Tips Buying out Car Lease

[djvern414]

So, my wife's lease ends in two weeks. She really wants to buy the vehicle but the residual value $19,300 is more than the actual value approx $17k.

From what I've read it's best to wait until the 11th hour and then call the lessor to see if they'll lower the residual buyout to have to pay a restocking fee or something if that nature.

Both Ford and the dealership have called her, but I assume the dealership sales team will try to push her into a new car. It's a 2017 Ford Escape and she only put 26,000 miles on it.

Any tips on how to get a better deal?  Should we deal with the sales team at Heiser or call Ford back directly?

Y'all are the best.

[dgies9156]

Brother Djvern, we just did that. My daughter wanted her 2016 Nissan Rogue pretty badly. It was a good, very reliable car and she asked to get it.

Our Nissan dealer had contacted us several times wanting to lease a new 2019 Rogue for "only a few more dollars than you pay now." A few more turned out to be 50 percent more.

We went in to see them and looked at other cars, both on their lot as well as on CarGuru.com, which is a very good car listing website. We also looked around for identical cars with identical mileage (her's was well below average and well below what we paid for). We saw the listings in the market for identical cars and saw the residual value (plus applicable taxes and BS fees in the contract) was less than we could replace car for with an identical vehicle.

If your wife treated her car well, chances are the dealer wants it for his inventory. Be wary of those kinds of dealers. We were. We also went to the dealer and told them they should negotiate with Nissan Finance to lower the price and we would split it 50/50 with him. That did not work either.

Be careful of the final traps. The dealer told us, in violation of Illinois law, that they would handle the buyout only if we financed the car through them (that's called tying and it's grotesquely illegal). I told them to get lost and that my daughter had a check for them.

Finally, we bought the car and my daughter is quite happy. She financed it, through the Bank of Dad, for three years.

[rocket surgeon]

i've never understood leasing and therefore i've never entered into a lease.  i've always bought, financed at the higher level so my mandatory payment was lower, then pre-paid it off, sometimes making double payments.  now i own the car.  a few of them i've kept for a few years, thus, no monthly payments.  why not take the lower term at the lower rate you ask?  if i had some other unexpected monthly expenditure, i could retreat back to the lower payment. 

   most recently, i've had jeep saharas.  the wranglers maintain their values quite nicely.  in 2011, i bought a 1998 sport with 110k miles on it for $6500. did a few misc things to it.  nothing crazy.  in 2016, i had about 160k miles on it, a lady hit me, the insurance company totaled it and they gave me $7200 for it. 

[jsglow]

I'm a little like rocket here.  Never leased a car.  Pretty sure I never would.  For about the last 15 years we've purchased used exclusively.  Was amused when the dealership that sold us our 2012 called saying it was about time for a trade-in.  The car has 53k and is just about broken in I thought.

But that's just me.  Not passing judgement on those that do lease so I'll read informed responses with interest, if only for the sake of my own education.

[dgies9156]

I'm a little like rocket here.  Never leased a car.  Pretty sure I never would.  For about the last 15 years we've purchased used exclusively.  Was amused when the dealership that sold us our 2012 called saying it was about time for a trade-in.  The car has 53k and is just about broken in I thought.

But that's just me.  Not passing judgement on those that do lease so I'll read informed responses with interest, if only for the sake of my own education.

Much depends on how long you keep an automobile. Leasing makes some sense if you trade regularly but if you own, like I generally do, forever, then buy.

More recently, I've done the same as you Brother Glow. I bought a 2.5 year old BMW with 19,000 miles on it last year. Price was incredible and never been happier with a car!

[djvern414]

Agreed. I have never leased, something she decided to do prior to the boss.  Thanks for the input. Some good advice.

[StillAWarrior]

I leased a few, but only because my employer gave me a car allowance.  Once the allowance ended, so did the leasing.  I purchased my last car new only because I bought it after turning in a lease and I was way over miles on the lease.  They let me out of the lease early and didn't require me to pay for the extra miles if I'd buy a new car from them.  Other than that, for the last ten years or so we have bought used cars for my wife and for the car used by our kids.  I'd honestly be surprised if we ever buy another new car.

[warriorchick]

Agreed. I have never leased, something she decided to do prior to the boss.  Thanks for the input. Some good advice.

Are you referring to yourself as "the boss"?

[djvern414]

Haha, wow that autocorrected badly from vows. Should proofread better.... Definitely not "the boss" nor want to be.

