Purchasing at the End of Your Lease

wale_bate1 · June 2006

Precisely so. For me to keep a lux car past warranty, it has to offer something I can't get in a new model (refer to above post), either functionally or viscerally. Yet more reasons why leasing lux cars makes sense to me.

someguy1 · July 2006

Anyone here ever try to negotiate buying a leased car in only the first year of a lease.

My Acura is in the first year of a 3 year lease and I would love to own it. Does it make more sense to ride the lease to the end or try to buy it now?

thanks

wale_bate1 · July 2006

Never did in the first year. Bought out the remainder of a three-year lease on a '96 Passat VR6 wagon near the end of its second year. We were looking to sell a very pretty, fun to drive (when it wasn't in the shop) maintenance nightmare that was almost at the end of its warranty period.

The balances and residuals due were quite a bit less than the book, which formed the basis of the decision to buy it out. In the end, we put an ad in the paper on a Friday, and on Sunday we sold it to a very excited designer from SF for about a grand over book and three grand over our payoff.

I don't recall any willingness to negotiate on VWA's part, though. In a solid equity position, the leasing party has little reason to cut a deal. In a non-equity positon, there's little reason (IMO) to buy out the remainder!

I would ride the lease out, unless you find you can lower your payments and maintain or reduce your payment schedule, or if doing so will put you in a strong equity postion on the car (hard to imagine in year one).

If you can't advantage yourself in the short term, it makes little sense to pull any trigger before lease-end. You effectively "own" it until then anyway.

qbrozen · July 2006

it never makes sense to buy it before the lease is up (if you are buying with a loan). With a lease, you are commited to paying all the payments, which includes the finance charges. So, if you turn a lease into a finance too early, you are financing the interest on the lease (in effect, multiplying your interest). If you wait until the end, you've already paid all the lease interest, so you would only be financing the balance.

someguy1 · July 2006

qbrozen,
thanks...
ka

mrmet06 · July 2006

Ok here is the deal. My wife and I are coming to the end of our 4 year lease on our 2002 Nissan Altima. We have no idea what to do. We are 2 months from lease end.
We currently have 94,000 miles on our vehicle and we were only allowed 48,000 miles x .15 per mile overage. Thats $6900 just on mileage not included excess wear & tear. Our current buyout amt is $10k.
We don't know if we should try to keep the vehicle or setup a new lease. I've have read a lot online about end of lease options, including the one on edmunds.com. We don't have the money to pay the excess mileage charge. We would like to buy/lease a new vehicle if we could, but don't know how the excess mileage figures in to that. My lease company (NMAC) is telling me I can keep the car, but must pay the buyout and obviously if I can't afford the mileage charge I can't pay the buyout. NMAC tells me I can't finance the buyout through them for some reason.
So, here are my questions. Has anyone of you ever been over the mileage by this much and how did it work out. If i lease/buy a new vehicle are the xcess mileage charges add to the price? How would I go about financing the buyout and can I get it through current financing company. Any suggestions would help as my wife and I are struggling with this is this is our only car. Just sucks we never thought ahead about the end of lease. honestly never thought I would be over the mileage this much, but thats what happens on Long Island. Any help would be appreciated. thanks!

cs2i · July 2006

hi, it just happened to me where i came very close to the end of my lease, but the difference is that i am way under the millage allowance. we did buy out our car, but we'll be trading it in for a new car, ends up my car retained its value well.

is there still a chance you can prepurchase miles? some leases allow you to purchase miles if you need to add BEFORE the end of the lease. it could be cheaper

actually i would not pay them the excess millage because if you do, plus the wear and tear, you could be out say 7,500-8,000? AND NO CAR! if you buy it out, you could probably end up with a payment of $200-215/month. do the math at
http://partners.financenter.com/kiplinger/calculate/us-eng/auto05.fcs

is the car worth 10K still? http://www.nadaguides.com/

if it is, then you can leverage that towards a new car, pay off the loan on this car, and save some bucks on taxes towards the new car. (this will offset the amount of taxes you spend on buying out the old car).

talk to a dealer with time on his hands, and not the one you leased from. maybe go on a weekday, when there is no one else at the show room and they can actually explain your options. this is what i ended up doing, and it was quite an education.

oh also remember, that buying out a car and then selling it, if you decide to, you'll have to have the title in hand to do so- it adds time to your whole transaction (that's where i was the dope)

hope this helps
cs.

steine13 · July 2006

You have to buy it. Or wrap it around a tree :-)

You drove the miles, you gotta pay, one way or the other. Either you pay too much for a 94k Altima, or you pay $7k+ to walk away. That is an easy decision as the car is definitely worth more than $3k.

