Help with Lease Buyout and Leasing / Financing the Remainder
05-02-16, 08:27 AM
#1
Lexus Test Driver
Thread Starter
Help with Lease Buyout and Leasing / Financing the Remainder
Hi everyone,
Hope all is well.
Business has been bad and I may keep the 2014 Lexus IS 350 I leased, which lease ends in July.
Can someone please help with the ability to lease or finance the remaining balance.
What can I do to negotiate the purchase option (I suspect the car's value is less than its previously set residual)?
How do I get the best payment? Continue with Lexus Financial Services? Any other recommended lenders?
Please advise as to the best procedure.
Thank you very much!
Hope all is well.
Business has been bad and I may keep the 2014 Lexus IS 350 I leased, which lease ends in July.
Can someone please help with the ability to lease or finance the remaining balance.
What can I do to negotiate the purchase option (I suspect the car's value is less than its previously set residual)?
How do I get the best payment? Continue with Lexus Financial Services? Any other recommended lenders?
Please advise as to the best procedure.
Thank you very much!
05-02-16, 08:52 AM
#2
wait for them to call you and offer a buyout, act as if you were turning it in, hopefully incentives to buy come your way.
come ready with a financier with a solid auto loan rate and this way you can haggle with apr %'s
be ready to stand tall on your requirements
come ready with a financier with a solid auto loan rate and this way you can haggle with apr %'s
be ready to stand tall on your requirements
05-02-16, 12:45 PM
#5
Lexus Test Driver
Lexus Financial Services will most probably stick to their guns on buyout at set residual or turn in, with inspection and whatever the wear and tear is. The IS does really well on the resale market, specially a lease return with full service history, that they'd rather churn it through the system and it ends up as a CPO on dealer's lot.
Depending on your current abilities to finance privately, I would ask them to see if they could finance the buy out, but be prepared for an unpleasant interest rate or negotiate with your bank/credit union for a better rate.
Depending on your current abilities to finance privately, I would ask them to see if they could finance the buy out, but be prepared for an unpleasant interest rate or negotiate with your bank/credit union for a better rate.
05-02-16, 10:52 PM
#6
Lexus Test Driver
Thread Starter
Thanks for this info, Gentlemen.
I called LFS today and they stated the purchase option price is what it is.
I have a call into my dealer's sales manager and hope he'll be able to negotiate same.
Otherwise, thanks for directing me to credit unions as well; Citibank branch manager stated same today too.
I called LFS today and they stated the purchase option price is what it is.
I have a call into my dealer's sales manager and hope he'll be able to negotiate same.
Otherwise, thanks for directing me to credit unions as well; Citibank branch manager stated same today too.
Trending Topics
05-03-16, 07:41 AM
#8
The residual is what it is, and as a Lexus dealer I cannot charge you more or less.
Lexus Financial does not negotiate residuals with lessees. Oftentimes we can buy the car, after an inspection, for less than the residual and in some cases many thousands less. Buying the car at market and then flipping the car to the original lessee at either a profit OR at a below residual price is, however, not allowed.
In my experience most 3rd gen ISs are worth a heck of a lot less than residual to the point where you can often buy a CPO car for less than your buyout.
If you're currently leasing you should qualify for the current LPW which will waive your last 3 payments if you lease a new car.
Lexus Financial does not negotiate residuals with lessees. Oftentimes we can buy the car, after an inspection, for less than the residual and in some cases many thousands less. Buying the car at market and then flipping the car to the original lessee at either a profit OR at a below residual price is, however, not allowed.
In my experience most 3rd gen ISs are worth a heck of a lot less than residual to the point where you can often buy a CPO car for less than your buyout.
If you're currently leasing you should qualify for the current LPW which will waive your last 3 payments if you lease a new car.
05-03-16, 08:09 AM
#9
Lexus Test Driver
Thread Starter
Wow; some great info; thanks for sharing! 
You may know the answer to this as well: Is there any way whatsoever to re-lease the residual of a car, so I can lease, not finance, the balance (I believe I've heard that used car leasing is on the rise)?
Otherwise, I just got off the phone with the sales manager and he said the dealer has the ability to pay LFS payoff value, residual value or market value, market being less than residual, but the problem is that the dealer only has the right of first refusal, where LFS must first 'take back' the car and while it's idle on the dealer lot, LFS decides whether or not to allow it will consider a dealer offer of market, meaning it's not in the dealer's ability to first offer market, but LFS determines whether or not they would entertain same, then the dealer can offer same, which I'm not entirely buying (why wouldn't LFS always permit the dealer to offer market and LFS would then determine if they want to minimize risk at market value in lieu of incurring additional transport and prep cost for auction).
