Purchasing at the End of Your Lease

artu · July 2008

The lease is with U.S.Bank and the model year is 2003 Sorry about that Artu

dwynne · July 2008

Turn that baby in and run, don't walk, away from it. The trade value on a guzzling 03 Pilot with 60k miles is probably under 10k.

I have had USB leases in the past and they use a 3rd party to handle the lease end and they do not (or did not) negotiate the buy out price and yours is WAY over the actual value of the Pilot.

The current Pilot lease deals are not very good but would still be a better "deal" than paying nearly 2x what your used Pilot is worth.

Anything is possible, USB may be so desperate to keep you from turning that Pilot in they will deal - but you are so far from the actual value that even if they dealt the price down you would still be overpaying for it.

Dennis

volvomax · July 2008

dwynne is pretty close on his guess.
03 Pilot ALL the money is $10,000
Realistically, it would bring $8-9,000

emjules · July 2008

I have at 72 month lease on a Ford Expedition that ends in Mar '09.

I am thinking about all of these for my next car:
GMC Acadia/Saturn Outlook/Buick Enclave/Toyota Hybrid

I have heard that some of these vehicles are hard to get lately, especially hybrids(waiting list).
At which time should I start shopping for a new car? On my last leases, I went in a couple of months b/f the lease end and the dealers, of course had no problem "taking over" (read:putting it into the price of the new car) my lease payments for me so I could drive off in a new car that day. With SUV's and the gas prices lately, I have heard they are sitting on dealer lots, so I am wondering how hard it is going to be to unload the Expedition a little early-

Any thoughts??

Thanks,
Jamie

volvomax · July 2008

Well, if all you are going to do is roll a payment or two in and return the truck to the lender that shouldn't be a problem.
I wouldn't try to actually trade the truck in though.
Why on earth did you do a 72 mo lease??? :confuse:

emjules · July 2008

I did a 72 mo lease b/c at the time, the payments for this type of lease were all I could afford monthly. The more you stretch it out, the cheaper the monthly pmt-

It has been a LONG 6 years and I am itching to start looking!! I am used to 3 yr leases so this has been unusually long!!

When should I start shopping if my lease is up in March?

Also, someone opened their door into my drivers side door the other day and there is now a nice "ding" in it- do you know if I need to get that repaired b/f turning that in?

Thx-
Jamie

qbrozen · July 2008

I did a 72 mo lease b/c at the time, the payments for this type of lease were all I could afford monthly.

That just means you were looking at WAY too much vehicle, of course.

With the resale of monstrous gas guzzlers like this, you are most likely stuck in it till the end of the lease, unless you want to roll the remaining payments into the next one. But I suggest you lie in the bed you made.

As far as your ding, read your contract. It should state on there what exactly is allowed on the vehicle at turn in.

volvomax · July 2008

I'd start seriously looking a month before the end of your lease.
Now, if your lease ends in March, your last payment is due in Feb.
So, once that payment is made, you can return the car.
6 yrs is wayyyy to long to lease a car.
I would probably not go any more than 3 yrs, even if you have to lease less car.

mlski96 · July 2008

Dear Dennis -
Thank you for the info - you really opened my eyes to Honda's M.O. I think I'll just turn it in and buy a used Pilot of CRV when the time comes.
mlski

ken1496 · July 2008

Thinking about purchasing VW Passat Wagon at the end of 36mo lease. Any feedback appreicated.

TMV price $16,404 (does the cost include CA sales tax?)
Purchase price $15,619 (all inclusive)

VW Credit 6.34%

czall · July 2008

I have a 2005 Volvo xc90 2.5T awd. we have already decided to buy the vehicle our lease is up in two months. i have been negotiating with US Bank. one month ago they offered me the car for $22,700 and they said they would cancel my last three lease payments of $530 a month but i decided to wait and make another payment to see if their offer would go lower now their offer is $22,000 (again if i buy the car obviously i dont have to make the final two lease payments) so i actually saved money by making my lease payment since the price came down $700 but i had to pay the monthly payment of $530 so i saved $170. My question is should i do this again in otherwords if i wait until lease end to buy the car i will have to send them $1060 will the car come down in the price by that much in two months? US Bank says they are giving me the wholsale price and that the price will come down at lease end based upon the wholsale book so do i roll the dice hoping the price comes down by more than $1060 or do i take the deal now? Original MSRP on this car was $44,000. im just not sure if this car will decline in wholesale value more than $1000 over the next two months. any thoughts? thanks

sebring95 · July 2008

What was the original residual (buy-out) stated in the lease contract? Go to the "real-world trade-in value" forum and post your vehicle for a "real-world" wholesale quote. Gotta keep US Bank honest on their wholesale number! With the current market for SUV's in the tank, it very well could decline more than a $1,000 in two months!

dwynne · July 2008

I would compare the buy out price against Edmunds, KBB, and NADA prices but at the TRADE IN level and not retail pricing. You would have to ADD tax to the online trade values you find.

