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Lease Termination Fees and other costs

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Comments

  • volvomaxvolvomax Member Posts: 5,238
    Don't forget that you will probably have to pay sales tax on the buyout amount if you sell the car privately.

    If you sell it to a dealer, there is no tax.
    At best, you will probably break even at a dealer, dunno if it's worth it.
  • law228law228 Member Posts: 1
    Hi. My lease is up in November. I have a scratch on my car that is about a foot long. Looks like someone keyed my car or something. Should I get that repaired before I turn it in or will the dealer consider it to be normal wear on my car?
  • volvomaxvolvomax Member Posts: 5,238
    What the dealer thinks is immaterial. The Lease company will certainly hit you for excess wear and tear.
  • cinweed2cinweed2 Member Posts: 3
    I am in my 30 th month ($353 a month) of a 66 month lease for a Honda PilotEX 2007 2WD, residual value $10,176,Kelley blue blue value is 21,500, the lease is with Huntington,payoff $20,000.The Honda is in very good condition with only 12,500, I paid for $15,000 miles a year.
    This is my first time leasing,I want out.I know I am going upside down. Butcan I go to dealer and they pay off the Honda, BUY a used car and put the remainer that I owe on that loan.(Will banks due that?) And hopefully get a loan between $250/$300.
    The Honda is great, just to big, the payment to high. And I don`t like the feeling of driving something that is not mine.
    Doesn`t it make sense to get rid of it while it looks great and has low mileage?
    Any advice will be appreciated. Thank You!
  • sebring95sebring95 Member Posts: 3,241
    Best bet is to try and find someone to assume the lease. leasetrader.com or swapalease.com is the most popular sites to market the lease. If someone will assume, that will be a far better deal for you. Otherwise, you need to figure out what the real-world trade in value is before going that route. Most banks won't finance 100% or higher on a used car these days so it might be hard to do what you want to do and actually save money. Always expensive to get out of one vehicle and into another.
  • qbrozenqbrozen Member Posts: 32,891
    Honda Finance does not allow lease assumptions.

    BUT... just reread the post and see if might be with a bank.(??)
    In which case, the poster will need to check with that bank to see if they allow assumptions and/or if there are any fees/penalties involved.

    '11 GMC Sierra 1500; '08 Charger R/T Daytona; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '08 Maser QP; '11 Mini Cooper S

  • qbrozenqbrozen Member Posts: 32,891
    Are you saying you've had it for 30 months and it only has 12,500 miles total??

    First step for you is to head over to the Real-World Trade-In Values thread and find out what the vehicle is worth as a trade-in. That will let you know how far upside down you really are.

    '11 GMC Sierra 1500; '08 Charger R/T Daytona; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '08 Maser QP; '11 Mini Cooper S

  • cinweed2cinweed2 Member Posts: 3
    Yes, I have had it for 30 months,or 2 1/2 years, and have less than 13,000 miles on it. I dont drive that much, 14 miles to work and back, one short trip and Wal-Mart is less than a mile.
    Thanks for the help, I will check out the real world trade in value.
  • qbrozenqbrozen Member Posts: 32,891
    Yikes. Well, as you now know, leasing is NOT for you. You are paying for miles you aren't using.

    '11 GMC Sierra 1500; '08 Charger R/T Daytona; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '08 Maser QP; '11 Mini Cooper S

  • nolafilmnolafilm Member Posts: 12
    I negotiated the price of a 2010 honda civic lx within a couple hundred dollars of Edmunds' TMV when shopping for a lease recently. when the paperwork came, i noticed a $595 acquisition fee tacked on. the dealer explained that this was a honda charge - not a dealer charge, and the payments calculated from the original negotiated price wouldn't change (because this acquisition fee had already been factored in, and wasn't something the dealer could change). So I have 2 questions here:
    1. If I'm using Edmunds' TMV as a guideline when leasing a car, how should i deal with this fee?

    2. is this a common, accepted dealer practice for leasing, and/or was I wronged?
    :confuse:
  • jwilliams2jwilliams2 Member Posts: 910
    The Acquisition fee is charged by Honda, the leasing company. To my knowledge, all leasing companys charge an acquisition fee.

