What is the buyout after lease?
That info in the calculator link provided.
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In 10+ years I cannot recall a lease being signed here where buying at the end was the best strategy
nah a few of the lexuses, toyotas, hondas, were worth it.
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Which lease was that where buying at the end was superior to buying on day one or leasing and buying out immediately?
any lease where the interest rate is effectively zero?
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I will explain if the @trusted_hackrs can move to a seperate thread.
Would you like us to create a new post in “Ask the Hackrs?”
We don’t possess this power. You’re looking for @community_moderators
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Or a wiki. This is one more leasing myth that needs to be debunked.
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Let’s try “Ask the Hackers” first and then we can see how the conversation goes and whether community wants to make it a wiki.
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It’s not common, but I recall around two years ago at the peak of the chip shortage, Subaru had a lease money factor (~2% APR) on the Legacy that was way lower than the 6% finance rate they were offering.
In that scenario, it seems better to take the cheap lease, get a nice 5-10% annual return on the down payment you’d otherwise pay on a finance deal, and buy out the lease if you like the car.
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There’s currently some electric car incentives for the $7500 that would not be income eligible for a buy credit but can be passed through on a lease that can make those more affordable to buy that way.
Been popular with some of the Lexus plug in hybrids that are otherwise going for close to MSRP.
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But those usually are candidates to buy out immediately as the MF is too high.
But yea, if the lease incentives are deep, the MF is virtually 0, it makes sense to wait out the purchase.
Acura ZDX these days is another example. On a OnePay lease, the MF is less than 1%. The rebates are deep, and the RV is 48% on a 24m lease. It’s worth evaluating the market after 2 yrs for the small MF cost.
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Yes, most are doing immediate buyouts on the PHEVs. Not worth doing on the full electrics, I’m waiting out my i4 lease to see what the depreciation actually looks like since the MF is low.
This is only half the story. First of all, the effective rate is never effectively zero even when the MF is .00001. The acq fee is just a rent charge by another name and benefits the lessor by being charged upfront.
Also: even if we ignore the acq fee for a second, paying less interest during the first N years (the duration of the lease) doesn’t guarantee that the interest paid over the full life cycle was lower. After that period, RV + any purchase fee + TTL needs to be financed at a used car loan APR.
If the sum of those two payment streams is lower than financing on day one, only then is it the better strategy.
See above for the bigger picture.
As for a return on DP, the only real comparable is a guaranteed return and post-tax. What size DP are we talking where that return exceeds the acq fee?
I couldn’t dig up anything but I recall there being insane incentives on G70s and Stingers and people were leasing them and then buying them out immediately. $17k+ off a $53k car was hard to beat. Financing the car only gave a 5-10% discount vs leasing that gave 32%+
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The utility of an immediate buy out is perhaps a different question than the original post (which presumably asking about buying out the car at the end of the full lease term).
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I assumed the fees/cost would be the same regardless of immediate buyout or buying out at lease end.
Is that assumption incorrect?
Possibly.
Comparing the MF for the lease vs. the interest for the loan is one factor to consider.
Another factor is that some companies (like MB) charge an early termination fee.
I think some (many?) banks waive dispo fee if you lease another car from the same brand at the lease end (which obviously doesn’t occur if you do an immediate buy out).