Purchasing at the End of Your Lease

sebring95 · May 2007

the dealer considerably increased the residual/buy out amount) to lower my monthly payments

Not quite, the dealer can't do that. The buy-out on your lease contract is what the leasing company was using at the time of your purchase. The dealer has zero control over these numbers. The car is apparently worth less than the residual that was originally used so they're offering you the buy-out at a discount. It's not that unusual because many times, these factory sponsored finance arms play with the residuals to get the payments down. Or they just plain screwed up, which happens as well. The buy-out on the lease contract is the MAXIMUM you'd have to pay. They can choose to accept less than that if it benefits them. For them to just offer up a cheaper buy-out, I would say they're WAY off on the original residual so you might try to bargain that number down even more.

davep626 · May 2007

Hi all, I'm so glad to have landed on this forum! I'm 1 payment away from the end of my lease on a 2004 Mini Cooper S. I'm about 13k miles under where the lease put me. Residual value is about 16600 and KBB puts the car around 18k.

I'm looking to buy the car at the end, 16600 sounds like a great deal to me, however, the lease company is offering something like 7.5% for lease buyouts. I've poked around the web to only see worse APRs for Lease Buyouts.... any recommendations? Thanks in advance!

Dave

joel0622 · May 2007

Being a lease buy out should have no effect on the APR. as far as the bank is concerned you are applying for a used car loan. 7.5% is not a bad rate though on a 2004 model. It is technically 4 model years old at this point.

joel0622 · May 2007

Replying to myself here. I just checked Cap One's web site and they do charge more on lease buy outs :confuse: Allot more like 2.1 points

Loan Type 3036 mos
APR* as low as 3760 mos
APR* as low as 6172 mos
APR* as low as
Dealer Purchase: New 5.89% 6.05% 6.59%
Dealer Purchase: Used 6.35% 6.65% 7.29%
Person-to-Person: Used 8.75% 8.95% 9.75%
Lease Buyout 8.25% 8.75% 9.35%

davep626 · May 2007

Yeah, I'm starting to think 7.5 ain't bad... I just hate it.

cti · May 2007

Makes me feel good about my credit union offering 5.5% on used car loans of 4-6 years and 4.25% on 3 year loans.

Jason

blane · May 2007

My 2004 Accord EX V6 Coupe with Navigation's lease balloon payment or return of the vehicle is coming up the first week of July. I've been agonizing over the choices of either getting a new vehicle or buying this one (that I love). The new generation 2008's won't be out until September, their prices will clearly be non-negotiable for at least six or eight month, and I'm not crazy about other brand choices right now.

My balloon payment is a clear winner at about $2,500 below private party sale value and $4,000 below retail. So, I've been checking bank rates to facilitate the purchase. They are in the 7.8% to 8.2% range for used vehicle refinancing.

I spoke with American Honda Financial Services today. Their rate is 5.9% with no prepayment penalty, an absolute no-brainer until I decide on my next vehicle.

qbrozen · May 2007

before you get too far, I suggest getting a true trade-in value of your accord. The numbers you are basing your purchase on are from what? KBB? Edmunds? Both are usually incorrect. I'm not saying you shouldn't buy it, but if you are planning on trading it not too long after buying it, you may lose more money than you think. Its worth finding out for sure.

yeltzen · May 2007

I am turning in a 2003 Jeep Liberty next month. My lease agreement states the buy-out amount will be around $10,800.

While it has only 36,000 miles on it and is in good working condition, there is some damage to the exterior and interior. I believe that I will get killed on the fees for this, and so I'm wondering how much I should be willing to pay in turn-in fees before buying the car becomes the better alternative. Thoughts?

grandtotal · May 2007

How bad is tha damage? Get a quote for repairs then ask your question again.

yeltzen · May 2007

The damage is not bad, realistically. It does not have any effect on the operation of the car, or on the ability to use any part of the interior. However, in terms of the dealer being able to sell the car, it would make it more difficult. I am getting a quote tomorrow, but I think I will have a hard time justifying $2000+ lease turn-in fees just to get them to take a car off my hands.

msindallas · May 2007

Hi experts,
I would be interested in pursuing the following business transaction. Want to ask you if the bank will kick me out if I take the proposal to them. Does this make sense? The numbers are for example only.