Are you under miles and the car in great shape (no dents, dings, scratches) with good tread on the tires? in other words, if you turned it in would you have to pay in extra charges? If so, you take that amount and subtract it from the amount of the buyout.

If buying your car would cost you about the same without taxes and after adjusting for end of lease charges as you could likely get for it trade in, then I would say that is a decent deal.

You should be able to do better on the rate as well. If nothing else, spend $20 and join the Pentagon Credit Union. Last time I looked they were doing 4.5% but they have had lower rates.

VW has not had a very good reliability record lately, but I would keep that in mind when deciding what to do.

Dennis

dwynne · July 2008

Times must indeed be tough if USB is negotiating lease buy out prices way in advance. I fought with them over the value of a 2000 Corvette and we went down to the last day of the lease before they dropped the price (and gave me a free couple of weeks to find a buyer for the car).

As you said, they dropped the price but you only saved $170. Sure they could make better offers in the next two months but after making your payment your net may not be much better.

Get the value here from the "real world value" forum as user sebring suggested, then check for trade value at Edmunds, KBB, and NADA then go to the various online car sources (ebay, cars.com, autotrader.com) and see what folks are ASKING for the same vehicle (asking price does not equal selling price or value). If you have a Carmax or DriversWay in your area run by and see what they will give you for the car. It only takes a few minutes and it does not matter if you own it or not, they can still give you an offer.

Between all those numbers you should get an idea if you are getting a fair deal or not. If you are, then I would say go ahead and take it. If not, then I would hold out for a better deal and if it does not come - then turn the car in and get something else. Never over pay for the lease buy out price, if the value is not there then turn it in - the beauty of the lease

. I would assume you would have no turn in charges or extra mile charges or damages. If you do, then you have to factor those in to your price comparison.

USB should offer you a discounted loan rate on the buyout as well, something cheaper than your bank or credit union offers. If they don't, ask them about that as well. PenFed is doing 4.5% for up to 60 months on used cars, so you can always go that route (if you plan on financing the buyout).

Dennis

hillybilly · July 2008

I have taken a 05 Acura MDX base model on 4K down $399/mo 36 month lease ($430/mo with tax). At the end of the term, I have an option to buy it for 22K.

I like the SUV though It is bigger than what I need. I took it for skiing trips and it never had any problems.

1) Is it worth it 22K (+whatever tax)
2) If I return it, I would like to buy a mid range (about 24K + Tax) Honda CRV EX or Toyota Rav-4 . Would it make sense buying these..

I am turning to you gurus for a real good advice.

volvomax · July 2008

1) Is it worth it 22K (+whatever tax)

Nope.
Wholesale is around $13-14,000
So, its probably a $16-17k sale.

2) If I return it, I would like to buy a mid range (about 24K + Tax) Honda CRV EX or Toyota Rav-4 . Would it make sense buying these..

Define "make sense"

hillybilly · July 2008

Quote :
I have taken a 05 Acura MDX base model on 4K down $399/mo 36 month lease ($430/mo with tax). At the end of the term, I have an option to buy it for 22K.I like the SUV though It is bigger than what I need. I took it for skiing trips and it never had any problems.

1) Is it worth it 22K (+whatever tax)
2) If I return it, I would like to buy a mid range (about 24K + Tax) Honda CRV EX or Toyota Rav-4 . Would it make sense buying these..

I am turning to you gurus for a real good advice.
Replying to: hillybilly (Jul 24, 2008 2:34 pm)
1) Is it worth it 22K (+whatever tax)

Nope.
Wholesale is around $13-14,000
So, its probably a $16-17k sale.

2) If I return it, I would like to buy a mid range (about 24K + Tax) Honda CRV EX or Toyota Rav-4 . Would it make sense buying these..

Define "make sense"

My alternative is a $24k new Small SUV and I save about 11 gallons a month vs MDX. I like both equally. Would it be economical to buy a new small suv instead of buying my MDX (say, the dealer agrees for 19k) considering Depreciation, Loan interest (0.9), and operating cost etc..

