Since this has come up several times lately, it might be good to have the pros and cons in one place.
Pros: let me know
Cons:
Your option to purchase the car at its stated residual $ value at the end of the lease is not going anywhere so why the rush?
If anything, during very adverse market conditions captive lessors such as BMWFS will offer to let you purchase the vehicle below its RV at the end of the lease.
Note: don’t ask us if they will negotiate. They won’t AFAIK. If any offer exists, it will show up in your online account.
In the meantime (between now and lease end), things could happen. For instance:
A. The vehicle could be involved in a non-totaled accident that not only diminishes its value but also affects the ease with which you could sell it later.
B. Mechanical or other issues pop up that make you question your interest in owning this car in the future.
Remember, the time on your warranty is running out regardless of miles.
C. Your personal circumstances change (job, finances, commute, family size, etc)
TLDR: Wait until closer to the end of your lease to make the decision.
The only possibility I can think of as a PRO would be you planned on buying at the beginning, but lease incentives were higher at the outset than finance, yet the rate was ho hum. You leased to take advantage of the better incentives in the expectation of a refi to get a better purchase rate at a different lender. That’s a pretty rare occurrence, and a bit of a stretch though.
Outside of this, I can’t think of one possible reason you’d buy out early, even with high miles. High miles will go away at refinance whether it was at month 6 or month 36. I’d just ride it until the end in the small chance the car was stolen/flooded/totaled before term, and none of it would be my problem anymore anyways.
This is also something that should pretty much be done immediately. In (almost) all of the cases where this makes sense, it’s a manufacturer that’s offering large lease incentives coupled with higher MFs. You want to lease to take advantage of the large incentive and then buyout the lease to get to a lower interest rate to wipe out the high MF.
Of course, one should always evaluate their specific circumstances, but if we consider a lease-to-purchase scenario like this rare, a lease-to-purchase scenario where it also makes sense to hold the lease until the end is like winning the lottery.
Before doing it immediately, I’d double check that there isn’t a minimum time allowed before you forfeit incentives. In other words, some captives may not let you refi at 1 month, and may require you to hold the note for 3-6 months. I know that was an issue in years past, but not sure if that’s still the case anymore.
This is the situation that was (still is?) occurring w/ Kia Stingers, right? Huge lease incentives, blah MF, so lease to get the incentives and buy out ASAP.
yes, but the point of the thread is buying out your lease, as in driving it till the wheels fall off. Not jumping into a new lease and rolling that sweet, sweet negative equity.
Have a Q50 in NY. Residual $22k monthly is approx $435/mo - have about a year left on the lease. Is there any benefit to starting the buy out process early? Do I save on taxes? does the monthly “rent” portion go away? Is the only thing that I can sell to a 3rd party?
May have already been asked and answered but I couldn’t find the topic.
