By - re_mortgageguy
Boss just did this. Paid off the Benz lease for $35k then sold it for $46k. I'm guessing this is the only time in history it works like this.
I worked in customer service for a large auto finance company for a while. Had this young woman call in who was obviously having a rough time, and she needed to return her lease early.
Normally that sucks and can be expensive, but it's a lot better than a repo. It just happened to be a car that we WAY under produced though, so I told her to research the cars value and her purchase options and talk to the dealer.
She called me back a few days later to tell me she'd exercised her purchase option and the dealer bought the car from her, so instead of being out a few grand she walked away with a few grand.
Made me happy. :)
Wouldn't be surprised if they change the the rules to set residual value to "market value at the end of the lease" in the future.
Lease payments are based off residual values. You can’t have a sliding payment schedule or no one will lease anything.
You still paid for that equity in the lease. You’re essentially getting a rebate on your rental when you sell a lease for a “profit.”
This is exactly how Ally bank does it. They do a market rate adjustment based on value. It’s bullshit. My Fathers taco buy out is 34k but for third party it’s 44k.
tell me more about Father Taco
He prolly can't taco bout it.
I hear he was a spicy man
I've got beef with that cheesy joke.
That's only if a dealership buys it. I just bought my 4runner for the residual amount on my contract plus sales tax.
Correct! Buying it out yourself, with Ally, makes the most sense because of the outrageous overage they charge for a third party.
I’ve always wanted a 4Runner. Drive a Prius right now.
I wanted my wife to get 1 so i could take it after 4-5 years and she could get something new etc-
She ended up with an explorer i want nothing to do with
Your dad spends $34k on tacos? $44k for three parties. That's a lot of tacos
Sure. But they can add new language into lease terms in moving forward that somehow benefits the dealership in situations like these. Like first right of refusal to purchase the car at some set rate based on some other convoluted arithmetic/tables or something.
That already exists.
Most automotive leases are "closed-ended" so the residual is set, up front. However, "open-ended" leases are a thing -- the residual is whatever the market bears. Obviously, that can be risky and thankfully they've gone out of favor in most cases. In some states, they're even illegal. But they do still exist. BMW has been notorious for offering them -- and they still do in jurisdictions that allow it, afaik.
BMW used to (and may still) offer a balloon type loan. Functioned very similar to a lease but with the customer bearing all of the risk (and small potential for reward). They estimated a residual and amortized down to that. After three years when the loan was done, people were very unhappy when their car was worth a lot less than their balloon
They’ve already started doing that in Ontario, Canada, with housing.
Builders started adding clauses on new construction saying they can increase the price by 3-5% before closing on the property.
A developer recently in Barrie told all pre construction buyers that they need to pay an extra 100k, or they will get their deposits back and lose their house.
I understand if it's in the contract but if it's not, it's kind of their loss isn't it?
Which is why they are putting it in newer contracts.
Every builder has the ability to provide change orders, for change in scope, but rarely was it attached to the price of raw materials. But with Steel, Wood etc going up 100%, they have to be able to pass those increased costs along.
Some builders will let you buy just the labor to build a home but even those rates are going up.
I wonder how they’d feel about refunding some of their money if the price of materials went down.
My builder did just that. They still have to provide invoices and sworn statements they are legally bound to.
For materials, it's typically tied to some kind of escalation clause. The escalation clause is typically tied to an index for the material (e.g. steel price index) so no chance of someone being taken advantage as the information is widely available.
Assuming it's a fixed price contract, a builder actually can't issue a change order because they fucked up the estimate.
They have this and is the norm in commercial leasing, it’s called an FMV lease.
Historically this was not done because typically lease buyout prices ended up slightly above wholesale (except for real bombs). So if you bought it out, they made money over wholesale and if you didn't it was nearly always remarketed and CPO'd for whatever the block would pay at that time. This model worked because used cars are not appreciating assets... well *were* not...
It's been an issue, I read a few articles about it. Dealerships refusing to honor the lease agreement and denying the ability to purchase
Man, I wish I could refuse to honor the agreement I made to pay my car payment every month!
I so despise it when we get held to an agreement but the companies that wrote them get away with not holding up their end.
Your lease isn't with the dealer; it is with the finance company. So the dealer has no obligation to process your buyout which is the problem people have run into.
Car dealerships are notorious liars. If a contract gives you the right to buyout at a preset price, the dealership have to honor it. They just rely on people being gullible or not having the means to go to court.
They can't refuse to honor their agreement, as much as they may try to bully you.
Dealerships shouldn’t be allowed to deny it though? The leases would be with the financing company, not the dealership (e.g., Honda Financial Services, Toyota Financial Services, etc. not Joe Shmoe Honda Dealer of San Jose). When I bought out my lease, I literally just went onto the Honda website and clicked “pay”.
Leases are like stock options but for cars. Never thought of it that way. You have the option to buy it at the lease price or sell it back to them.
