CCAP lease and early buy out of Jeep 4xE confusion

Ask the Hackrs
1

My wife and I encountered some conflicting information regarding the cost of a CCAP lease and early buyout for a Jeep 4xe. Some finance managers at other dealerships told her that the early buyout would include all future lease payments which includes all future interest + the residual (net cap) = total cost of the Jeep. This seemed odd to us because it would amount to more than the MSRP, making leasing impractical.

I did some research and came across a person who went through an early buyout with a CCAP lease on a Jeep 4xE, and they shared the following information:

“If you buy out early, you’re paying all payments minus interest. Our 4Xe started at $76,765 Jeep MSRP. We had a cap reduction of $7,500 from federal incentives, $3,000 from state incentives, a $1,000 Jeep coupon, and an additional 1% discount from Tread Lightly, starting at 4% below invoice. We put $5,000 down, and now I can buy out the lease for $58,500 plus tax, as license fees were included in the $5,000, along with the first payment, Chrysler lease startup fee ($1,250), doc fees, and sales tax on the first payment.”

Is this how a CCAP lease works?

I found this and wonder if this is accurate:

When you buy out your Chrysler Capital (CCAP) lease early, you will pay the residual value of the vehicle minus the interest that has already accrued on the lease. The residual value is the amount that the vehicle is expected to be worth at the end of the lease term.

To calculate the buyout amount, you can use the following formula:

Buyout amount = Residual value - Interest accrued
The interest accrued is calculated by multiplying the lease amount by the lease interest rate and the number of months that have elapsed since the start of the lease.

Any information would be appreciated. My wife and I are confused by this whole Jeep 4xE leasing and early buyout deal. Is it too good to be true? Or are we better off just straight buying with our funds?

Thanks in advance!

2

I can’t speak to CCAP, but I do believe this is correct.

With BMW it’s residual plus remaining payments minus unearned interest.

3

Like Scott mentioned above, It’s gonna be your residual plus the remaining payments (minus the interest) + tax
Normally your monthly payment consists of 3 portions (depreciation+ interest + tax)

Just went thru that with a 22 4xe HA. Residual was supposed to be ~40k (at the end of 36 month lease) and still had 2 years left on the lease. The payoff came out to be around 50k which was 40k residual plus $10k in remaining lease payments minus interest (basically 23 months of depreciation charge).

Don’t forget there is also a $495 “early lease termination” buyout clause so you will end up paying that as well as opposed to the standard $395 lease end disposition fee.

4

Im yet to see a finance manager that has actually read the contract. Theyre all clueless on this front.

The contract spells it out.

Ccap charges the adjusted lease balance on an early buyout, which is your adjusted cap cost, less the base payments you have made, where the accrual method is used to calculate the earned rent charge to get you to the base payment amount.

Long story short, you do not pay all remaining payments plus rv. Unearned rent charge is not paid.

5

Ccap is a $350 lease buyout fee. Youre not doing an early termination.

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6

I took my Jeep Compass to local Jeep dealer in August. They paid off my Jeep to Chrysler fully (amount equal to lease buy-out by me), but they also paid few thousands of dollars on top of it, which was used as “down-payment” on my current Compass Lux. My DAS was $333, with $333/mo remaining for 35 more months. I got the new car with 12000/mi a year. New Compass had sticker price of $38K with options. I was never told by dealer that I had to pay residual plus remaining payments to get out of it. May be it worked because I traded it in for another Jeep.

7

Omg thank you all. I appreciate it. Finally some real answers from people who actually did it. Quick question, for Jeep 4xe you get net cap reduction for 7500 from Federal government up front. Once you early buyout the Jeep, can you claim the 3750 tax credit as well during tax season?

8

Dealer says that non sense cause they get paid from the deal. I wish dealers were just honest and say “hey keep it for 3 months so we get a kickback”

9

No, because CCAP Claimed it on your Jeep, so you can’t double dip.

10

Your das wasnt $333 if you had thousands in equity applied down.

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I traded in 21 Jeep Compass, which I paid $300/mo for under 36 mo lease term, it cost me literally $0.0 to get the “equity” on it. They paid above payoff and Carmax on my leased car, which I didn’t own (their decision). Why is this supposed to be added as DAS?

12

Anyone know if you can just buyout directly from CCAP? Getting mixed information on whether or not I have to go pay fees for no reason at a dealership.

13

Don’t ever listen to car dealers as they’re total clueless. The final authority on your lease buyout is your CCAP lease agreement. If you would like me to compute your buyout price, I would ask that you either PM me or post the first few pages of your CCAP lease agreement including the itemization of the gross capitalized cost as well the early termination and purchase option language. The language contained therein is pretty much standard across all consumer retail leasing contracts.

Or, if you would prefer to do it yourself, the purchase option amount (buyout) can be computed as follows…

First, compute the adjusted lease balance….

adj. lease balance = residual value + the sum of the remaining monthly depreciation charges

The sum of the remaining depreciation charges is equal to the sum of the remaining base payments minus the sum of the remaining lease charges (interest charges). Remember that the base payment is the sum of the depreciation charge component (principal component) plus the lease charge component (interest component). This is similar to the P&I components in an installment loan.

Alternatively, the adjusted lease balance can be computed as follows….

Adj. lease balance = present value of the remaining base payments discounted at the constant yield rate (i.e., actuarial rate) implicit in the lease + the present value of the residual discounted at the constant yield rate (actuarial rate) implicit in the lease.

If your state levies sales tax on each monthly payment (payment streams), then you need to subtract the sales tax from your lease payment to get the base payment. If your sales tax is capitalized (financed) in your lease, then the is no need to make any adjustments to your lease payment (i.e., contractual payment = base payment). See your lease agreement for details.

Finally, add the purchase option fee plus any applicable taxes, admin fees, etc. to the adjusted lease balance to determine your buyout price.

All calculations can be easily done in EXCEL or on a TI-84 calculator. If you have high school aged children, then they most likely have a TI-84 calculator. You can use the TI-84 TVM (time value of money) app by pressing the apps key.

Questions? Please let me know.

14

Wow thank you so much for the offer. My wife and I really do appreciate it. We’ve been trying to figure this out for weeks going to several dealerships. We going to one that seems to know what they are doing tomorrow and I will get the CCAP lease agreement and share.

This is an amazing forum.

Thank you all!

15

My friend told me to be careful you don’t get double tax in MD when you early buy out a lease. But I believe you pay taxes up front and don’t get tax when you do early buy out right?

16

Just login your portal and there should be a buyout there, HOWEVER some states like Florida do not allow it.

17

I stand corrected! Lease disposition is $395. Lease buyout fees is $350. $495 is an early lease termination if your car is totaled

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18

How soon can you do an early buyout after you start the the lease with CCAP? I’ve been hearing 3 months is usually good.

19

You can do it as soon as the title has fully processed and your lease has funded.

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