Is it ever wise to lease? Paging Dentist not really (1 Viewer)

[Cliff Clavin]

Are we spending $1000/yr in maintenance with a 5 yr/60,000 mi basic, 10 yr/100,000 mi powertrain warranty, or are we ignoring that?

I give up.

 

[gianmarco]

If impressing people with a new car is high on your agenda, personal finance probably isn't important to you anyway.. so that's fine to make that choice (albeit a stupid one unless you're rich, in which case you probably wouldn't lease anyway), but just don't start telling me it's a great deal.

This is just silly.  There are reasons people don't want to drive older vehicles and it has nothing to do with impressing people.  Newer cars have more features aside from just bluetooth.  Increased safety features (lane departure, parking assist, backup cameras, blind spot detection), comfort features (bluetooth connectivity, phone integration, hands free, etc.), better gas mileage, just to name a few.  Necessary?  Of course not, but still helpful and choosing to have those features has NOTHING to do with impressing other people.

Just because driving a newer car isn't important to you doesn't mean that anyone who does doesn't care or look at personal finance.  That's the most ridiculous thing ever.  The same can be said for you taking vacations, owning a boat, etc.  Would it fair to say that if you spend money on KC baseball tickets that personal finance probably isn't important to you?  Save me that bull#### and just acknowledge that NO ONE makes every spending decision on trying to maximize their finances.  It's just ridiculous when people that are completely unfamiliar with leasing try to come in and proclaim that only a fool would lease without knowing the actual details. 

 

[Random]

I give up.

  As you should.  I truly don't think you understand the impact of this. 

 

[Dentist]

This is just silly.  There are reasons people don't want to drive older vehicles and it has nothing to do with impressing people.  Newer cars have more features aside from just bluetooth.  Increased safety features (land departure, parking assist, backup cameras, blind spot detection), comfort features (bluetooth connectivity, phone integration, hands free, etc.), better gas mileage, just to name a few. 

Just because driving a newer car isn't important to you doesn't mean that anyone who does doesn't care or look at personal finance.  That's the most ridiculous thing ever.  The same can be said for you taking vacations, owning a boat, etc.  Would it fair to say that if you spend money on KC baseball tickets that personal finance probably isn't important to you?  Save me that bull#### and just acknowledge that NO ONE makes every spending decision on trying to maximize their finances.  It's just ridiculous when people that are completely unfamiliar with leasing try to come in and proclaim that only a fool would lease without knowing the actual details. 

well I think those safety features are bull####...  I do wish sometimes I had a backup camera and better gas mileage,  and I do take vacation, own a boat, and have premium Royals tickets...  so I guess you got me there.     So you've got me this round...  I'll come up with some additional compelling arguments in my favor if I have time.

 

[chet]

This is just silly.  There are reasons people don't want to drive older vehicles and it has nothing to do with impressing people.  Newer cars have more features aside from just bluetooth.  Increased safety features (land departure, parking assist, backup cameras, blind spot detection), comfort features (bluetooth connectivity, phone integration, hands free, etc.), better gas mileage, just to name a few. 

Just because driving a newer car isn't important to you doesn't mean that anyone who does doesn't care or look at personal finance.  That's the most ridiculous thing ever.  The same can be said for you taking vacations, owning a boat, etc.  Would it fair to say that if you spend money on KC baseball tickets that personal finance probably isn't important to you?  Save me that bull#### and just acknowledge that NO ONE makes every spending decision on trying to maximize their finances.  It's just ridiculous when people that are completely unfamiliar with leasing try to come in and proclaim that only a fool would lease without knowing the actual details. 

Please enlighten us as to the benefits.  I've seen a couple of potential financial positives for leasing over buying:

1) Some states only charge sales tax on the lease payment and not the entire purchase; and 

2) For some, the lease payment will be tax deductible.

I agree that trying to outguess the car companies on the future residual value is a fool's errand.

 

[gianmarco]

well I think those safety features are bull####...  I do wish sometimes I had a backup camera and better gas mileage,  and I do take vacation, own a boat, and have premium Royals tickets...  so I guess you got me there.     So you've got me this round...  I'll come up with some additional compelling arguments in my favor if I have time.

You don't have to bother.  It's common sense that even the most frugal people spend money on certain things. 