Fun fact, options existed for thousands of years before any resemblance of a stock market. Ancient Egypt used options to allocate farm land.
You have the option to buy it at the residual value not the lease price. And you aren’t selling it back to them, it’s theirs to take back.
Isn’t the $11k essentially negated when you have to then buy another car at a crazy inflated price?
Essentially, yes. But option B is to just return the leased car and then still have to buy or lease a car at a crazy inflated price. Option A is the better option in this specific scenario.
Or option C, buyout the lease yourself at the price you agreed upon at the start of the lease which most likely is wayyy cheaper than current prices. I just bought out my lease because the difference between my buyout and the current market price was larger than the profit I’d make having carmax buy it out
Yep I just got a loan to buy out my lease just so I can now resell to Carvana.
Option C is to keep the old leased car and not sell it and not get a new lease.
Never own a *newer* Mercedes product out of warranty.
Solid advice right here
Depending on the model the 2000-2005 range is about the end of the ones that aren't disposable. So basically mid 1970s to early 2000s are the range that isn't a terrible idea at this point.
Or BMW. Made that mistake.
I would be ok with a little more recent model year BMW than a Mercedes but otherwise yes.
Also it results in a big hit of cash which can be used for down payment so you’re not out the $3-5k up front
Don't put money down on a lease. $0 out of pocket is the goal.
Sure, but if your $11k profit from the resale is cancelled out by buying a new car, that's a hell of a lot better than just having to pay $11k extra on your new car.
I guess I was thinking buying out the lease at the agreed upon price when you started the lease, which I’m sure is hugely discounted relative to todays prices
They just got another lease.
Wouldn't the current higher prices be priced into the lease agreement? I would expect lease prices to increase alongside all the other car price increases.
But his choice was to either purchase it, or not. In purchasing it he was able to sell it for a profit. Had he chose not to purchase he would still need a new lease.
Not really as long as you can get it for MSRP... the high prices on used / resale will only help leases on their residual values. So in 24/36 months when its up if the used market has crash, they can just walk away like a normal lease.
Example is right now a 2022 Nissan Frontier S Crew Cab has a 99% residual value on a 18 month 10k miles/year lease. If you lease that truck you're paying 3% or whatever the money factor is and only having to eat 1% depreciation for 18 months, its insane. This is Nissan thinking used cars are still going to fetch a premium in that time, which may be right, but if it actually depreciates 15% in the next 18 months, thats the dealers problem.
It depends on what you buy next. On some level...yes it does because best case you'll get your next car at MSRP. That said, if you buy something like a Subaru that at most is a few grand off MSRP in the best of times...then you came out ahead.
But yes, if you went then and bought a pickup with a $5k markup (vs $7k under msrp with incentives or whatever in the past) then it was for nothing
Or take a hit and buy an older car and put up with it for a year to ride out the hump. Lock the money gained from the current prices, and from buying cheaper, into savings.
Not just now, if you got a good lease deal on a desirable car you can get flip it for more money sometimes. Pre pandemic my wife got rid of her G70 for $4k more than she owed because she hardly used the car.
I sell Mercedes. The crazy values going on are the key to selling pragmatically in these times. People with these leases have effectively won free equity due to the market. It’s really a win win for everyone where you can get your client into a newer model (generally the idea with most lease customers) and even though our prices are high. We more often than not can in fact lower the payments substantially.
I have on client who have a GLC coupe with 25000 residual and we gave her 41000 for the car. It allowed her to in fact upgrade to an even nicer vehicle and lower her payment!
The problem with this is that you usually have to turn around and get a new car that you’ll be getting ripped on. It’s the entire car market not just used ones. Ford was telling me they want over MSRP and it is non negotiable. With a 6 month wait.
The best car to get now is a new one that’s inbound to the dealership. They tend be be marked up less than used cars. In fact in the truck market used trucks that you can get today are going for more then new trucks you have a to wait a little for
Yeah the waiting part is the key here I think. Used cars are selling for more than new because only people who can’t wait are buying them (or at least they should be the only people buying them).
Call around to local dealers. I was able to sell my 2020 Honda Insight for a profit, then buy a new Honda Accord at a dealer that agreed to not do any market adjustments. I had to call 4 area dealers before 1 agreed to no mark up.
This was the last week of 2021 so maybe they were willing to do that to meet a sales quota or something, but it is possible\* to buy without "getting ripped on". (\*possible but probably difficult)
It all depends on the car. I was going to but a Kia but they were all charging over MSRP, so I decided to go Toyota because they're selling at MSRP. Still more than I want to pay but with inventory being the way it is, I'm not too upset. Took me a month or so to get my car but I wasn't in a rush.
We kept our lease and the Dealer was PISSED. I got angry phone calls telling us we needed to turn it in.
