Lease buyout VW

Ask the Hackrs
1

Hello, and thank you for the great advice I got a couple of months ago here !
My lease is almost up, and my residual value is $5000 lower than the retail value so I figure it makes sense to purchase the car (and possibly trade it in later) instead of getting into a brand new car.
1)I do not want to do this through the dealership. Can I pay it off directly to the leasing company?
2)Are there additional costs / taxes I will have to pay for owning the car ? I assume I would pay those to the DMV and not the leasing company correct? Can the leasing company charge me anything over the residual ?
3)Is there any benefit in financing it instead of paying it off at once ?
Thank you hackers !!

2

Do you mean the other way, your residual is $5000 lower than retail?

  1. You don’t need to involve a dealer. The contract is between you and the leasing company. A dealer has nothing to do with it.

  2. You’ll have to pay sales tax on the purchase price. DMV fees will be minimal, whatever it costs to transfer title. BUT, you will not have to pay the disposition fee for turning in the car at the end of the lease. That saves you $500 or whatever VW charges.

  3. All depends on what interest rate you can get and what your opportunity cost for the money is. Nobody can really answer that but you.

Also consider, retail isn’t what you will get selling it. If you trade it in that $5K is gone. Maybe if you sell it privately you’ll be $3-4K ahead.

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3

There generally is, however, a lease buyout fee thats about equal to the same amount as the dispo fee. It’d be listed in the lease contract though.

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4

They get you either way huh? LOL.
I’ve never bought out a lease before so I didn’t realize that.

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5

Not sure how CA handles DMV fees and taxes on a lease buyout, but basically I assume it is similar to buying a used car from a dealer. In MD we pay full tax on the selling price at the start of the lease, but then don’t have to pay tax on the buyout if registered in the same name on the lease. If we trade the vehicle in at the end of the lease we get a tax credit for the trade value against the new lease. YMMV.

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6

Thank you so much !
Yes residual value is *lower than retail thank you !

7

They waive it if you lease another car from them so yes they get you either way.

8

That’s really only relevant when you’re buying something to hold on to

Trade-in values are much more relevant and you may be surprised at how much lower they are than retail.

But even if you break even on the trade there’s the sales tax — if you’re only holding on for, say, 3 months and the tax was $3,000 then that cost you $1,000 per month. Something to consider

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