I was wondering if you can pay off a lease early and keep the car for the duration of the lease. I’m looking at a VW lease for my daughter and I’ve got a 2012 Sonata that I’m going to sell. I want to just take the $ from the Sonata sale and put it toward the lease immediately and just have her enjoy the lease with no payments. Wasn’t sure if it could be done. Thanks.
Could you make a bank account specifically for the car payment, and just set up automatic withdrawals?
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To add on this, I’m pretty sure you should be able to do automatic payments with most brands
I understand that I can set up an account with auto payments. But can you just pay it off and keep the car for the duration?
With a lease you’re basically only paying the depreciation. You still have the buyout amount which is offered at the end of the lease agreement.
Does VW allow a one pay?
If they do, you can. You will save a bit on interest expense as well.
“I was wondering if you can pay off a lease early and keep the car for the duration of the lease.”
jaypol, sounds like you want to do a one-pay lease or, simply, pay for the lease in one lump sum using the proceeds from the Sonata sale. Yes, most fund providers will do that. However, if the interest rate on the lease is extremely low (e.g., < 1%) so that a huge percentage of your payment is allocated toward depreciation, most seem to suggest that you take the proceeds from the Sonata sale and invest it in an interest bearing account paying 1.5 - 2.0% to subsidize the lease payments. I’m sure the fund provider would eagerly welcome automatic monthly withdrawals.
VW does auto pay, both mine are
I dont think he is asking for one pay. But to answer if you can pay lease early and keep the car until end of term, yes you can. Been there, done that.
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I think he is talking about leasing a VW for his daughter and wants to know if, instead of making lease payments, he can payoff all those payments immediately. In other words, prepay all the payments. That suggests to me that he’s interested in a single pay lease.
You’re right… one can prepay the remaining payments of an existing lease. It’s should be computed by finding the present value of the remaining payments using the interest rate implicit in the lease.
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It will be computed by taking the monthly payment and multiply by the number of months. He isn’t going to get a discount on the total payment unless he does an official single payment lease and receives a lower MF.
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Short answer is, Yes you can, and the leasing company will love you pay off your entire lease early.
Here is another reason you shouldn’t. My first BMW lease was 39 months, $600 a month. In the middle of my lease term, I paid the entire lease to BMW financial, so I don’t have to make payment any longer. 3 months before my lease end, BMW offers to end my lease 3 months ahead if I lease another BMW. Since I paid the lease in full, BMW Financial will not RETURN the money I already paid, so I’m not able to enjoy the opportunely and save some money.
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Depending on the bank, a one-pay lease has protections for the car being totaled/stolen (You can get a prorated amount back). A regular lease with payments made early has no such protection AFAIK.
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That may be how it is actually done which ignores the time value of money (TVM). In that case, there is no incentive to pay the lease off early. In fact, it’s foolish to do it as it may cause more harm than good IMO. I was describing how it should be done. It’s the not only the fairest way but the right way.
That is why people are saying it is a bad idea.
I agree when I stated…
“In fact, it’s foolish to do it as it may cause more harm than good IMO” But, this applies to an existing lease. The OP is talking about a new VW lease for his daughter, not an existing lease.
I’m not a big fan of a single pay lease particularly if the interest rate is extremely low (e.g., <1%). I believe in the highest and best use of my money as well as TVM.
Makes sense to not pay it off in advance especially as it relates to the car being totaled/stolen. The finance company would not return any of the money.
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How do you know that he does not plan to lease VW first and then sell his old car a few months/years later and pay off the VW lease with these money?
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I don’t know. I simply made a reasonable assumption for purposes of engaging in a discussion. The OP stated…
"I want to just take the $ from the Sonata sale and put it toward the lease immediately and **just have her enjoy the lease with no payments. "
Sounds to me as though he wants his daughter to have a lease free of payments suggesting that he plans to sell the Sonata first before he leases. On the other hand, one could argue given the phrase…
“take the $ from the Sonata sale and put it toward the lease immediately”
that he is going to enter into the lease before he sells the Sonata.
He isn’t very clear about what he intends to do… sell first, then lease or, lease first, then sell.
Given that he intends to sell the Sonata and lease a VW, neither of which he has done yet; wouldn’t it be reasonable for one to conclude that he is likely to sell the Sonata first and then, “immediately” lease the VW using the proceeds from the Sonata sale to make a lump sum single pay VW lease so his daughter does not need to contend with ANY monthly payments?
Why would he lease first and then, sell the Sonata if his objective is to have a lease without monthly payments? Unless, of course, he needs to lease the VW right now and can’t wait to sell the Sonata for whatever reason. But, I’m assuming this isn’t the case. So, I believe he is going to sell the Sonata first, then lease then VW and apply the proceeds to the VW lease and execute the single pay option…
Sounds like many posters are assuming that the VW lease is an existing lease (i.e., lease first, then sell). Maybe, maybe not. If we don’t know and, it appears that we don’t, then why not close the thread as this whole discussion becomes speculative and moot? We’re looking at two different points of view…
sell first, then lease (mine) v. lease first, then sell (others)
It’s called debate.
Right, but then your statement that I quoted is not, is it?
Just your assumption.
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