    The dealer has no choice but to include it in the lease, either paid up front, or rolled into the lease. Edmunds obviously doesn't include it in their TMV, as only leasing customers pay it. So no, you have not been wronged, and yes, everyone pays it.
  • nolafilmnolafilm Member Posts: 12
    Thanks so much. I was really hoping you'd say that - I like my dealer a lot and was bummed at the thought of them not being straight with me on this. My inclination was to say, no - I want the price we agreed upon to include the acquisition fee, but your response and the other info i found seems to indicate that that fee is unavoidable, and just part of the cost of leasing.

    thanks again!
  • tifightertifighter Member Posts: 3,592
    A 66 month lease. Learn something new everyday...

    23 Civic Type-R / 22 MDX Type-S / 21 Tesla Y LR / 03 Montero Ltd

  • justjill3justjill3 Member Posts: 2
    I am going to lease a mercedes and they are offering something when I sign that is a wear-and-tear plan. It is about $900 and offers up to $5000 worth of coverage (up to $1000/incident) when I turn in the car. So if it there is tire wear or it needs new tires then that is covered up to $1000. Or if there is a ding in the side then that is covered up to $1000. That kind of coverage for 5 things.

    Has anyone bought into this and do you think this is worth it. Also, when would I expect to need top put new tires on the car? I am leasing it for 30,000 miles/3 yrs and I can't expect they'll be bald at that point.

    Any help is greatly appreciated. This is for a 2010 C-300.

    Thanks!
    Jill
  • nlkleinbergnlkleinberg Member Posts: 17
    My lease with US Bank is ending soon and I've got two questions I thought someone on these boards could help me with:

    1. I bought the car from a dealer in New Jersey, signed a Lease Contract that had "US Bank" and "New Jersey Lease" printed at the top but the Car Dealer listed as lessor. I live in NYS, the car is registered in NYS and my NY address was listed under "Lessee". For purposes of perhaps having to file an arbitration claim, would this be considered leasing the car "in New Jersey" or "in New York"?

    2. After hearing horror stories about US Bank I called them up to get information about the lease-end inspection and the rep told me (I'm sure I heard her correctly) that in New York (and some other states I don't recall) US Bank "doesn't do lease inspections" and "you won't get an excess wear-and-tear invoice". I SUPPOSE this could be a crafty way to throw me off-guard :) but does anyone have any info to support or contradict this? I KNOW I've read of excess wear horror stories from people in NYS.

    Thanks in advance.
  • texnme2texnme2 Member Posts: 1
    I live in Missouri. I leased a vehicle and my lease term was up in August 2009. I purchased the vehicle. Am I suppose to pay personal property tax on the vehicle for 2009? I need help.
  • nolafilmnolafilm Member Posts: 12
    Not sure about Missouri state law, but i had to pay sales tax only when i purchased my previously leased Honda Pilot in Louisiana. No other taxes were due once I made the purchase. Maybe ask your dealer or a car title company, or a tax advisor/accountant in your town to see if you'd owe anything else.
  • Kirstie_HKirstie_H Administrator Posts: 11,147
    I'm in Missouri too. For tax purposes, you don't own the vehicle until January 1, 2010. Sometime around March, you'll get a declaration statement in the mail, listing the vehicles that you owned as of January 1. You're supposed to review it, make any corrections, and then mail it back.

    Taxes are assessed on personal property owned as of January 1 of the tax year. Since you didn't own it until August, your taxes for 2009 should be covered in your lease payment. You should have received a property tax statement (payments must be postmarked by today!!) - if you have any question, you should be able to call the revenue office and double-check.

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  • dgingodgingo Member Posts: 21
    I'm turning in my bmw 328i this summer, which will be close to the 36,000 miles I leased. Are there any "secrets" or must-know info. I need. Looking for any leverage I can create before I start this process. I have $1000 sec. dep., and am thinking of moving to an X3. Any advice on this process would be appreciated!

    Thx...
  • chills1chills1 Member Posts: 8
    edited February 2010
    heres my story i leased a honda civic a couple of days ago for 34 months, the insurance was through the roof due my age and because i had to get full coverage. i thought mybe ill put it under my fathers name and deal with it later. so i take the car home , sign the papers and pay half of my downpayment..... this weekend i tried to put my insurance under my fathers name but couldnt because i signed it and my father didnt cosign it. so now im screwed and cant afford my lease due to my insurance, is my lease in effect eventhough i didnt finish paying my downpayment, could i cancel the lease? what can i do? i only used the car for like 2 days! any way i can get out of it?
    thanks
  • tidestertidester Member Posts: 10,059
    I'm assuming you were approved for the lease and that makes me wonder why the lessor didn't know you couldn't afford the insurance? If you were approved for the lease and you signed it then it would seem to be in force and you are responsible for all its provisions.

    tidester, host
    SUVs and Smart Shopper
  • qbrozenqbrozen Member Posts: 32,891
    Talk to the dealership. While you can't get out of the lease, they may do you a favor and rewrite it with your father as a cosigner.

