Payment is $478 a month - includes tax. 11 payments remaining. ($5,258)
Chrysler Capital would not tell me the dealer buyout amount at this point. They said the dealer would have to call.
Without getting into specifics of why, I am looking at a Focus RS.
If the dealer buyout is - say - $32,500 and I get $35,500 for trade in - then that’s it, correct? I have 3k in positive equity to our toward the new car.
Yes, if the dealer gets a buyout quote of $32,500 and is offering $35,500 for trade-in you will have $3k in positive equity.
Be wary, though, if it is the same dealer you would be getting the Focus from. They may not discount the Focus very much if they are already $3k in the hole (I have no idea what the Ram resell value is but doubt they would offer more than what they could sell it for).
The dealer is not “in the hole” if the trade in value is more than your loan or lease payoff. There is no correlation whatsoever.
I could buy a car today with 50% down payment and trade it in tomorrow and have $20k of positive equity in it, that doesn’t mean the dealer is in the hole $20k on the trade.
In this case if the trade in value is $35,500 then you can bet they will put it on the lot for $40k+. They won’t be losing money on it.
What? You mean dealerships aren’t in the business of losing money? What about all those times the salesman told me “we’re losing money selling to you at this price”??
Since we have literally no further information than what OP had provided in the first post, “in the hole”, in this sense, would mean the dealership paid $35,500 for a truck that, according to the captive, is worth $32,500.
Of course the dealer would not buy this truck and not expect to sell it for more than $35,500. But perhaps they had a deal worked up for OP wherein the Focus was not discounted at all and they made that $3k back in profit, and then some.
No. The captive is not saying the car is worth $32,500. They are saying the payoff on the lease or loan is $32,500. These are two very different things.
If the dealer paid $35,500 ($32,500 to captive, $3,000 to OP) and the captive says the truck is worth $30,798 in 11 months, the dealer is in the hole $4,702 until that truck is sold.
Lets just all wait until @JustinK comes back with the info what CC quoted the dealer. To me, it doesn’t make any sense why dealer pay off would be lower but i’ll eat my hat when I have to
Eh, that doesn’t make any sense at all. You have a misunderstanding of how loan and lease payoffs work.
The current loan or lease payoff on any given car has zero, nothing, nada to do with what the current market value is. It’s merely a dollar figure that the bank needs to be free and clear on the note.
Additionally the original residual value of the truck in 11 months time on the original lease is completely irrelevant to the dealer who just traded for the truck and paid off the lease in the process. This has nothing to do with their cost basis on the trade or anything like that.
My guess is that it’s because of state taxes. For my parents’ lease in CT, the personal payoff included CT Sales tax (CT Taxes monthly for leases, not upfront) whereas the dealer payoff did not include sales tax. Effectively, the payoff if they wanted to buy the car outright was ~$23.5k but the dealer pay off was around $22k because they don’t need to pay tax on cars they buy to resell.
For my lease in Virginia, taxes are paid upfront (for the whole car), so the dealer payoff should be same (or possibly slightly higher for per-diem interest)
Happy to take this to PM if you’re simply just in it to “win an internet argument”.
It seems like you are stuck on external factors/info we do not have. I already said the dealer would not pay $35,500 for this truck if they didn’t think they could sell it for more (or make a big enough profit on the sale of the Focus to make up for it).
But, again, we don’t know. Maybe the Finance Manager is sick of the GM being an a-hole and is trying to tank the business by overpaying for trade-ins…
My original point still stands for OP. If the dealer is offering more than buyout for your truck, be aware that they may not discount the Focus as much as if you were coming in clean with no trade-in involved.
In my case, and everyone’s maybe different, was a Giulia lease. My pay off was 31500 (+tax) while dealer payoff was 32500.
To me, it doesn’t makes sense that dealer payoff should be less than current personal payoff, because that the captive would be taking a loss. Its one thing to take a loss when market value is less than residual at the time when lease is due. However, taking a bath when the captive doesn’t need to unnecessarily during the lease doesn’t make sense to me. Maybe im thinking it all wrong?
The captive estimated that the truck would be worth $30,798 at the end of the lease. At the end of the lease, it could be $25k or it could be $35k or any other number the market says the car is worth. It is feasible that the car’s value is higher than the residual that the captive thought it would be. Not sure what trim level the OP has, but some Ram Big Horns currently have trade in values in the upper $30k/lower $40k range (and some trims/builds are in the mid-upper $20k range).
The payoff is based on the terms of the initial lease and isn’t fluid based on market conditions. The value of the truck could have gone up recently if there is high demand/low inventory for trucks. To say that OP should be suspicious if the trade-in value is higher than the payoff is wrong imo. For all we know, OP could have done a $10k down payment or gotten a killer deal on the lease. If the trade-in value is [significantly] higher than CarMax/Carvana/Vroom/other car buying lots that will buy his car regardless of if he buys a car from them, then he should be cautious. OP should treat this as two separate deals to make sure that the dealership isn’t moving money from one deal to the other - make sure the deal for the Focus is the best he can do and the deal for the truck is the best.
Again, you keep comparing the loan or lease buyout to the trade-in value as if there’s some correlated relationship between the two. There’s not.
If the loan balance on my car is $15k and the dealer offers me $30k on a trade, this does not mean the dealer is in the hole $15k on the deal and would somehow give me a worse deal on whatever new car I’m buying from them, which is what you’re saying.
Not trying to win any argument, just hopefully trying to curb this misinformation.