Situation: I want to drive a $48K vehicle, and have saved the money to buy it. However, I am worried about reselling after a few years. The bank's estimated residual is 50% with 12K miles/year for 4 years.

Proposal: I put down $48K + TTL at the bank, buy the required insurance and some kind of Gap that will pay me $48K if the vehicle is totaled (the lease gets terminated at such event). The bank holds the title, and pays me $500/month for 48 months (total of $24K, the residual value). At the end of 48 months/48K miles (whichever comes earlier) I turn in the vehicle and walk away.

Whats in it for me? I don't have to worry about the resale value after 4 years, and I am making some use of the money I saved so painstakingly over the years in not having to pay interest.

Whats in it for the bank? This is as if I am investing $48K minus depreciation in the bank and they are not paying anything in interest. They have the money to invest into whatever is most profitable to them.

Is this a valid business model? If so, does it already exist by some other name that I dont know about? Thanks, - MS.

sebring95 · May 2007

I've personally not seen this as you've described. There are similar options for homes but you're talking bigger numbers and longer terms. IMHO, the bank would pay so little in interest on this deal it would not be worth it.

Depending upon the brand/type of vehicle you're looking at, it's fairly common for the manufacturer's finance arms to be offering low money factors on leases. I currently have a Tundra under lease at less than 2% interest for 36 months. I'm making 6% on a credit union CD with the cash I would have spent. Just wait for them to offer a good lease deal (Memorial day is popular for toyota/lexus/honda/acura/others?). You'll probably make more investing the money elsewhere as the banks are pretty tight on these types of deals.

msindallas · May 2007

You'll probably make more investing the money elsewhere as the banks are pretty tight on these types of deals.

Yes, I agree. I went to an Acura dealer today and proposed it. He agreed with my rationale, but said "Sorry, Honda does not do that". Then he tried to lease the vehicle to me, slapping on a 0.0038 money factor on it. I said, "I dont want your money! You will own the residual and the car in 36 months, so pay me that money in 36 instalments. You should also be paying me (MSRP+Residual)*APR/2400 the same 36 times, because I am giving you the full MSRP up front".

It got a little nasty, and in the end we parted as "You keep your car, I keep my money". Oh well!

Then I figured I can get a loan at 5% APR for 48 months (not an auto loan, so I get to keep the title), and put the purchase money into some money market account, getting 5.25% APR. So I can still make a cash purchase, but it doesn't solve my other problem - how to rid myself of the liability of the car after 48 months. If they could give me in writing that they would buy back the car from me for $XX in 48 months, that would be acceptable to me, too. But they wouldn't agree in quoting a price, either.

I still can't figure out whats wrong with my proposed business model - if they say the residual is 50% after 48 months for lease purposes, why can't they promise to buy back the car from me after 48 month at that same agreed price? Should I check this with other dealers if somebody else can do this? Thanks for the discussion, - MS.

joel0622 · May 2007

If they could give me in writing that they would buy back the car from me for $XX in 48 months, that would be acceptable to me, too. But they wouldn't agree in quoting a price, either.

If that has to be part of the deal then you are not buying a car.

The reason no one wants any part of your plan is that,

1. I am sure it violates some of lending rules.

2. The cost to pay a lawyer to draw up the contract for the one time it would be used is not cost effective.

3. The biggest reason is that if it was a good idea and the banks could make money on it they would be doing it all ready.

sebring95 · May 2007

I'm not so sure why you're so concerned with the tail-end value of the vehicle. You're trying to base the entire buying decision on ensuring someone takes the vehicle off your hands in 48 months....the residual is typically a wholesale number. Theoretically, if you hit the numbers you can easily sell the vehicle for more than that amount to any individual (or at least get the lower amount from a dealer). A major market correction might effect this, but even major market corrections on vehicles aren't generally that substantial, particularly higher-end vehicles.

And be sure to shop around for that Acura. I bought my son an RSX-S a couple years ago and one dealer wouldn't budge off MSRP and the other was willing to deal. It's typical for the lease money factor to be high unless there are some incentives. This is what makes leasing appealing to these companies. There are also some single-payment lease options that you might look at. The ones I've seen aren't that great of a dealer either, but even if one of these companies agreed to your reverse lease, I don't think the numbers would be in your favor either.

jaz1959 · June 2007

Does anybody know if a leased car can be sold to another party?
I have 3 payments left on my Acura 3.2TL and am wondering if I could try selling above residual value's price?

Thanks.

sebring95 · June 2007

You can, but how you go about it depends on the leasing company. Tax is usually the mitigating factor.

You can buy the vehicle from Acura and then resell it. This will require you to pay the sales tax, which means you make less money on the deal.

The other option is to work through a car dealer. You approach a dealer and ask them to accommodate your sale. Most will do this for a small fee that is generally a lot less than the tax. The dealer buys the car from Acura (they don't pay sales tax) and then sells the vehicle to your buyer for the agreed price. They refund you the difference less their fee. I have done this in the past for around $300. Any dealer can do it (used, etc.) so you just need to find a willing participant at the right price. They're usually excited about it because they make a few bucks and if the new buyer needs financed they can offer that (and make a few bucks there as well).

The only time I had a problem with this was with a GMAC lease. They REFUSED to sell the vehicle to a dealer for my residual price. They said they could only transfer the title into my name for the residual price and I had to pay the sales tax. They had a wholesale price for anybody else that wanted to buy the truck, and that price was a lot higher than my residual. No idea why they were such butts about it, but that's what they did. I currently have a Toyota lease and they even suggested I go to a dealer to save the tax if I wanted to sell my truck to someone else.

I've never seen a leasing company sell the vehicle directly to someone else. It either has to be you or through a dealer.

bojanglingus · June 2007

My lease is ending on my 2004 Acura RSX in one month and I want to purchase a 2007 Acura TSX. My price to buy the RSX today is from Honda Financial Services is $11,706 and the KBB value (Good Condition) is $13,640. Is there anyway I can extract the value delta there and use the difference to aid my downpayment for the new TSX? If so, does it have to be at the dealer I bought it from? Thanks!

qbrozen · June 2007

You can trade in your leased car at any dealer. They would have to buy the car out and give you credit for any equity or negative equity.

FYI, KBB is rarely, if ever, accurate. So don't be surprised when the dealer's offer on the car is lower than KBB estimates.

bojanglingus · June 2007

Realize that the KBB is high, but if I can pull any value out of it I would be happy.

Should I expect any dealer to do this? Most have said no, but 1 dealer said yes.

qbrozen · June 2007

most dealers don't want your trade in? That's very very odd.

Just tell them you want to trade it in. Don't go into the details. Its not necessary. Tell them you want them to buy the vehicle from you, and ask what they will give you for it.

msindallas · June 2007

I'm not so sure why you're so concerned with the tail-end value of the vehicle.

Here's the reason:
Depreciated value of current vehicle + savings over the time period > Cost of next vehicle.

Lets talk with an example: Vehicle cost now = $35,000
Depreciation over 48 mo = 45% = $15,750
Over these 48 months, if I save $M/month @ 5.25%APR, accrued money =

M * 48 * ( 1 + 5.25 * 47 / 2400) = 52.935 * M

Tax on the next car after 48 mo = 0.0625 * $35,000 = $2,187.5
To save up $15,750 + $2,187, monthly savings M = $340

In words: If I keep saving $340/mo for 48 months, I will have more than $15,750 (the depreciation on the car) + the tax money for the next car. If I can have a buyer buy my old car from me for 55% ($19,250), I can buy a $35,000 vehicle every 4 years, for the cost of $340/mo.

