Help calculating any (positive?) equity?

Ask the Hackrs
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1

Hi all! Long-time lurker, infrequent poster on this fantastic forum that’s taught me so much…

I’ve read thru a ton of posts here regarding equity calculations but I’m getting tripped up regarding residual value, lease buyout, payoff amount, etc. Hoping some of you experts can help sort me out. My situation is the following:

  • Current lease: 2018 Mercedes CLA250 FWD
  • Location: Miami, FL 33132
  • Monthly payment: $354 (including tax + maintenance)
  • Lease allowance: 36 months, 12000 miles
  • Current mileage on vehicle: 5,300 miles (no, that’s not a typo)
  • Lease maturity date: Nov 4, 2020
  • Residual value displayed on lease: $24,060.20
  • Diamler pay-off: $26,880.95 (as of 2 weeks ago)
  • KBB value (if this helps at all): approx. $27,500 for private party

The car is in pristine condition, too, if that helps. What do you guys think? Let me know if I’m missing any information that may be pertinent to these calculations.

Thanks again!

2

Best bet is to check with Carvana, Vroom, etc to see what they are willing to pay for it first. Whatever the difference is between the Daimler payoff number and the best offer you get would be the amount of equity, or lack of.

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3

This is pretty much the only thing that matters. You’ll need to verify if that includes sales tax or not and if that value is the same for a 3rd party buy out.

You have two options.

  • Sell to a dealer/3rd party
  • Buy it out and sell it private party

The tax implications are always the big hurdle with the latter. I don’t know if Florida has any provisions that allow you to buy it out and then quickly sell without having to pay sales tax (California, for example, allows you to do this if within 10 days). Otherwise any equity you may have will go up in sales tax flames.

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4

Thanks for the responses, guys. Let me reach back out to Diamler, get an updated pay-off amount & ask if that’s inclusive of tax. FYI - What I’m ideally trying to accomplish is to roll any positive equity I can squeeze out of this lease into a new lease on a new/demo 2020 CLA either at lease-end in November or through the pull-ahead Loyalty program now.

5

If you pull equity out, you’re not turning it in for pull-ahead. You get one or the other there.

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FYI - I have used successfully in the past, the tactic of getting a quote from a place like CarMax or Carvana. Bring that with you to the negotiating table. Ideally, you want the dealer to match the ‘better’ value of your off lease car. But realize they can also call your bluff … lowball you and tell you to go to Carmax and sell the car there. In all cases, I have gotten more equity in my deal. If they get close = good enough.
I just got one from Carvana…all online, I go a value in about 3 minutes - used that with my dealer in negotiations.

7

Sorry, I’m probably not being clear of what I want to do &/or confusing myself… I want to use my current lease as negotiating leverage with a Mercedes dealer in order to get a more favorable new lease.

8

If you have equity in the lease, you’re far more likely to extract value from it by not involving it in a new lease and selling it separately (or negotiating the new lease fully and then telling the dealer they can have the trade if they meet/beat your carvana offer).

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9

Just don’t do that. It will have a lot more chance of backfiring and them confusing you more into believing you made out in that deal.

Separate two transactions if you have any positive equity. Take the check for that equity and then look for a car

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10

Thank you guys. That makes sense to me. Probably best to not conflate the two… Regarding the equity calculation itself, is it as simple as subtracting the Diamler payoff amount from my Carvana/vroom offer?

11

As long as the payoff amount is the 3rd party pay off, yes

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12

Thank you all for the input on this. I think I was under the incorrect assumption I could take advantage of the pull-ahead program PLUS get credit for any equity I have on my current lease. Doesn’t seem to be the case. :slight_smile:

13

Honestly I don’t remember anyone trying to pull that off:)
If you can resist selling pressure at the dealership I’d ask then such question to them for fun and see their brain explode trying to understand how do the math on that one:)

But in reality for you to use equity some one needs to buy it - dealership or Carvana-type. And for you to get pull-ahead I think you need to return the lease to MB. Two separate lanes.

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14

How would that work though? Pull ahead makes it so you don’t have to pay any more payments. If someone buy’s it out, you don’t have to pay any more payments.

Or are thinking more of an extra loyalty incentive?

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15

You are not going to have equity as a trade in. End of story. Your car is selling for below $25k at auction and KKB’s value is private party, meaning you have to sell it yourself. If you are lucky the dealer might buy it for the payoff, but unlikely.

16

But he hasn’t checked Carnava, Vroom and Shift for their offers. Might strike better offer than KBB in case they want that car in that market.

17

Find the highest of those, and then get Lux.autos to beat it by “up to $2,000”

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I’d be shocked if they beat KBB private party prices

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19

Exactly. OP is looking for a dealer/buying service to pay retail for a car that they can buy for a lot less if they wait until November or even one at auction if they are desperate. I think best case, OP gets $25k-$26k from an online service or a dealer. He has to sell it himself to get any equity and for $700 (assuming taxes are included in the payoff), it is not worth dealing with random people who will waste your time.

Edit: Actually after looking at cars for sale, I think anything over $25k will be extremely generous. Dealers are selling similar ones with under 10k miles for $26-$28k and CPO ones around $29k. cars.com results

20

Lately prices from those services have been pretty crazy from what I see so I won’t rule that out.