Smug remarks about how, while you were driving all these miles, you might have set some money aside to actually pay for them, are valid and pertinent, but probably not welcome. But hey, this is the internet, so here they are anyway. Free of charge. What were you thinking?

Relax, it could be worse. Were it a Dodge Stratus with tranny problems, you'd be in REAL trouble. As it is, you'll be driving an Altima with a bunch of miles. That's not so bad. Try to pay the sucker off in 3 years.. that'll be $300/month or so, maybe more if your credit is shaky. And then, keep it even longer and save up for the next one. Buying cars for cash isn't so difficult.

-Mathias

Kirstie_H · July 2006

And to answer your other question, if you purchase the vehicle instead of turning it in, you do NOT have to pay for the excess mileage on the vehicle. Your purchase price is $10K, period.

corvette · July 2006

Ditto. The car is worth way more than $3k. You could roll the negative equity ($10,000 purchase price less cash value of the car) into trading the car in, but this could very well put you on the downward spiral of always having negative equity in your trade-in.

qbrozen · July 2006

AND, on top of what the others have already told you, DO NOT LEASE AGAIN!! You obviously drive WAY too many miles (unless you get a very high-mile lease).

Oh, by the way, did you tell NMAC how many miles you have? I hope not. If you didn't, then you should try negotiating a lower purchase price from them. They may go down, they may not. But its certainly worth a try. If they know how many miles you have, though, they certainly won't negotiate as they know they've got you over the flames.

BeamerMan · July 2006

Hi, I have a leased 2004 z4 BMW. There are 12 payments left and the buyback is 25,000. I have heard if I buy it back I must pay tax again. I live in Md. I could easily sell the car for a profit of 3 to 4 k but not if I have to pay 5 percent taxes again. I also heard that you could trade in a lease for the extra equity. Appreciate some advice very much.

stars4304 · July 2006

I was wondering if I can get your opinions on the option to purchase a car when the lease is up.

My friend, who has been wanting to get the 06 Touareg, is deciding to do this because payments to finance the car is too much.

From what I know, it would be a lot better to just finance from the start. How much more money would she end up spending? Do you guys think it's worth doing this just to have the car that you want? Thanks

steine13 · July 2006

Unless you live in IL, there is no "again" about these taxes.. yes you will be paying sales tax on the purchase price, just like any other used car. Except for two states, though, you only paid taxes on the amount financed when you originally leased.

It is possible that a dealer would give you a little "extra" when you trade in the car, but you have to understand that they would be buying it from the leasing co. and not from you. After all, you don't own it. Therefore, I would not count on a lot of money... it doesn't hurt to ask, though.

-Mathias

BeamerMan · August 2006

OK Carman Here is the deal. As up until 8/25 the payoff is 31,620.75. I ran the value at retail of 35,000, I would ask 33500.00 or trade for 32620.00 and lease a Lincoln MKZ. What do you think?

qbrozen · August 2006

where are your numbers from? If from any online priceguide, you can pretty much guarantee the trade-in value is less than quoted.

is the problem just that you need a bigger car right now?

BeamerMan · August 2006

No not really just a car nut that is all. Prices are retail asking prices in the area for certified z4s. BMW also said I would save 860.00 by paying off early.

qbrozen · August 2006

save $860 by paying off early? I wonder why they said that. I would say interest ... but lease interest is packed in up front, not accumulated over time. Hmmmm.... strange statement, indeed.

Anyway, I'm surprised you would go from a Z4 to an MKZ unless you NEEDED to. Its not a vehicle I see as appealing to car nuts. I mean, its slow, FWD, etc. Eh, to each his own, right? I'm not saying its not nice or anything ... just a strange switch for you, that's all.

You may be shocked by what the Lincoln dealer would give you for trade (and not in a good way). You should stop by and get an appraisal before spending too much time thinking about it.

BeamerMan · August 2006

I have had fun with the Z4, but traveling in it is a chore. You should drive a MKZ or Zephyr and you will be surprised. My wife and I are going to do some road trips and the MKZ is perfect for that. Besides I will only lease for 24 months. I like variety. In the past 10 years I have driven a A4 Audi, M3 Beamer, Jaguar, Acura TL and now th the Z4. We have been married 38 years and I have owned or leased 55 cars. See what I mean, nothing strange about this to me?

qbrozen · August 2006

but, still, all of those cars would run circles around the Zephyr (unless you had the V6 Jag S-type, that is).

