Purchasing at the End of Your Lease

tmjohnson39 · June 2009

Good idea. Any idea where to find an independent inspector that would be respected if we were to go to court? Thanks for taking the time to write. I appreciate it.

sebring95 · June 2009

You might contact your insurance agent as well. It's usually more expensive to insure a leased vehicle for this reason. I was under the impression they would notify and clear repairs with the leasing company.

jeolivares · June 2009

Our 5 year lease is ending soon ( August 21), the financing agency says the cost to purchase is $18,000.00 at 8.5%. How do we know if this is the right price? Or if this is even negotiable? A quick search of comparably equipped vehicles with similar mileage (72,000) shows most going for 14,500-14,995.

sebring95 · June 2009

Is this leased through Toyota Motor Credit or someone else? From what I've found, Toyota won't negotiate the buy-out price. So whatever is stated as the residual in your original contract, that's what you'll have to pay. It sounds like you've already answered the question that it's not worth $18k...walk unless there's a good reason you should pay an extra $3k for it. If it's leased through another leasing company, they might negotiate a lower price if you ask.

jeolivares · June 2009

It is financed thru Wells Fargo. I,m going to see if there is room to negotiate. If WF recovers the vehicle, well, they're facing wholesaling it for some 9k. I just want to see if they can get closer to reality, not 18k!

sebring95 · June 2009

All you can do is bargain with them. I have heard Toyota insures against their residual values, so they have no incentive to negotiate. I've not directly heard of anyone negotiating with WF, but I highly doubt they were insuring back in 2003-2004.

mjpjnj · July 2009

I have a Hummer H3 lease that is up in Oct. It was a 39 month leases with 15000 miles a year. Can you offer them a lower price than the payoff and how do you go about doing it? Thanks in advance

volvomax · July 2009

Depends on who the lender is, and what your buyout is.

mjpjnj · July 2009

Gmac and about 19000. It right around what edmunds says it worth from a dealer.

dutch124 · July 2009

Hi All-

Have a 2006 Murano coming off lease in a few weeks. 20k miles, and the buyout is $19k. Seems like a good deal but would like to be sure. Also, is it correct that I'd pay tax twice? Would I pay tax on just the $19k or the entire value of the car?

Thanks in advance,

Jason

volvomax · July 2009

If its an 07, it should bring @ $18 wholesale. I doubt that GMAC will give you a lower price than your buyout.

volvomax · July 2009

You would pay tax on the buyout price.

davenga · July 2009

When you're given the "buy out" price, that price is only good for a specific period of time. I learned this the hard way. Was given a price on my Volvo when lease was up. . . left for a trip out West. When I returned and was ready to take care of the purchase, etc, I was told that price was no longer good. In the end, I had to pay almost $400.00 more than what I was originally quoted. Was told buy out quotes are only good for 10 days !!!!! This is highway robbery.
I WILL NEVER lease another car!

psumommyof2 · July 2009

Hi Folks - Because I'm not a car leasing expert and not so good with numbers and such, I thought I'd post here for some opinions/assistance.

My 2007 Honda Odyssey (base model) lease is coming to an end. My maturity date is 10/21/09. I am trying to decide what my best option will be for when lease is up. I'm not sure if I should buy, hand it back and walk away, or what ever other options might be available.

If I need to share more info, please let me know.

The current payoff amount is $16822. The residual value on the lease agreement is $15481.

I am over mileage, I had a 15000/yr and am presently at 46500. I don't have another car to drive, so the over mileage will continue till I decide what I'm going to do next.

