GMF no longer allowing 3rd party buyouts

Why? It was rarely ever in the favor of the customer until the last 12 months. Only now it’s become an issue due to low inventory and competition where Dealers are getting beat because they can’t stay competitive

It’s someone’s job in accounting to detect and take advantage of these trends. Otherwise, that person is not needed.

Because no bank should be in business selling their assets below fair market value.

Banks are regulated for a reason. No country wants a S&L crisis or bailouts.

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The banks aren’t the one’s profiting here. They have done this to protect their associated dealerships. The dealers are profiting from the equity.

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Captives and dealers have a symbiotic relationship; it’s hard for one to thrive without the other. More specifically it’s not uncommon for franchise agreements to have a clause allowing dealers to buy cars off lease at RV or wholesale value, whichever is lower.

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Totally — borderline incestuous.

This is not aimed at anyone, everyone here is part of this discussion: but most of us are not having the same discussion.

Separate from any judgments or interpretations anyone has, the fundamentals can’t be reduced to lemonade-stand analogies that then are so deeply drilled-into they become a root canal. We keep trying to simplify…

I am ready for one lease equity discussion to end them all, where I am certain I will learn a ton, but only those who have the patience and curiosity to really understand, and not lemonade stand:

  • the most complex web of interdependent global supply chains; implemented recursively
  • trade agreements, tariffs, transportation and logistics (of raw materials and finished goods, which themselves are raw materials for the finished product)
  • elastic workforces of 100k+ on multiple continents, with and without collective bargaining agreements
  • multi-country, multi-company, multi-currency accounting
  • finance and portfolio theory - to finance manufacturing, to floorplan dealers, to invest in finance and lease portfolios that BOTH keep manufacturing going AND return a profit. That money could come from any country as public/private debt, subject to any number of covenants
  • NADA and state dealer lobbies, dealer franchise agreements, and as Max just got to, what makes a captive: blank financial service, the parent company borrow’s someone else’s money, to finance/lease cars at a profit, which is used to build more days of available-to-sell inventory, and goose any low demand with subvened rate/residual/incentives (hello kyfdx@edmunds: How much did Acura Financial kick-in this month toward the MDX I am about to lease?)
  • 99.9% of dealers agree to prioritize using/recommending captive lender on a certain % of loan/lease deals, the captive floorplans all their inventory at a subvened rate (you prefer our credit, we give you preferred credit), the dealer must accept lease returns from the captive (in good times and bad), the captive gives the dealer FROR (and some discount reflecting not transporting to/selling at auction, and time-cost-of-money) to buy/resell disposed lease returns from the customer

There is a cynical angle to all of this, but the captive is the lubricant that keeps the manufacturer and dealer solvent at-scale, and everyone has mutual responsibility to each other.

It’s not that Peggy Portfolio manager at TFS had a bad day and needs to be fired, or even her $500M invested in loans/leases that should mature on a schedule — the rent on your payment acts like a coupon on a bond, paying cashflow on a schedule older than a first grader (a compliment not a criticism), after a full year of extensions and early exits, third parties — drunk with money, swooped in and stole what trickle of expected lease returns, in many cases for more than they sold new!

They lost the cashflow on an asset (but yes - got paid upfront in a 0% rate environment with fewer units to move, so reinvestment will yield less), and lost a potential resale unit on behalf of a dealer rhat would have grounded it in normal times, whom the captive has a fiduciary responsibility to — in the middle of a new car shortage

:expressionless::exploding_head::zipper_mouth_face:

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Honda/Acura is supposedly next on that list - Honda's the latest to refuse lease buyouts to rivals, following GM's lead - Roadshow

Anyone having any luck selling em back to their dealers. Or is the dealer just taking them back at the end of the lease

Dealers will definitely buy them at anytime. If price is right…

Vroom - 44.3k
Dealer 1 - 37.5k
Dealer 2 - “around 37k”
Dealer 3 - 40k

Well this new makes me a little less irritated at VW Credit for not allowing third-party buyouts… At least it has “always been that way” with them.

Luckily I was still able to get a decent amount out of my lease by selling to a VW dealer.

Can anyone speak to the purchase process with Chevy? What’s the turnaround time? How does that align with VROOM/Carvana/Carmax offer shelf life?

Sorry, didn’t read all 146 prior replies, but why can’t you just get a loan from another bank and then sell the car to Vroom/Carvana/etc the next day?

I leased a 2019 Corvette Stingray back in December 2018 (really damn good lease too btw) through GM Financial. Last Tuesday (July 6th) I refinanced the remaining $39k through PenFed. PenFed overnighted me the check, GMF overnighted me the paperwork with a return pre-paid envelope. Now, I’m in the process of selling it to Vroom.

I explained what I planned to do with a Vroom representative, and they said either way I walk away with the same amount of money. Doing it the way I explained above, I pay the taxes and they scratch me a bigger check. If they purchased it from GMF (assuming they could) they would be paying the taxes, so they would’ve scratched me a smaller check. Either way, I end up with almost $14k in equity in my car.

(I effectively drove my brand-new Stingray for 32 months at $165/mo. I have not been this proud of a car purchase before in my life.)

A funny aside, I started the PenFed refinance a month earlier but because they took so long getting me the first check I ended up seeing the Vroom buyout price go up an extra $2000. I’ll take it!

You generally have to pay tax on the buy out and it takes a varying amount of time to get the title. Otherwise, you absolutely can.

All of us have been proud of ourselves lately🤪. Its been too easy (which means it probably wont last) so glad you cashed out now.

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Right.

But that tax gets accounted for no matter what you do. Whether I pay GMF $37k + $2k (tax) and Vroom gives me $53k or Vroom pays GMF 37k + 2k (tax) and writes me a check for 14k… I walk away with $14k.

That’s the way the Vroom person explained it to me anyway. Is that incorrect?

Vroom doesn’t have to pay tax if they buy it directly

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did u do an auto loan or personal loan? I’m thinking of doing the same, as AFS just joined all other lenders in blocking 3rd party buyouts.

Vroom offered me 2500 over the MSRP price for a 2021 that I leased earlier this year but can’t do it because of this 3rd party buyout crap. So I’m going to buy the car from same dealership I leased it from. They’re not charging me anything extra on top of the personal payoff quote I got from GM Financial except a tag transfer fee. Other dealerships wanted to raise the payoff quote by not including a 1k rebate from GM and adding dealer fee, doc/bank fee, and the tag fee.

Vroom rep stated on a phone call that they will not buy a car if the title is less than 14 days old. I’m going in to dealership today to buy the car today.

Does anyone know what date the ownership will be on the title? I’m in Florida. Per dealer I have to wait 2-6 weeks (per GM financial they will expedite if I give them a fedex account number). I’m assuming the date on title will be the day I purchase it?

Do you have to pay tax when you pay off the car to the dealer? If so, that may end up being more than the $2500 equity you have right now. The offer price from VROOM may also decrease in the weeks it will take to take care of everything and wait the required amount of time.

Just curious, why are you trying to sell a car you just leased recently? What are you planning to replace it with?