When I wanted to trade my lincoln LS, I WANTED to like the Zephyr, but a heavy luxo-sedan with an underpowered 3 liter FWD V6 with only an automatic just wasn't going to do it for me. Like you, I've had alot of cars, and the more recent ones have all been sporty.

Are you able to drive the MKZ yet?? Are we talking about the one with the new 3.5 liter? If so, that's a big improvement over the Zephyr .... but I didn't think that was out yet. Lincoln's website certainly doesn't have it. And the press hasn't even published real reports of it yet (only a quick one-lap look has come out in the mags this month).

british_rover · August 2006

I mean the MKZ/Zephyr whatever is basicly a reskinned Mazda 6 right?

That is an alright driving car although with an automatic it is not going to be as great as it could be. How much could lincoln have really screwed up that car?

Kirstie_H · August 2006

Gonna have to throw the "off-topic" flag down here.

qbrozen · August 2006

handicapping it with an automatic screws it up enough, IMHO.

Have you driven a Mazda6s automatic? Its truly a painful experience. A 3400 lb car with ~200 ft-lbs of torque through an auto tranny is just not going to cut it. Oh, and let's not mention the fact that, despite giving up so much power to the CamCord, it gets significantly worse gas mileage. Yikes!

I drove the Mazda6s and Accord back to back. Lemme put it this way ... if you blindfolded me and put me in each car (as a passenger, of course), I would have told you the Mazda was a compact Asian sedan, while the Accord was a Euro midsize sportsedan by comparison.

but I'm WAAAYYY off topic here. Sorry.

****************************************
edit: oops. sorry, kristie, i was working on this when you posted.

ummmm.... on topic ... on topic ...

beamer ... if you are talking about the MKZ, when will it be available and how much time will you have in your lease at that point?

BeamerMan · August 2006

MKZ available for order now, delivery around November. I will havd had 27 months of a 36 month lease. Car has only 12k, should get a good price for it from private. It is kept in a heated garage and detailed every 3 months professionally. The Zephyr,06 has a 9.8 rating on tis site check it out, besides I can lease for 300/month and get something else later.

perna · August 2006

I was wondering if I can get your opinions on the option to purchase a car when the lease is up.

My friend, who has been wanting to get the 06 Touareg, is deciding to do this because payments to finance the car is too much.

From what I know, it would be a lot better to just finance from the start. How much more money would she end up spending? Do you guys think it's worth doing this just to have the car that you want? Thanks

Nobody replied to this, but IMO your friend can't afford a Toureg. If she can't afford the payments to finance it, she certainly can't afford the maintenance on a German car after the warranty (and lease) are up.

audia8q · August 2006

I agree with Perna....if somebody can't afford to buy the car, they can't afford to lease it either..

The folks who have the notion that they can afford the lease but not finance usually end up posting here on edmunds the day the lease ends.....it goes something like this

"I'm 40,000 miles over my mileage limit and the car has some dents. I can't afford to turn the car in and pay the damages and I can't afford to buy the car because the buyout is too much. now what do I do?.."

kyfdx · August 2006

Well.. the last time I suggested this very thing, I was called an elitist clown..

So.. I was probably on to something..

If you can't afford to buy it, then you can't afford to lease it.. Your scenario is a perfect example of why..

mrrk47 · August 2006

Hello,
I have a 2006 Honda CRV EX That we might want to buy out before the lease ends....the Residual is about 14500 and the payments total about 12500(I may be wrong). I'm thinking it's better to wait the whole 3 years, but we might want to lower the payment in the meantime. Does Honda Finance do this? Would they finance it for 60 or 72 months...do you guys recommend waiting it out. One of the reasons I wanna do something on this is because when we leased it we didn't know about negotiating lease price, so they stuck us with MSRP...well now I know more since I leased my S40.....it's not a bad situation. live and learn I guess.

sebring95 · August 2006

In most cases, you're going to be better off waiting until closer to the end of the lease to buy-out. Unless Honda is willing to discount your buy-out now, you'd be paying all those finance charges twice. I doubt you'll lower your payments anyway.