I would like to get my payments back down to something more reasonable, whatever option I choose. These lease payments are killing me, I was so foolish in my younger days..anyways, any help would be greatly appreciated.

tidester · July 2009

I posted a comment here: http://townhall-talk.edmunds.com/direct/view/.ef25783/1009#MSG1009

Try not to post the same question in multiple topics to avoid confusion.

tidester, host
SUVs and Smart Shopper

psumommyof2 · July 2009

Sorry host. I wasn't sure which forum was the best place and i wasn't sure which forum had activity etc, i did not mean to cause any confusion or problems. Sorry.

impalamomma · July 2009

I have a lease on an 07 Impala LT that is ending in 3 months. Right now we're only at 21,000 miles on a 39 month 39,000 mile lease. I would like to buy the vehicle but want to get a deal. My buyout at lease end is $12,700, which is roughly what I would pay for this vehicle from a dealer, but trade is only just over $10,000. Will GMAC negotiate a buyout price? I've read so many different things ... yes they will, .... absolutely no they won't. I don't know what to think. I just cashed in on the Cash for Clunkers on a little work car, and the finance lady there told me that GMAC won't negotiate my residual value. Any advice on what to do? Should I wait another month and see if GMAC approaches me with an offer for buyout... does that happen?? And what's with this gmacleasebuyout.com... is this a legitimate company? Any help/advice is appreciated. Thanks

volvomax · July 2009

Call GMAC. They will probably refer you back to the dealer. If the dealer says GMAC won't negotiate,then that is that.

british_rover · July 2009

And GMAC almost never negotiates on leases. They might be changing their tune because of all the changes lately so it is worth a shot but I wouldn't get my hopes up.

tony411la · July 2009

I need some advice on my pending lease buyout. My lease is up in 2 weeks. Here are the stats:

Los Angeles, CA
2007 BMW X3
3.0 Liter V6 Auto
AWD
15,100 miles
Platinum/Butter
Sunroof, Premium Package 18 inch wheels
Excellent Condition (No dings or scratches) In or out
Tires: <10% Worn
Brakes: no problems to date
This car is in Primo condtion, never had any problems.

My Residual is $35K but BMWFS said the would give me $7K off the residual but the interest would be 5.9% for 36 months. The dealer said she would give me $6K off the residual and the interest would be 4.9 for 36 months, PLUS they would extend the warranty & maintenance out to 6 years (from the current 4).

Is $28k-$29k a good price for a 2007 X3?

If the dealer is going through BMWFS, how can they give me a lower interest rate? Should I try to negotiate a lower interest rate with BMWFS?

Also, I have a feeling that in 3 years, I'm going to want to have a different car, should I even deal with the higher payments from the purchase? Or just continue to lease and get something new now at a lower payment than what a purchase would be.

Thanks in advance for your advice!

tidester · July 2009

The dealer can offer a lower interest rate because he's charging you more for the car and you'll end up paying about $600 more (principal + interest). Also, if it makes a difference to you, your payments will be about $17 more per month with the dealer's terms.

$28,000 @ 5.9% = $850.54 payments/$2620 total interest
Total cost: $30,600

$29,000 @ 4.9% = $867.65 payments/$2242 total interest
Total cost: $31,243

You'll need to figure in the cost of the extended warranty to see whether that $600 difference is worth it and make your decision based on that.

tidester, host
SUVs and Smart Shopper

kyfdx · August 2009

tidester gives a great financial analysis.. I'll add a couple of things..

BMWFS will sell the car for (a lot) less money to the dealer than they will you. This allows the dealer to pay for the CPO warranty and maintenance, oonly charge an extra $1000, and still turn a profit. The extended maintenance and warranty would cost you at least $3000, even if the car needed nothing...

The dealer is definitely the way to go on this... If you don't like the high payment, see if you can get the same rate for 48 months. The money is cheap enough, and the car will still be worth quite a bit more than the payoff after 3 more years.. and, the payment will be a couple of hundred less per month..

If you want to keep driving an X3, it's really your only choice... Lease deals are terrible on the new ones...

regards,
kyfdx

tony411la · August 2009

Thank you both very much for your replies. I think I'll see my dealer tomorrow.

rbirns1 · August 2009

My lease ends in less than 2 months. I have seating for 7, a feature that I don't really need long term. However, it would come in handy for the next 9 months or so. I'm looking at new sedans and smaller crossovers for my next lease, but I wonder about the option of extending my lease for another year. I asked Audi Financial, and they said they will not allow it. I got a brochure in the mail from a company "specializing in end-of-lease options". Brochure says they will customize a new lease on your current vehicle. Anyone know how these companies work? Good idea?

qbrozen · August 2009

The company in the brochure is merely purchasing your vehicle from Audi and leasing it to you. Not a cost effective option.

rbirns1 · August 2009

Just called them. Guy said the way numbers work right now, nobody offers one year leases because payments would be astronomical. He said even 24 and 27 month leases are hard to do nowadays. At least he was upfront and honest, not trying to steer me into anything.

