I think the problem is people assume that dealers can buy CCAP cars at the same price the lessee can buy it at which is basically the residual and fees minus sales tax (the mistake I made). But in some cases, CCAP seems to mark the value of the car to market for dealers which ruins any real equity. In my case, to get any equity out, I’d have to buy the car at the residual + fee total, pay sales tax and then flip it to a dealer. But with sales tax being high and then time to get the title, if equity margins are thin, it’s a risk buying out the lease yourself.
You hit the nail on the head. However: No bank in their right mind should be selling assets below fair market value. That’s an unrealistic expectation for consumers to have.
Sure but when they set the residual that’s the value I can buy the car for myself. They are contractually obligated to sell me the car for $20K if the car residual was set at $20K. They can’t then charge me $25K because that’s what the market is for the car now. I think the confusion comes in if they are selling to me for $20K then why wouldn’t they take the $20K from a dealer? Who cares where the money comes from? Apparently CCAP does, LOL.
And FWIW, I’ve done this before with a Grand Cherokee when the lender was Ally. Ally sold the car to the dealer for the exact residual + fees that I could have bought it for per the original lease contract. In fact, I actually got a check for a portion of the equity from the dealer after we agreed how much equity in the car to apply to new lease. Seems CCAP just handles it differently.
The bank is contractually obligated to sell it to you for $20k. Why would they sell it to someone else they’re not obligated to sell it to for $20k when they know they can get $25k for it? The fact that any bank allows this is surprising.
You’ve got it the wrong way around. If the market value is $25k, they would charge you $25k too. The only reason they don’t is because the contract tied their hands.
True, in theory, why would anyone sell an asset for less than market value? But we are getting into a theoretical question that goes beyond my whining like a baby that CCAP won’t let me make a few bucks here. LOL.
But to carry on the discussion, even if the car has a market value of $25K, the finance company isn’t going to get that. They aren’t a dealer. It’s not like if you turn in your car today, it ends up on a CCAP or GM Financial lot listed for $25K tomorrow. Finance companies aren’t in the business of selling cars. They have to utilize the dealer networks to move cars for them. So they offer them to dealers at discounts after maturity and if the dealers don’t want them, they end up at auction. Jeep dealer tonight told me, based on his dealership, most grounded cars end up at auction.
Now clearly CCAP knows what they are doing since they make money and I am just a guy whining on the internet. Haha.
Right… They can either run out the contract and get paid or they can levy a market value price if you want out early. Either way works for them. There’s not really any motivation for them to offer a lower than market price to sell to a third party dealer.
Market price in this case is more in line with wholesale than with resale price; either way it’s more than you’re contractually obligated to.
They usually bring the off-lease cars directly to wholesale auctions. The dealers then bid to acquire the cars from them as used inventory.
you actually hit your own point.
So lets see
- Sell it to you because they are contractually obliged to. Lots of paperwork, they have to fill out as well as a team of ‘reps’ to answer phones for many many customers.
- Sell it to the dealer that was grounded to. Those dealers usually have a dedicated Finance rep already at their disposal to pay funds.
- Sell it at auction. Those auction houses have a dedicated rep to call and pay funds.
- Sell it to a 3rd Party, those guys do not have any dedicated reps, so they would have to call in just like in #1 and waste a lot of time the Finance bank doesn’t want to spend on.
So #1 they are forced to, but they don’t care about #4, so why should they give a better price to #4? The few extra dollars they get per car might not be worth all the paperwork and hassle a non dedicated rep can cost.
The solution here is to buyout the car & then sell it yourself. If the dealer retail price is 30k, you should be able to move it for 28k. List your car for sale on TRED. You can also sell it to Vroom after you have the title in hand ( if they buy from WA).
I did this in California with Shift. In CA the law allows an exemption for sales tax, if you have the title for less than 10 days.
Can you go a little more into how you did this? How did you buy out the car without paying sales tax? For example, lets say my buy out was 20k, and there is a 10% sales tax, normally the leasing company would tell you pay 22k (taxes bundled in) to buy out the car. Also - in regards to only having the title for 10 days, how did you go about making sure the deal with Shift completed within that time frame? I would be so nervous if there was a slight delay making the transaction 11 or 12 days instead of 10. Appreciate it, as I am also in CA and might do this exact same thing in the future.
I was working with VW Credit. They do not charge you the sales tax in their quote. It is your responsibility to pay sales tax when you register the vehicle. As I recall, even BMWFS did not ask me to pay the sales tax as part of the payoff.
Get the payoff quote from the lender, send the cashiers check via Fedex overnight. Title arrives in 2-5 days. Schedule a Shift visit around that time…loop them in so that they understand that the timing is critical.
If going with a private party, I would take a goodwill payment before starting the process. It’s worth it for them cause they’re getting a great price for a gently used card.
This is the several thousand dollar gamble you take here unfortunately.
I can’t buy the car and resell it, even though I could make a couple thousand. My buyout is $27,000 and these jeeps are selling on lots for the low 30s. Very popular cars in the Pacific NW.
I’m about to start a mortgage refi and need this debt and account off my credit report. I can’t open a new account (car loan) because I’ll take a hit to my credit score. Want to get those low mortgage rates!
But, I agree, buying the car and reselling makes sense, just not in my particular situation.
I got the same treatment from Chrysler Capital here in Florida on Saturday. They wanted about $3k more from the dealer than what my contracted buy out is. I’m glad I saw this post beforehand because they were willing to make the deal based on my contracted buy out minus sales tax, so I’m sure I would’ve had to pickup the bill on the difference. I demanded they show me an official dealer buy out before I sign, and despite there’s and Chrysler’s incompetence they finally phoned a friend at Jeep to give me the bad news.
I have to say this forum is a great resource. I’m also located in WA and leasing a 2018 JGC, although my maturity date isn’t until the end of November. Thanks to this forum I got a great deal and with topics like this I can avoid getting hosed at lease end.
Just following up on my pursuit to sell my leased 2018 Grand Cherokee to a dealer. I had 4 different dealers who wanted the Jeep so lots of offers to choose from. My payoff amount from Chrysler Capital was my residual plus my last 3 payments plus a $350 fee.
In the end I got money from the dealer due to some equity, didn’t have to pay my last 3 payments or the fee for being over my mileage had I returned it. I also had a lease return fee around $400. All together, I put $2000 in my pocket. Oh yeah, the safety ratings on Jeeps isn’t great so I was paying $100 a month for insurance so was able to get rid of that payment. By comparison, I pay $32 a month for my VW.
I’m in WA state. The whole transaction to get the payoff amount and complete paperwork took 30 minutes. Pretty easy process.
This is great to know. I also have a 2018 Grand Cherokee (Laredo E) with a lease ending soon. My buyout is $19,639 including the 7 remaining payments. Right now, I have an offer from Vroom for $22,260 and an offer from Carvana for $21,526. The one option I haven’t explored yet would be a buyout from a dealer. I’ve had a pretty low payment over the past two and a half years so I guess my first step is trying to find my next car before getting rid of this one.
I ended up trading in my 2018 JGC this past Monday (to a dealership, not a CJDR dealership). I had some equity which I chose to apply to my new vehicle. All went smoothly, at least from what I could tell.
My '18 JGC lease will be ending too, and looks like there will be some equity. Did you trade it in right at the end of lease, or did you trade with a few months remaining on lease?