That said, my whole point is that your average lease deal is a losing proposition.  And for someone like you with your vehicle of 13+ years, you will always come out ahead vs. a lease. 

Where I take exception is that ALL leasing is bad.  That simply isn't true.  IF you know how leasing works and IF you know how to find a good deal and IF you know how to evaluate a lease deal, then it's very possible to make leasing just as good of a financial decision as buying even if you plan on owning your car purchased car for 8-10 years.  I've laid out the numbers for that.

Even as a bad financial decision, your average lease will still be appealing to people much like your Royals tickets are to you.  Because I actually care about my personal finances, I've been on both sides of this, and I've learned how to make leasing be a good financial decision as well as enjoying the perks that come with it. 

 

[Random]

It makes it possible to drive more car than you can afford 

 

[guru_007]

I don't lease because I like having a new car.  I lease because financially it's a good decision with the deals I'm able to procure.  

Sorry, but you're just fooling yourself here.

I like how you laid out the math and tried to justify how you think you're coming ahead leasing.  But, truth be told, you never ever ever are.  Leasing was created so that American's spent more than they could afford for a vehicle and so they could upgrade and always have something new.

Is it wrong to lease?  That's a personal decision, similar to paying off your mortgage early.  I'm not going to argue for car buying vs. leasing.  I've done both.  The only pros of a lease are you get to drive a new vehicle and never have to worry about maintenance really.  If you can qualify that in some way for carrying a lease, go for it.

Do you think you can't get great deals on vehicles by buying them outright?  Do car dealers want inventory sitting on their lot, or coming back to them?  

 

[Sammy3469]

Please enlighten us as to the benefits.  I've seen a couple of potential financial positives for leasing over buying:

1) Some states only charge sales tax on the lease payment and not the entire purchase; and 

2) For some, the lease payment will be tax deductible.

I agree that trying to outguess the car companies on the future residual value is a fool's errand.

He's not so much trying to outguess as minimizing both it and the MSRP from the start.  Basically there's some delta between the two which he's happy with (sets the monthly payment) while trying to get the residual as low as possible.  Without having ever done a lease, I'm not sure how much wiggle room there is to do that.  

 

[chet]

He's not so much trying to outguess as minimizing both it and the MSRP from the start.  Basically there's some delta between the two which he's happy with (sets the monthly payment) while trying to get the residual as low as possible.  Without having ever done a lease, I'm not sure how much wiggle room there is to do that.  

As I understand it, the residual is set by the car companies and is not negotiable.  You actually want a high residual as the difference between the residual and the purchase price is the prime driver of the monthly payment.  

Best practice is to negotiate the purchase price prior to revealing whether you're going to purchase or lease.  

 

[Sammy3469]

As I understand it, the residual is set by the car companies and is not negotiable.  You actually want a high residual as the difference between the residual and the purchase price is the prime driver of the monthly payment.  

Best practice is to negotiate the purchase price prior to revealing whether you're going to purchase or lease.  

I thought he said you could negotiate the residual as well, but yes.  

The other thing is I looked around half-heartedly on the web and every Lease special I saw included upfront payments, so I have no idea how easy it is to get those rolled into.  

 

[RUSF18]

I think even with optimal lease terms it is very hard to come out ahead when leasing over buying. I read the posts earlier and don't see how gianmarco is coming out ahead even in his own example, but maybe I overlooked something. When you're saying "I'm spending $X more a month but..." you're still spending more. 

That being said, I think you can get it close enough where the mental aspect of having a new car every few years and not having to worry about large one-time maintenance expenses can outweigh the slight cost disadvantage. The analogy to paying off a mortgage early/quicker is a good one, IMO. 

 

[Da Guru]

Some here are paying some high leases.  Right now my wife is driving a 2015 GMC Terrain. Sticker was 30K....coming out of a Jeep lease (conquest money) and with me getting her GM Employee we are paying 155.00 a month for 24 months 30K miles.  Sign and drive zero down.  So it is costing us around 3600.00 for two years.

Not sure I could swallow 450.00  a month lease payments.

 

[RUSF18]

Some here are paying some high leases.  Right now my wife is driving a 2015 GMC Terrain. Sticker was 30K....coming out of a Jeep lease (conquest money) and with me getting her GM Employee we are paying 155.00 a month for 24 months 30K miles.  Sign and drive zero down.  So it is costing us around 3600.00 for two years.