Looks like I have no choice but to get a new car.

sebring95 · August 2009

Have you asked Audi about extending your lease? Usually this can be done relatively heart-burn free and sometimes month-to-month.

british_rover · August 2009

I asked Audi Financial, and they said they will not allow it

Leasing companies used to be cool about extending leases now they don't want to.

grandtotal · August 2009

I can understand that because they are trying to reduce their exposure to the uncertainty of closed end leases. However I think they could view this as an opportunity to adjust their exposure on some of their current leases. Maybe they have already tried this but in results in lease payments that are considerably higher than the customer has now or expects.

smarty666 · August 2009

Hi, I've leased luxury vehicles for the last several years (Acura and Infiniti) and while I've gotten great monthly payments with low down payments I've come into problems when it came to the price if I wanted to buy the car at the end of the lease; while I've gotten typically 1000-1500 dollars cap cost reduction off the msrp so that the selling price of the car is usually 500-1000 over invoice but when I've added the amount I paid toward the lease at the end of the three years with the amount it would cost me to buy the car it usually runs 500-1000 dollars over msrp to buy the car at the end of the lease and this is without paying sales tax and the other fees associated with buying the car - luckily I've had the money to return the vehicles and lease something new - I've only been leasing for a few years so I'm still trying to figure everything out, but doesn't it seem outrageous to pay 1k-2k over msrp for a 3 or 4 year old car? shouldn't the total be what the agreed selling price of the vehicle should be and not 1-2k over msrp? is there anyway to negotiate with the finance company to reduce the cash price (buyout price) down to buy the car so I don't have to be hosed over in order to buy the car? I'm only asking because sometime in the future if I lease a car that I really like and want to buy it, I'd like to find out if there is a way that I'm not paying over msrp to keep it? any help or information would be useful!! it just seems that while my current lease deals have been good I've been hosed over if I want to buy the car which doesn't make sense to me?

sebring95 · August 2009

Maybe I'm not completely understanding your question....but the finance charges are the reason you end up paying so much more for the vehicle.

I'm not sure what MSRP really has to do with the vehicle three years down the road though. The only way to determine if the buy-out is a good deal is to compare that to the current value of the vehicle. If you can buy it out for less than market price, it might be worth considering. If it's worth less than the buy-out, then you benefited (somewhat) because you paid for less depreciation than actual.

smarty666 · August 2009

I see what you are saying about comparing the buy-out to the market price and that makes sense; to better understand my question I'll use one of my previous leases for example

* the msrp was $34,485
* the adjusted capitalized cost (selling price) of the vehicle that the lease was based on was $28043
* I put $2500 down and had $405/month payment at the end of the lease which means at the end of my 3 year lease I put out of pocket $16675
* if I wanted to buy the car at the end of the lease the non-negotiable buyout price was $17932

if you add what I paid out on my lease and add it to the buyout price ($16675 + $17932) you get $34,607; so if I bought the car I would have spent almost $200 dollars over msrp (list price) to keep the vehicle; to me that was no incentive or deal for me to buy the vehicle so I decided not to buy the vehicle and I leased something else from a different car manufacture

what I don't understand is, shouldn't the buyout price (once added to the amount I paid out in my lease) be no more than the selling price of the car because the way this was laid out, if I had bought the car the car company would have made almost $6000 profit on me

volvomax · August 2009

You are forgetting a couple of things.
First, the payments include interest. Interest on a lease is calculated on the depreciation amount AND the residual. Second, you are also paying tax on your payment and you are adding that to your total price for the car.
Put it this way, if you bought the car and financed it, chances are once it's all said and done the purchase price,taxes and fees plus the interest would be way over MSRP.