Compare this to monthly payment for leasing:
depreciation payment = 0.45 * $35,000 / 48 = $328
money factor cost @7% APR = 1.55 * $35,000 * 7/2400 = $158
Tax spread out = 0.0625 * $35000 /48 = $45.57

Cost per month for leasing with no money down = $532

Conclusion: Leasing is WAYYYY more expensive than buying the same car. This is a simplified math, but drives home the point. I have done the math including taxes on the savings account (yours will vary depending on your tax bracket) but conclusion remains the same - purchase is always better than leasing.

If you do not like the math - here's the point - for leasing, (a) you borrow the bank's car to drive, and (b) bank assumes the risk of selling the car at depreciated value - so you pay a hefty finance charge to the bank. The banks are able to squeeze the money out of you because

(a) You didnt exercise a discipline to save up for buying the car now
(b) You need a car every day for going to work (This is how they rope you in - you have to buy/lease another car the very day you return a leased car)

british_rover · June 2007

That is not always the case though. There are leasing programs out there with .000001 money factors, enhanced residuals and lease cash up front so you pay no money down.

For those cars leasing makes sense.

Also you should never lease for 48 months. I recomend that people lease for between 30 and 36 months. You only go shorter or longer if the programs make a 24 or 39 month lease too attractive to pass up.

A 39 month lease is the absolute most you should do.

kyfdx · June 2007

You aren't considering the time/value of the money you paid upfront. What about the lost investment on that money?

If you want to compare apples to apples, then you have to compare leasing the car to financing the purchase. And, even then, you have to consider the actual depreciation of the purchased car to the fixed depreciation of the leased car.

Other possible scenarios? The leased car could have a lower effective interest rate than a car loan. Or, it could have an unrealistically high residual compared to real-world experience.

Blanket statements that leasing is always more expensive than paying cash or financing don't reflect reality. Sometimes they will be correct. Maybe even more than 50% of the time, but that still leaves a lot of instances where it doesn't apply.

regards,
kyfdx

msindallas · June 2007

Oh sure, like I said, for someone else leasing could be less expensive. People get tax incentives for leasing, car can be business expense (tax free), there is inflated residuals (more deceit). Everybody should do their own math and figure out what is best for them. I will make my point with another example: Here is an offer to dealer:

Price of new car: $X
Depreciated value after 36 mo: $Y

I give you ($X-$Y)+TTL right now, return the car after 36mo or 36,000 miles, whichever is earlier. Any takers? Inflate the residual all you want, it makes things easier for me.

My experience is that neither the dealer nor any bank is interested (I actually offered this to 2 dealers). Responses:

1. That is not how leases work (I guess they want a quart of blood every month).
2. You dont want to pay finance charges. Why should I let you do this?
3. You are asking the bank to take the risk of selling the car for $Y after 36 months. Why should the bank take the risk?

grandtotal · June 2007

A 39 month lease is the absolute most you should do.

Would you care to back that statement up with reason(s)?

sebring95 · June 2007

Compare this to monthly payment for leasing:
depreciation payment = 0.45 * $35,000 / 48 = $328
money factor cost 7% APR = 1.55 * $35,000 * 7/2400 = $158
Tax spread out = 0.0625 * $35000 /48 = $45.57

Cost per month for leasing with no money down = $532

Now, you need to calculate the interest savings of KEEPING your $35,000. Using the 5.25% you used before, that should make up a big chunk of that difference. It may still be more expensive that your financial model that doesn't exist, but it's not a HUGE difference. Banks are only going to offer financing plans that make them lots of money. Manufacturer leases are going to offer plans that make them money and moves vehicles. The only way to guarantee yourself a predetermined buy-out amount is the conventional lease.

