Leasing (versus buying) a Volvo is never a losing proposition, for sure.
Well, the reason I am on the leasing website is to understand the value of leasing.
Ok, so I really want to try to believe this, but I find that you arenât engaging with the arguments made by well intentioned folks on the site, including myself. It seems to be more of a question of individual preference than value or facts.
I argued value for dollar, where greater value for dollar is given over a nine year period for a leased car because even if equal in total cost of ownership, having a vehicle that is 3 years old or less is inherently more valuable than a vehicle that is 3-9 years old. You argued that I âwrote a lotâ but sonatas sell retail at 5-6k. Which was at least on point with what the whole thread was about. When I told you that number is retail and trade in is much less (v. high risk cars to try to sell) you changed the subject to giving your optima to your kids if itâs worthless. Ummm⌠ok?
Things went off the rails there. This was no longer about the Sonata or the conversation at hand. It became âdefend leasingâ. You donât want to pay more tax. Well unless youâre in a state where you pay full sales price tax (rare) instead of payment, that really doesnât make sense. Most fees you would pay anyway (registration) and doc fees are usually pretty minimal. Usually fees are offset by overall value saved.
If you donât want to get a new car, lease the same car. If you donât want a new car period because you donât like getting new cars, donât lease, it isnât for you. Pretty rare to not like getting a new car in general, but if thatâs you I get it. Nothing I can do to convince you on the value of leasing because you like old cars. If its just not liking the process, thatâs different. For that a value does exists, the market calculates it, and thatâs why brokers are a thing.
A well supported example was given by g8organt to try to show value once again. You respond that it doesnât work for everyone (what does that even mean?). You talked about not being able to get a payment, fine. You then said something about a residual value being âmuch lowerâ than 50%. Donât see those a ton but sure. Donât get a car like that, itâs not going to lease or buy well.
He actually argued a complete âbest case scenarioâ on the buyout side, so most charitable for you. No, he didnât see upside in buying out his lease, he wanted to pay 2k less than residual (21k) at cpo retail (19k) which is not buying out a lease, since you pay your residual to buy your lease. Assuming a difference of 2000 between retail cpo and trade-in (conservative) the carâs value was 4k less than residual at the time he returned the lease. If he didnât private party the car and got 7k for it on trade (more likely scenario) youâre looking at a $5000 difference between cost of ownership vs. leasing not including maintenance and repairs. Thatâs the value. If everything was perfect, you save 1k. Since it isnât, you save 3k to 5k.
Rearrange the numbers how you want, calculate a high lease payment, and find a way to make up 4-6k from buyout to net yourself a grand, great. Maintenance and repairs have likely superseded that number. So even if you get cracked on a lease, you can still do better than buying out your previous lease. Look at the evidence, if you arenât convinced then facts really arenât what youâre after and you arenât concerned with understanding the value proposition presented by buying out a lease. Hijack this thread no more.
To bring everything back full circle to the actual question at hand. You are definitely being scammed, but not by a dealer, itâs actually the leasing company who want you to pay your residual for your car. Donât buy out your lease. Lease a new one. Buy a CPO instead if you insist on buying a 3 year old car. Certainly with a Hyundai Sonata and in almost every case, your car isnât worth residual. Those who say otherwise understand too little about the car business to give valuable advice. Check out the new equinox or encore if you want a crossover. The encore is great. Sorry this is so long.
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Itâs all about cash flow, leasing gives me the cheapest option per month and highest cash flow. Iâm done jacking around with crap cans. Any car will need maintenance, especially once itâs out of warranty. Iâve got two Jettaâs right and they $150/mo, just did first payment at signing. Only done oil every 10k and tires on one of them. They are by far the cheapest cars Iâve ever had, and I got about a years worth a payments on a hail repair on one of them(used paintless instead of body shop).
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Just my $0.02. If you are buying out your lease, always check with the bank owning the lease, your current bank and credit unions. Getting back to the dealer to get finance may end up in a financing agreement that will be favorable to them, not you.
Thatâs what I did with my Forester was 2 months before the lease was up. Contacted Chase and got a good interest rate.
I have come to the conclusion that leasing and then buying is mostly incompatible.
RVâs are usually jacked to get a lower payment up front, with a swift kick in the ass come buying time.