Not sure I could swallow 450.00  a month lease payments.

That's an oddly amazing deal. If you still have your paperwork I'd be curious to see what your payoff amount is. 

 

[gianmarco]

I think even with optimal lease terms it is very hard to come out ahead when leasing over buying. I read the posts earlier and don't see how gianmarco is coming out ahead even in his own example, but maybe I overlooked something. When you're saying "I'm spending $X more a month but..." you're still spending more. 

That being said, I think you can get it close enough where the mental aspect of having a new car every few years and not having to worry about large one-time maintenance expenses can outweigh the slight cost disadvantage. The analogy to paying off a mortgage early/quicker is a good one, IMO. 

In my math and examples above, I was very conservative on the numbers for the purchase side, so I think you did overlook that part.  I didn't list any equity when turning in the lease because you can't count on it for sure, but I've had, on average, $500-$1000 equity on my leases over the last 10 years.  As I mentioned as well, I had one lease with a monster amount of equity ($8k in trade in value).  It only takes one of those over 10 years to swing it well into the leasing side to come out ahead financially.   I also assumed a modest 5% return even though historical returns are more in the 7-8% range.  So there are scenarios where I'm actually spending less AND having the better cars.  And, as you alluded to with the mortgage analogy, the peace of mind of never really having to worry about repairs is hard to put a price on.  Or the peace of mind that my wife isn't driving a car with 100,000+ miles with our children in the middle of winter. 

Even with paying more compared to buying, the difference can be much smaller than you'd expect (again, look at my numbers above).  And you should expect to pay more to have newer cars and the benefits of the lease.  When it's an additional $400/year, however, that's a pretty reasonable cost for that and most would argue isn't a bad financial decision.  When it's an additional $2,000/year, that's a different story. 

Let me finish it by saying that, knowing the numbers, if I were only able to get your average lease deal (i.e. the second set of numbers I posted above), I wouldn't be leasing.  Like Dentist, I might be willing to drop a grand on Royal's season tickets but not 10 grand.  But the numbers are close enough that it can swing in either direction with things I can't control (residual equity, repairs, etc.) IF you can find the right deal.  And those saying that leasing is never a good financial decision are just flat out wrong. 

 

[chet]

Anyone know what the residuals look like on a Yukon or Suburban?

 

[Da Guru]

That's an oddly amazing deal. If you still have your paperwork I'd be curious to see what your payoff amount is. 

I guess the key is getting employee pricing.  I do work for all the auto companies and am able to get employee pricing deals.  The key is not being picky about what you drive when the best deals are available.  A Terrain was not even on our radar and then I get a flyer in the mail.  Have to have employee and conquest.  My wife does not care what she drives as long as it is new.  Her last 5 vehicles have been a Ford Fusion, Grand Cherokee, Ford Escape, Dodge Charger and now the Terrain and the price range has been from 155-185 a month on sign and drive leases.

 

[SHIZNITTTT]

My wife would love to have a new car every 2 years.  She has budgeted into her head the amount she is willing to pay to drive something new.  I would rather drive something till the wheels fall off and have no payment.  It is just what is important to you.  

 

[RUSF18]

I guess the key is getting employee pricing.  I do work for all the auto companies and am able to get employee pricing deals.  The key is not being picky about what you drive when the best deals are available.  A Terrain was not even on our radar and then I get a flyer in the mail.  Have to have employee and conquest.  My wife does not care what she drives as long as it is new.  Her last 5 vehicles have been a Ford Fusion, Grand Cherokee, Ford Escape, Dodge Charger and now the Terrain and the price range has been from 155-185 a month on sign and drive leases.

With your lease terms, you've paid off only 12% of the sticker price of the car after 2 years. That should be going well beyond employee pricing.

 

[Random]

Some here are paying some high leases.  Right now my wife is driving a 2015 GMC Terrain. Sticker was 30K....coming out of a Jeep lease (conquest money) and with me getting her GM Employee we are paying 155.00 a month for 24 months 30K miles.  Sign and drive zero down.  So it is costing us around 3600.00 for two years.

Not sure I could swallow 450.00  a month lease payments.

Wow, now thats tough to beat.

