Buddy is coming out of a Grand Cherokee lease at end of July. His buyout was higher than market so he was just going to ground the lease and get a new Grand Cherokee. He thought he got a nice deal until the finance guy put the paperwork in front of him.
For starters, he was going from a CCAP lease to a CCAP lease and the dealer tried to charge him the disposition fee. That’s waived if you go into another CCAP lease.
Maybe worse, they counted his current Jeep as a trade in and rolled $1400 of negative equity into the new lease (what the dealer claimed the car was worth minus what the dealer could buy the car for from CCAP). He inquired why in the world would he do that when he can just ground the lease and have no negative equity? Finance guy kind of hemmed and hawed. The manager tried to explain it to him and he got frustrated and just left.
I recall a recent thread where someone had posted language on Stellantis lease advertisement where it stated something like what’s happening to your buddy on the actual value versus the residual. Sounds like this dealer is putting it into practice and making your friend pay. Just ground the lease.
The only way it makes sense to roll negative equity from an old lease into a new lease is if there is an offsetting savings in taxes. In MD we get a tax break on the full trade in value of a vehicle, not just the equity portion, since we pay full taxes upfront at time of leasing. At 6%, that adds up quickly. If the old Jeep had a trade value of $40K, that wold mean a $2400 tax savings, more than offsetting the $1400 in negative equity.
I would execute this as two separate transactions. Make the remaining payments on the current lease and ground with the originating dealer. Then shop for a new lease at your dealer of choice. Otherwise, it sounds like this dealer is treating the returning vehicle as an early termination and not a lease-end turn-in. In most cases, vehicle must be less then 90 days to term for a lease-end turn-in.