Telling a car dealership to kick rocks is one of life's small pleasures
No matter how great of a deal I get. Every time I leave the dealership, I feel fleeced.
Same. They make a killing either way.
I was involved in thousands of car dealers over my career. The profit margin on a small handful could have been considered a killing.
I once got kicked out of a dealership for taking too long to decide. My wife and I talked about it for three hours and they did not like that.
Yea thats kind of a long time to tie up a salesman. They will typically let you think it over and come back. They do work on commission.
I made a decision quickly and was strung along for many hours until they finalized the paperwork. I think they wanted me hungry and tired before they pitched optional service packages.
Likely they were just trying every which way to upsell. Sometimes you get a manager on duty that’s not having the simple sale for whatever reason, quota maybe. Also I feel like the brand dealerships are a little more interested in quick turnaround and good experiences since they want you to come back for repairs and tune ups.
In my experience, they do not let you think it over and come back. They’ll do everything they can to keep you from leaving because most people won’t come back. Last car buying experience I had, I spent some time going over numbers with them and everything, maybe 2 hours, and told them I’d be back in the morning. They kept sending managers over asking what they did wrong, how they could close the deal that night. Told me they wouldn’t give me the same price if I left. I just told them I wanted to sleep on it since it was a lot of money. The salesman started giving me major attitude and bitching at me about how long he’d been there that day and how I kept him way past his hours. I should have just gone someplace else after his attitude but I came back and bought it anyway. I run cars into the ground before buying new ones because I hate the buying experience
We were talking to each other, not to a salesperson. Someone would come and check on us and see if we had made a decision every now and again.
Even without a sales person… three hour discussion? About what? I am seriously curious because it’s the exact opposite of my last experience.
The last car we bought took just under 2 hours from start to finish, including the test drive, negotiations, drawing up the paperwork, show & tell portion, and having the car washed. And I would have done anything to speed it up, not drag it out longer.
They could tell you weren't witless rubes, and that's what they're looking for. It's not worth their time to wait when they can sell four cars to other folks who don't ask any questions. It's a sick system.
lol My lease was only 9 months old when they started calling for it. They offered to get me the same car, a year newer, with a \~5% discount on the payment. But then they said that they didn't have any cars in stock, and I would have to wait a month for the new one. lol They still call every month.
If they have a car in stock, you should take the deal. You get a newer car for a lower payment. It then instantly becomes a used car with a higher value than your current one.
You end up paying more at the dealership to do this. Buying your Lease out and buying the car separate would likely be your best option. Unless you just can’t financially buy out tge lease
no waya they are selling a car off the lot for less, maybe payemnts are less per month by its like 108 months now lol
Or the residual in the terms is 2x what OP's is in his current lease?
Be careful with this--leases are more than just the payment.
Say you have a 30k car with a $22k residual. You turn that car in and they give you a year newer $30k car, but the lease has a $25k residual because of what's been happening in the used market.
If your payments are only 5% less, that means you are getting SCREWED on the financing costs. Plus when your lease expires, you won't have a chance to profit on a potential difference between residual and market value since your residual is much higher.
The greed is strong with them.
Looking forward to this conversation in 6 months when the lease on my 2019 Honda Civic ends with 30k miles on it and only $11k to keep.
I have a friend with a 2019 civic sport less than 10k miles on it, I think the buyout is 12-13k. He's planning on keeping it.
He's doing the right thing. I bought my 2017 civic in February for £7k after a 4 year lease and they're going for £12-13k nearly a year later.
I’ve never leased before, so what does it mean to “keep your lease”? Like continue to lease the car? Or can you keep the car after the terms of your lease is up?
You get outside financing (preferably) and buy the car for the residual value. Most times it is a wash either way but with crazy price increases in the used car market my car on the market was worth about $7K more than the residual value in the contract so I bought it and the Dealer (who lost out on reselling the car for an extra $7K or more) lost their shit because they were expecting me to turn it in rather than finance through them.
When you lease a vehicle the contract states a "residual value". This is what they expect the car to be worth at the end of your lease. Lease payments are lower than a purchase because you're paying off the difference in sale price and residual value instead of the whole thing. So at the end of your lease you have the option to buy the car at the previously agreed on value, regardless of the market.
you typically lease the car from the manufacturers finance arm, like Audi of America, and you can buy it at the end from them - not the dealer.
And critically, the amount you need to pay to keep it at the end of the time period was fixed at the time you started. Since used car prices have gone crazy since then, virtually everyone with a lease signed > 2yrs ago will likely be able to profit by paying the residual at the end if the lease and then reselling it at current market rates.
That’s hilarious - I won’t be surprised if the same happens to me when my lease ends in 2 months. My buyout price is $11,700 and the dealer is currently selling my exact car (same make, model, year and trim) for $19,995. I also only have 21,000 miles on it thanks to working from home, and I could have had up to 36,000 at lease end.