And I agree, that leasing is almost always more expensive than buying. There are exceptions, but when you fully do the math it almost always works out in favor of conventional buying. IF you can take a tax deduction for your lease payments AND the vehicle is in the $40,000+ range, and you invest the payment/cash difference, leasing can be financially beneficial. Beyond those conditions, leasing is a convenience or a way to get a vehicle you otherwise couldn't afford.

The reason I questioned why you're so worried about the future value is this: Banks are hedging their bets when they're giving you a residual value. In most cases, just buying the vehicle outright and then selling/trading in the same time period will work out to your advantage. There was a time period when they were regularly inflating (either by choice or bad estimating skills) the residuals, but most learned their lessons and now go with very conservative residual. The value of the vehicle isn't effected by whether it's leased or not, it's just a matter of guaranteeing the value. It would take a major market turn for you to really come out a head on the lease residual.

In your situation, I'd recommend pounding out the best price possible for your vehicle (or find a very slightly used one) paying cash and making payments to your savings account in lieu of a lease payment. In 48 months, the vehicle will be worth $XX which is likely more than the lease residual and you can easily sell/trade it and start over. Yeah, there's a little bit of risk that a major market turn could zap your residual more than planned, but the odds are in your favor.

kyfdx · June 2007

1. That is not how leases work (I guess they want a quart of blood every month).
2. You dont want to pay finance charges. Why should I let you do this?
3. You are asking the bank to take the risk of selling the car for $Y after 36 months. Why should the bank take the risk?

Those are all valid responses to your proposal.

No offense, but the only thing this proves... is that you really don't understand leasing. Which is why your comparison examples are all wrong.

But, all that is okay. On one point you are absolutely correct. If you don't understand leasing, then you shouldn't lease. Because, you'll never know if you are getting a good deal, or not.

regards,
kyfdx
visiting host

british_rover · June 2007

Easily done.

You should never lease a car out of warranty and a 39 month lease using the 15,000 miles a year average puts you right at the end of the warranty.

Assuming we are talking about cars with a 4 year 50,000 mile warranty that is.

Also as you get above 40,000 miles things start needing to be replaced. Tires and brakes are going to need to be done around then if not before. If you are doing a lower mileage lease you might be able to get by without putting brakes or tires on the car. Depending on the leasing company they will charge you back if the tires and brakes are below a certain margin.

I can maybe see doing a 42 month lease if you were only doing 10,000 miles a year but only if the monthly cost savings were very significant over a shorter term lease.

msindallas · June 2007

Thank you, sebring95. You answered one question I could not find the answer for - when a dealer tells you about a residual value, if that estimate is conservative or not. Good to know they are conservative. Now I can do my math accordingly, to figure out how much to save for the next car.

One more question (pardon my ignorance): Lets say the estimated residual for a $40,000 car is 55%, or $22,000 after 36 months. Lets also assume that market conditions, etc. remain stable. I buy the car now and bring it back as trade-in after 36 months. Should I expect $22K for my trade-in, or something around $19K, since the dealer will have to sell the car to somebody and make around $3K in the process?

sebring95 · June 2007

All things being equal, the residual value is supposed to be the estimated wholesale cost of the vehicle. The leasing company (US Bank, Toyota Finance, etc.) will take that vehicle back and run it through an auction, where they expect to get their money back. So, assuming they're not using an inflated residual value you should be able to get that amount on a trade-in. Might have to haggle since dealers like to make money....but you should be able to get that on trade. Or a lot more on a private sale.

I know Toyota has used some goofy residuals lately on the Tundras to move them, so it's certainly not beyond them to inflate the residual to move iron. I would look at what private banks are using for residuals over the manufacturer. Two reasons why: The private leasing company has no incentive to inflate the residual value. They also will have a greater cost of wholesaling the vehicle on the tail-end so they'll have a more conservative approach on values.