Nevertheless, are you stating the dealer would actually be in violation of their agreement with LFS if they sell the car to me at market value? Sales manager didn't state this, but simply that from the time I return the car, there's no telling if they have the ability to offer market yet or not, as it's a determination that LFS makes.
You may know the answer to this as well: Is there any way whatsoever to re-lease the residual of a car, so I can lease, not finance, the balance (I believe I've heard that used car leasing is on the rise)?
Otherwise, I just got off the phone with the sales manager and he said the dealer has the ability to pay LFS payoff value, residual value or market value, market being less than residual, but the problem is that the dealer only has the right of first refusal, where LFS must first 'take back' the car and while it's idle on the dealer lot, LFS decides whether or not to allow it will consider a dealer offer of market, meaning it's not in the dealer's ability to first offer market, but LFS determines whether or not they would entertain same, then the dealer can offer same, which I'm not entirely buying (why wouldn't LFS always permit the dealer to offer market and LFS would then determine if they want to minimize risk at market value in lieu of incurring additional transport and prep cost for auction).
Nevertheless, are you stating the dealer would actually be in violation of their agreement with LFS if they sell the car to me at market value? Sales manager didn't state this, but simply that from the time I return the car, there's no telling if they have the ability to offer market yet or not, as it's a determination that LFS makes.
05-03-16, 08:23 AM
#10
The residual is what it is, and as a Lexus dealer I cannot charge you more or less.
Lexus Financial does not negotiate residuals with lessees. Oftentimes we can buy the car, after an inspection, for less than the residual and in some cases many thousands less. Buying the car at market and then flipping the car to the original lessee at either a profit OR at a below residual price is, however, not allowed.
In my experience most 3rd gen ISs are worth a heck of a lot less than residual to the point where you can often buy a CPO car for less than your buyout.
If you're currently leasing you should qualify for the current LPW which will waive your last 3 payments if you lease a new car.
Lexus Financial does not negotiate residuals with lessees. Oftentimes we can buy the car, after an inspection, for less than the residual and in some cases many thousands less. Buying the car at market and then flipping the car to the original lessee at either a profit OR at a below residual price is, however, not allowed.
In my experience most 3rd gen ISs are worth a heck of a lot less than residual to the point where you can often buy a CPO car for less than your buyout.
If you're currently leasing you should qualify for the current LPW which will waive your last 3 payments if you lease a new car.
Can you please elaborate further on your statements in bold above? I'm a bit confused as how LFS forces dealerships to sell the car for at or above residual price if the car is obviously worth a lot less.
Thanks!
05-03-16, 09:07 AM
#11
Lexus Test Driver
The residual is what it is, and as a Lexus dealer I cannot charge you more or less.
Lexus Financial does not negotiate residuals with lessees. Oftentimes we can buy the car, after an inspection, for less than the residual and in some cases many thousands less. Buying the car at market and then flipping the car to the original lessee at either a profit OR at a below residual price is, however, not allowed.
In my experience most 3rd gen ISs are worth a heck of a lot less than residual to the point where you can often buy a CPO car for less than your buyout.
If you're currently leasing you should qualify for the current LPW which will waive your last 3 payments if you lease a new car.
Lexus Financial does not negotiate residuals with lessees. Oftentimes we can buy the car, after an inspection, for less than the residual and in some cases many thousands less. Buying the car at market and then flipping the car to the original lessee at either a profit OR at a below residual price is, however, not allowed.
In my experience most 3rd gen ISs are worth a heck of a lot less than residual to the point where you can often buy a CPO car for less than your buyout.
If you're currently leasing you should qualify for the current LPW which will waive your last 3 payments if you lease a new car.
WRT to 3rd Gen IS being worth a lot less than residual, that depends on the market. Here in Canada the residual is very close to Kelly BB wholesale value and those cars go to close to retail on the lots. In fact, in some markets like Alberta and BC, the cars go for even more than retail on the dealer's lots.
The OP is from NY, so that is worth considering. I think he can negotiate a good deal on the finance for the buy out.
@ OP:
the dealer can negotiate with LFS, but only after you decline the buy back and turn the car in. At the point the lease contract is fulfilled, the asset belongs to LFS and the dealer is now negotiating best terms with LFS. If I understand rld14's statement correctly, even if the dealer were to buy out the car, the dealer is not allowed to resell that car to the original lease holder.
Last edited by My0gr81; 05-03-16 at 09:32 AM.