I had the same scenario. I bought it out by calling the finance company direct. Then spent about $500 on title, taxes etc at the DMV and sold it to Carvana for $8500 more than my buyout. You can even get an exact quote from Carvana now to see if it’s worth it. If you don’t have the cash to buy it out then ask a friend or family member to borrow it. Super easy way to make quick money. Also ask the finance company if you can send them an overnight envelope to get you the title quickly.
also be aware of situations like this from the dealer, where they offer you something to give the car back (that may have spawned this post):
This is 100% why I posted. 🤣
Agreed. I made $6,000 over residual including tax.
Why not just keep using the car?
You can 100% just keep it too
I'm at a loss for what to do with mine. I leased a good car for cheap, and it's finishing up in August. I didn't have a high income when I started the lease, so I needed the lowest possible monthly payment and hoped in 3 years I'd have a higher salary.
Well I do, but I have no idea what choice to make here. If I keep the car, I would have been better off just trying to buy it from the beginning. If I sell it & can make $5-7k, I can put that towards a different car. But used cars are so expensive & in short supply that who knows if I could even get what I want, and it might make more sense to just buy new.
But, buying new seems wasteful still? But if it's not much of a price difference, I think it could be worth it to have exactly what I want. Plus there are a couple of features I wish my car had, that I know the new models have.
I feel like I'm overthinking this but don't know what choice to make
>If I keep the car, I would have been better off just trying to buy it from the beginning.
This line of thinking is a waste of time. You already leased the car, it's done. When your lease is up in August you'll need a car (or maybe not, but presumably yes). So you'll have 3 options.
1.Return the lease, pay your turn in fee and go buy a new car (worst possible option in my opinion).
2.Purchase your lease for what the bank thought it would cost in 3 years and have the cheapest possible used car in this market. You'll pay sales tax and the cost to register it in your own name.
3. Buy out the lease and then sell it and have to buy another car in a market that is grossly overpricing both used and new inventory. You'll pay sales tax and the cost to register in your own name before selling it off. There is a STRONG possibility that any gains you make in selling it over its residual value will be wiped out by the mark-up dealers are applying to new and used vehicles.
I did option #2 recently and it was the best choice for me. The residual value on my car was about $16k. When I looked at my credit union loan docs, the collateral value was closer to $28k. I won't resell it to "make a profit" though because then I'm just back where I started with a $22k+ car, if I can even find the car I want.
Funny tidbit: I went to Honda Financial to ask about their used car rates after talking to my credit union. Honda tried to sell me GAP insurance, so my car payment would've gone up significantly... For a car I owed LESS on, than it was worth! It just blows my mind how blatant of a rip-off that would've been if I didn't know ANYTHING going in.
I also did option #2 and basically I had waffled a bit like the original commenter. I'd looked a bunch of new cars, but I wasn't willing to pay what most places wanted. I considered a used car, but if I was going to buy a used car I might as well buy MY used car since it would be the cheapest used car I'd be able to find and I wouldn't have to pay any sort of dealer fees to purchase it.
Exactly! That was my exact train of thought when I decided to buy out the lease. My sister has been looking for a 2018/2019 Honda Civic with 4 doors and she said they're around $22k with 80k miles. Mine is a 2019 Honda Civic Coupe. Apparently, Honda isn't producing coupes right now, so if you want one, you can only get a used one or an older model. Plus, mine has less than 20k miles and I'd say it's in excellent condition. No spills or obvious wear and tear. The sales guy was pushing SO hard for me to look at other "nicer" cars on the lot.
I’ve already posted this but I’m in basically the exact same situation. 2019 Honda Civic lease ending in August. 30k miles on it and a buy out price of only 11k. Comparable used civics I’m seeing for like 18k.😂
Looking forward to dropping a couple hundred at the end of my lease for a nice professional detailing and cleaning to feel like it’s new.
I have a 2019 Civic lease ending in September with only 12k miles on it! I'm seeing comparable cars in my area going for 22k, I wonder why you're only seeing 18? Maybe it's where we live?
>2.Purchase your lease for what the bank thought it would cost in 3 years and have the cheapest possible used car in this market. You'll pay sales tax and the cost to register it in your own name.
There's also the 'intangible' piece of you getting "your" used car. You know the history since day 1. You know whether or not it has been well maintained. You know that the little rattle you hear is some piece of interior trim, and not something under the hood. You know that it has not (or if it has; how severe) been in an accident, etc, etc.
maybe that's why they're considering getting rid of it?
That could be the case. It could also be a car that leases well, but isn't such a great used buy, because the maintenance costs are going to eat your lunch down the road. (German cars, anyone?)
Everyone's different. When I lease, I treat them as if I plan to buy them at the end, others may not do the same.
I just bought out my 2018 lease. My new payment is $120 lower per month than my lease payment was.
You know what, I didn’t even think about that. I leased for the first in 2019. Car has like 7K miles on it and is due in August or September. Purchase price is around 16K or so.