[dgies9156]

Are you referring to yourself as "the boss"?

Please send Sister Chick a suitcase full of $100 bills, unmarked, lest your wife somehow learn you called yourself the boss!

 

[reinko]

The Reinko family leased two cars in the past 10 years, but just bought our last one.  Leases were nice because you could more car for a lower per month payment, zero maintenance other than oil changes, and maybe rotating the tires once or twice in three years.  We didn’t drive a ton, so mileage was never an issue. 

We are happy with our purchase a few years ago, but a brand 2016 CRV, as the 2017’s were being delivered so the dealership was motivated to get them off the lot.  At the time I got .9% financing so essentially an interest free loan on a new car.  Car is currently worth $4K more than I owe on it, and couldn’t be happier.

[Cheeks]

Buy used, best decisions I have made with cars.  Low mileage, already depreciation hit.  2 of my 3 cars bought used.

[reinko]

Buy used, best decisions I have made with cars.  Low mileage, already depreciation hit.  2 of my 3 cars bought used.

We tried, but CPOs of the same model (Certified Pre Owned) that had under 30K in miles were selling for only 15-20% less in comparison to one with 6 miles.  Seemed like a no brainer for this particular model, plus loans for used cars at the time were around 3% versus the .9 I got for a brand new car. When we get our next one, certainly will try to target a CPO again.

[Jay Bee]

Buy used, best decisions I have made with cars.  Low mileage, already depreciation hit.  2 of my 3 cars bought used.

Hark! Have always bought used, all cash.

[Cheeks]

We tried, but CPOs of the same model (Certified Pre Owned) that had under 30K in miles were selling for only 15-20% less in comparison to one with 6 miles.  Seemed like a no brainer for this particular model, plus loans for used cars at the time were around 3% versus the .9 I got for a brand new car. When we get our next one, certainly will try to target a CPO again.

I’ve bought some CPO and some not, good luck with most.  The Mini Cooper we have is a pain in the ass German car that costs a lot to fix, but every Japanese used car or truck I have purchased I do not regret at all.

[warriorchick]

We have probably bought a dozen used cars from dealers, none of them CPO, and have never had a problem. If you trust the manufacturer, CPO is a waste of money.

[rocket surgeon]

Buy used, best decisions I have made with cars.  Low mileage, already depreciation hit.  2 of my 3 cars bought used.

new used cars are a steal.  back in 2006, i bought a used 04 jaguar xjr loaded with 12,000 miles for $54k...it was $98 k a year and a half brand new.  iasked the sales dude why it was available-said the guy traded it in for a brand new xk8 convertible-made me feel better.  believe it or not, had very few probs with it, traded it in for one of my saharas about 5 years ago with 150k miles on it.  that was a beauty.  faster than b@lls but rear wheel drive sucked in the snow

[dgies9156]

I bought a 2016 BMW 528i, X Drive a year ago from a dealer in Westmont, IL. The car had 19,000 miles on it, the remainder of the factory warranty and got it for less than $30,000 (excluding taxes). Car was sticker of $57,000 new.

Will own this sucker forever!

[WI inferiority Complexes]

So, my wife's lease ends in two weeks. She really wants to buy the vehicle but the residual value $19,300 is more than the actual value approx $17k.

From what I've read it's best to wait until the 11th hour and then call the lessor to see if they'll lower the residual buyout to have to pay a restocking fee or something if that nature.

Both Ford and the dealership have called her, but I assume the dealership sales team will try to push her into a new car. It's a 2017 Ford Escape and she only put 26,000 miles on it.

Any tips on how to get a better deal?  Should we deal with the sales team at Heiser or call Ford back directly?

Y'all are the best.

I'll try to be concise. 

I sell probably 8-10 leases, and "write up" just as many who go in a different direction.  I don't sell Ford, so specifics are different than GM, (but I'd be surprised if they were that different).

Your buy-out figure was included in your original lease contract, and is non-negotiable.  You leased the vehicle with a certain residual value (between 53% and 48% percent?), and your buyout figure is that value.  There are times this works in the customer's favor, (if you only put 26k miles on your F-150 lease, your buyout could be $33k and the value market value could be $35k, for example).  I'm positive you can not negotiate the buyout with General Motors, (or, more specifically, their leasing agency, GM Financial), and I'd be surprised if you could do it with Ford Motor Credit or whatever.