05-03-16, 09:15 AM
#12
Lexus Test Driver
Thread Starter
05-03-16, 09:35 AM
#13
Lexus Test Driver
05-03-16, 09:53 AM
#14
Per the program guidelines (And I asked my LFS rep this just now, just for clarifcation as we were on the phone about something else) we are to sell a car to the lessee at residual. Period. It is also forbidden for us to mark the residual up in any way.
Now, can I buy the car cheaper and either make money or sell it to the lessee for less? I suppose that I *_could_* and I'd probably get away with it but I have a great relationship with LFS and don't want to jeopardize that.
In some cases the car is worth a lot more than residual, I just missed (because the customer wisely bought it) a beautiful 2013 GX460 that was highly optioned with 20K miles on it for just over $30,000!
So it works both ways.
If the customer turns the car in, I have 3 options: Payoff, Residual or Market Price. If the car came in under the Lease Payment Waiver program then I cannot buy it at residual.
Market price comes after the car has been inspected. If I buy the car at any price other than payoff the lessee gets charged excess wear and tear and mileage if applicable.
At the moment... Right now I have one 2014 IS250 on the ground that's priced. I am not buying it but the residual is $29,399.76 and I could buy it for $24,000. I would likely retail it, CPO'd, for $28,995.
05-03-16, 10:29 AM
#15
Wow; some great info; thanks for sharing!
You may know the answer to this as well: Is there any way whatsoever to re-lease the residual of a car, so I can lease, not finance, the balance (I believe I've heard that used car leasing is on the rise)?
Otherwise, I just got off the phone with the sales manager and he said the dealer has the ability to pay LFS payoff value, residual value or market value, market being less than residual, but the problem is that the dealer only has the right of first refusal, where LFS must first 'take back' the car and while it's idle on the dealer lot, LFS decides whether or not to allow it will consider a dealer offer of market, meaning it's not in the dealer's ability to first offer market, but LFS determines whether or not they would entertain same, then the dealer can offer same, which I'm not entirely buying (why wouldn't LFS always permit the dealer to offer market and LFS would then determine if they want to minimize risk at market value in lieu of incurring additional transport and prep cost for auction).
Nevertheless, are you stating the dealer would actually be in violation of their agreement with LFS if they sell the car to me at market value? Sales manager didn't state this, but simply that from the time I return the car, there's no telling if they have the ability to offer market yet or not, as it's a determination that LFS makes.
You may know the answer to this as well: Is there any way whatsoever to re-lease the residual of a car, so I can lease, not finance, the balance (I believe I've heard that used car leasing is on the rise)?
Otherwise, I just got off the phone with the sales manager and he said the dealer has the ability to pay LFS payoff value, residual value or market value, market being less than residual, but the problem is that the dealer only has the right of first refusal, where LFS must first 'take back' the car and while it's idle on the dealer lot, LFS decides whether or not to allow it will consider a dealer offer of market, meaning it's not in the dealer's ability to first offer market, but LFS determines whether or not they would entertain same, then the dealer can offer same, which I'm not entirely buying (why wouldn't LFS always permit the dealer to offer market and LFS would then determine if they want to minimize risk at market value in lieu of incurring additional transport and prep cost for auction).
Nevertheless, are you stating the dealer would actually be in violation of their agreement with LFS if they sell the car to me at market value? Sales manager didn't state this, but simply that from the time I return the car, there's no telling if they have the ability to offer market yet or not, as it's a determination that LFS makes.
You can lease a CPO IS, the trouble is I'm not sure ethically how that would work with a lease buyout (LBO) as on a typical IS the residual is way higher than market wholesale so I guess we'd have to buy the car at residual, run it through service, do all the work, add certfication... this could get quite spendy especially with what it costs to get the average IS through the shop.
Generally we'd simply sell a CPO out of stock or the customer leases a new one.
As far as how it works with market pricing...
When a car comes in off lease we ground it and an inspection is ordered. On occasion I know that the car is worth residual/payoff or less and I just buy the car from the get go and don't even bother with an inspection.
Failing that within a few days AutoVin or another company comes and does an inspection, generally we get a market price the next day. I then have 2 business days (Unless it's Friday, then I have through Monday) to buy the car at market (or residual or payoff).
If I don't buy the car then it's available to other Lexus dealers starting at just after midnight the next day for a 24-48 hour period. Oh, Toyota dealers have a shot the first day if it doesn't sell by 4pm.
If it doesn't sell in the online sale I have one last shot before it goes to a physical auction.
This is another reason why nice IS F-Sports almost never make it to auction.