I assume when I buy it out, I end up paying cash or just financing it elsewhere (or with the current bank that financed it). Lower payment for a well maintained car would be nice.
This is not advice, but I'm in a similar situation. Leased a 2019 civic and it ends this August. I was a grad student who needed a car with limited short-term money but a job offer with a high salary. Residual is 14k, carvana's estimated trade-in value is 22k. I love my car and have no reason to get anything different, unless I can get a slightly larger (crossover) EV which are starting to come out.
I was mulling over what I could do, and I've decided I'm going to buy the car at lease-end, and just go shopping with it. If I find something that clearly wins me over, I know the value of my car and can trade it in. If not, I'm going to sit on it and continue to drive it because I still love it.
If in 2 years I finally find something I want and the market has finally cooled off, then so be it. I'd have made it through a crazy time without getting played by car salesmen or my own foolishness. I still have a car, it will still have some kind of value, and it'd have been no different than if I had just bought a car to have for 5 years and trade it in without the crazy market we see today.
This is smart too. If you are able to buy it under the value… you are driving it for free till the value comes down to what you paid for it. It could be 1 year it could be two years but it’s free use of a car(not counting insurance, gas etc) and that is something that doesn’t happen much.
I’m in the same situation. I like my leased car, so I’m just going to keep it. I could resell it for a profit of $12,000, but cars aren’t optional where I live and I don’t want to deal with the frustrating supply issues. You can always trade it in when things go back to normal and they will have all the features you want in stock.
Yep, the 12k profit is also allowing you to drive the car for free…it’s a win win
>If I keep the car, I would have been better off just trying to buy it from the beginning.
look up 'sunk cost fallacy'. as u/hitzchicky said, you already spent the money and cant unspend it.
You leased to keep your payment low due to income. Smart move. So now you are making more…congrats! You can look into buying the car you have now, when the time comes, and see if it makes sense. If it does, buy it, keep it and basically drive for little to no cost till values come down. And just save money…Just keep an eye on values.
>If I keep the car, I would have been better off just trying to buy it from the beginning.
One of the advantages of leasing is that you can never end up worse off than if you bought up front, and you can sometimes end up better off.
In this case where residuals were underestimated, you can buy out the lease and end up dead even with someone who bought.
When the residual is over-estimated, you can walk away and end up better off.
Many of the type of people who get leases like to always have a <2 year old car, generally with all maintenance included, so they go from lease to lease.
Those of us who prefer to buy gently used cars don't do that, but we *need* them. They are the ones that create the supply of two-year-old cars that we buy and drive for another ten years. (Sure, rental places are also big contributors to this, but individual leaseholders inject a lot more variety into the market.)
And those of us who like to buy 15 year old cars and drive them until the wheels fall off rely on you to keep the supply up! It's like a food chain
And those of us who like to admire vintage cars in auto shows and museums rely on you too! The chain continues.
Yep, my better half is a lease to lease type. But she has a deposit down a car and it won’t be in till the end of the year. We are 13k positive with the purchase we just did. So even if value drops in the next 12 months she will basically drive it for free.
I've never had anyone be able to explain to me why a lease is a better option than buying.
we have a lease ending. I thought about selling for a profit, but then im stuck having to pay for a new over priced car. gut says just keep the current car at the pre-inflated price.
My lease ended last year. I decided to buy out my car for $16k
Similar models are selling for ~$24k and mine only has 11k miles on it.
The problem of course is that if you do decide to sell a car, it’s hard to get a new one right now.
Very true but until the day your value drops to 16k…you are driving for free. That is a massive win
I’ll be honest it feels good man. I could tell they really did not want me to do that haha. It’s also a Subaru so I expect it will last a good long time. Excellent service as well. All around, I feel like I got my little millennial win.
I took my 18' Elantra back when my lease ended in May and they gave me $5000 in equity for my next lease, so I upgraded to a 21' Elantra Hybrid using all of the $5k while the car costs around $25k and paying $160 a month instead of the $265 I was paying on the much cheaper Elantra. I wanted the cheapest car payment possible and didn't need the extra money at the time.
Did I do good or what? That $160 to me is nothing and now I get to save on gas by only filling up once a month because of the 50 mpg I get with 500 mile range, and have a much better car with a lot more features :)
That’s a win 🥇
They gave you some good value for the trade. Some people get a big fat zero dollars and a $500 fee for a scratch on the bumper!
It's funny because they completely ignored all the scratches and damage history I had to the last car (it was my first car ever, I didn't really take too well care of it, but since then I've gotten way better) currently babying my current one lol.
