This is not a debate on lease vs financing. In general, we agree that car lease is not a good financial decision. But we are humans and sometimes make mistakes. If you already have a lease and nearing the end of lease, here are your options. State laws/manufacturers may vary.
1. Return the leased car and pay disposition fee + wear/tear, overage. (inspection may be required.)
2. Buyout lease directly from lessor and pay residual value + ~$50 extra fee. Register and pay sales tax yourself at DMV.
3. Buyout at dealer for the convenience. Dealer will add exorbitant fees.
4. Sell the lease to 3rd party dealer (eg carvana) and receive check if positive equity.
5. Trade-in lease to another dealer for a new car purchase (net trade-in value, if positive equity)
6. Extend the lease month to month.
More tips/details on each option:
1.Call lessor (=leasing company, the owner of the leased car) in advance and schedule an inspection.
2.Residual value is written in the contract. It's a preset % of the MSRP and non-negotiable. Once you pay off directly, you become the owner and the lessor will send you the title, Take the title to DMV to register and pay sales tax/fees.
3. IMO, this is the worst option of all. Dealer will add dealer fees (which you already paid when leasing). In my case, they even quoted some crazy fees such as inspection/reconditioning fee for the car I was driving/buying. If you decide to buy out, use #2 option.
4. You can get instant appraisal value from carvana/carmax. But Carvana will not buy, if less than 60 days left in the lease. Typically, the 3rd party dealer requests 30-day payoff price from the lessor. The lessor will not disclose this 3rd party payoff price to you but it is slightly higher than your residual value. When signing the contract, make sure the dealer payoff amount is higher than your residual value and the lessor name is correct. If lessor doesn't receive the full payoff amount in time, then you are responsible for the shortage and any late fees. Some ppl even suggest keep making regular payments until dealer pays off and fight for the over-payment refunds later.
If your lease has positive equity, this is probably the best option for you. Do your own research at r/carvana to avoid possible scams.
5. As far as lessor is concerned, this is the same as #4 option so read the above first. The difference is, in addition to 3rd party buyout, you are buying a new car at the dealership in a single visit. It feels like a single transaction but technically it involves multiple transactions. Because of this single visit convenience, the trade-in value won't be as high as #4. Just like you can negotiate the purchase price of new car, you can also negotiate the trade-in value of your lease. Typically, at the dealership, the gross margin for used cars is higher than that for new cars. So there will be more wiggle room to negotiate the OTD price than negotiating on purchase price alone. Next, dealers are known to delay making payoff payments to the lessor. When signing the contract, ask when the dealer will pay off the lessor. Even if the answer is a total lie, you will have leverage later to demand payment. From lessor's perspective, they don't know the transaction between you and the dealer. So the lessor thinks you still have the leased car. So call lessor and have every event documented. Update the lessor with the date you traded-in, check issued date, check amount, mailing address, the date the check was mailed out, and the tracking number, You may need to keep calling the dealer higher management such as GSM or customer relations manager to get these information. If you don't push, it may take 4-6 weeks for dealer to notify the lessor and make payments. Delinquency may get reported to your credit.
6. In my case, at lease-end, I could extend the lease month to month up to 6 months with same lease payment and same monthly mileage allowance. Call lease end department and sign new documents. If you are already within 60 days of lease end and carvana won't buy out your lease, you can extend the lease and satisfy 60-day requirement.
Final note: I am not claiming to be a lease expert. I just went through this experience recently. I read the whole lease contract top to bottom (highly recommended) and read/questioned a lot to find out what my options are. I just wanted to summarize my knowledge and share with the community. If there's any error, please add a comment so that I can update OP. In no way, I'm endorsing car lease, as it's a bad financial decision for most people. .
Submitted April 10, 2021 at 05:37AM by zacce https://ift.tt/3d5w6at