BeamerMan · August 2006

Hi Rob I meant to get back with you on the 860.00 savings question. Ok here we go. The BMW and most leases designate a part of the lease payment as a rental fee. When you pay off early they rebate this to you, so I get 860.00 knocked off and get back the 600.00 deposit. Hey we all learn something new every day. By the way the local small town Lincoln dealer has overed me 1000.00 over the payoff for trade but I will sell it for 32,500.00 and make more. Beamerman(Wayne)

qbrozen · August 2006

hi wayne. thanks for the answer to that question.

So if the lincoln dealer is offering you $32,620, how will you make more by selling it for $32,500??

BeamerMan · August 2006

No the payoff is 29500 and they are offering 30,500.00, 1000.00 over. I only have 12100 miles on the car so selling should not be a problem. Car is like new. Wayne

qbrozen · August 2006

oh. ok. in your original message, the numbers were different (and good till 8/25).

By the way, have you checked the tax laws where you live? Trading could potentially give you a big tax break that would at least somewhat offset the money you gain by selling yourself.

If it was for the full amount, you'd be looking at a couple grand. But since its a lease, its a different story.

roshansaj · September 2006

i have a 2003 black 4 door GLS hatchback AUTOMATIC

which i leased and the lease is ending on sept 30

i have 14,000 miles and the car is in very good condition..
i have monsoon sound, stability control , heated seats

i checked the appraisal for buying and its prices are
trade in: 10,527
private party: 11,867
dealer retail: 13,058

i was considering to buy a car since i need it..but i dont know if its worth is..the pruchase quote from VW is 10,088 plus $ 700 in taxes making it total of 10,788. I want to know if its worth to buy or release a car..
i did the car inspection and they said they will not charge me anything extra appart from the $350 turn in fee since the car is in great condition

also..i live in MA but im moving to FLorida next week so i was thinking to buy the car and ship it
also..a friend was telling me about lease extension..but how long can i extend it for? i want to know if its a good deal to buy a car..or do what with it? any ideas? car in good condition but im really confused? can i buy it in florida and pay florida tax? maybe a dumb question? what should i do..need advise..asap//please help!!

qbrozen · September 2006

well, do you LIKE the car? That's the big question.

I've heard so many complaints about VWs over the past few years, that I'd be real hesitant to buy one, personally.

What are your monthly payments now? What would you have to pay on a loan if you bought this car from VW? Is that more or less than a lease of a new car that you might like?

With only 14k miles on this car, you obviously don't drive much. But you are now moving, so that will change. How much will you drive when you are in your new home? Will it continue to be very low miles, or will you now how to drive more? And, if so, how much?

If your situation wasn't changing, and you don't care if you are driving a new car, I'd certainly say buying is for you because you are paying for more miles in a lease than you are using. If you buy something, you'd have it paid off and still have a very low-mile nice vehicle that you could then drive for a long time payment-free. BUT, your situation is changing, so I don't know if this advice applies.

matana · October 2006

My 2004 Pacifica Lease expires in march of 2007. It has several cosmetic scratches and dings which will probably be charged for excess wear. The Milage is low. The Residual buy-out is quite a bit higher than the TMV estimate.

I would like to buy the car when my lease is up. How and more importantly WHEN do I negotiate the best deal with the leasing company.

qbrozen · October 2006

I would start talking to them maybe 2 months before expiration. Call the leasing company directly to start negotiations.

Do NOT let them know anything about the condition of the vehicle. You don't want to give them any negotiation leverage. If they know it has low miles, then they will want to charge you more. If they know it has damage, then they know you are less willing to turn it back in and pay for the damage, so they'll want to charge more.

wale_bate1 · October 2006

Also, if previous and current Chrysler experience applies, they will contact you probably 90 days prior to lease-end. They will know all too well the difference between book and residual and may offer some easing up front. May not, but might just cough up "loyalty" bucks to move you into a new lease.

Be prepped for the call: know your numbers and what you'd be willing to do, and strike while that iron is hot.

cdt1 · October 2006

I have a 2004 VW Passat GLS with 32,300 mi. My lease ends on Dec. 27. I have a lease end purchase price of $12,817.50. Edmunds is showing this vehicle with an average retail price of over $15,000. I've done a search online and many cars are advertised for sale for $16,000 - $17,000 that are the exact same car as mine. I had originally planned on turning the car in at the end of the lease and leasing another make/model of car. What would be my best option? Obviously, I don't want to just turn the car back in if there's some value there that I'd be giving the dealer for nothing. Can I trade this car in and receive the difference toward another vehicle? Thanks for any help you guys can provide.