smarty666 · August 2009

everything you said I agree with; if you also include wear/tear, gas, tires, oil, etc in the end you will be putting alot over msrp into a car when it comes to out of a pocket cost, but you are correct, taxes and fees really do increase the price tremendously whether you are leasing or financing

I have read on edmunds and other sites that most financing companies will or are willing to negotiate the buyout price for a vehicle at lease end because financially it is a lot easier to have the consumer buy it then the cost associated with auctioning, paperwork etc for returning a 3-4 year old car to their lot

I was hoping either you are someone else knows which car manufacture fiancing companies are wiling to negotiate with you on the selling price? - from experience I know that Infiniti finance is willing to negotiate but that Toyota financing is unwilling negotiate

volvomax · August 2009

Generally speaking, the independent banks will negotiate, the captive manufacturer lenders won't.

smarty666 · August 2009

really, wow that is pretty lousy for them to do; you would think how bad car sales have been since last year when the economy tanked they would do whatever they could to get rid of their cars - oh well

smarty666 · August 2009

I think eventually it is going to come to the point that leasing won't be a viable option anymore because since I started leasing in 2005, I have seen so much changes when it comes to leasing and each year it is becoming more and more difficult to lease - now, dealerships want more money down, longer lease terms, disposition fees and the buyout price higher than TMV and the way the economy has been the last year, the dealerships are doing what they can to get people to buy the vehicles so that they don't get 3-4 year old cars no their lots in 3 years from now because they know they might have a problem selling them, especially large gas-guzzling SUVs

volvomax · August 2009

Most captive lenders have residual insurance on their cars. That is why they don't negotiate, they don't have to.
This is a business, not a charity.

volvomax · August 2009

Remember, the BANKS set the lease terms not the dealers. Banks have been losing money leasing, thats not what they are in business to do. Leasing has been ridiculously inexpensive for years. Both banks and car co's thought that sheer volume would lead to profits and that just hasn't been the case. Leasing is going to be done at realistic terms from here on out.

sebring95 · August 2009

what I don't understand is, shouldn't the buyout price (once added to the amount I paid out in my lease) be no more than the selling price of the car

That would be true only if there was zero interest on the lease and usually lease rates (money factors) are higher than normal financing rates. I don't know what your sales tax rate was...but assuming average sales tax is 7%...that would make your interest rate (apr) about 9.5% on the amount financed. One reason leases are usually bad deals is the high interest rate which has been proven here.

Also, you need to realize these are two seperate transactions. The dealer made $XX when they sold the car to the leasing company for whatever your agreed upon sales price was. The leasing company now is on the hook for the car and they either can sell it to you or sell the vehicle elsewhere. Some of the captive finance arms (toyota motor credit for example) have incentives that can go back and forth on these deals, but essentially that's how it works.

smarty666 · August 2009

very true, leasing used to be inexpensive but as you said the car companies, rather the banks of the car manufactures were losing money on leases and they are getting smart and learning from their mistakes; for instance, each year more and more car companies are now charging disposition fees if you decide to return the vehicle and not lease or buy something else from them; it originally started a few years ago with GM and Chrysler and now its starting to make its way into the Japanese automakers; all my leases up till now have not had disposition fees but I know Nissan/Infiniti started it early this year and I've heard Toyota/Lexus has it on certain leases; I've been lucky that Acura hasn't started it yet since that is what my current lease is with; to me a disposition fee is just another way to get more money out of the customer and punish them for returning the car; even if I leased for three years, made every payment on time, kept the car in pristine condition none of that would be taken into consideration and if I decided to return the car I'd be charged that $400-$500 fee regardless of how good a customer I was and the great condition the vehicle was turned in; you have the legal right to return the vehicle at the end of a lease why should I pay a fee to return it; just seems ridiculous but at least my lease now doesn't have one