    '11 GMC Sierra 1500; '08 Charger R/T Daytona; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '08 Maser QP; '11 Mini Cooper S

  • chills1chills1 Member Posts: 8
    is there a 5 day cancelation law in new jersey because i leased the car less than 5 days ago
  • qbrozenqbrozen Member Posts: 32,891
    edited February 2010
    nope. There is no grace period in NJ.

    Why don't you just call the dealership and ask them nicely to rewrite it? It can't hurt. That is, unless what you really want is to get out of the contract altogether and the insurance thing is just an excuse... (?)

    '11 GMC Sierra 1500; '08 Charger R/T Daytona; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '08 Maser QP; '11 Mini Cooper S

  • chills1chills1 Member Posts: 8
    edited February 2010
    i called them and they told me theyll rewrite it and my father will be the cosigner, thing is if i rewrite it with my father the cosigner will my monthly lease go down due to the fact that my father has a much better credit than me? or does the previous contracts monthly payments stay?
    thanks
  • tidestertidester Member Posts: 10,059
    Why would you expect the lease payments to be reduced? You have already agreed on a price and they are doing you a favor rewriting it to accommodate you.

    tidester, host
    SUVs and Smart Shopper
  • chills1chills1 Member Posts: 8
    because i just found out that they allowed me to lease a car without me being approved! they lied about my credit!! they told me the only reason why im gona pay higher monthly was due to my low credit but i checked it out and the bank didnt even approve and i dont have a credit!!
  • chills1chills1 Member Posts: 8
    im just gonna give the car back...too many lies and cheats going on!!
  • qbrozenqbrozen Member Posts: 32,891
    edited February 2010
    You can't give the car back. You are on the hook. You are obligated to pay it off.

    UNLESS, they are unable to get you approved. That is a whole different story!

    Do they now NEED you to resign with a cosigner? If so, then yes, you can give the car back and walk away.

    Spot delivery is completely normal in the car biz. It is not necessarily a lie or a cheat. It is what the system allows. Sometimes, after the fact, a dealer finds they can't get the deal approved and they have to either rewrite it or unwind the deal.

    '11 GMC Sierra 1500; '08 Charger R/T Daytona; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '08 Maser QP; '11 Mini Cooper S

  • tidestertidester Member Posts: 10,059
    Wow! That's amazing.

    tidester, host
    SUVs and Smart Shopper
  • chills1chills1 Member Posts: 8
    they were unable to approve me .... and im pissed off because they lied to me and claimed my credit number was low... when i give back the car do i need any papers from them for proof that they terminated the lease even though im not approved?
  • qbrozenqbrozen Member Posts: 32,891
    so what is your real credit score? ... just curious. I mean, "low" is a somewhat subjective term.

    Ummm... hmmm... I don't know what paperwork you would need, honestly.

    Sorry to hear it didn't work out, though. Hopefully you can find something else you like for less.

    '11 GMC Sierra 1500; '08 Charger R/T Daytona; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '08 Maser QP; '11 Mini Cooper S

  • chills1chills1 Member Posts: 8
    lol! i never had a credit...im too young and dont have anything under my name...what they did is lie that i had credit and said it was low and said the bank approved me! they are liars and cheats! i have another dealership who i know that can get me a much better deal then them anyways with a better car, so i want to get out. my father will cosign the other dealership whom we trust. right now all i need to know is if i need some kind of paperwork after i return this car proving that i dont have the lease anymore.(eventhough the bank didnt approve me).
  • qbrozenqbrozen Member Posts: 32,891
    I guess you should get some sort of receipt showing the cancelled lease. (?)
    Seems to be the safe way to go.

    Well.... no credit IS low credit, right?
    ZERO is pretty darned low. ;)

    Ah well. Yeah, they should have been upfront with you. No excuse for that.

    '11 GMC Sierra 1500; '08 Charger R/T Daytona; '67 Coronet R/T; '13 Fiat 500c; '20 S90 T6; '22 MB Sprinter 2500 4x4 diesel; '97 Suzuki R Wagon; '96 Opel Astra; '08 Maser QP; '11 Mini Cooper S

  • assameseassamese Member Posts: 15
    Folks,
    My 36 months/36k-mile lease on Audi A4 (in NJ) will end next month, The car has exactly 35k miles on it & I am supposed to do a scheduled-35k-service that will cost me $350. Is there any penalty if I just skip the service and return the car next month ?
    Thanks in advance for your suggestions.