Though it is in the contract that I have an option to buy this back at 22K,
Is that negotiable.. (KBB Values - Trade-in 16K, Private party 20K, Retail 24K). What is the reasonable price to buy it..

volvomax · July 2008

Well, 11 gal/mo @ $4.00/gal is $44/mo.

So, IF you can buy the MDX in the teens, you aren't saving any money buying a $24k SUV.
How long would you keep the MDX vs the mini ute?

Personally, I think that leasing a mini ute might be the smart thing to do.
The entire SUV segment is in flux right now. It's hard to say how it will shake out.
With a lease, you do have a get out of jail free card if the entire segment tanks.

kyfdx · July 2008

I'd get a brand-new CR-V for $24K, before buying a 3 yr.old MDX for $19K... Having owned two CR-Vs (might be a little biased), I'll guess that the depreciation on the new one will be less than the used MDX, you'll use less gas, maintenance will be less.... and, you'll have a new car warranty....

Just my $0.02,
kyfdx
visiting host

af1092 · July 2008

Hi,

The end of my lease is coming up on my 2005 Jeep Wrangler Sport. The lease was for 36k i will have about 39k when i turn it in and the buy-out value on it is $15,756.00 without takes another $1,100.00 about with taxes. The car is in excellent condition except for the soft top is torn about an inch in two places (i have the hard top as well) and there are two rings of glue stuck to the rear seats from duct tape that was squished in there. Besides for that there are no other problems with the car, not even a scratch or two. The trade-in value for an excellent condition is about 14,200.

What are your thoughts?

Thanks!

volvomax · July 2008

Realistic trade w/ those miles is closer to $13k than $14k.
Even so, you'll probably pay as much or more than your buyout for
a comparable used one from a dealer.

jeffc · July 2008

My lease on this car will be up in about 5 months. Car is in excellent shape and only has 21,000 miles on it ( my limit would be 39,000 under the lease agreement.)

The residual is $9,027.

2 of my kids are very interested in the car as they know I pampered it and took excellent care of it, plus it has low miles.

Does Hyundai allow family members to buy the car or is the deal only for me? Due to my wife becoming disabled and financial issues, I do not think I will be purchasing the car at lease end ( it is killing me as i love the car and had originally planned on buying it).

Will they do this? What about if they buy and I co-sign for them? Or do I have to buy and then sell it to them?

dwynne · July 2008

Are your kids "kids" or grown ups living away from home ?

In most states title can't pass from the lease bank to anyone except a licensed car dealer or the lessee (you). So you would have to buy the car, pay sales tax to register it, then resell it to your children and then they would also have to pay sales tax.

In some states (CA, for one) you can get a tax refund of you resell the car in xx days. In about every state if you go through a dealer you can avoid the double tax problem, but will have to pay the dealer some money to handle the paperwork. This could be several hundred dollars so check with several dealers to see who will even do it and how much they will charge you. Depending on your tax rate you could do the double tax thing and still come out OK. Here in 7% tax land than would pretty much ruin the deal. You could also ask your local DMV how you go about giving the car to one of your children in a manner than would not cause them to pay extra taxes.

The powertrain warranty is only valid for the original owner (you) and goes away when you sell the car.

Ideally, if you purchased the car and titled it in your name and then let your "kids" use it you avoid the double tax and keep the warranty intact. You have registration and insurance issues, though.

Dennis

dgdapilot · August 2008

Great info on this topic. Here's the stats on my lease. I'm just not sure what to do at the end. I now love my car, but I also really want a 2009 Dodge Challenger R/T (to buy, not lease). Anyhoo:

She a Daytona special edition, TorRed in color. 1 of 2000 made. It's a 27 month lease that started in IL. The car is now registered in TX. I'm allowed 12000 miles a year (27000 total). Lease is up March 2009 and I will have about 18 or 19000 miles on the car. She is in absolute pristine condition. Lease payments are $405.56 (includes an oil service contract). I put $3000 down, had a rebate of $1834, plus made the first lease payment on day 1 (405.56). Tax owed at start of lease was $1789. My residual is showing $19714.80. MSRP was $35,205.

Any input? Does Chrysler Financial ever negotiate? I know they just recently stopped future leasing and will not charge me the $425 turn-in fee if I buy out this car or buy another new one at the end.

