Can't understand US Bank lease buyout numbers

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Hi everyone, need a little help from hackrs as I already spent almost an hour over the phone with USBank and I still don’t fully get the math behind the end-of-lease purchase quote.

TacomaLease
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So I have my initial lease paperwork and it lists the residual value of the vehicle as $27,620.06 (under D in my screenshot)
It also lists a purchase option at the end of the lease term as $27,970.06 (#10), exactly the Residual + Purchase option ($350).

Now I currently have ONE monthly payment remaining (240.37 base + tax), due on Jul 24.

I spoke to US Bank today and I was quoted $29,240.45 as the final purchase price (NC apparently has 3% tax on vehicles) with everything included if I purchase the vehicle now before Jul 24. I then asked what the quote will be on Jul 25, after my last payment, and I was told they could not run calculations for future dates.

Then I asked what this current quote includes AND what the difference to the new quote after the last payment should be, and here comes the confusing part:

If I understand two reps correctly, my current quote includes BOTH an elevated purchase option of $590.37 (350+240.37) AND the fact that my principal has not yet depreciated by the portion of the last payment of $173.83. In other words, if I wait 2 weeks, my new quote should be LESS than my current quote not by the remaining payment amount, but by 240.37 + 173.83 = $414.20 + potentially some tax.

This sounds entirely counter intuitive, as, if I understand the math correctly, by making my last $240.37 payment, I will be getting a quote which is $414 less.

Does this sound right at all? Would it make sense for the bank to “overpenalize” for buying the lease out prematurely both by elevating a purchase option AND using higher remaining principal?

TL/DR - Do I understand it correctly that I just need to wait until 7/25 and re-quote?

(the only reason I was rushing is because my registration expires in July and I recently moved states, so I wanted to kill one bird in one stone and do the buyout and register the car in a new state at once, and ~5 days don’t leave much room for error unless I want to drive around without registration lol)

(or am I just overthinking this too much lol?!)

Thanks a lot!

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TL;DR; but your short answer is

US Bank is evil, make your last payment then buyout the car.

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Some banks do charge penalties for buyouts before lease end, so this isn’t unheard of.

Also many of your basic phone reps will have no clue as to the specific details of what’s included in the payoff or penalties, etc., so I wouldn’t put it past just a rep that wasn’t sure or didn’t do a good job of explaining.

At the end of the day it really comes down to whether you buy it out now for $29,240 or wait till the end of the month and buy it out for $28,799 (residual + 3% tax + fee). Wait till the end of the month and you’ll save around $200.

I’m in NC as well and you really won’t have any problems if you don’t have the car registered immediately, especially as a new resident.

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And that seems to be correct, however it still feels super counter-intuitive to me.
I would rather expect my, e.g. $250 monthly payment to lower my quote for LESS than $250 (because obviously a portion of that payment should go to cover interest and other bank’s expenses), not MORE than $250, but it looks like it is the case.

And I finally just got a fax from USB and they indeed “reflect” my remaining payment both in a higher current purchase price ($27,798.42 vs $27,620.06 as per my initial paperwork) and in a higher Purchase Option Fee ($590.37 vs $350.00). I don’t get it, but hey… I’ll wait.

Thanks a lot for everyone’s input!

USBLeaseEndQuote
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Super evil. All those 250-350/mo tundra and Jeep Grand Cherokee deals. They should burn in eternal hellfire.

What do you expect? They’re a bank. They need to profit for shareholders. They took a risk with high residuals and that gamble paid off. Sure they would be bailed out if it all goes to shit but that’s Merica. The lease contract has a buyout price at lease end. That’s what they owe you…

I can’t terminate my apartment lease early. Landlord is evil…

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Actually how do we know that the Carpocalyse is over?

when people are posting on LH on how can they get out of their leases early and not take as much of a bath on them. :slight_smile:

Or AT LEAST I hope that’s what that super long post was about.

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That’s the financial cycle/cluster fuck of allowing a quasi private bank to control interest rates.

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It could be worse, on my Mercedes contract I’m charged a 4% fee if I buy it out early. So in the same situation I would save around $1,700 by waiting until lease end to buy it compared to a month early.

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I am not sure it’s apples-to-apples - I don’t want to terminate early to avoid paying them something, as a matter of fact, I am happy to prepay all my contractually agreed payments right now and exercise my purchase option with the pre-agreed purchase price, but for some reason they don’t want to accept my money earlier. They are probably in the right from the contractual standpoint, it just feels a little weird.

It’s like you say to your landlord - hey, I still have 3 months left on my lease, I want to pay you for these three months today in one payment and I need to leave tomorrow. I don’t care what you do with this apartment after tomorrow, I don’t need it, you can lease it to someone else, I’m gone anyway. And all of a sudden your landlord says NO, I won’t accept your 3-month payment and I will strictly expect each monthly payment to come on agreed dates. Can he do this? Probably. But… why?

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Bc they know the value of your car is more then the current value of my apartment…

Say apartment values tank. Why would they let me buy out? It’s all an equation and banks have actuaries that calculate it to the nickel

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That’s fine, I’ll just wait. That’s my first experience buying a lease out, so it was just a bit unexpected :rofl:
This topic would not have even existed if at least one of the phone reps didn’t stonewall me, but rather just explained me cohorently what the final purchase quote consists of and how exactly it changes from month to month - I would’ve just thanked him/her, stopped there and waited for 2 weeks :slight_smile:

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But - from my understanding - it’s not a question of IF they let me buy out at all, but rather WHEN they let me perform this transaction given the money exchanged stays the same.

Let’s say you have a pre-agreed purchase price of $20,000 at the end of the lease and you have 8 monthly payments left, $500 each. In my naive and childish view of the world, if you decide to buy it out today, the maximum you should owe is 8 x $500 (to cover cash flows already projected by the bank) + $20,000 = $24,000. If anything, time value of money tells us that $4000 right here and now is better than $4000 spread out over 8 months.

But… whatever. Like they say on other discussion boards, “today I learned something new” :smiley:

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Again. They know you have equity. That THEY own. Their accounting has that equity as an asset. Why take it off their balance sheet?

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There’s actually a line in your contract about buying it early, and it’s can be read that they can get a ‘value’ and make you pay it.

US Bank is Evil and anything they do is a leading indicator of what is going to happen in the future.

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