KY resident. Currently lease Acura 2021 RDX base. 12k miles/36mo. $490/mo no down payment, 1.9% money factor.
Here is my current lease with Acura. I have to turn it in 2024. I can’t afford to have my payment go up for a new lease. Was wondering if the market/interest rates might be better next year (currently like 7%) to stay with Acura (love the car) or browse for other SUVs. I’ve checked out Kia Sportage, Hyundai Tuscon, and Mazda CX5. Or should I get out of the leasing game altogether and just buy out my car/look for something else? Thanks.
All jokes aside…no one knows what 1 year from now holds. Most people didn’t expect almost triple rates in 2023 at this time in 2022.
You have time. Don’t panic just keep an eye on deals and move if it makes sense.
It’s good that you’re thinking ahead, but it’s really impossible to make an informed recommendation about where things will be when it’s time to turn in your car in 2024.
If payment certainty is the most important factor, you could consider buying out the lease now and financing the payoff (and then if rates go down you can refi later).
I’m not advocating this, just tossing it out there.
Thanks. I’ve looked at the current value of the car on KBB and it’s almost 10k more than the trade in value with Acura. Might buy out the lease and sell 3rd party and pocket the difference.
The only way to avoid having your payment fluctuate every 2-3 years is to finance something. Your payment might even go down if you refi later with lower rates.
Your equity in your lease will likely never be higher. Use that equity as a DP, and look at an online auto loan calculator to see what car you could afford at monthly payment X at Y% APR for N months.
Ky Resident. Current Acura RDX Lease, ($40k car) turning in next year.
So my current vehicle buyout price is $23,000. KBB and 3rd party offers show the value of the car is over $30,000. If the offer still stands next year, could I ask the dealership to accept the 3rd party value and use that $8k+ towards a ‘down payment’ on a new lease? Or do I need to buy out the car, then sell 3rd party, and pocket the difference?
Paper valuations don’t mean much. Your job is to find the highest bidder. What would you do if you were selling your house, accept the best bid or just accept someone offering the “trulia estimate”?
You can put that money into your bank or you can put that money down on a financing. Putting it down on a lease is a pretty bad idea imo.
Unlikely you’ll have the same amount of equity, but you may likely still have some.
As for getting the dealer to match 3rd parties you can always ask, but it’s unlikely they will unless they’re not giving you a particularly aggressive deal on the new car and are making up for it there. They have a captive market since you can’t directly sell an AFS lease to said 3rd party and they know it.
My family all lease with Acura. Pre Covid, Acura would take our car back and offer a brand new lease for a lower payment bc they needed used cars that bad. But since the inflation, prices have gone up. I dont really want to finance/buy a car bc of the convenience of reliability, tech, etc for leases.
If market value of your car is greater than the residual value, then yes there is turn-in equity, but most dealers will happily let you turn it in and not realize your equity.
You don’t really have equity in the true accounting sense of the word, as you don’t own it. But because most leases have a buyout option at the end, you indirectly have equity from the difference in the fair value of the car you can sell it for and the price of the buyout. Instead of you using the buyout option and flipping the car on to someone else for profit, the dealer can consider that difference your ‘equity’ in the car and essentially roll it into the next lease as a down payment. They most likely won’t offer a price higher than you could get in the market because they are providing you a service by making life easier, so they can just undercut the value a bit and its potentially a win/win for both of you.
Note that has become a much bigger deal than historically because of the current market making the values of used cars often higher than was predicted 3 years ago with the residual % put in the contract. Historically you would have much less equity and it would less often be useful to use the buyout to attain your equity, so rolling it into a new lease (unless you wanted to actually keep the car) was the most common method.
That’s something Honda/Acura Financial does, not the dealer.
I can’t recommend you continue your current strategy because you’ve probably been leaving tons of money on the table.
You need to understand how leases work and not just believe what the dealer told you. Pre COVID Acura leases were really cheap, like sub $400 for an MDX even without putting any cash or equity in. There was a lot of trunk money that the dealer probably kept.
Your prior payment is a poor benchmark of what your next payment should be. You need to target the best programs, and then separately you need to maximize your equity.
Are you sure that’s the buyout price now? Lease end buyout, or the residual, is not the buyout price right now. That would be the residual plus all the unpaid payments.