    - Sanjay
  • vad1819vad1819 Member Posts: 309
    I have GM Acadia for 3 years almost, but due financial troubles I want return vehicle to GM or GMAC, whenever. So is it possible to do or I got screwed with this Smart Buy. BTW, during the purchase sales manager was so on this Smart Buy deal, so I have been an idiot to agree. He tol;d me I can return anytime, but last year I was tried and I have to pay so early termination fee, then price deference.
    Of course I have a last reserve stop paying for it and they will take it back, that will screw my credit score, but house is more valuable then some car.
  • nolafilmnolafilm Member Posts: 12
    hey, not sure what the rules are for GM's Smart Buy program, but i have a friend who has handled all his leasing through Swap a Lease and he speaks highly of them. May be worth a look: http://www.swapalease.com/
  • johnwsmithjohnwsmith Member Posts: 1
    According to the Toyota Financial Website, my lease buy out is $8900. I still have 9 months left on the lease. So would the actual cost to buyout right now be the $8900+9 months left on lease(($340*9)+$8900=$11960) or just the $8900?
  • sebring95sebring95 Member Posts: 3,241
    It should be in the neighborhood of the buy-out plus remaining payments. There may be some adjustments for interest or early buy-out fees...just have to read the contract. Best thing to do is call them.
  • jmhillsjmhills Member Posts: 2
    Hi, Ive got an 09 Outback that I leased for 3 years/ 15k a year for lower than the best deal Subaru had to offer at the time. My needs have changed and I am looking to get out of it and into a smaller, more fuel efficient car as a companion to my other "fun car." I am 3k under the mileage allotment, the car is in excellent condition and all servicing has been done at the dealership. The payoff amount I was quoted is $19500 which is less than Black Book on the vehicle which is good since Black Book is what all the dealers are using these days. I can trade in the car and be free and clear of it if they pay the $19500, correct?
  • sebring95sebring95 Member Posts: 3,241
    You would need to clarify with Subaru that the payoff is good if someone else is buying out the lease (i.e. another dealership) and does not require taking it to a Subaru dealer. Sometimes there are stipulations that make the "buyout" more if it's not being sold directly to you. It's hard to say exactly what book the dealers are using. Some (a lot) go directly to Manheim auction values which can be obtained almost real-time online.
  • delta737hdelta737h Member Posts: 626
    edited May 2010
    jmhills,

    Did the dealer quote the 19,500 payoff amount? If so, I would be very careful. Is the 19,500 the actual trade-in value or is it the amount owed under your current lease? You need to differentiate between the two and determine the following if you haven't already done so...

    (1) The trade-in value

    (2) The early temination liability charge. Your lease agreement describes how this is computed. It also describes how the adjusted lease balance is computed. Basically, your total early termination liability is the present value of the remaining payments discounted at the implicit lease rate plus an early termination fee. You may want to request an early termination letter from the fund provider reflecting your early term liability charges. Nevertheless, all calculations should be verified as fund providers do make mistakes.

    The difference, (1) - (2,) represents the amount of positive or negative equity given that (1) exceeds (2) or (2) exceeds (1), respectively.

    The calculations can easily be done on a calculator with financial functions or an EXCEL spreadsheet. I don't know which state you're located, but the full 19,500 trade-in value would be deducted from the sell price to determine the tax basis of your new leased or purchased vehicle. You may end up with $0 tax liability if you're leasing. If any positive equity exists, you could take it in cash or use it to reduce the gross cap cost or selling price of your new lew lease or purchase.

    Hope this helps.

    John
  • jazo82jazo82 Member Posts: 3
    Does anyone happen to know based of your experience
    if i would call nissan financial bank to do a buy out in
    a 2007 murano With 18000 miles would they give
    me a good deal!!?? Kbb private party value is
    $23,460?? Right now i owe $17353. Based of the figures it
    appears that a wise choice would be to buy it. But i am thinking to call the bank and negotiate the $17353. I still have 5 months to turn im the lease but would like to take any suggestions earlier to give
    me enough time to make my decision.

    Thanks everyone. This is a great forum!!
  • dwynnedwynne Member Posts: 4,018
    Almost every lease bank now takes out residual insurance on their leases. So if the car does not return residual at auction the insurance picks up the difference. So there is 0 incentive for them to give you a deal on the buy out price. I am sure Nissan will not give an inch on the price, but it should be a free call - you never know they might not have insurance on your 07 lease and could be willing to deal. Of course, once you express an interest in keeping the car they are not likely to offer you a discounted loan or any other deals at lease end.