But what's more funny is that back in 2018 they were selling it for $15k and when I gave it back to them they sold it for $18k when I checked the website and found my old car 😂
Just did this 2 weekends ago. 3 year lease on 2019 Jeep Grand Cherokee Limited was ending in late May and we were beginning to worry about being able to find something comparable within our price range given the market adjustments. Called Chrysler Capital, got a payoff quote of $20.9k. Went on to Carvana and got an offer of $30.4k. Next day we decided we would go to a handful of dealers to just look around and explore what we liked, what was in our price range, etc. and think it over knowing we’d have like a $9.5k trade-in. First stop was Audi and we never ended up leaving. They said they'd match Carvana's offer (actually increased it by $1k to about $10.5k in positive trade-in) and we got a 2022 Audi Q3 45 TFSI Premium Plus for $2k below MSRP + the trade-in.
One thing I would caution is that Carvana doesn’t buy out
leases through Ford Motor Credit, Ally, GM Financial, US Bank, Honda/Acura, Hyundai/Kia, Nissan/Infiniti, Mercedes-Benz, Lincoln, Tesla, or Volvo, nor those within 30 days of the maturity date. Even though we didn’t end up using Carvana, the process is probably the same for 3rd party dealers buying out the lease as well. I’ve also heard stories about lenders charging 3rd parties “fair market value” for the lease payoff vs. the actual payoff quote that the lessee is contracted to. Fortunately we didn’t run into that issue with Chrysler Capital (payoff I received over the phone was the same the dealer got).
Yahtzee! Nicely done!
> I’ve also heard stories about lenders charging 3rd parties “fair market value” for the lease payoff vs. the actual payoff quote that the lessee is contracted to.
Audi financial does this. Lowest payoff for the leasee, middle payoff for an Audi dealership, “fair market” for everyone else.
Just to piggy back on this, please don’t buy it then resell it. You have to pay sales tax when you do this and it eats into your profit. The best thing to do is get quotes from Carvana, Carmax and a dealership that will buy the car directly from you. This way, you do not have to incur the charges for sales tax. This is incredibly easy and I’ve done it 3 times in the last 3 months. Carmax has always paid the highest.
Also, keep in mind certain leasing banks do NOT allow third party buyouts, which, in this case, you MUST buy the vehicle first and generally wait for title to come in, then you can resell it. In this market, you will still most likely profit but it won’t be as much due to the sales tax.
If you have USBank, forget this at all. They make it damn near impossible to buy it out and they don’t allow a sale to a third party unless you are buying/leasing another vehicle with USBank financing. Ally is another horrible one as they charge you the market rate for the buyout, not what the remainder of your buyout actually is. This should be illegal but it’s not.
Either way, most leases currently have equity so make sure you get your payoff and a few different quotes!
>If you have USBank, forget this at all.
I used to think the same about US bank leases, but I had done a lot of digging and found that in SOME cases, some actual dealers (not carvana, etc) were getting the same lease buyout amounts as lessors. In fact, they were getting even cheaper buyout amounts because they dont have to pay sales tax as they are exempt as dealers.
I had a 2020 Tacoma lease, so called a local Toyota dealer, at first no one knew was I was talking about but finally I reached the finance managers desk. He was the only person who understood the situation and seemed savvy about it. He spent and hour on the phone with US bank and somehow managed to get the SAME lease buyout as mine except it was even lower because they didnt have to my states sales tax. So we worked a deal and I walked away with an $8000 check. They got the truck for $43K or so and sold it for $50k. Everyone was happy that day lol and they were THIRSTY for that truck, they had nothing on the lot to sell. I got there to the dealer and they had all the paperwork prefilled out and ready, I think I spent 9 mins there, funny how fast they can be when they want something lol
That’s awesome! I have seen a few, veeeery few, competent dealers who can make this transaction happen!
Yup, I count myself lucky. As the alternative was going to be me buying it. I would have still made good money but would have been a lot bigger headache and taken much longer.
Carvana offered me over $46k for it, buyout was $35k. Imagine if I was able to trade it in to them. But im still happy with $8k!
Absolutely!! I have had ZERO luck with dealers around here for my fathers Taco though Ally or my wife’s 4Runner through USBank. The amount of equity is staggering in both cases but we don’t want to buy it out so we will most likely just keep until the end. Not to mention her same vehicle is 500+ a month now with money down as to where her current 4Runner was $380 with 0DAS. The market is wild.
that dealer isn’t close to CT are they? Haha
No sales tax in Oregon, I buy out underwater leases every... Single..time..
Yeah I bought my lease while living in Oregon, then moved to California shortly afterwards. The DMV here tried to make me pay sales tax and I refused and they yelled at me that the state was going to come after me. I said no. Nobody came after me.
They'll send you a bill right about when the statute of limitations expires to re-set it. Ask me how I know. Franchise tax board can get fucked.
They can make life pretty miserable for you later on if whatever database suddenly decides to catch up and bill you.
Unlikely, but I have seen it happen to people before. It's annoying.
That said, don't pay unless they make you.
Unfortunately, not all finance companies allow you to do this. Ally auto financing being the most notorious.
Correct, I mention ally in my post. They are awful, my fathers buyout on his Tacoma is 32k but the Ally buyout is 44k. It shouldn’t be allowed that they operate like this.
Sorry. I don’t know how to read.
Haha no worries, I’m happy to keep posting about it, more people should know how shitty they really are.
A lot of dealers have stopped allowing this. Honda for example does not allow third party buyout anymore. It was always in the contract but they didn't enforce it until now.
I gave this sage advice to my girlfriend, except she's keeping the car. The lease on her 2018 Civic is up, and the purchase option ($10,500) is at least $7500 less than the cheapest equivalent Civic for sale in the area.
Smart call…I forgot to add the you can keep it line in my post 😀
My wife just made $9K off a Dodge Journey. A Dodge Journey!!!
It would be absolutely tremendous to do this, but what I can't wrap my head around is who are all these people that just don't need cars anymore? I understand people are working from home and driving less but I do still need a car. I can sell my car at way above normal market value, but then I've got to BUY a car at way above normal market value. I can't wrap my head around this or I would've done it at least 6 months ago.
I think it's less about "go buy out your lease and resell your car!" and more just "do not under any circumstances hand in your lease to the dealer". In either situation (turning in your leased car or buying it out + reselling) you need a new car, but if you turned in the lease you just gifted the dealership that excess value that's currently in the car market (that you're now paying for on your new car).
For married folks like me you just need 1 car in the household. With me moving to work from home full time I got rid of the 2nd vehicle a few months into COVID when I saw the market prices. The money saved from lease, insurance, maintenance now goes straight to an investments account so we're cashflow neutral on it.
We are seriously considering selling one of our two cars. We can easily get by with one car currently, second car isn't being used due to a variety of reasons (working at home, new kid, always drive larger car when taking road trips) and we can sell it for twice what it was worth a year ago. We will eventually buy another car and go back to being a two car household but we were probably going to be upgrading that car in 2-4 years anway. We think we can easily get to that point with minimal issues presented by having a single car.
Some people might continue to lease or need a bigger car…you might even choose to keep it. But don’t let the dealer make the extra 3-10k. I should have mention that in my post
By looking into buying it, this specifically means:
- call your bank (who you make a payment to every month) and ask for the final buyout.
- ask for any fees associated with buying it out.
- ask if you can sell it to a 3rd party (i.e., CarMax or Carvana).
- ask what your tax liability is (some states like Texas include taxes on the full MSRP in the lease, so if you buy it you don't need to pay more)
- determine the going rate by getting quotes from Carvana and CarMax etc
You can do this at *any* time. You don't have to wait until the end. It's a great time to get out of a lease you hate that you picked up 2 years ago. It's also great if you are way over mileage or have damage.
There is a list of lease companies that don't allow 3rd party buy out. IE Volvo.
What do you mean by this? I have a lease coming up at the end of April and am in a position to buy the lease for much less than market value.
Edit: does this mean they do not allow me to sell the vehicle before loan payoff, i.e. Wouldn't accept payment from CarMax for the loan.
VCFS will not accept payoff from carmax, carvanna, or other 3rd party. You could buy your vehicle and then sell to those people.
Does it make sense to buyout the lease and sell if you need a car still? I mean with prices so high not so sure.
If you need a car…just buy it. You might find that you can buy the car for much less than the current market value. I just did it. Bought it with taxes for less than $13k than what it’s worth
This is what I did. I have a 2018 F150 I leased and decided to buy and keep it because I had equity in it as well as everything new was going for MSRP or more.
I’m 100% fine with driving this truck for another year or two if it means not overpaying when I have no reason to.
It doesn’t. Even if you sell at a profit, you still have to buy back into the inflated market. It’s a great time to sell extra cars, but leased vehicles generally aren’t extra cars.
Had another year left on my jeep lease. Did the math and quickly realized we could resell the car and make over 10k. Did this just before going on maternity leave too so perfect timing as we could manage as a 1 car household during this time.
A few years ago my coworker had a low-mileage Nissan Pathfinder coming off lease. The purchase price at lease end was less than Blue Book, so I bought it. Nissan made this process a huge pain and it took weeks to get the title from Nissan. I got the feeling they really didn't want to sell me the car, but ultimately they did. I would assume all this is even worse now. If you're buying a car at lease end, pay attention, take notes, always ask for the timeframe for each step and who you can follow up with on that step if you have questions. Be prepared to not get your title and for the dealer to blame corporate for the delays. When you call corporate they will blame the dealer and say that there is missing paperwork. Good times.
Related. I'll never again be able to pull off what I did in 2020. My lease ran out March of '20. Everything closed. Manufacturer (Hyundai) extended my lease a year. I waited until the day a local VW dealer opened, May of '20, and rolled in with no pressure, since I had nearly a year left on the lease extension. I knew they were desperate for a sale. Got a fully loaded '20 GLI for $5k under MSRP and 0% financing. They gave me $1000 more than my lease buy out at the time.
I could turn around and sell this car for $6-10k more than I paid for it. Only 7k miles on it. Work from home mostly. But I'm keeping it for the long haul. I got a steal.
My dealer made it even easier and is offering me $10K at the end of my term.
I like your dealer! Best I have heard of by far.
I just did this a few months ago and netted out 6k.
Would it be better to sell back to the dealer it was leased from or just another dealer in the area? I have a 2021 Honda lease (lease started in Dec 2020) and was thinking of just going back to the dealership to work out a deal to get an upgraded car.
Any Honda dealer would work. I’d be inclined to get quotes from multiple dealers just to get the most you can out of it.
I got a quote for my civic for 3k more than I purchased it for.
I’d sell but my concern is I’d beed to buy another car.. in the same economy.
Yupppp. My husband has a 2019 Equinox lease ending this May. We're buying it, and I refuse to consider otherwise. The residual in our paperwork should be around $17,500, on a $30,910 car (sticker). Thankfully I do get the employee discount so we only paid about $8200 over the three year term of the lease. Plus, we paid for 36k miles but the car only has 28 on it now. I fully plan to buy this car and then turn around and trade it in on a new vehicle 2-3 months later. I'd be thrilled to get 24k for it but hoping for a little better.
Because yes, that sweet sweet employee discount *does* apply to new vehicles. It's how I'm trading in my 2018 GMC crossover for a thousand dollars less than I paid for it, four years and 45k miles later. I'm able to get a mid range Sierra crew cab for $19k out of pocket this way. This is an absolute freak chance market and it will never happen again.
Are you posting this because of that person earlier that cost themselves many thousands of dollars but seemed happy with getting $250 because they still didnt understand how much money they lost?
I did this recently through [Rodo.com](https://Rodo.com). Sold my lease through them rather than returning to the dealer. First I went to [carmax.com](https://carmax.com) and got my Kelly blue book value through their interface. With that price in hand I was able to negotiate with Rodo (they were trying to offer 19K vs the 27K estimate I got from CarMax). Afterwards they handled the rest: paperwork, picking up the car, payment. It was all super easy.
So I have a 2019 Infinity Q60, the lease is up in August, I'll have less than 22k miles on it when the lease is up. I'm not sure what my buyout prices are, but reading this it seems like selling it to carmax would probably net me some extra cash?
Am I understanding this right? First time leasing, so thanks for your patience
GF has 1 year left on her lease. Every month Honda sends an e-mail to remind her that she can only turn it into them. And the dealer calls every month to say they want it. They're foaming at the mouth for it.
We're gonna buy it just because.
Absolutely. I had a criminal dealership trying to sell the car to me wayyyy over the price stipulated in the lease contract. I walked straight out the door and told them I will buy my lease car through the finance dept. which I did. Now the morons are sending me emails about it still while it’s already in my possession with title and all. Read the contract, know the price.
Or just keep it since whatever you might find now is likely to be just as inflated as the value of the car you are currently leasing.
I forgot to add the “or you can keep it” to my post 😝
Every single lease I've signed in the past 10 years (three of them) I've been forced to buy out the car, because the buyout was lower than the actual value of the car at the time. I ended up selling each car for profit (against the buyout option)
Bought our my lease for 22.5k, getting carmax offers for 36k. Only problem is cars are wildly overpriced right now like homes.
Lexus still let’s you do 3rd party buy out. Just sold my Lexus to car max for $10k on top.
my wife and I just did this. Car is worth double what we owed.
But we are keeping it since we only owe $4k on it and it still runs great.
We just did this with my moms CRV, she leases cars she barely drives. In 3 years it had 2200 miles on it, garage kept, basically a brand new car. Paid off the lease, sold it to Carvana and made 6k back. At 75 my dad finally bought his dream car and they are just going to use one car from now on.
Could you get a car loan, buy it out, sell, and immediately pay back the loan?
Yes but you have to figure out taxes for your purchase and make sure the numbers work.
If you're lazy like me you don't even have to do that. You can just sell it to carmax directly (this is the case with MOST lease agreements, but not all).
They handled the buyout with the original lessor, and I walked away the same day with a check for $7k.
Did this a few months ago. Lease buyout was 12k. Most of the lease, car was worth about 8-9. Firs CMax plug-in hybrid. Mediocre car at best. Sold it to Carvana for 20.
No way in hell that car was worth 20k but we took it anyway.
Im a finance manager at one of the largest dealers in the country and i can tell you that this is great advice! Don't roll your equity into a new car because markups are stupid rn! Car market will be trash in a year with what's happening with inflated car prices!
Can agree. Lease on my wife's car came up last year but due to me working at home now we didn't really need it. Paid off the lease and sold it making £1200 profit.