Lease Due Soon: Question About Lease Buy-Outs

[DTownWingNut]

Hi everyone,

I've been asking a few people this and I'm not sure I"ve gotten a definitive answer yet so I'm going to see what you guys have to say! I'm currently in a lease for a 2006 TBSS. It ends coming up in April. I am NOT going to keep this vehicle, but I still have a question about leasing and buying out leases at the end. The lease price on a 2008 TBSS is right near $400 right now while the straight buy price is more towards $600 (I have the exact number written down at work). My question is when you get into a brand new lease and end up buying it out at the end... How does it work? I realize you're going to be paying extra as far as interest goes becuase you'll end up paying on it for more than 5 years, but is that the only extra you'll pay? I'm trying to figure out how much more the truck actually ends up being. Any help would be appreciated!

Thanks!

[rcam81]

You end up paying whatever the dealer sets the residual price at. I have bought out several leases and the only extra that is added onto the residual is taxes, title fees and the license transfer.

[LT1GMC]

For example, we had a 36 mo lease on an 04 Rainier, list price $39,000, lease $381 mo, no money down, 45,000 miles. When it was up, the residual was $21,3000, they will not negotiate that. Although we (she) Loved the trouble free Rainier, no way was I going to pay $21,300 for a vehicle that booked at $16,000 Blue book and several dealers had on the lot for $14-16,000. However, if we had bought it, and hated it, we would have lost our butt on it due to the depreciation if we wanted to trade.

The answer, if you are sure you are going to want to keep it, buying is the only way. If probably not, well, the lease "may" save you money since the resale is weak, especially on SUV's right now.

[TrailinAlong517]

In my experience working in sales for 2 years at a GM dealership and now Chrysler/Jeep dealership for 3 years it NEVER worth it PERIOD to buy your own lease. If you want to overpay for what the car is really worth and be flipped on the car by a good amount than be my guest and buy out your own lease. But in end, my 2 cents is to NEVER buy your lease, I don't care what anyone says, it's absoultly not worth it. Unless you leased a car with an excellant resale value than you might be ok, but GM cars/trucks are no where on that top 10 list. MINI Cooper being #1, Jeep Wrangler #2, Volkswagon Bettle #3. Just my :m2: with my experience, GM has nothing but 30%-40% residuals on a 3 year lease and that's just nuts. Something like Jeep Wranger on the other hand has a 68% residual for a 39 month lease.

[the roadie]

I've never ever leased, but my understanding is that the residual value was set when you arranged the lease. So if you're already leasing the 2006, that negotiation has already happened and the value is in your paperwork already. Whether or not that residual value is what the vehicle is really worth today is something you need to research now, knowing the exact options you have.

If the residual value is less than the current blue book, you might be getting a bargain when you get a loan to buy the (now used) vehicle. But as others posted, the residual value might be more than it's really worth, so you should walk away. It would be a bad deal to buy THAT used vehicle.

Your question about $400 and $600 prices is the kind of confusion that sales folks love to exploit. Those are just monthly PAYMENTS. Not at all related to the true price you'll end up paying for the vehicle. All the car-buying advice, and there's a lot of it on the net and in Consumer Reports, etc., says to negotiate the PRICE first - the bottom line lowest cost to you of the thing you're buying. Then negotiate for the loan to buy it, with the dealer, but also with your bank or credit union, to get the lowest possible interest rate. The monthly payment is the last thing that comes out of the process, but it's important to get the lowest cost, and the lowest interest rate, then your monthly payment (as affected by your loan length) will be the lowest it could be.

Going into the sales office with only an idea what your monthly budget can afford is just backwards, and the sales folks will exploit that by ripping you off on the price, interest rate, or high residual value (if it's a lease).

So if you aren't keeping the 2006, just walk away at the end of the lease. If you intend to keep the 2008 for five years or longer, I've always thought that leases made no sense unless it's a business expense.

Bottom line: If you're doing the lease just to be able to afford a better vehicle than you can afford on a normal loan (lower monthly payments), you're not really getting something for nothing. You're trading a lower monthly payment NOW by accepting significant risk that you're going to be ripped off in the future. With a straight up loan, you're taking a risk that for part of the loan period you might be upside down, owing more on the loan than the vehicle is worth. But if you keep the vehicle to the end of the loan, that risk vanishes. You owe NOTHING, and have a vehicle that's actually worth SOMETHING.

I'm lucky because I seem to be able to pick a vehicle that I'll be happy with for 5-10 years at a time, and not get disillusioned or change my reasons for buying that kind of a vehicle. But I've also been married 34 years, which isn't quite average any more in these days of "starter" marriages and 50% divorce rate. Your mileage may vary. That's why the industry invented leases - to give them another tool to extract money from consumers while making the sheep feel fortunate to give up their fleece. :D Happy sheep come back repeatedly for the fleecing if they're well and truly fooled into buying while poorly prepared.

[Envoy Fan]

Read ALL the posts in this thread.

http://forums.trailvoy.com/showthread.php?t=35733

[TrailinAlong517]

Now with what happen with that one guy all depends on the dealer. The only way he nego. that deal with his 06 TBSS was because the dealer bought the truck from GMAC. Dealers always get lease returns cheaper than the set residual cost. Example: TBSS Residual is $25,000. Dealer talking to GMAC and buys it for $20,000. Dealer sells it to you for $22,000 and all they paid for is $400 to certify it and give you the good warrenty. Not all dealers will wish to do this but if you are near a dealer that would than you can possibly take advantage of it. BUT.... make sure it's still worth the $22,000 and not a lot less. All my figures were just examples so don't bank on them.