    Look at kbb or edmunds trade in value, not private party, to get a better idea of what it is worth. They may offer it to the turn in dealer or may just roll it through the auction where it will likely bring LESS than trade in by $1k or more.
  • beefmasterbeefmaster Member Posts: 3
  • beefmasterbeefmaster Member Posts: 3
  • beefmasterbeefmaster Member Posts: 3
    my Mercedes lease has an early purchase option and states the unearned rent charge will be calculated on a constant yield basis. What is this and how is it calculated?
    Thanks,
    beefmaster
  • delta737hdelta737h Member Posts: 626
    edited September 2010
    beefmaster,

    Leases are amortized in much the same way as installment loans. Most lease contracts contain an early termination clause that specifies how the lease balance is computed using the actuarial or constant yield method. This is really the same method used for installment loans. Each payment consists of two components: (1) interest (lease charge) and (2) priniciple (depreciation). The current month's priniciple (depreciation) is allocated toward reducing the previous month's outstanding loan (lease) balance. The interest (lease charge) for the current period is determined by multiplying the monthly interest rate (implicit in the lease- see discussion below) by the previous month's outstanding loan (lease) balance. This routine continues each month so that at the end of the lease, the outstanding lease balance equals the residual value. So, we begin amortizing the lease with the adjusted cap cost and end with residual value.

    I always encourage those with leases or installment loans to create an amortization schedule using an EXCEL spreadsheet. If you wish to payoff a loan early or, terminate a lease early, you can easily and immediately determine your lease balance plus any applicable early termination charges. If you decide to purchase your leased vehicle, the buyout will be the lease balance plus any applicable purchase option fee/misc fees + title/reg fees + plus taxes.

    For most leases, the early buyout is calculated as follows...

    1st. Calculate the lease balance by finding the present value of the residual plus the present value of the remaining payments discounted at the interest rate implicit in the lease. Lease agreements refer to this rate as the actuarial or constant yield rate (discussed below).

    2nd. Determine if your lease agreement stipulates an early termination fee or a purchase option fee in the event you wish to exercise your option to purchase.

    Adding these plus any miscellaneous fees plus tax determines the buyout price. What people need to do is read the early termination clause in their lease agreement to see exactly how the lease balance is determined. I always create a lease amortization schedule in excel so that I always know my lease balance and buyout at any given point in time. This keeps the fund provider or dealer honest and, believe me, there were dealers that inflated lease balances in the past paving the way for a minefield of moral hazards. This was fairly prevalent in the 80's/early 90's when fund providers refused to give customers their lease balances deferring, instead, to dealerships. Well, golly gee whiz, what the hell do you think was going to happen?

    Note on computing the actuarial or constant yield rate...

    This can be done using a financial calculator such as the HP12C or TI83/84 graphics calculator. Or, it can be calculated using the financial RATE function in EXCEL with the following syntax...

    Annual Constant Yield Rate = 12 x RATE(nper,pmt,pv,fv,type,guess)

    nper = total number of payments (i.e., Term)
    *pmt = monthly base payment (this is not payment PLUS tax)
    pv = adjusted cap cost (enter as a negative value)
    fv = residual value
    **guess = 24 x money factor

    *pmt = F x (C + R) + (C - R) / N
    F = money factor
    C = adjusted cap
    R = residual value
    N = term

    **The program uses an iterative routine known as the Newton-Raphson Method of Successive Approximations (approximates roots of real-valued functions) to compute the implicit interest rate and so it must be initialized with a guess. The optimal guess is simply the money factor multiplied by 24 (not 2400).

    Hope this was more helpful than confusing.

    John
  • jwilliams2jwilliams2 Member Posts: 910
    Not sure how this would be affected if it is indeed a single pay lease as I saw in another post. My suggestion would be to contact Mercedes-Benz Financial and discuss it with them. Perhaps you could post their response and any questions you may then have.
  • delta737hdelta737h Member Posts: 626
    edited September 2010
    My suggestion, for whatever it's worth, would be to read the early term clause in the single pay MB lease agreement. Normally, the lease balance is the present value of the remaining payments plus the present value of the residual discounted at the constant yield rate implicit in the lease. However, there are no remaining payments in the case of a single pay option. Therefore, the lease balance is simply the present value of the residual discounted at the constant yield rate.

    John
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