 

[ghostguy123]

Sorry. No money down, 12,000 miles a year for 3 years. I basically searched around for the cheapest lease i could find. I previously leased a Sentra for 159 a month, same terms. Got this one cheaper and its not stripped. Push button start, steering wheel controls etc. They also paid the last two payments of my previously leased Sentra to get me into this one.

so 159 for three years comes out to $5,724.

I got in touch with the nearest Nissan dealership, went through the whole spiel about how I am contacting dealerships to see the beast deal I can get for an inexpensive lease and the absolute best the Nissan dealership could do for me for a Sentra was 189 a month with like 600 down, which comes out to about $7,400 for three years.   Bit of a difference there. 

I imagine the deal you got has to be just as rare as finding a gem of a used car for a great price.  Rather go that route. 

 

[Ministry of Pain]

I lease a Sentra for $146 a month. Hard to beat that in terms of cost.

How much did you give them when you accepted the car? Insurance? 

146 for how long? 

 

[Ministry of Pain]

I'm a big fan of leasing.  It's not ideal for everyone, but it certainly makes sense for some and it's not the poor financial decision that many think it is.  If you drive a lot of miles, typically keep your cars for at least 7-8 years, or are looking at a vehicle that doesn't keep its value well, then you're better off buying for sure.

However, there are times you can get more car for less by leasing if you understand how it works.  We started leasing about 10 years ago and it's ideal for us.  We don't go over 12K miles per year.  While I used to keep my other cars for quite a while, I love being able to change every 3 years and have new technology in cars today.  And one of the biggest things is that I haven't had to bring my car for any repairs or even worry about any of those expenses for almost 10 years.  Because leases are almost always on new cars, any repairs are covered under original warranty and pretty rare to begin with. 

First of all, you should read this to get an understanding of how leasing works.  It's about 15 pages long but worth the read if you want to seriously consider.  I also wrote a bit about it before here in this post

Nicer luxury cars that retain their value are ideal for leasing.  In fact, as I mentioned above, if you know how to negotiate a lease, you can have a lower monthly payment on a higher priced car because of that fact (i.e. a $50,000 BMW can have a lower monthly payment than a $35,000 Ford).

In the end, most lower priced cars, particularly domestic vehicles, are better off being bought and taken care of.  If you're looking for something more, then leasing is something to seriously consider.  I'll add that I've never had any issues returning a leased vehicle (actually typically turn it in a little early and get something back as a result).  I've also now done leases with several different brands and there are certain companies that are much better to lease from than others.

Hey Amigo, thanks. I'm so busy and I miss good threads like this. I guess I just love to hear war stories and how people buy things from both sides. I love sales which is part of the allure in all of this. 

We might have to lease soon. We don't have to but I wanted to get my wife something extra and I don't want to feel like I have to buy it. 24-36 month leas, can always buy one if we like it after the lease runs out. 

 

[Ministry of Pain]

I read thru Page 1. Love GiMa's lease info but I have to share my Subaru story. We bought one about 5 years ago. Outside of it being great little hatch, we bought the Impreza Sport version and we paid about 20 for it but will even go up to 21k and say we paid that. 

5 years later it has close to 50k miles. New brakes 400, New tires 350

22,500 into the car with oil changes and everything else. Now the car in KBB is worth about 11-12k on trade in. Dealers list these cars used for 14-15k all day long. Assume I could sell it for 11k...

I come up at about 200 a month to own this vehicle the last 5 years and I have money to put down on the next car. I think to be able to recoup half your money 5 years later...a lot has to do with the car maker themselves. 

I love all the info, feel like the best move for younger folks is to buy a slightly used Japanese car and enjoy the savings. Now,that I'm a little older though it would be nice to have a bells and whistles car sometime soon.

 

[Ministry of Pain]

I've driven my SUV for 13 years now...  I haven't had a car payment since 2006,  my personal property taxes keep declining, my insurance rates have fallen to the floor,  my maintenance expenses haven't been that high, and I haven't had a single breakdown since 2011.. and that was the ONE breakdown I've had in 13 years.  Car has been in 3 wrecks, all minor

I get to work safely each and every day,  what am I missing out on here?  Bluetooth?

If you buy and hold a car 10+ years I can't imagine any scenario where you come out +EV on a lease unless you're the type that's not going to hold their car long term.