In your position, the only thing you're gaining by leasing is a guaranteed value on the tail end. And you'll pay dearly for that. Keep in mind if you have some excess wear/tear or miles racked up, that will cost you a lot more on the leased vehicle than one you own.

msindallas · June 2007

In your position, the only thing you're gaining by leasing is a guaranteed value on the tail end. And you'll pay dearly for that. Keep in mind if you have some excess wear/tear or miles racked up, that will cost you a lot more on the leased vehicle than one you own.

Thank you again, sebring95. I figured out the 1st 2 points, guaranteed value and paying dearly. One last question, and I'll shut up after this (for a while, at least). This is something that I cannot figure out by myself...

How do the miles driven relate to the depreciation calculation? Looks like the more I drive the better off I am. Thanks for your input.

Example: I buy a $30,000 car and drive it for 6years/100Kmiles, trade it for $5,000. The cost of driving the car is $25K/100Kmiles = $0.25/mile, over 6 years.

OTOH, I lease the car for 3yr/30Kmiles for $400/mo, and the residual is $16,500.
Cost of driving (depreciation, fixed by lease) = $13,500/30Kmiles = $0.45/mile.
Charge for driving extra miles (per contract) = $0.15/mile.

In 3 years, I put on 50Kmiles on the odo, bring the car back, write a check for $0.15*(50-30)Kmiles = $3,000 and walk away. I got to drive 20Kmiles at $0.15/mile, cheaper than owning the car.
Overall per mile cost = (36*$400+$3000)/50K = $0.348/mile.

Just for argument, if I put extra 70Kmiles, the cost per mile is (36*$400+$0.15*70K)/100K = $0.249/mile! This is cheaper than owning the car, if I can put on all those miles in 3 years instead of 6.

So, when I lease, the initial miles are more expensive compared to owning, but if I drive lots of miles, I get to drive the extra miles at a cheaper rate. Does this make sense? Should one target to get the lease at the minimum term/miles and put on a bunch of additional miles to get closer to breaking even?

sebring95 · June 2007

Well, I guess the cost is the same (or slightly less) per mile. But in the buy scenario you spent $25,000 for three years worth of transportation. In the lease scenario, you spent $24,900 for three years. I'm not sure that's a good comparison either way.

One thing to consider is that depreciation levels off during year three and drops significantly for years four and five. This is why the 60 month leases are so attractive to the low-income folks. I can make $250 payments and get a new car (that's not exactly new feeling 40 months into the payments......and you've got nothing to show for that money).

The mileage the leasing company charges is usually a profit maker as well. Take a look at residual values on 36k miles leases vs 45k miles leases. There's a $323 change in residual on a full-size Chevy pickup. At $.15/mile that's a $1,350 charge on the tail end. So you be the judge on that one....the money factor on the difference sure doesn't equal that!

And it would make sense (in every scenario) that the cost per mile will go down the more you drive. That's because there's a fixed amount of depreciation on a vehicle regardless of how much it's driven. It's only incrementally more expensive as the miles pile on (but maintenance also starts becoming a factor). You could potentially get by without even buying a set of tires on a 36k miles lease.

commercebranch · June 2007

Here's one I've never heard of before...

My company leases cars for their employees. They request that the lease is structured so that at the end of the lease, there is a small buyout - $500, and they own the car free and clear. As a result, the lease payments are astronomical - $900+ per month for a $40k car on a 4 year lease. I've never heard of anything like this, and I doubt it's legal. They say they have been advised to do it for tax purposes. Thoughts?

jlawrence01 · June 2007

My company leases cars for their employees. They request that the lease is structured so that at the end of the lease, there is a small buyout - $500, and they own the car free and clear. As a result, the lease payments are astronomical - $900+ per month for a $40k car on a 4 year lease. I've never heard of anything like this, and I doubt it's legal. They say they have been advised to do it for tax purposes. Thoughts?

Why would it not be legal?