As a salesman, I would certainly try to "push her" into a new car, for I get more credit for a new car sale.  That said, if she wanted to buy her lease, I still get an "X on the board"), for a used car sale, she still pays the $179 doc fee and the finance dept still has a chance to make a few bucks on rate and extended warranties, maintenance plans, etc.  For these reasons, no one at our dealership will try to talk her out of buying her vehicle; it's just a take-it-or-leave-it price.

What I think you have to decide is:

1) or there similar vehicles to her which are retailing for $17k, where are they, etc.  "Market value" is sometimes an abstract idea; if I want to be a real a$$hole I sometimes ask customers "Which street is the Kelly BlueBook dealership on?"

2.)If you find the actual Escape retailing for $17k, is it worth an extra $2,300 to drive her car?  You know what works, doesn't work, have often maintenance was performed, etc.  $2,300 at 3.9% for 5 years is $42/month; is that worth not taking any chances?

[rocket surgeon]

I bought a 2016 BMW 528i, X Drive a year ago from a dealer in Westmont, IL. The car had 19,000 miles on it, the remainder of the factory warranty and got it for less than $30,000 (excluding taxes). Car was sticker of $57,000 new.

Will own this sucker forever!

that's the thing dog-it makes me wanna cry driving a new car off the lot knowing you just lost a few  thousand $$.  then there's that first dent!! 

true story-i had that xjr for about a week, parked in my turn around.  well, my youngest with his fairly new license in hand backed our hummer out like there was nothing there.  put the first and only dent in front right fender-not as bad as it could've been, but the look on my wife's and sons face when i came up from basement-looked like they had seen a ghost.  only funny as we look back 15 years

[dgies9156]

Some thoughts on Brother WInferiorityComplex's comments from experience

Your buy-out figure was included in your original lease contract, and is non-negotiable.  You leased the vehicle with a certain residual value (between 53% and 48% percent?), and your buyout figure is that value.

Very true from our experience. In some ways, we thought that there might be some flexibility since the buyout saves the lease company certain costs. I'm guessing they've somehow figured that into the residual. Morale of story: Pay close attention to the sale and residual values if you lease.

Also, there's something called the money factor in the lease. The money factor is the interest charged. When we leased my daughter's car, we studied the contract and found we paid about $3.00 interest over the life of the loan. In effect, what we liked was we paid for what we thought she would use.

As a salesman, I would certainly try to "push her" into a new car, for I get more credit for a new car sale.  That said, if she wanted to buy her lease, I still get an "X on the board"), for a used car sale, she still pays the $179 doc fee and the finance dept still has a chance to make a few bucks on rate and extended warranties, maintenance plans, etc.  For these reasons, no one at our dealership will try to talk her out of buying her vehicle; it's just a take-it-or-leave-it price.

This is one of the things that bothered me about the lease. The car needed to be retitled and the dealer said the fee was "standard." When I asked the salesman what the cost of preparing the docs was, he gave me jibberish. The dealer to whom I took the car to buy out the lease was the same one I leased the car from, so they already made a profit on it. Plus, there was a $350 buyout fee (that Nissan's Finance arm implied -- perhaps incorrectly -- went to the dealer). Morale of story -- read the contract carefully. It's heavily tilted toward the dealer and finance company, as one would expect.

What I think you have to decide is:

1) or there similar vehicles to her which are retailing for $17k, where are they, etc.  "Market value" is sometimes an abstract idea; if I want to be a real a$$hole I sometimes ask customers "Which street is the Kelly BlueBook dealership on?"

That's what we did.

2.)If you find the actual Escape retailing for $17k, is it worth an extra $2,300 to drive her car?  You know what works, doesn't work, have often maintenance was performed, etc.  $2,300 at 3.9% for 5 years is $42/month; is that worth not taking any chances?

Wasn't our issue but a very legit point. We did look at comparably priced, comparable mileage Nissan Rogues and we could find very few. They were priced higher and while we could negotiate, we agree with Brother WI that the vehicle we had was worth it because we knew about the maintenance.

[jsglow]

I'll try to be concise. 

I sell probably 8-10 leases, and "write up" just as many who go in a different direction.  I don't sell Ford, so specifics are different than GM, (but I'd be surprised if they were that different).