Buy, hold, maintain, defensively drive, and forget stupid technology and keeping up with the Jones'.... profit.

If impressing people with a new car is high on your agenda, personal finance probably isn't important to you anyway.. so that's fine to make that choice (albeit a stupid one unless you're rich, in which case you probably wouldn't lease anyway), but just don't start telling me it's a great deal.

This is a really good post. I like GM's explanation too. I'm gonna lease for the Mrs and buy for the MOP.

My current car is Accord v6 EX Coupe '05, 140k miles, flipped a home in Miami during ownership of this car, made a good chunk of change on it over 36 months. Folks like you always inspire even if I am silent in those threads. 

 

[johnnycakes]

 

 

[Doctor Detroit]

I read thru Page 1. Love GiMa's lease info but I have to share my Subaru story. We bought one about 5 years ago. Outside of it being great little hatch, we bought the Impreza Sport version and we paid about 20 for it but will even go up to 21k and say we paid that. 

5 years later it has close to 50k miles. New brakes 400, New tires 350

22,500 into the car with oil changes and everything else. Now the car in KBB is worth about 11-12k on trade in. Dealers list these cars used for 14-15k all day long. Assume I could sell it for 11k...

I come up at about 200 a month to own this vehicle the last 5 years and I have money to put down on the next car. I think to be able to recoup half your money 5 years later...a lot has to do with the car maker themselves. 

I love all the info, feel like the best move for younger folks is to buy a slightly used Japanese car and enjoy the savings. Now,that I'm a little older though it would be nice to have a bells and whistles car sometime soon.

I know you love the Imprezza but according to both JD Power and CR, that car is below average.  Buy American you monster. 

 

[ghostguy123]

I guess I have to ask cause I really don't know, but who is responsible for the costs of routine maintenance? 

If you you are, do they require proof that you did routine oil changes?  And do they add fees if you missed any sort of mileage/time deadlines on it?

 

[fruity pebbles]

How much did you give them when you accepted the car? Insurance? 

146 for how long? 

3 years, didn't give them a penny. insurance is 600 a year.

 

[fruity pebbles]

I guess I have to ask cause I really don't know, but who is responsible for the costs of routine maintenance? 

If you you are, do they require proof that you did routine oil changes?  And do they add fees if you missed any sort of mileage/time deadlines on it?

Techniically you are but ive leased forever and ive never had the dealership ask or check if I did the routine maintenance at turn in.

 

[fruity pebbles]

so 159 for three years comes out to $5,724.

I got in touch with the nearest Nissan dealership, went through the whole spiel about how I am contacting dealerships to see the beast deal I can get for an inexpensive lease and the absolute best the Nissan dealership could do for me for a Sentra was 189 a month with like 600 down, which comes out to about $7,400 for three years.   Bit of a difference there. 

I imagine the deal you got has to be just as rare as finding a gem of a used car for a great price.  Rather go that route. 

I suppose where you ive and more importantly when you look for the lease makes a big difference. I wouldn't say the deals I got are rare cause I got two back to back. $159 the last time and $146 this time. The car at $146 was leased in March and it was last years model. Still new. I don't care what I lease. Im basically looking for the cheapest car. Both times its been a Sentra. The old one had two bald tires and they never charged me a thing.

 

[fruity pebbles]

so 159 for three years comes out to $5,724.

I got in touch with the nearest Nissan dealership, went through the whole spiel about how I am contacting dealerships to see the beast deal I can get for an inexpensive lease and the absolute best the Nissan dealership could do for me for a Sentra was 189 a month with like 600 down, which comes out to about $7,400 for three years.   Bit of a difference there. 

I imagine the deal you got has to be just as rare as finding a gem of a used car for a great price.  Rather go that route. 

This wasn't a one day event either. It took a week for them to come down to where I wanted them. Ignore them for a few days and say I got a better offer. Rinse and repeat. Price kept coming down.

 

[fantasycurse42]

I like to look at lease prices regardless of where I am in my current lease, I'm always looking to see which cars are offering the best leases. I basically have no choice but an SUV for our next car, which I'm kinda okay with, but if I was an empty nester or younger with no kids and had money - Jaguar F Type has amazing deals for a James Bond kinda car. You can grab one with good negotiating for like $550 a month - that's a $70k sick coupe or convertible.