When I lease cars, we generally pay 2% of the capitalized cost of the vehicle (purchase price plus taxes plus license and fees) to the leasing company plus interest on a monthly basis. We use the 2% factor as we depreciate our fleet vehicles over 50 months. On some vehicles, we adjust that to as low as three years (due to high mileage). On slow depreciating vehicles like Lexus, we may go to 60 months.

After 50 months, we own the vehicle and often sell teh vehicle to our employees.

Why is $900 an unreasonable lease amount? That is generally what you pay for a $40-45k vehicle when you have a lease without a guaranteed residual like MOST business leases. You are comparing it to a CONSUMER lease which is a whole different animal.

By structuring the lease the way we do, we can drive teh vehicles as many miles as needed for business each year with no penalty. But there is no guarantee that we'll get a certain dollar amount at disposal.

The ONLY issue that I would have is that the company is required to sell the vehicle to the employee at fair amrket value. If the company gives the employee a bargain price (like $500), the difference between FMV and the sales price would be considered W-2 income. (And we have done that on occasion also.)

For the record, we deal with all the major leasing companies like LeasePlan, Wheels, GE Fleet, and ARI and they all handle it in this manner.

sebring95 · June 2007

I'm confused on one thing....are the employees buying the cars for $500 at the end, or is the company buying the car and keeping it in their fleet? If the employees are actually buying the cars, then there should be some taxable benefits to them for the difference in fair market value.

But these types of lease are not so much for tax purposes, but for the balance sheet. The loans show-up as debt, the leases are just operating expenses. For tax purposes, a lease with a less-than-market-value buy-out is a construed purchase and will be taxed the same as if it were owned by the company. Leases expenses on luxury vehicles are also limited for tax purposes similar to if it was purchased.

nwgal · June 2007

My lease is set to expire on 9/2/07 on my 2002 Ford Ranger PU. The residual value stated on the contract is $5,829. However, there is a purchase option also shown on the contract of $6,179. I just called for the full purchase amount and was told the amount is $7,696.61 - which includes 9.2% tax on $6179. Even with my July and August payments included in the amount, there's a difference of $238.38 unaccounted for. Can anybody explain what this is for?

Also, what is the difference between the residual and the purchase price on my contract? And finally, is my purchase price negotiable considering the value of the truck is more than the purchase price.

One more question - when looking at the blue book value of the truck, should I be looking at the trade-in value, retail or private party value?

Thank you!!

sebring95 · June 2007

Well, $6,179 - $5,829 is a $350 difference. Sounds like some sort of a service charge. You signed the contract, so I guess you agreed to that.

No idea on the $238 but they should be able to explain.

As for values, this can be a tough one. There's a real-world pricing forum around here and that would be a good place to post your truck/options and ask for some values. I would compare edmunds and kbb numbers and go with the lesser amount. Whether you use trade-in or private party values just depends on what you're plans are for the truck.

The only Ford lease I've had work out to where it made sense to buy-out and resell was on a 30 month Lincoln LS V8 with only 8k miles. Everything else has been worth less than the buy-out.

joel0622 · June 2007

Even with my July and August payments included in the amount, there's a difference of $238.38 unaccounted for. Can anybody explain what this is for?

Sounds like the dealer exercised his option to add a small amount to the buy out at lease inception to make it worth the time to do the buy out. In 2002 if I remember right you could add up to $500 to the buy out option. If you were a plan customer then $250 or $350 (I can't remember) was automatically added to it wether the dealer wanted to or not. The reason why was to make it uniform for all plan customers. One cannot be offered a better deal then another on a vehicle.

Kirstie_H · June 2007

Whoa! If the value is more than the purchase price, you don't want to negotiate the purchase price! You are to be envied, as you have the option of buying it for the lower price, then selling it yourself for a profit if you want to go thru the hassle.

tbuonger · November 2007

Hello all.

