When it comes to leasing, I'm a relative novice which may explain this question. My daughter has a 2018 RAV-4 with only 22,600 miles to turn in this month. The dealer has virtually the exact same cars on their lot selling for $21,000-$23,000. The buyout number on my daughter's lease is $15,500. She loves this car and wants to buy it. How does the dealer allow this car to be turned in and sold for about $6000.00 less than the same cars sitting on their lot? Seems to good to be true. Is it? Am I missing something? Her monthly lease payments were only about $170.00 per month on a 3 year lease so it's not like she overpaid during the lease period. What would happen if we just turned the car in and walked away? Thanks for any insight!
Buy the car at the end of the lease?
- Thread starter Dave P.
- Start date
Not sure if I understand your question. When the original lease agreement was made, the residual value was locked in. If the market changes, you are still entitled to purchase the vehicle at the agreed buyout price. If it works to your advantage then you do well. If it doesn’t, turn in the vehicle and walk away. In general, the buyout number is very close to market value - what we are seeing right now it is not a common situation.
Buy the vehicle for the buyout number. The finance company owns the car and holds the title, not the dealer. Your daughter won't need to go to the dealer and certainly won't need to turn the car in.
Call the lease company and they will give you a buyout number with all taxes and fees included. Send them a check for that amount and they will send you the title to the car.
Right now with used car prices overinflated, cars coming off lease can be good deals relative to other used cars out there.
Buy it. Keep it and know you got a great deal in today's market, or sell it off to Carvana and the like and pocket a few thousand.
@The Critic explained it very well. If she likes the car she'd be crazy to not buy the lease out right now. Used car pricing is insane.
As others have said the dealer is just an intermediary they don't own the vehicle. The finance company owns the vehicle. Unfortunately for your daughter the buyout price isn't above the used price. When that happens you can sometimes renegotiate for a lower buyout.
This right here is one of the benefits of leasing a car. You start out with a brand new car, make sure it's for you and has no big issues, you take care of it for the limited mileage you're allowed and then you have the option to buy it for (sometimes) a LOT less than a similar model would be priced elsewhere.
Agree with the others: if she loves it, she should keep it.
Agree with the others: if she loves it, she should keep it.
We're going to buy the current Leaseon Sentra off lease. It's either $8900 or $9800. And it's only going to have like 8 or 10K miles on it. No brainer with used car prices!
That's the gamble with leases. This car was expected to be worthless in three years when we picked it up in January 2020. Then the used car market exploded.
That's the gamble with leases. This car was expected to be worthless in three years when we picked it up in January 2020. Then the used car market exploded.
Leasing Dealer have NO SAY, you daughter has a contract. Terms are stipulated in the contract.
The used car lot pricing is dealer gouging due to unprecedented market demand and silliness.
When my Wife bought a new 2021 Subaru Outback recently they gave her $11,000 for her car in trade.
Below is her actual car. Look at the asking price. The Asking price is NOT the transaction price on a used car:
All they did was a deep clean recon, polish and new tires. Car could be bought for $13,500 on a good day.
Used 2017 Subaru Crosstrek For Sale at McGovern Subaru | VIN: JF2GPABC2HH236025
Used 2017 Subaru Crosstrek from McGovern Subaru in Newington, NH, 03801. Call 833-678-7544 for more information.
www.mcgovernsubaru.com
I get the same choice at the year of this year. Plans are to buy it at the end of the lease, as I do not see prices going down any time soon, if even at all.Many dealerships are hoping you do turn it in, as it will make a tidy profit. I’ve already seen a few dealerships try to throw in a fat “fee” to try to discourage folks from buying them. If you can buy it- go for it!!!
This. Exactly this.
Do not make the same mistake I did by going to the dealer to figure out your buyout options. They look at it as an opportunity to sell it to you again, pay fees, etc. I was told that it was going to cost me about $2k in mystery fees and taxes, and a required inspection for some unknown reason, just to buy our leased Civic which was ridiculous. The dealer does not own your car, the bank or finance company does. They are the only people you need to deal with.
We were able to buy my wife's car for the already-contracted $13k even though the current value was almost $19k due to its ultra-low mileage and nearly new condition.
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Its often a good deal to buy the car at lease end. Many people are tired of the car and want something new. If you turn the car in there are some crazy fees they can hit you with like tire wear if less than xx/32" tread or interior damage or exterior damage, mileage. If you buy another vehicle they often waive all the lease end fees.
I was told the dealer just acts as a middleman for lease end vehicles. To the point that they all go to auction even if a dealer wants to keep it for resale. He has to go to auction and buy it. At lease end if you do not buy it, the leasing company wants as much as they can get for the vehicle.
I was told the dealer just acts as a middleman for lease end vehicles. To the point that they all go to auction even if a dealer wants to keep it for resale. He has to go to auction and buy it. At lease end if you do not buy it, the leasing company wants as much as they can get for the vehicle.
Your daughter has a ton of equity in the car. Carvana will cut you a check. You can buy the car yourself for the $15K. You can check with any dealer anywhere and see what they will give you on trade.
In February we turned in an '18 Lexus RX with low mileage and bought another. The dealer gave us $2K for our equity, matching Carvana's offer, no questions asked. You are in a good place with that RAV4 deal.
In February we turned in an '18 Lexus RX with low mileage and bought another. The dealer gave us $2K for our equity, matching Carvana's offer, no questions asked. You are in a good place with that RAV4 deal.
When you do the lease, the residual is figured in as part of the monthly lease payment. When the residual is higher than market value, in effect the manufacturer is subsidizing the lease because then you just turn the car in at the end of the lease. In this case when the residual is lower than market value, that just means you paid more for the lease and the way to recoup your money would be to buy it at lease end. Usually there's a fixed lease disposition fee at the end of the lease. Usually when you turn the car in, the dealers get the option to buy the car or send it to the auction. If you end up turning it in, they get a nice car they can mark up and get 6k for. If it was the reverse, the manufacturer would take the hit on the residual.
harbor
Site Donor 2024
Since you’ve already paid off most of the depreciation through the lease payments and the current market is crazy, your best options are to buy it and keep it or buy it and flip it for a few grand.
Check with Carvana or CarMax online and see what they’ll pay you for the vehicle. If you opt to purchase, it’ll take a few weeks to get the title from the lessor.
Check with Carvana or CarMax online and see what they’ll pay you for the vehicle. If you opt to purchase, it’ll take a few weeks to get the title from the lessor.
This isn't always true anymore - you have to check the terms of the lease contract. Supposedly FCA has a new policy that prohibits 3rd parties from buying out leases when you are within 45 days of lease-end.
Buy it!
Just to add to the above, your daughter is in a decent spot. They buyout price is much lower than average retail. Dealers would be licking their chops to have that RAV4 turned in at their store because as said, they'll buy it for the ~$16K, then immediately turn around and sell it for $22-23K.
I bought my 2007 Honda Odyssey at the end of the lease years ago because I couldn't find another similar minivan for the residual price I was locked into. At the time I did it though my credit union. It was a breeze.
I bought my 2007 Honda Odyssey at the end of the lease years ago because I couldn't find another similar minivan for the residual price I was locked into. At the time I did it though my credit union. It was a breeze.
I flipped a lease car to Carvana and walked away with 2500 bucks for ending my lease six months early. It was a Rav4, and Toyota had a payoff for the lease if you wanted to buy it outright.