 

[RUSF18]

I didn't list any equity when turning in the lease because you can't count on it for sure, but I've had, on average, $500-$1000 equity on my leases over the last 10 years.  As I mentioned as well, I had one lease with a monster amount of equity ($8k in trade in value).  It only takes one of those over 10 years to swing it well into the leasing side to come out ahead financially.

Bump for a question on this, as I am going to be dealing with this soon. I have 5 months left on a lease so I am getting inundated with letters from the manufacturers. "Trade in your lease early, we'll assume the remaining payments, waive fees of $$$, and you'll have a new 2017 XYZ!!!"

How do you approach the issue of having some equity in your lease when looking for the next one? I was covered for 12K miles/year over 3 years and by the end of my lease, I'm guessing I'll be at a max of around 23K total (combination of my wife's job changing from 70 mile RT commute to using public transportation, and also having a baby 6 months ago cutting down on moving around much). Presumably it wouldn't make sense just to swap this for a new lease as if I put another 13K of wear and tear on the car. 

Do you contact internet sales depts of dealerships with the relevant details, basically treating it as if you're looking to sell a used car, and seeing what kind of...I don't know, credit?...you'll get towards the agreed upon price for what you'll use as the basis for a new lease?

At this point I'm leaning towards buying the car outright but any sort of trade-in incentive could swing it back in the other direction. 

 

[gianmarco]

Bump for a question on this, as I am going to be dealing with this soon. I have 5 months left on a lease so I am getting inundated with letters from the manufacturers. "Trade in your lease early, we'll assume the remaining payments, waive fees of $$$, and you'll have a new 2017 XYZ!!!"

How do you approach the issue of having some equity in your lease when looking for the next one? I was covered for 12K miles/year over 3 years and by the end of my lease, I'm guessing I'll be at a max of around 23K total (combination of my wife's job changing from 70 mile RT commute to using public transportation, and also having a baby 6 months ago cutting down on moving around much). Presumably it wouldn't make sense just to swap this for a new lease as if I put another 13K of wear and tear on the car. 

Do you contact internet sales depts of dealerships with the relevant details, basically treating it as if you're looking to sell a used car, and seeing what kind of...I don't know, credit?...you'll get towards the agreed upon price for what you'll use as the basis for a new lease?

At this point I'm leaning towards buying the car outright but any sort of trade-in incentive could swing it back in the other direction. 

So, what I do is look up the value on KBB with your specific vehicle and the mileage and see what it's worth.

When you go to the dealership, treat it as two completely separate transactions. Negotiate the lease terms and also negotiate the trade in value they will give you.  Don't deal with both simaltaneously.

With so much time left in your lease, go into the dealership and let them look at your vehicle and let them give you a trade in value. Your current lease has a payoff amount (essentially the residual amount plus give months of payments).... Look that amount up. But do not tell them as what you owe on your current lease is irrelevant to the value of the car. They will ask. Do not tell them. Just find out how much they will give you for the vehicle.

If the payoff is $15k and they say they'll give you $17k, then great. If it's less than the payoff, then you turn it back in. But you may want to check a couple dealerships if need be. 

The difference between what they give you and what the payoff is can be applied to the cap cost of the car or you can just get a check for the amount. I recommend taking the money as cash as you don't ever want to put money down on a lease.  During the transaction, they will assume the lease and take care of the payoff for you. It's such an easy process and avoids turning the car in, costs for damages or disposition fees or any of that. 

Feel free to ask any questions I didn't go over.

 

[Nugget]

So, what I do is look up the value on KBB with your specific vehicle and the mileage and see what it's worth.

When you go to the dealership, treat it as two completely separate transactions. Negotiate the lease terms and also negotiate the trade in value they will give you.  Don't deal with both simaltaneously.

With so much time left in your lease, go into the dealership and let them look at your vehicle and let them give you a trade in value. Your current lease has a payoff amount (essentially the residual amount plus give months of payments).... Look that amount up. But do not tell them as what you owe on your current lease is irrelevant to the value of the car. They will ask. Do not tell them. Just find out how much they will give you for the vehicle.