I leased a 2006 Honda Accord EX-L w/Nav for $382/mo for 24 months, with 12k miles per year. The car currently has 8k miles and the lease ends in seven months. The payoff is 19475. There's no way I'm going to return the lease, definately need to buy the car, but should I keep it or sell it and buy/lease a new car. At current interest rates, probably can get the same monthly payments.

dtownfb · November 2007

Since you have seven months left on your lease, it makes it harder to give you a definite answer. If it were me making this decision, this is the informatin i would need to know.

- What are similar 2006 Accord selling/trading for (at the anticipated mileage at the end of the lease)?
- What interest rate can I realistically get and what length of contract?

You can go over to the Real World Trade-In values forum (see link below) and give them the specs for your Accord estimating the miles at the end of the lease. Those experts can give you a realistic trade-in value on the Accord. If the trade-in value is greater then the residual, it may be worthwhile to keep the Accord or buy it and trade it in on another car. If it is lower then the residual (which I doubt), then simply turn it in.
http://townhall-talk.edmunds.com/WebX/.ee9c851/34275

If you keep the same monthly payment, you'll need approximately 52 months to pay off the loan (this does not include sales tax on the residual) on this USED car. Essentially, you will have paid $382 for 76 months on this car. You'll have to decide if you are comfortable with this. With the amount you drive per year (or don't drive), you can easily hold onto this car for another decade. So the extra payments may not mean anythign to you.

To sum it up, you need to know the approximate value of the Accord at the end of the lease. this will dictate what you should do.

Good luck.

jackstar · November 2007

I need some advice....

I am nearing the end of a GMAC lease. I called to day to negotiate the residual/buy-out price to see if I could get them down some because I wnat to buy the car. I was told by the first person and then his manager that "GMAC does not negotiate". Is this really true? Has anyone else experienced this? Is there anything that can be done or will I simply have to pay the agreed-upon residual and the sales tax to buy the car in a couple of months. Any help is appreciated.

JS

qbrozen · November 2007

have you found out what the car is really worth? That would be my first step. If it is not worth the buyout, then I would just return it if they refuse to negotiate. If it is worth the buyout, then I'm sure they won't negotiate. I mean, why would they?

mlski96 · December 2007

have a 2006 EX AWD Leather Honda Pilot lease due April 2009; and am interested in buying the car. The car has 10,500 miles on it. Can you give me some advice?

sebring95 · December 2007

Wait until closer to the end of the lease, unless they're willing to give you some sort of deal on the current buy-out. I know Toyota doesn't budge on the numbers if you want to buy it out in advance....you basically owe the residual + payment X number of payments left. So buying out early makes no sense that I can come up with.

skopiec · January 2008

Looking to gather some feedback on purchasing our '04 XC70 at the end of our 4 year lease. Facts:

Residual - 19K (Huntington bank) - Havn't tried negotiating yet
4 yr warranty from the dealer around 2.6K
9.5/10 condition right now - really no mechanical issues over the last 4 years. Been a fantastic car
I have the cash to buy it, so I woudnt be financing any of the amount

Would you
a) Buy it for 19K and pay for repairs (self insure w/ the 2.6K)
b) But it and the warranty
c) Just lease another one and pull the interest of the 20K in the bank
d) Buy something new w/ a 20K d/p. Looking at A4s, TLs, etc

I have a preference to get off the leasing train, but I don't want to make a decision w/o weighing all of the factors. My wife really likes the car and feels she could be happy with it for another 3-4 years, assuming it continues to be reliable. I'm a DIY kind of guy, but this car intimidates me a bit for anything past normal servicing

Thanks for any input!

volvomax · January 2008

If it were me, I would probably lease a new car. But, thats me.
The buyout price isn't bad.Wholesale isn't much less,so huntington prob won't give you much of a break. Don't forget that you will probably have to pay sales tax on the buyout price.
I'd also get the warranty. There is virtually nothing you can do yourself on the XC70.

skopiec · January 2008

Thanks for the reply 'max.

In your experience, do Volvo's that are initially "good" tend to stay that way throughout their life? The one I have could have had "Toyota" on the front so far

Purchasing at the End of Your Lease

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