Thanks.

volvomax · August 2008

Walk away unless Chrysler Financial will negotiate.
Car isn't worth $19,700 today, let alone in March.

dgdapilot · August 2008

Well I respectfully disagree. That car is consistently going for $21+ (private sales) right now with double the miles I have.

volvomax · August 2008

Well I respectfully disagree. That car is consistently going for $21+ (private sales) right now with double the miles I have.

Hey, if you want to pay all the money, be my guest.

dgdapilot · August 2008

If you're going to respond to my original post, please give information that I can use in determining a "yes/no/what-to-do" answer. If I wanted a straight up "dump it" answer with no explanation, I could've asked a bum on the street.

Thank you.

sebring95 · August 2008

Well you did ask for input. I'd say be prepared to turn it in as well. If it's not worth $19,700 on trade today...it's not going to be worth that in seven months. Private sale? Maybe....but even today...assume you can get $22,500 with the low miles...you're looking at break-even with your current buy-out. Not a good sign. If you really WANT to keep it, then it comes down to a personal decision and we can't help you there.

Will DC negotiate? I dunno. I haven't seen any of the captive finance arms negotiating on lease buy-out the last few years, which tells me they're likely insured against market swings. Maybe that's why Chrysler is getting out of leasing....the insurance premiums might price them out of the market.

dwynne · August 2008

I will jump in with my $0.02 worth.

I have no idea if they will negotiate or not, they usually do not - but these are strange times. Your lease is not up until next March so asking now is a waste of your time - none of us knows what will happen next week or next month, we darn sure are not going to know what is going to happen 7 months from now.

In any case, you don't want to keep the car you want to get something else - right? In most states title can't pass from your lease bank to anyone but you and then sales tax will be due. Then when you sell it sales tax is again due. So unless you go through a licensed car dealer to handle the paperwork the double tax will kill any kind of "deal" you have and leave you with little or no profit.

A $425 turn in fee is pretty rich, this is with a 3rd party lease bank or Chrysler Financial? Usually only 3rd party banks charge such high fees.

Wait until your lease is about up and see if they offer you a discount on the car. If not, then just turn it in a walk away. If they do and you can work a deal to beat the double tax with a dealer, then perhaps you can make a little money off of it - but I would seriously doubt it.

Dennis

dgdapilot · August 2008

Ok, thanks folks. That sheds some more light for me.

As to the $425 turn in fee, that is through Chrysler Financial. But like I posted earlier, they are now waiving that fee for people who buy out the car or roll into buying another Chrysler product.

Thanks again.

kylet · August 2008

My lease is going to end in 4mos. My residual is $39,241. I used kbb and gotten current value for the vehicle which is around $36,400. Assuming the trends hold, once my lease end the vehicle would be closer to $32K maybe less. Anyways, I was wondering if Mercedes Benz Financial negotiate the buyout price?

catspaw00tng · August 2008

I just got on this site looking for information on lease-end activities, and saw your posting - just wanted to interject that I am ending a lease (in 26 days) with Chrysler Financial, and several people there (from the bottom-of-the-totem phone answerer to the one manager I got through to) all told me that with the new management, Chrysler Financial will not bargain on the lease-end amount. Period. Best they'll do is waive the turn-in fee.

I have a ridiculously high credit rating and got a phenomenal rate from my credit union to buy either new or used, but the folks at CF told me that they "don't do preferential treatment" - that manager I spoke to explained to me that that means they don't negotiate on the interest rate anymore, either. *shrug*

Hope this information is helpful, and good luck on the new car. I'd give my eye-teeth for one of the new Challengers, but I don't have anyplace secure enough to park one (you know, Fort Knox secure, with alarms, and guard dogs, and ninja security guards *grin*).

-C

dgdapilot · August 2008

Thanks for the post. Much appreciated.

mattplayspiano · September 2008

Hello all --

I'm currently leasing an '07 Mazda 3 (which I love). It's a $17,000 car, my end-of-lease purchase price is $11,500. By the end of the lease I will have put $8,500 into the vehicle. Edmunds says the resale value is around $13,000 for my model.

Still, the numbers don't add up to me. I've never leased before -- it is reasonable to ask Mazda American Credit to lower the purchase price to something closer to $9,000 (which is the difference between sticker price and what I've invested) or is that too pie-in-the-sky hopeful?

Thanks for any advice!
MATT

kyfdx · September 2008

What you've put into the car really has no relation to it's worth. If the buyout is $11,500 and the value is $13K, then why would they cut the price for you, if the residual is already under the actual value?

