I hope this is the right place for this post. I am sure someone can answer this pretty quickly… I have a US Bank lease with four remaining payments. I have been trying for several months to trade it in but the numbers have not been favorable on trade in value vs payoff amount, so I kind of stepped back and recently started looking again. I call today to get the “payoff amount” and learned something that I was not aware of before. She says if I purchase the vehicle, my “payoff” is set in stone from my lease contract, which is RV+tax+remaining payments. But… if I trade it in, the dealer calls and gets a DIFFERENT number that is based on current market value. Is this normal or is this something shady by US Bank? She refused to give me the dealer value, so in my opinion it gives the upper hand to the dealer on trade in value negotiation. I don’t understand this, I guess I see it as I am required to make US Bank whole per the numbers that I successfully negotiated on my contract, and it should not matter how I get them their money. What difference does it make? Why can’t I just have the dealer cut ME a check and I pay them off? Or am I overthinking this and it could come out in my favor? Any help would be appreciated as I am back on the trail of a good deal.
This has been noted before several times in the forum. USBank is a 3rd party, non captive. Those are their rules for selling the car, so those are the rules you must play by if that’s what you want to do. No getting around it.
A few years ago I have a US Bank lease in the same situation. The dealer was open with me on the difference. On that vehicle at that time is was around $1,000 less than my personal payoff. If you have a good relationship or a sales manager feeling open about things they should share with you. I also think that the dealer payoff was contingent on my leasing with USB again-- but it has been several years and I could me mistaken.
First I’ve heard of it being lower. Typically the dealer gets jacked.
VW is a good example of this procedure too. The dealer payoff is like $3k more than customer payoff typically
This is the case for Chrysler Capital as well in my experience. I can not confirm if the dealer payoff was significantly higher, but they made it clear it was not the same as what I would owe myself.
I understand it is their rule and I understand I have to play by their rules. I was more or less looking for feedback from others who have more experience or knowledge with US Bank leases that could explain whether I should expect to get hosed by the dealers “market value” payoff. It would appear to me that this “rule” could hinder my negotiations with trade in value, so the question was asked of why can’t the dealer just pay me directly for my payoff and I could just buy the vehicle from USB and sell it to the dealer.
Because if you buy the car, you pay tax, unless you have a tax exempt status.
US Bank has this business rule to maximize their profits. The market based price that they charge dealers will almost always be higher than the payoff quote the lessee would get. The only time it isn’t this way is when the rv was set far too high and they expect to take a big loss on the vehicle if it gets turned in. Currently they are setting RVs on the low side so there will be equity opportunities on a lot of models. But if you turn the car in at the end and have any wear and tear, expect to see a big bill.
Check with your states DMV. If you live in a state like CA I believe there is a 10 day grace period where a vehicle bought out from lessor by lessee and sold to a 3rd party within 10 days doesnt get charge sales tax twice. Not sure what other states have that policy…
Same occurred with my jeep. Instead of clear payoff ended up being a few hundred of negative equity. It is not written in the contract though so that made no sense to me.
Back in the day when Saab leases were through Chase, we use to crush people that bought their leases out. It was not unusual to have $2k to $3k deals on lease buy outs, plus we made the poor suckers pay the $499 doc fee. We’d call up chase and say we needed a payoff because we were thinking about buying the vehicle for our inventory. Banks will offer dealers lower payoffs on vehicles if they know they’ll be taking a bath anyway at the auction, cut their losses.
Just found this on the ohio.gov site… sounds like this is not going to work out in my favor:
## 5. Can a third party purchase a leased vehicle without payment of sales and use tax twice?
Most motor vehicle lease agreements prohibit the sale of a leased vehicle from the leasing company to anyone other than the lessee or to a motor vehicle dealer during the lease term. However, there are times when the leasing company will allow the lessee to sell the leased vehicle to a third party. In that case, the lessee and the third party should, prior to the transfer of the vehicle, enter into a written agreement providing the following:
(1) The lessee has determined the amount required to purchase the leased vehicle from the leasing company;
(2) The third party agrees to provide the funds to purchase the vehicle from the leasing company and pay the sales and use tax due;
(3) The lessee and the third party understand that the leasing company will obtain the title in the lessee’s name, as required by the lease agreement, and that the sales and use tax payment will be in the name of the lessee; and
(4) The lessee agrees to immediately assign the vehicle over to the third party for a price of $0.00.
The agreement should be in duplicate and signed by each party. Each party should retain a copy of the signed agreement.
This information is based on the Board of Tax Appeals decision in Sarah B. Yocum v. Lindley , BTA 80-A-501 (July 27, 1981) regarding title transfers involving the Ford A-Plan situation.
Note : If the third party has agreed to pay more than the amount required by the leasing company with the additional amount going to the lessee, the additional amount paid by the third party must be shown as the “price” in the assignment portion of the title between the lessee and the third party. Further, if the lessee purchases the vehicle during the life of the lease or at the end of the lease term and then sells the vehicle, each transfer is a separate sale and sales or use tax is due at the time of each title transfer.
My “payoff” quote which includes remaining payments and tax is $26,946.00 and the current KBB value for dealer trade-in is $25,056 - $27,016. So I guess this all comes down to how USB determines “fair market value”. I think at this point, I am going to just see if a dealer can call in to get the amount from them to see what I am dealing with, and ultimately, I may just have to take my chances with “excess wear” and ride this out and walk away. It is in great condition, so they should not have too much to get me on.
Here’s the deal, if the dealer has a lower payoff than you and wants to work that equity into another deal, they can. If they don’t want to or you’re not getting another car from them, then you’re stuck with what’s on the contract.
Another consideration is the dealer often does not have to pay the tax and rent charge components of the remaining payments. This has been a pleasant surprise when I have traded in over a dozen leases. Usually to be conservative I have assumed RV +remaining payments as my payoff.
I’m dealing with a lease end USB now too. Pain in the ass they are. Told me it will take up to 2 weeks to get the title after I pay them off. I will be negative equity at that point, so am not thrilled about it, but that amount is less than what they are going to charge me in wear and tear.
US Bank is horrible. I will never lease with them again. The buyout figure is only for the leasee. If trading in the car or selling to a dealer US Bank will have a higher “Market Price” for them. Also if trading in more than 6 months early they have a pre payment penalty equal to one lease payment.
So, I wonder if we are better off taking our chances on just riding the lease out and turning it in. We will be below miles and the vehicle is in great condition. Maybe I should start by walking in to a dealer and letting them get the dealer trade amount to see what we are dealing with. I have always leased directly with the manufacturer but this time they offered me a pretty good deal through US Bank. I should have researched them better but I didn’t. The KBB dealer trade amount is comparative to what they are telling me is my buyout amount, even with four payments remaining, which is why we started looking early to begin with.
I just thought of something that maybe someone can help with… I have never bought out a lease before but if US Bank is quoting me $27,000 which includes (I think) residual + remaining payments + tax?? … If I were to just buy it out, then I would be free to trade it in or sell it to a private buyer, correct? The KBB trade in amount is competitive with the payoff amount above and the KBB private party estimate is a bit higher than my payoff. So when they say I owe taxes to US Bank if I buy it out, is that JUST taxes on the lease payments and I would then also have to pay more taxes to Ohio on the rest… or is US Bank collecting ALL taxes due on the payoff quote??? This is frustrating
Ally also has a different payoff for dealer vs consumer
Just saw this. Tax is based on the total amount due at buyout. For example, my buyout is 25,333, add 6.25% tax for 16xx more, AND the $350 fee to buyout.