Chris

qbrozen · October 2006

If the retail is $15-$17k, then actual trade-in value is probably LESS than your $12,817 buyout price.

The only way for you to make money on it is to buy it and sell it yourself. But is it really worth all that hassle? That's the question you have to ask yourself.

sebring95 · October 2006

The buy-out price (residual) on your lease was based on an estimated wholesale/trade number. So you need to compare that with trade-in values today to determine if this is a good deal. Keep in mind if you buy it, you'll likely have to pay tax on it before you could sell it. Just because folks are "asking" $16,000-$17,000 doesn't mean they're actually getting that. I usually find KBB "private party" value to be very close to what you should be able to sell it for. If after paying tax you're still well under that number, it may be worth it to buy/resell. If you're just going to trade it in, I really doubt you'll come out ahead. Buying new will be a lot easier if you don't have a trade to hassle with.

mp67 · November 2006

When you do a lease extension, how does the monthly payments effect the payoff? NMAC said that there's no way to forecast what percentage of the payment would go towards the payoff & that I would just need to check every month during the extension.

My lease is up on my 350Z next month and I do not want to get rid of it until the 2008 Infiniti coupe comes out (May-June 2007). Is it better to just buyout now & sell it when the new coupe comes out? Or, just do a lease extension? It's hard to compare the 2 options since I don't know what portion of my payment will go towards the payoff.

32lock · January 2007

Hi, I'm new here. I am in the market for a truck. Ive been researching the f-150. I'm wondering if it makes any sense to lease a new one knowing that i'll go over the miles and buy at lease end.(to keep payments low for now) Or just to buy a used truck. I have the z plan to work with also. thanks for any help that can be offered.

jlawrence01 · January 2007

Usually the leasing company will work out an extenion - usually at a lower payment. If you plan to keep the car less than a year or so, it is almost always better to extend it than to start another lease on a new vehicle.

qbrozen · January 2007

This is something I've thought about many times. It really comes down to working out the numbers and seeing if there is any benefit.

When it does work, as far as I can see, is when there are heavy leasing incentives such as cash and a low money factor. If you calculate out what you'd pay during the lease and then what you'd pay during a short-term loan in the end, you may find that it would be cheaper than one long-term loan now.

Don't forget, however, to add in the inception fees AND, if you don't already carry higher insurance coverage, the increased premiums that come with the higher coverage required for a leased vehicle.

british_rover · January 2007

Sometimes if you have a very good relationship with a dealer you can work out a nifity trick with leases.

You turn the lease into the dealer at the end.
They buy it for less then what your buy out was and then they sell it back to you.

Doesn't always work but when it does it can be very attractive. The problem is that sometimes the dealer can't buy the lease return for lease then the buy out.

qbrozen · January 2007

that would be nice if it worked out. Its something to look into, in any case.

The other choice is to negotiate the buyout yourself with the leasing company (as has been discussed here before). Not all manufacturers will do it, but, from what I've heard, many will.

british_rover · January 2007

Something that me and my boss are looking into doing next year is this...

At the end of last year we got in two so called "brass Hat cars" they were used by Land Rover employees and had less then 2,500 miles on them. Land Rover sold them to us very, very cheaply. These cars had MSRPs of nearly 57,000 dollars and we oned them for around 39,000 dollars. The trick was they did not qualify for any incentives of bonus programs. You could still lease them as new cars and wow did they lease good.

A low mileage lease with no money down was around 400 bucks a month all taxes in. Next year we are hoping to get a couple of more cars like this and so we would do a high mileage lease on them to force the residual down but not actually drive it the full amount of miles. At the end of the lease we would turn them back into the dealership and then do a Pre-owned lease for even less money a month...

On the pre-owned lease the residual is based on the miles the car has at the time of the lease. By doing a high mileage lease at the beginning you force the residual down and help yourself out on the other side. The monthly payments on the new car lease are slightly higher but because the moneyfactor is so low it is like free money. SO now you have a used car with a low buy out but a high residual because the miles are low.

qbrozen · January 2007

let me know when you're ready to do a pre-owned lease on an '07 RR sport. ;b

j/k ... i can't even afford the gas in that thing.

british_rover · January 2007

Sure just wait two and a half years...

Actually our marketing manager is driving a 2006 MY SC Sport right now. I am hoping she turns it in soon and maybe we can snap it up. I wouldn't want to buy it as it would still be too much money for me but I know a couple of people I could sell it to.

Purchasing at the End of Your Lease

Comments

Helpful Tools

Most popular vehicles