Another way to look at it: Your $8500 investment includes finance charges... after all, you've borrowed their car for two years... You wouldn't expect them to loan you the money at 0%..

regards,
kyfdx

volvomax · September 2008

First of all, Mazda Credit probably won't negotiate with you.
They could sell that car for more than the $11500 and make some money.
That is what they are in business to do.
Second, it rarely makes any financial sense to buy out a leased vehicle.
I'd suggest you go buy or lease another car.

bgates222 · September 2008

ok ive not come across this before
My mother leased a mini cooper in 2006 for 2 years and 24k miles
now its time to turn the car back in and to my dismay she has 6k miles on the car
and they want around 18k for the car if she wanted to buy it. It seems to make more sense to buy the car and either keep it or sell it on our own because with that kind of milege wouldnt they make a killing on it? Or can we use it to get into another brand new car ? thtnks in advnace

volvomax · September 2008

Car's worth @ $18k on a trade.
So, you wouldn't have much, if any equity.
However, if you wanted to buy it, it's a good price.

qbrozen · September 2008

He doesn't say it here, but in the RWTIV board, he said convertible. To which you replied its worth around $21k trade.

bgates222 · September 2008

ok i thought it was a good deal just wanted some input thanks guys

volvomax · September 2008

Hmmm, wasn't paying attention.

qbrozen · September 2008

can't blame ya. You've got alot of requests to answer.

johnrobert57 · September 2008

My Volvo above comes to the end of it's lease Nov. 1st. It has 48M miles, 2.5 liter 2 Wheel Drive. It's in very good condition. They have now lowered the buyout to $17,225. Originally it was over $20,000. I've checked an it looks like the party to party value of the car is around $19,000. It looks like an OK deal as I dread having to go out find another vehicle. My question is.......will US Bank negotiate that $17,225 number? If so, what might I offer? \\

ANy help is appreciated.

JohnRobert57

volvomax · September 2008

US Bank will negotiate, to a point.
$17k is a pretty good price as it is though.

fandiguy · September 2008

I'm currently leasing an '07 Mazda 3 (which I love). It's a $17,000 car, my end-of-lease purchase price is $11,500. By the end of the lease I will have put $8,500 into the vehicle. Edmunds says the resale value is around $13,000 for my model.

Still, the numbers don't add up to me. I've never leased before -- it is reasonable to ask Mazda American Credit to lower the purchase price to something closer to $9,000 (which is the difference between sticker price and what I've invested) or is that too pie-in-the-sky hopeful?

Just because Edmunds says its worth $13000 that doesn't mean its worth $13000, keep that in mind. Unfortunately Mazda won't negotiate a dime on the purchase price, i think they've got some good leases going on right now for the 3. Maybe you can just lease a new one.

yatze · September 2008

My lease on BMW 530 xi station wagon is up in March. Residual is aprox, $38k. I paid for 45k miles, but only drove 18.5K miles. The extended warranty on this car would run about $6k according to the dealer. Even though I still have a year left on this car, the dealer told me I would have to pony up the warranty amount upon purchase of the car, not when the original waranty would end after I would own it for a year. The dealer and BMW financial services both said if I re-lease for one year, it would cost me more per month than I am paying now.

So, what are your suggestions? I am going to need another wagon. Thanks.

kyfdx · September 2008

You still have six months to go..

If you are interested in purchasing the car, wait until closer to March, and they may offer it to you for less.. They certainly won't negotiate this far in advance..

volvomax · September 2008

If it's an 06, $38k is WAYYYY too much.
If it's an 07, it's still too much.
$38k, plus $6k warranty! plus TTL.

I'd look at leasing a new one. Or, go look at a Subaru wagon or Volvo XC70 or Audi Avant.

yatze · September 2008

Thanks for your response. Can you give me a ballpark figure if I want to buy it?

I checked with several dealers and BMW financial and they all said that it's about $3k for warranty and another 2-3K for maintenance warranty.

Was told that leasing a 535xi would run over $100 a month more which would
put me at $759 and I would have to come up with a downpayment to get that #.

Didn't like the Subaru -- new XC70 are close to 42K.

I live in ne NJ -- both BMW dealers just put multi million dollar renovations and they are not hurting for business they told me. So they won't deal. Actually none of the high end dealers BMW, MB, or Audi negotiate much around here. A friend of mine priced a 535i to lease loaded and they wanted over $800. Which is why I was thinking of buying.

Purchasing at the End of Your Lease

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