If the payoff is $15k and they say they'll give you $17k, then great. If it's less than the payoff, then you turn it back in. But you may want to check a couple dealerships if need be. 

The difference between what they give you and what the payoff is can be applied to the cap cost of the car or you can just get a check for the amount. I recommend taking the money as cash as you don't ever want to put money down on a lease.  During the transaction, they will assume the lease and take care of the payoff for you. It's such an easy process and avoids turning the car in, costs for damages or disposition fees or any of that. 

Feel free to ask any questions I didn't go over.

Likely would have to pay sales tax on the residual if you sell it.  Also tough to keep the transactions separate. If I don't buy your trade in for the number you want, will you still lease mine?

 

[gianmarco]

Likely would have to pay sales tax on the residual if you sell it.  Also tough to keep the transactions separate. If I don't buy your trade in for the number you want, will you still lease mine?

That's not what I meant. In the end, it's all a part of the same transaction so that you do avoid any tax issues.

What I meant is that you negotiate the two transactions separately.  If you try to do it all together, it's more difficult to know if you're getting the best leasing terms you can.

I normally get all the leasing numbers in place. Then I discuss the trade in. I bring in the vehicle and let them tell me what they will give for it. They ALWAYS ask what I owe and what I'm looking for. I don't answer either as neither is beneficial to me and neither is necessary for them to give me a trade in value. 

Once they give me the number, if it's close enough to what I'm seeing on KBB and the lease terms are good, then it's an easy deal. If the leasing terms are average but I'm getting good trade in value, that also helps. Similarly, if leasing numbers are good but trade in isn't, I tell them I'll look elsewhere and I've had them to up on what they originally offered.

The two keys are being informed (know the value of the car you are turning in) and don't give away info you don't have to (payoff amount). Whether my car is fully paid off or not doesn't change the value of the car at all. So you never have to give that information. The only time you do is if you are turning it in early, it has no equity, and they are going to pay the final payments. And yes, they'll do this to get a deal done but unlikely to get a phenomenal deal on the lease.

 

[gianmarco]

Bump for a question on this, as I am going to be dealing with this soon. I have 5 months left on a lease so I am getting inundated with letters from the manufacturers. "Trade in your lease early, we'll assume the remaining payments, waive fees of $$$, and you'll have a new 2017 XYZ!!!"

How do you approach the issue of having some equity in your lease when looking for the next one? I was covered for 12K miles/year over 3 years and by the end of my lease, I'm guessing I'll be at a max of around 23K total (combination of my wife's job changing from 70 mile RT commute to using public transportation, and also having a baby 6 months ago cutting down on moving around much). Presumably it wouldn't make sense just to swap this for a new lease as if I put another 13K of wear and tear on the car. 

Do you contact internet sales depts of dealerships with the relevant details, basically treating it as if you're looking to sell a used car, and seeing what kind of...I don't know, credit?...you'll get towards the agreed upon price for what you'll use as the basis for a new lease?

At this point I'm leaning towards buying the car outright but any sort of trade-in incentive could swing it back in the other direction. 

BTW, I wrote that long post, but before doing anything, look up the value of your vehicle and look up the payoff (go to your leasing finance account online). That will tell you right there if there's equity or not. If the payoff is higher than the value, DO NOT buy the car.  You are losing money by doing so (paying more for a car than it's worth).

You can look up those two pieces of information in 5 minutes. Post here or PM me once you get that if you have questions.

ETA -- Assume "good" condition even if your car is in great shape. KBB will give you a range.

 

[RUSF18]

Thanks. I have the payoff amount from my original paperwork and according to KBB I have up to about $900 in equity at the higher end of the range. That's if I go with the "very good" condition. I think it's actually in excellent condition (don't we all) but I was in a pretty good accident last year that had about $11K in repairs put into the engine and front of the car, and I'm sure that would be held against me. 

Kind of surprised it's that low given the 13K less miles than allowed but what do I really know.

Appreciate the rest of the info/advice too.

 

[gianmarco]

Thanks. I have the payoff amount from my original paperwork and according to KBB I have up to about $900 in equity at the higher end of the range. That's if I go with the "very good" condition. I think it's actually in excellent condition (don't we all) but I was in a pretty good accident last year that had about $11K in repairs put into the engine and front of the car, and I'm sure that would be held against me. 