I have a 2015 KIA Cadenza that I am returning next month. Love the car, but buyout it 23K. If it actually getâs 15K at auction, I would be surprised. Easier to just lease a new one at the same rate, and have more cash flow month to month.
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Now if banks ever stop providing sub 1% and sub 2% on leases, and/or stop jacking up the residual rate, the game will change drastically.
Though one could argue that weâre weâre paying $1,000 - $1,300 extra over the course of our lease in acquisition and disposition fees, which helps subsidize these interest rates and residuals. That can work out to $36/month on a 36 month lease.
Exactly what I was going to say, my CU has sub 4% for used vehicle loans as long as 2008 or newer.
Where did you get this from? I have a 4 year old car with less than 20k, that is not an old car. My other car has 8k miles since 2015. Should I have leased it as well? Iâve leased 4-5 cars prior, all less than 17k miles on return. This had to stop. I did the math every each way, the remaining payment came up to around $250 a month for remaining 6 years, not including the value of the car when and if I sell it. To get into a lease for similarly equipped car would be around $400. Yes, I would probably not do it if not for the 10 year warranty. That adds to a piece of mind. I donât mind buying new tires, since stock tires suck and I see from being on this site many lessees still have to buy new tires. Believe it or not, but Iâve made almost identical arguments as you all the years I was leasing, but after a few months here I realized that for my situation it just not worth it.
@wallyCT Buying out your lease is a bad idea at any interest rate, get a CPO or lease another one. Second, it is usually true that dealers can match your rate. Banks and CUs mark up rates. If it is at all possible to match the rate, go through the dealer. They get a little money for it and you get a little less hassle. Everyone wins. If they canât match it, well then use your own financing. But always ask.
My man, this thread isnât about you or your situation. It is about the value proposition presented by buying out a lease and whether or not it is a good proposition and if a dealer was trying to scam someone. I doubt @eniram has even checked this thread out because it turned in to a âletâs argue leasingâ disaster. If you think thatâs the right move for you, then do it. Youâre going to keep the car ten years or more and drive it to death, thatâs how youâll get value.
But I will say, make sure your warranty isnât voided because itâs easy to void, so check your terms and conditions. Also make sure that you get a warranty on electronics as they are most likely to break and also are expensive to fix. If you choose to not get a warranty then set aside 3-4k for potential repairs in an interest bearing account or other investment. Just my humble advice for aging modern cars.
My humble servant, OP seemed to be in the same situation as me, buying out a low mileage car with reasonable residual. However, he did not ask whether it was a good value, but rather why his cost was so much higher. Btw, it is mostly the interest that makes his deal unfavorable. When I shopped around, our credit unions were under 2%.
BTW, just fyi as a broker you may need to register as such with admins.
Iâll let you have the last word on the subject.
This is the crux of the issue. It is a big assumption that one can repeat their Hackr deal 3, 4 or 5 times in a row, let alone their entire lifetime.
When I was getting mine, Kiaâs MF wasnât jacked up as it is now, plus I still got over $6k lease cash, therefore, residual was much lower than CPO and buying it made sense.
BTW, something I learned about CPO warranties from a tech at Kia. Apparently they have similar terms as factory warranty, however, they are in fact 3rd party warranties, which causes additional roadblocks and beuracracies, as well as denial of coverage.
Totally understandable. If the financials make sense for you, then there is no question about how to proceed.
Itâs more of a gripe, than anything else. I canât complain if the artificially high RV got me a great deal, and then bitch because the buyout is not realistic. âYou canât have your cake and eat it too!â
The one that always getâs me, is reading about folks that lease a car to get a payment they can afford, with intention of taking out a 5 year loan at the end of the lease to buy. If you need an 8 year loan to buy a car, you may want to reevaluate your financial decisions a little more closely.
If those folks get a MF close to 0% and then another loan at 1-2%, then why not? With Kia, they allow you to buyout a brand new lease without any MF penalty, which if I knew prior, Iâd probably consider.
The dayâs of easy money like 
are well behind us. If a dealership is giving you near 0% MF in this market, you are paying in some other fashion.
Because those interest rates are gone, interest rates are going up, not down. Typically 3% is an exceptional rate now, closer to 4 being more common.
Agree, credit union that I looked up just a few months ago now at 3.1%, it was 2% back then.
Also, this wasnât my reason for above decision, but something to take into consideration for current buyout prospects: