Hello,
I am debating between buying out my car lease vs returning the car at the lease-end.
Car: Merc C43 AMG 4door Sedan
Year: 2020
Lease expiry: Jan 2023
Current Miles: 9400 only
Signed Contract: 36000 miles
Condition: Almost New
Lease Details:
Adjusted Capitalized Cost: $55101
Residual: $38963
Current Monthly: $651
Paid Upfront: $5000
Contract Type: First Class Lease
PayOff as of 6th July: $42000
Car Appraisal quote from Merc Dealer in my area: $47000
Would appreciate insights on if the above deal for buying is worth pursuing in current market conditions or if I should just sell it (get a check of ~5k - which is what I paid upfront) and move on
I think the equity will always be there for you to recapture. You still have plenty of warranty left and you cannot reproduce this payment in the current market. If you are happy with this vehicle, I would finance a buyout at lease end, keeping it until the warranty expires. On the other hand, if you always wanted something like a Jeep Wrangler or an EV, now is your time.
I am happy with the car but given my low usage and economy conditions, I wanted to consider the option of getting into a regular sedan and save on monthly payments.
Wanted to see if buying out above is a good/excellent option
I’ll be in ur same shoes next year on mine. Been debating selling mine too. I’ve only put on 5300 miles since July of 2020….my payment is $700 with a fully loaded one.
Unless you are talking about downsizing to a Civic, I think you will find your current C43 nicer then any option given a budget below $500/mo. Your $5000 equity will just get chewed up by the DAS on your new, lesser, lease.
MB leases can only be bought by MB dealers, so the offer is what it is, not much to evaluate, other then trying to get another MB dealer to beat it. You would be better served buying the lease out yourself, and then selling it on the open market, where it is worth closer to $50K right now. Especially if you are not gonna lease another MB vehicle.
Think of it this way. If your budget is the same—5k down and 650/mo. Now you get 5k for free. You can put that 5k into your new lease which makes it 10k down. So look at what cars right now are about 10k down and you pay around 650/mo. If you are happy with it, go get it; if not, buy it. Of course, I assume your budget remains the same, so please adjust accordingly. In other words, I would look at the 5k equity kind of like a 5k discount on a new car (if it’s a finance), lease is even better because you are bringing your payment down by like 138/mo if it’s a 36-month lease.
Dealer can retail your car for $52-$56k so I think you should call around to every MB dealer within a 300 mile radius and see if anybody will bid $49k. I think that should be possible.
If you buy it out at lease end, you will finance $38,963. Your total lease cost was $28,436. You’ll be a year from warranty expiration so to compare apples to apples, you need to add a 3 year warranty ($4300), sales tax (I’ll say $3300), then finance and keep the car for 36 months. Total amount to finance is now $46,563. Payment on a 60 month loan will be $858 at 4% interest. So now you look ahead 36 months and you’ll owe $19,800 but keep in mind you’ll have paid an extra $7200 over the 3 years that you did in the first three years. The may however be the amount you would need to pay for a new comparable lease if you decide to sell the C43 and lease something else comparable and put the $5k down.
So asuming you could sell now for $49k and pull $7k of equity, but that would necessitate paying $200/mo more on a new lease, ask the hypothetical question, will your car be worth MORE than $27k trade-in 3 years from now? If the market is the same as it is now the car would be worth about $40-$42k at retail ($35k best guess on trade-in) but I think you might see some steeper depreciation due to the remodeled C43 coming on the market between now and then, which historically has not been kind to AMG resale values. Then there’s the elephant of current car prices being 30% inflated over 2020 prices.
I don’t think you can go wrong buying the car at the end of the lease, mainly because you drive so little and the C43 will still be a more desirable used car in 3 years, especially one with crazy low mileage and in great condition. You may very well be able to build up $15-$20k of equity by that time but even in a worst case scenario I wouldn’t expect your equity to drop below $7k in three years from now, and certainly not less than $5k if that’s all you can get right now. Keep in mind that once you own the car you can sell to anybody, not just MB dealers.
If you could get into a new C43 lease for $5k down and $650/mo I would say that’s a no brainer, but I’m thinking that car would be about $950/mo for 3 years with $5k down when it comes out. So that brings us back to that extra $200/mo payment.
TBH that was probably a terrible deal for a C43. So it’s not a good benchmark at all.
@bluetoothbird have you considered an EV? Depreciation, maintenance and fuel are 3 of the biggest components of TCO and they’re all much better on a well-bought EV.