Your buy-out figure was included in your original lease contract, and is non-negotiable.  You leased the vehicle with a certain residual value (between 53% and 48% percent?), and your buyout figure is that value.  There are times this works in the customer's favor, (if you only put 26k miles on your F-150 lease, your buyout could be $33k and the value market value could be $35k, for example).  I'm positive you can not negotiate the buyout with General Motors, (or, more specifically, their leasing agency, GM Financial), and I'd be surprised if you could do it with Ford Motor Credit or whatever.

As a salesman, I would certainly try to "push her" into a new car, for I get more credit for a new car sale.  That said, if she wanted to buy her lease, I still get an "X on the board"), for a used car sale, she still pays the $179 doc fee and the finance dept still has a chance to make a few bucks on rate and extended warranties, maintenance plans, etc.  For these reasons, no one at our dealership will try to talk her out of buying her vehicle; it's just a take-it-or-leave-it price.

What I think you have to decide is:

1) or there similar vehicles to her which are retailing for $17k, where are they, etc.  "Market value" is sometimes an abstract idea; if I want to be a real a$$hole I sometimes ask customers "Which street is the Kelly BlueBook dealership on?"

2.)If you find the actual Escape retailing for $17k, is it worth an extra $2,300 to drive her car?  You know what works, doesn't work, have often maintenance was performed, etc.  $2,300 at 3.9% for 5 years is $42/month; is that worth not taking any chances?

Inferiority, I think everyone here at Scoop really appreciates what you tell us about the car buying process.  Thanks.  You can sell me a car anytime. 

[StillAWarrior]

true story-i had that xjr for about a week, parked in my turn around.  well, my youngest with his fairly new license in hand backed our hummer out like there was nothing there.  put the first and only dent in front right fender-not as bad as it could've been, but the look on my wife's and sons face when i came up from basement-looked like they had seen a ghost.  only funny as we look back 15 years

Imagine how Tracy Morgan felt when someone hit his $2 million Bugati just minutes after he drove it off the lot.

[djvern414]

I'll try to be concise. 

I sell probably 8-10 leases, and "write up" just as many who go in a different direction.  I don't sell Ford, so specifics are different than GM, (but I'd be surprised if they were that different).

Awesome advice. She's definitely attached to THIS car, so likely not worth the gamble to replicate similar year/make/model. Although this is odd....check engine light has come on a couple times, which they fixed under warranty (says just a filter setting)....weird for a 2017 but otherwise condition is excellent. If can get he $$, is it better to negotiate if we go through dealer financing to get a lower deal on the purchase?  I assume they get a kickback for that so may be worth haggling. I'll make sure no prepayment penalty and just pay off the loan within 30 days.

Interest is so cheap now might be worth the finance terms too...

If you sell in the local area you can PM but think she's stuck on this Ford. I laughed at the KBB quip,  l use those kinda lines all the time.

[Coleman]

Pay cash for my cars, all used. Bought a 2015 Subaru Forester for cash last year, I love it.

[djvern414]

Ah, I think I misread. So, you're saying the residual value is non-negotiable whether with Ford or the dealership.

[augoman]

I used to run private lease companies and trained dealership sales teams in leasing.  years ago the factory finance source would negotiate buyouts with dealers but do to abuse and factory shortfalls the practice was stopped.  Now all lease turnins must go through the auction.  The factory bases the lease on the stated residual and to sell the vehicle for less causes a loss. Most lease companies used to buy 'residual value insurance' insuring the residual for stated amount minus a small deductible.  The cost of the insurance has risen to the point that it is no longer used.  Most factory leases are subsidized either in money factor or vehicle price- they are using leases as a means to move inventory without having to resort to 'rebates', which are a sign of 'distressed goods'.

Leasing can be a great program, depending on your needs.  If you have a business a finance lease could greatly benefit you.  Used car leases are terrific programs but you must deal with a private lease company.  I currently have several vehicles and only 1 is leased-my wife's car.  She drives little and likes a fresh car every two years.  I usually get her a dealer owned and titled car that has been re-invoiced to the dealer as a rental.  They are substantially below original invoice but can be leased as new.   The lower capitalization but same residual and money factor results in a lower payment/cost. Using a lease as a means to acquire a new car, paying it down to the residual and having the ability to walk away or purchase it is a great option.  My two daughters have done this and purchased the vehicles at maturity.  The option is comforting-especially if the value nosedives, or you have an accident.  All titles are branded today and you can simply turn the unit in at maturity, or if it's pristine and used vehicles are high, enjoy the bargin and buy it.