Dumb question regarding buyout lease vs finance

Ask the Hackrs
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1

Hi guys

I have a dumb question regarding the buyout options.
Take this calculation link for example

If I decide to buyout the lease after the 3yrs contract, isn’t the total cost would roughly be (exclude tax)

Depreciation: $12,606
Rent Charge: $2,338
Non-residualized Fees: $1,994
Residual: $25,225
Total: $42,163

And if I decide to finance, the MSRP is already $45045, not to mention the finance rate

That to be said, isn’t lease always better than finance the car if there’s dealer discount or I’m missing anything here?

#ask-the-hackrs #nj #acura #lease-end-purchase

2

Apart from tax, your buyout price is the residual value.

You paid the depreciation and rent charges in 36 installments.

And there is nothing to residualize at the end.

3

Thanks for the reply.

Then for above case, if I buyout, the total cost would be $42163, which is lower than MSRP (finance/cash) ?

5

Sorry, I think I misunderstood what you were asking.

Are you trying to decide if it makes more sense to purchase/finance now, vs. leasing for 3 years and then buying it out/financing the buyout?

I thought you were asking how the buyout price for the lease was calculated at the end.

6

Are you trying to decide if it makes more sense to purchase/finance now, vs. leasing for 3 years and then buying it out/financing the buyout?

Yes, I’m asking above.

Cause for the rough calculation, seems if leasing for 3 yrs and buyout out would be much cheaper than purchase/finance now (due to the dealer discounts, and incentives)

7

The total lease cost is everything you pay upfront plus the sum of the payments.

Generally the most compelling reason to lease something first is to capture incentives that aren’t available on a purchase (like $7.500 on certain EVs for those who aren’t income-qualified), but in those cases it’s also common to do the buyout immediately (and not wait 36 months).

8

Where are you getting this number from? Your calculator shows $45045.

9

Your total cost should be $18139 + $25225 + $25225*tax.

I’d assume the sale price would be the same for purchase/lease. Are there any purchase incentives?

10

Ah, you are right, was looking at another page when editing. Updated

11

Yes, and in order to be simple, I removed all tax part, so that’s why I placed the breakdown without tax for comparison

For lease + buyout (without considering the tax)
Depreciation: $12,606
Rent Charge: $2,338
Non-residualized Fees: $1,994
Residual: $25,225
Total: $42,163

For finance or cash
Total: $45045 * (finance rate)

12

The $18139 in your reply, have applied taxes $1205, so I removed it in the breakdown

13

Some posts in this forum have very high dealer discount (like 10%+), thought that can’t be easily applied on finance as well?

14

Plus the disposition fee

Usually the pre-incentive discount applies whether you lease or finance. Some incentives are lease-only/retail-only.

15

Generally you can get the same dealer discount on a purchase or a lease; it’s the manufacturer incentives that can vary significantly between the two types of transactions.

16

Plus dealer fees & title/reg

17

@trism @jeisensc
Thanks for the reply. I found it’s really hard to come to dealership and asking for those same amount of % dealer discount, comparing to the broker posted discount in this forum. So I thought maybe that discount is only available for leasing instead of finance and cash.

18

This is a lease-oriented forum, which is why you mainly see ads for (and discussions about) leases.

But it’s also a reason you don’t see a lot of common brands represented here… because they lease terribly (which doesn’t necessarily make them poor candidates for purchasing).

Also, the reason brokers get compensated for their deals is because (generally) they aren’t something available to the average retail customer who walks into a dealership on a Saturday morning to do a test drive.

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