a deal to ship 'em to the Mideast a year later.
  • bodble2bodble2 Posts: 4,519
    Some oil baron in the mid-east wanted used Jeeps? :confuse:
  • Saves a fortune on Import taxes....
  • bodble2bodble2 Posts: 4,519
    I just didn't think money is a concern with those guys. :P
  • It is when it comes to taxes. They are always looking to reduce the amount of money going out for taxes.

    I sell a couple of Used Range Rovers a year to people who are going to export them. Depending on the country they can pay half the taxes or even more by buying a one or two year old car vs a brand new one. This one guy was telling me that when he exports a car to Dubai, at least I think it was Dubai he has to pay 100% duty on the purchase price of the car if it has less then such and such miles. He only has to pay 50% duty on cars with higher mileage.
  • cccompsoncccompson Posts: 2,388
    Ah, well, import taxes would explain it. Thanks, I never understood what was going on.
  • I have been looking to buy a new to me/used vehicle. I came across a "private owner" selling a vehicle. The problem is is that they are leasing the car. They have 2 years left on the lease but are trying to sell it. How does this work? I am so confused on the process. He told me we could go transfer the title to me. can anyone help?? Is this possible. What are the "be aware ofs"..??
  • volvomaxvolvomax Posts: 5,274
    Yes,you can buy a leased vehicle.
    It is the same as buying a vehicle with a lien from a bank loan.
    With one exception.
    Obvioulsy, the bank has to be paid off,so make sure that happens.
    Also, on leases there is usually sales tax on the payoff to consider.
    Make sure you have all the numbers sorted out.
  • bodble2bodble2 Posts: 4,519
    But can lucy not simply take over the lease, and not buy the vehicle outright per se? I see ads all the time "to take over remaining lease...."
  • volvomaxvolvomax Posts: 5,274
    That is an option(usually).
    The lease company has to be on board,and you have to be creit worthy to assume the lease
  • Hi there. I have a Mercedes C230. I hate it. It's too low to the ground and I keep ruining the spoiler due to curbs :). Anyway, I want to get out of my lease early. MB says I owe $6448 to get out. What's the best way of handling this? Is getting another MB my best option?

    I just want a new car (really I'd prefer something other than a MB) for about $500 per month which is my current payment. I have no idea how to calculate what the cost of the car would be to get my payments at that rate and roll in my negative $6k. Bleh. By the way, I drive 15-20k per year. So if there's a way I could get in a new car and NOT lease, I'd love it.

    Thanks in advance!
  • tidestertidester Posts: 10,059
    Why don't you just hang in there for the last 12 months then buy into a new vehicle without the burden of financing your existing $6,000 debt?

    tidester, host
    SUVs and Smart Shopper
  • I think I'm going to have to. The other IMPORTANT thing I left out of the post is that I am at my mileage allotment now. Eek. I guess it's 6 in one, half dozen in the other.
  • tidestertidester Posts: 10,059
    I am at my mileage allotment now.


    tidester, host
    SUVs and Smart Shopper
  • Thanks for your reply- I accidentally neglected to thank you in my previous response :)
  • volvomaxvolvomax Posts: 5,274
    There is no simple answer for this.
    If you don't want to lease, $500/mo is roughly $25,000 financed for 5 yrs.
    Tax license,inequity,everything.
    So, you have to buy a car in the teens in price,then add your $6k to Mercedes.

    Since you are driving a Mercedes,I don't think you are going to want a sub $20k car.

    Otherwise,try to find a car w/ decent lease incentives.
  • peetertpeetert Posts: 124
    Looked for this topic, found one question from this spring, but no reply, so I'm gonna try my luck.

    We're looking to get into a newer car and one of the options I am considering is leasing a higher end used vehicle. I've looked around but cannot find much information on this topic. What I'm really trying to do is figure out if this might be a viable option for us. My guess is alot of the depreciation has already been eaten up, so the depreciation won't be that bad, but I'm sure there are other gotcha's, like higher interest rate & money factor.

    A real-world example would be great. We're contemplating an off-lease XC-90 for comparisions sake.


  • volvomaxvolvomax Posts: 5,274
    I think I answered your question in another forum.
    Bottom line is that new car lease programs are far more aggressive.
    The residuals are higher and the money factors lower on new cars.
    On used cars,you are paying bank rate money factors and the residuals stink.
  • cccompsoncccompson Posts: 2,388
    Volvo is offering a good lease deal right now on the '08 XC 90:

    MSRP - $44,725 for $369/Month for 24 months with about 3K down with 10.5K miles per year.

    I called a local dealer about this yesterday to get further particulars but he was, for whatever reason, unwilling or unable to provide the cap cost, money factor, or residual figures on this offer.
  • volvomaxvolvomax Posts: 5,274
    Hmm. I thought it was $399 + tax w/ $3869 due,plus local taxes and registration fees.
    It is a new offer,so he may not have the particulars,esp if you did not quote it correctly.
  • cccompsoncccompson Posts: 2,388
    No, the figures were directly from a (very large) ad they ran in the local paper yesterday. Actually, the same offer shows up here on edmunds (incentives) so it's a Volvo offer. It's possible, though, that this could be a regional thing.

    Interestingly, during the call he asked for my email to send the figures. His claimed reason (today) for not so supplying the numbers was that his finance manager would do so only when I came to the store.

    Dealers that play games like that will have to find their customers elsewhere.

    I did visit a competitor today to look one over - nice car -and confirmed the offer.
  • Probably because Max is in AZ and CC is in Ohio IIRC.

    Volvo is the King of regional lease programs.. I remember someone out in I think it was the west coast flip out because they couldn't get the S70A Sign and Drive deal that we had in the NYC metro area back in 98.. S70A with cold weather pkg, $299/mo+ tax, only plates due at signing... waived 1st pmt, bank fee, sec dep, etc..

    In Missouri, for example, the deal on the same car would be like $340 with 1st payment upfront, but they had 3.9apr and we didn't.
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