My lease ends in December 2022, currently the lease buyout is 34k and Carmax is offered me the highest amount at 37k, which I will end up in negative equity so it doesn’t make sense to buy my car. I am in LA county with 9.5% sales tax.
In searching of a new car, my same Volvo dealer offered me 2023 XC60 B5 Ultimate FWD for 63,500 out of the door, MSRP 58,090 minus $500 loyalty minus $1,000 discount plus TTL. He also offered to take my Volvo and reduce the out of the door by $2,000, to 61,500 and after much negotiation he offered me 61,000 out of the door with the trade in.
Is this reasonable price in this market?
As for financing, I mentioned to the dealer that my credit union will be financing the car. He said I need to finance with Volvo first then my credit union can take over without any additional cost/penalties paid to Volvo. Is it true that I need to finance with Volvo first? Anything else I need to look out for?
They want to make the profit on the Volvo financing.
You would then need to refinance with your CU, likely at a higher, potentially much higher rate. You will need to find out from your CU how the refi rate compares.
But the question id be asking myself is whether I like the new car enough to jump from $34k + tax to $61k for a fairly similar vehicle.
$37,000 - $34,000=$3,000. No? If this is not equity then what is? But I always put ‘*’ for the sales tax, so in the end it may not work for everyone. Go read my posts again lol
the amount of time it will take OP to buy out and receive title is far too long of a risk to play a potential $3k gap. most off-lease volvos are worthless
Is this a common requirement for Volvo or varies by location / dealership?
This is very annoying and not mentioned much on here. It seems that if they’re forcing you to finance with them, there should be a price reduction compared to paying by cash. Otherwise, this is no different than a forced, non-negotiable add-on (e.g., paint protection package). Or do they say that you have to finance with them, but can pay off in full after the first month. In which case, are there any financing or admin fees that would be incurred.
Likewise, it sucks that refi rates would be higher than getting a loan from a credit union in the first place. The financing sticky doesn’t have the refi rates. Also, is it true that there are really no additional costs from doing a refi with the credit union.
This is just common from dealers in general. It’s a separate profit center and in the current state of the market, a way to mark up without marking up just like the addons example you mentioned.
And dealer arranged financing (other than captive special financing rates) is almost always going to be more expensive as there’s profit/mark up in there for the dealer vs a direct loan from a CU.
Even pre-pandemic dealers would often throw a financing required curveball to juice up profits on the deal. Obviously it’s gotten far worse now as a sellers market.
I would like to know as well if financing must be with Volvo at first. As for having my CU to take over the loan, there are no additional fees incurred at Volvo’s side. Checking with my CU if the process and fees are different between financing or buying the loan.
I asked the sales person, who is the Internet sales manager, about the best published rate for which he said he needs to check with the bank, smelled fishy for me because they know the best rate for best credit score.
For illustration:
Benedetto helped me with a $409 incl tax deal on 2019 XC60 T6 Polestar back then. I bought it out for $38,500 incl tax 6 mo before the end of the lease and used the car as ($41,500) trade-in giving me like $6500 equity on MachE purchase. Dealer listed for $49k, no buyers, now sits at $39,999.
I was lucky to go through before the market decline.
Interesting that the Volvo dealers ask for the lease return cars.
Volvo doesn’t like when you bring your own financing to the dealer on lease buyout. I did and my dealer allowed me to do it, but I didn’t tell that to Volvo.
The plan is to give them back my leased car and finance a new car. Not sure if the new car purchase must go through their finance first then my CU can buy it back.
Not at all, I appreciate your and everyone’s input. My wife and I were debating and I wanted to make sure if what the dealer is offering straight forward and makes sense.
Isn’t this just a case of volvo financial not allowing the dealer to buy out the current lease unless a new volvo is purchased/leased through volvo financial?
We often think of the limitation on volvo being from volvo… can’t sell your lease unless you’re trading it in on a new one. But ultimately, the lease is through Volvo Financial… they have no motivation to let you sell/trade in the lease on a cash/non-VFS finance purchase.