smarty666 · August 2009

yeah I see what your talking about; I live in NJ so my sales tax was 7%; no matter how good the lease deal was, unless the selling price is lower than the TMV it is not worth it to buy the vehicle at the end of the lease and as volvomax has stated most manufacture finance companies don't have any incentive to negotiate the selling price since they have residual insurance on the vehicles

itslisa · August 2009

I just tried to negotiate buyout with VW dealer in Denver area on buyout. VW said perviously that I needed to contact the dealer. Dealer tells me that 'they' are only 'middle' men and they have NO power to negotiate price down.....that VW is the owner and they are not licensed in CO?! I'm wondering what the heck that means relative to my lease buy out. And, if this information is true? Does anyone have any help they can offer to this. My lease is up in 3 weeks. FYI- I know for a fact the same car today is less than it was priced at in 2006 when I negotiated my price then. Is this a bunch of crap?

michaellno · August 2009

See my response to your post in the other forum.

bostonmdxbuyer · September 2009

I have a 2007 Lexus RX lease which ends this month. I am 2000 miles under the 36,000 miles for the lease. The residual is $25500. Based on Edmund's and other websites, I think this car is worth $28000+. I want to purchase the car, but Lexus Financial won't negatiate on the price. I have gone to the original dealer and they offered 5.9% financing, but won't go down on the price. Is it worth going to other Lexus dealers to see if I can get a better deal, or will they just offer me the same deal? Any other way to get the price down?
Thanks

sebring95 · September 2009

Why would they negotiate if it's worth MORE than your buyout? Additionally, I have NEVER heard of Toyota finance negotiating the buy-out on lease and it's rumored that they're insured. I know some folks that had the big trucks and SUV's that were coming off lease last year worth thousands less than residual and Toyota/Lexus wouldn't budge on the buyouts. I know one guy that turned in his lease and then bought it back off the dealer for quite a bit LESS than his residual.

When you say "worth" more than the residual...are you speaking of retail, private party, or trade-in value? Residuals are set on trade-in or auction values.

volvomax · September 2009

Lexus Financial sets the price, not the dealer.
If the finance co will sell the car for $25,500 and its worth $28,000 a) WHY would they lower the price anymore and b) why would you not just take the deal and be happy?

apocalypso · September 2009

So I've got a Cadillac CTS and my GMAC lease ends Jan. 18 2010. I have roughly 35,000 miles on it so far, and this was a 15K/year 3 year lease. My residual is $21,000. The residual is roughly equivalent to dealer retail value today.

I was talking to a Cadillac dealer today, and he suggested I call back in a month and see if he can help me with a lease end purchase. If I understood him right, he said sometimes he's seen where the residual can be negotiated down if you're 90 days from the end of the lease (possibly several thousand dollars) but usually it's a lot tougher or impossible if you actually wait to the end of the lease to try and purchase. I'm assuming he's expecting I would finance a loan for the buyout price. (Which I do want to do.)

He wasn't guaranteeing a residual reduction, but he seemed to think with the market conditions he's seen it's possible or likely.

Does this sound right and/or likely? Do I need to work through a dealer necessarily? Thanks for the comments and suggestions!

grandtotal · September 2009

I think the dealer may be blowing smoke. I can't see GMAC being willing to negotiate a lower residual until just before the lease expires.

I'll bet that when it comes right down to it and he cannot negotiate a lower residual he's hoping you will be so in love with whatever you replace the current car with that you'll go ahead and do the deal anyway. "Instant gratification".

wbb56 · September 2009

My 335i 3-year, 36k mile lease is up in April of 2010. Due to an unforeseen job change I am going to go way over 36k miles. In fact I'm over 37k right now. Given that, and the fact that I made eight security deposits of roughly $600, I am considering purchasing the car at the end of lease--rather than pay for the 8-10k additional miles. Is this a good idea? If I decide to pursue it is the price of the car negotiable? What price should I expect to pay for the car?
My negotiated price for the car was $45,575.00 (MSRP was $47,795). Residual value $30,000.

Thank you very much in advance!

Purchasing at the End of Your Lease

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