Anyone know how Hyundai does it? Considering a 2016 Genesis buyout for a friend’s elderly father. So far I can only see contracted buyout, dealer says no adjustments with Hyundai but wasn’t too interested in conversing…
My username not withstanding, I got some helpful info from this thread. I don’t get why some tried to derail it before it got started, but anyways thanks to those who contributed.
It’s a personal choice, but it’s rarely a good financial decision overall, even at market price.
You already rented the utility of driving the lease, for the term (months and miles), for the inverse of the residual plus taxes and fees. Almost always with the expectation of handing over the keys at the end of the lease term. Why everyone always says that leasing is a waste of money is because on a straight line depreciation curve over a normal ownership/financing period, you “spent more for less” where the lease term ended. But what you got is: 0 risk (it’s all on the bank in a $0 DAS), 100% optionality at the end (extend, return, buyout, lease another usually at a discount, lease something different, buy something, give up having a car and take Uber/Lyft everywhere) without any possibility of being upside down.
When buy out the lease, even for less than residual (and it’s never for black book, never for auction price, but hopefully something closer to retail), you still have transaction costs, you still have taxes, your MF was likely higher than captive financing would have been, and if you don’t write a check you’re paying used car interest on the new loan. You took on the personal risk (which is fine if you love the car and want to keep driving it) and you gave up your optionality. Even at a discount, the captive made money on you over the term, and by selling you the car they don’t have to deal with it. In every case I know of someone buying out their lease, it happened at the dealer who got something for processing the transaction, and got another opportunity to sell product, so they make some money too.
I’ve lost count of how many of these I’ve done spreadsheets for, not just hypothetically but also retrospectively. One example: my dad leased a final production year C70 convertible but didn’t want to buy in case he didn’t love it or it had issues. He loved it and had no issues so he bought it out, and I pulled up all the math I did in 2013 and updated it when he bought it out — he paid a few thousand more than if he just financed for the same term in 2013, AND the car was worth more than the residual when we bought it out. He knew it would be cheaper to buy upfront, but he made his choice and decided to keep it and he’s happy, so it’s just money (in someone else’s pocket).
Snarky enough for you?
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