Lease Buyout by Dealer

[GenesisGuy70]

Hi all,

So I leased the Cadillac in my sig a few months back. I recently moved from Ohio to Florida and I wasn't able to secure a job making what I made in Ohio so the payments have become a problem. I contacted a local dealer to discuss my options and they've said they could potentially buy the entire lease out, in essence buying the car. So I'm trying to clarify a few things for myself because I'm a little confused.

Let's say the remaining lease payments on the Cadillac are $50,000 (which they aren't) and the trade-in value of the car is $40,000. If the dealership buys the lease out and buys the car, would my negative equity be $10,000? Or am I missing something? I had rolled over quite a bit of negative equity into this lease so it just seems odd to me. If this were to work out I would somehow end up with less than negative equity than what I rolled into the Cadillac and that doesn't make a lick of sense to me. I feel like there's a piece of this equation that I am missing in deriving what my final negative equity would be. I guess I am mainly confused on remaining lease payments owed and residual value of the car at the end of the lease and how all that ties in together.

If anyone has experience in this please enlighten me on how it all works so I can go into the dealership informed.

Thank you.

 

[Pelican]

Originally Posted By: Throt
Hi all,
So I leased the Cadillac in my sig a few months back. I recently moved from Ohio to Florida and I wasn't able to secure a job making what I made in Ohio so the payments have become a problem. I contacted a local dealer to discuss my options and they've said they could potentially buy the entire lease out, in essence buying the car. So I'm trying to clarify a few things for myself because I'm a little confused.
Let's say the remaining lease payments on the Cadillac are $50,000 (which they aren't) and the trade-in value of the car is $40,000. If the dealership buys the lease out and buys the car, would my negative equity be $10,000? Or am I missing something? I had rolled over quite a bit of negative equity into this lease so it just seems odd to me. If this were to work out I would somehow end up with less than negative equity than what I rolled into the Cadillac and that doesn't make a lick of sense to me. I feel like there's a piece of this equation that I am missing in deriving what my final negative equity would be.
If anyone has experience in this please enlighten me on how it all works so I can go into the dealership informed.
Thank you.


I don't lease, but strictly from business math you'll be on the negative side of your liability on the previous car plus the depreciation on the current one less the payments that you've made for the principal on the current lease. There may be other facets about leasing that I may not be aware, but on the whole what I've said ought to stand.

 

[Zee09]

Regardless you need to shop it around. Offers will be all over the place.

 

[dishdude]

My advice is bite the bullet and ride the lease out. Cut expenses elsewhere or pick up a PT job if necessary.

You'll owe all lease payments plus the buyout and if you rolled negative equity into this lease there is no way to walk away from this cleanly. My guess is the dealer will try to sell you another vehicle and roll more negative equity into another long term lease or buy. If you're going to make all the lease payments anyway, you might as well get use of the car.

 

[Mr Nice]

I agree with DishDude

Maybe LeaseTrader.com ?

 

[JustinH]

There used to be a company called Beepi that would pay cash for any car. There is another one called Give me the VIN that is still in business.

I decided a Rav4 lease was a poor move for me, so I sold Beepi the car outright.

When I signed the 24 month lease, Toyota offered me a buyout price of I think like 17,500 to purchase the car outright after I leased it.

I always had the option to give them 17,500 after x amount of lease payments.

Beepi offered me 19k for the car, it was worth about 20k.

They sent a check to Toyota Financial for $17,500, and the rest came to me in a check.

The transaction went fine.

 

[eljefino]

Go in and find out what the deal is. You sound prepared for it to be unpleasant. And it could be.

 

[Donald]

There are lease calculators that take as input the price of the vehicle, cost of money, down payment, term and residual and come out with a monthly lease payment.

I cannot see this ending well.

Good luck.

 

[Wolf359]

You need to get hard numbers from the dealership to figure it out. Some dealerships let you out of the lease early if you get into a new lease without much of a penalty. Hard to give any advice without any actual numbers. The ones you provided makes it sound like a horrible deal. There's usually a residual value and the monthly payment. Their offer should be more than the residual payment plus some of the lease payment. So if it's a 3 year lease and you just started it, the valuation of the deal should be based on how many lease payments they're covering. For instance if you have 30 payments left and they're covering 15, that's something to think about or if they're covering 20 or 25, then maybe not too bad. If it's just 5-10 payments them maybe not worth it. If it's not close to the 30 months that might be left, then it might be worth it to just put it on swapalease and offer an incentive like an extra $1k or 2k to lower the monthly payment. Better than a theoretical 10k hit unless that 10k is from previous negative equity that you rolled into the lease.

 

[fisher83]

I would steer clear of the dealership for awhile. There are no really good answers to this without paying a lot of money out of pocket. If anything you could try to refinance it as a purchase instead of a lease to spread the payments out and lower them a bit. You mentioned that you rolled over negative equity into it when you bought it. Any car dealership or car buying outfit is not going to give you more than what the car is worth regardless of the negative equity situation. You would basically be left with two options- neither of which would benefit you. One is to sell the car outright. The problem there is you would have to put down the cash to pay the difference in the lease payoff and their offer. Option two is trading it in on something else which is also not good because then you would have negative equity you had already rolled into the lease plus more from the Cadillac. Add to that the fact that even if you were willing to do it you will be hard pressed to find a vehicle that can not only carry all the negative equity but that can do so and still net you a lower monthly payment. It’s a tough spot to be in. Best of luck to you.

 

[exranger06]

It's simple. The dealer is going to pay you whatever they're willing to pay. The difference between this amount and the amount of your lease buyout (you can call your leasing company and find out exactly how much the buyout amount is) is the amount of negative equity you'll have.

 

[AZjeff]

Originally Posted By: exranger06
It's simple. The dealer is going to pay you whatever they're willing to pay. The difference between this amount and the amount of your lease buyout (you can call your leasing company and find out exactly how much the buyout amount is) is the amount of negative equity you'll have.


This. It sounds like you were way underwater when you drove off the lot. If the dealer says they'll buy out the lease doesn't it mean they'll cover the amount, or did they already say they'll give trade-in and you cover the difference to get out? A dealer has no reason to give more for a car than they can go to the auction and buy it for. Ouch, this may sting a little.

 

[Mr Nice]

How much negative equity is there with your lease ?

Definitely get rid of car and get a used vehicle within your budget. You'll definitely take a financial blow... but it will be a good lesson for your financial future.