Kind of surprised it's that low given the 13K less miles than allowed but what do I really know.

Appreciate the rest of the info/advice too.

No, you need to look up your current payoff amount. The payoff amount in your paperwork is at the end of the lease. Right now, it's that plus 5 months of payments. So you likely have no equity and definitely need to turn it in at lease end. You can still check with a dealer and see how much they'd be willing to give, especially if they need the vehicle, but do not pay that amount at lease end to keep it if the car is worth less. 

 

[RUSF18]

No, you need to look up your current payoff amount. The payoff amount in your paperwork is at the end of the lease. Right now, it's that plus 5 months of payments. So you likely have no equity and definitely need to turn it in at lease end. You can still check with a dealer and see how much they'd be willing to give, especially if they need the vehicle, but do not pay that amount at lease end to keep it if the car is worth less. 

Ah good point. Even more surprised then. 

 

[irish eyes]

If you had accident with that much in damage, you are screwed. It will show on Carfax and the value will be way under what kbb says, trust me.

 

[RUSF18]

If you had accident with that much in damage, you are screwed. It will show on Carfax and the value will be way under what kbb says, trust me.

Yeah, a tire flew off an ambulance that was going down the highway in the opposite direction at probably 70 MPH, it rolled up the median which caused it to go maybe 60 feet in the air, crashed down on the road, went all the way back up, and then smacked into the right side of my hood immediately killing the engine. If I was going even the smallest fraction of a MPH faster, it would have crashed through the windshield and into my then-6 month pregnant wife. 

I couldn't believe they didn't consider it totaled. But...I was definitely not screwed that day. 

 

[jonessed]

I generally buy used cars after they have been out on a 2-3 year lease.  The German cars have a lot of maintenance costs, but Acura, Lexus, and Infiniti generally don't.

The value drop is front-loaded on a lot of luxury brands.  It smooths out after that.

If someone finds a great lease deal going perhaps they can post the make, model, and terms.

 

[Nugget]

Yeah, a tire flew off an ambulance that was going down the highway in the opposite direction at probably 70 MPH, it rolled up the median which caused it to go maybe 60 feet in the air, crashed down on the road, went all the way back up, and then smacked into the right side of my hood immediately killing the engine. If I was going even the smallest fraction of a MPH faster, it would have crashed through the windshield and into my then-6 month pregnant wife. 

I couldn't believe they didn't consider it totaled. But...I was definitely not screwed that day. 

Glad everyone is safe. Definetly walk away from this car. 

 

[RUSF18]

So taking the lease question out for a second...what's the best method to get financing when buying a new car? I'm assuming dealership will be higher than what I can get on my own.

Is there one preferred site to shop quotes? This part of it is new to me. I have a good potential lease locked in but now I'm considering just buying it outright. And yes Dentist, I could pay cash but would like to know my options if rates are good. 815+ credit here. Thanks. 

 

[sbonomo]

So taking the lease question out for a second...what's the best method to get financing when buying a new car? I'm assuming dealership will be higher than what I can get on my own.

Is there one preferred site to shop quotes? This part of it is new to me. I have a good potential lease locked in but now I'm considering just buying it outright. And yes Dentist, I could pay cash but would like to know my options if rates are good. 815+ credit here. Thanks. 

Go through your bank.  My bank (Bank of America) offers .5% interest discount as a Prima (i think you need $50,000 in total investments/deposits to qualify) customer plus auto debit.  I am sure whoever you bank with has something similar. 

 

[eoMMan]

So taking the lease question out for a second...what's the best method to get financing when buying a new car? I'm assuming dealership will be higher than what I can get on my own.

Is there one preferred site to shop quotes? This part of it is new to me. I have a good potential lease locked in but now I'm considering just buying it outright. And yes Dentist, I could pay cash but would like to know my options if rates are good. 815+ credit here. Thanks. 

Usually, it's the opposite.  A lot of new car dealerships offer 0%, 0.9%, 1.9%, etc depending on their current promotion. 

It's a good idea to be preapproved at your bank or credit union so you have that to fall back on just in case.

 

[RUSF18]

Thanks. I don't keep much in my checking account but the savings account could get me a decent rate. Of course it would be nice if I got a discount from them just because they're my employer, but I digress...

 

[boots11234]

Good thread. Thx