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Smart Shopper Purchasing at the End of Your Lease
716 messages, Last post on Nov 30, 2009 at 8:03 AM
You are in the Smart Shopper Forum. Your Hosts are kirstie_h & tidester
| I want to purchase my 02Accord which lease is about to end. I decided to work through the dealer from whom I had originally obtained the car. He ran the numbers and after I quizzed him on the monthly payment (which was higher to what I had calculated) it emerged that he had added on $800 to the residual owed to AHFC for "dealer fees" (processing/his time etc--this was in addition to the regular doc fees & licensing and reg fees).If I had not grilled him on his calculations I would never have known about this added charge.Is this normal dealer business practice?. I have decided to work directly with AHFC and obtain financing myself. Is their any risk you are aware of in dealing directly with AHFC to buy out the lease. Thanks | |
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Hi steve18. One should always deal directly with the bank that they are leasing through and leave dealers completely out of the equation if they want to purchase their leased vehicle. The bank owns your vehicle, not the dealer. They are the ones that set its selling price. Your dealer, who knows that you are not going to purchase another vehicle from them in the near future because your are purchasing the one that you were leasing, is only going to try to profit somehow from your purchase. Car_man Host Smart Shopper Forum
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The dealer must pay off AHFC. He would then resell the car to the owner as a used car. In order to do that, any smart dealer would do a mechanical inspection to make sure it's in safe condition. If may need brakes, tires etc. And, yeah, after doing all of that that dealer may feel the need for some profit. Or the leasee can deal directly through AHFC and write them a check which is what almost always happens.
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Replying to: Car_man (Dec 19, 2004 6:09 am) |
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Replying to: isellhondas (Dec 19, 2004 12:24 pm) Craig, we're all dancing around the real issue here.. which is price. As far as I know -- and from what you've told us -- AHFC does not negotiate buyout prices with their customers. This is really dumb when looking at individual deals, and probably really smart in the big picture, as it keeps their perceived value from sliding downhill like Fords... anyway, they will "deal" with someone in the end, 'cuz the car is worth what it's worth.... an I'm guessing they will deal with their dealers. I was thinking really hard about leasing another Vibe, because they have big rebates AND inflated residuals on a good car. The salesman told me that they sometimes negotiate the buyout with GMAC, then add their 'pack' of $300 and resell it to the consumer. This could be a pretty good deal all around, and should work on a Honda as well -- by returning the car, the consumer has fulfilled his obligations, and by buying the car back from the dealer, he doesn't have to buy an unknown quantity. But, like I said, the issue is whether the financial institution will negotiate. BTW, on the Vibe: I can lease the twin to my '04 5speed for 24 months, and they'll give me a residual of $12k with 24k miles... which is hilarious, cuz a similar '03 would be worth in the $9s today... so yeah, they know it, and they'll deal... -Mathias |
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You're welcome, steve18. Car_man Host Smart Shopper Forum |
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| we're at the end of the lease for my daughter's 2002 Jetta GLS... low miles (29k)... Buy out is $11,900... I can't seem to access Edmunds True Market Value but Kelley's retail is $15,355 and private party $11,070... VW Credit says there isn't any "wiggle room" on price -- that closed end lease is just that... Is this true? If it were $10,500 or they extended the warranty, I'd buy it... | |
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This is a lease and you knew what the residual was when you signed up for it. They aren't going to drop the price or give you a warranty. By the same token, if the market happened to go sour for whatever reason on Jettas they couldn't ask you for any more money at lease end. 11,900 is what they figured the wholesale value would be at lease end and they will either sell it to you for that amount or take their chances when the auction it. It could bring more or less than that figure.
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Replying to: isellhondas (Jan 17, 2005 12:51 pm) Craig, We've had this argument off and on... and I think you're wrong on this. SURE they're going to drop the price. If they won't do it for the present customer, they'll do it at auction. And they know it. I dunno if VW of A will negotiate, and I DO know that American Honda will not. Plenty of lenders will, and I think there are arguments to be made both ways. Maybe I'm misreading you, but you seem to take a fairly high-falutin' approach to this with "you knew what the residual was." You seem to think that someone who wants to buy the car for less does not live up to what was agreed. But that's baloney; the agreement was, so much a month, and give back the car in ok shape. After that obligation has been met, why not offer a lower buyout price? Heck, if I know the first owner, I'll likely pay more than the bank will get at the auction... especially because banks don't even do "reserve prices" at the auction, so once it goes, it's gone on the first bid (AFAIK). I think offering less is a perfectly honorable thing to do, as is refusing to deal. Honda is shooting themselves in the foot on individual cars, but overall, they are helping to protect their resale value. I respect that, but of course I don't know if it works. With all the rebates, I almost leased an '05 Vibe... price would have been $14, residual $12 after 24 months/24k. That's funny, my identical '04 is currently worth less than $11, with 11k miles. In the end, I would have paid more in interest, taxes, and fees than in depreciation, and it just wasn't worth it. But I certainly would have offered to keep the car, and they certainly would have negotiated -- a $2 spread, easily. And yes, GM is killing resale on their cars -- and on MY car, thank you very much -- in a way that Honda isn't. With too much time on my hands, I remain, -Mathias |
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"This is a lease and you knew what the residual was when you signed up for it. They aren't going to drop the price or give you a warranty. " One of the sales managers comes to me. He has a Chrysler T&C that is coming off lease with a residual of $13.5k. We wants to keep that car BUT does not believe that it is worth that much. I posted. Terry told me that the auction price for the vehicle was about $9k. He got the car for $10.2k. Why shouldn't the leasing company negotiate? If he doesn't buy the car, they'll get maybe $9k less the auction fees and other expenses. Plus, they'll have the vehicle on their books for a minimum of a few weeks tying up their working capital. They lost the money a few years back when they overestimated the residual. Just my 0.02. |
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