Clean1

I received a letter today from the bank (not Lexus Financial) that holds the lease on my Starfire Pearl 2008 LS pointing out that my lease will mature in 11 months. They said I had several options as follows:
A: Buy it and finance it through them @ 5% interest
B: Buy it outright
C: Continue to lease it with the chance to exercise all the options anytime up until the end of the lease.
D: Continue to lease it and turn it back at the end of the lease.

I called them to find out the costs of these different options.

My car has been driven 22,800 miles in 25 months and is in perfect condition. I recently had Michelin PS2 all seasons tires installed. I can buy it now for $41,400 plus sales tax or at the end of the lease for $34,250 plus tax. My lease payments are $825/month. I would save about $2000 by buying it now. I would not finance it through them.

This is the first car I have ever leased after owning about 50 cars. Since the early 1990's we have kept our cars about 8 years or a bit longer. Being retired, we no longer have the need to buy a new car every 3 or 4 years. Looking back, I am sorry that I leased this one instead of buying it. I am more comfortable driving this car than any other car I have owned. I really love the car and there is nothing currently on the market, in the LS price range or less, that I would rather have, except perhaps an LS Sport model. The next LS version will not be out for about a year or so after my lease ends, so I probably would consider buying this one at the end of the lease and keeping it for at least 3 or 4 more years.

What is the consensus of the members of this board as to whether I should buy it now or delay the decision until closer to the end of the lease to make that decision?

Looking forward to your opinions.

JSTALEX

Buy it and turn it in when the new one comes out! But 5% is to high in my opinion!

topgun04

I would save about $2000 by buying it now. I would not finance it through them.

Not really... You didn't calculate what $41400 will make for you in the next 11 months to make a fair comparision of the interest you will save. i.e. if the 41400 will make you $400 in the next 11 months, you will save only $1600. But if the 41400 will make you 3000, you are lossing 1000 by buying the car early. And have you looked into what how much a equivalnet LS is selling for right now? If you can buy a equivalent one for 35000, would you still want to pay 41400 for your?

A couple years ago, we have an 05 CLK55 came off lease with about 45k miles on the odo. The buyout price specified in the lease was $48000, Mercede sent us a letter offering us to buy out the car at $40,000. I did a quick check using autotrader and found a dealer has a similar car with less milegage and CPO warrenty for $36000.. So we decided not to buy the car then.. About 10 months later, we finally bought another 05 CLK55 with a CPO warrenty for $31,000 with about 23K miles on the odo.. My point is that used car market is seasonal and location dependent, you have to check to see if your car is really worth the price that your lease specified.

Nospinzone

This is the first car I have ever leased after owning about 50 cars........Looking back, I am sorry that I leased this one instead of buying it.

I know exactly how you feel. I've always bought my cars but once I leased an Infiniti for my wife. I couldn't stand it. I terminated the lease in a year and bought her new Infiniti. It cost me money, but I learned my lesson to never lease. (Leasing may be appropriate in certain circumstances, but it always costs you more than buying).

If I were you I would let the lease expire and turn the car in. Then buy either a new or CPO LS. If you buy out the lease now or at the termination, you will be paying full pop for the car. I'll bet you've never done that in those last 50 cars!

topgun04

heh heh, it is not true.. I don't want to turn this into a lease vs buy thread.. But my lease for 08 LS460 now is cheaper than buying it.. And I still have an option to buy my car at the end of the lease in 12/2011 for 29K+ if I want to. When I leased my car in 12/08, Lexus throwed in $8000 lease cash for anyone who want to lease an LS.. Can you explain how I can do better in buying the car at that time?

Leasing and buying are comparable form of owning/financing a car.. There are some minor difference that can account for a thousand +- betwen the two (acquisition fee for lease which run between 500-700 that buying don't have to pay. Sales tax saving for leased car in some state like Ca if someone end up returning the car..).. But at the end of the day, it is the tax advantage (if someone own a business and use the car for business) and incentive from manufacturer for lease vs buying that detemine which form of ownership is better.. e.g. It is hard to beat zero pecents purchase loan for 7 years.. If a manufacturer offer it. At the same token, if manufacturer offer a close to zero money factor for leasing car or make the residual artifically high, it is hard to beat a lease...

If you want to save money, you need to keep you mind open and truly compare the cost of different forms of ownership.. If you have money to burn, then choose any form of ownership that make you feel better..

Clean1

It took about two weeks after the first reply for additional comments. All the points made are valid and I thank you all for your comments.

In the meantime, I decided to buy the car now for the following reasons:
1. This car is the only used car I would buy, regardless of whether I bought it now or waited until the end of the lease. I know the car thoroughly and my wife and I have been the only drivers. If I returned the car at the end of the lease, I would only buy a brand new car. I probably would not spend the money to buy a new LS due to the downturn in the economy which occurred after we leased this car. I might consider an Infinity M37 or a Mercedes E350, both of which would cost at least $15-20,000 more than my LS would cost at the end of the lease, but neither would compare to my 3 year old LS.
2. I did a careful financial analysis and I wound up saving over $1500 by buying it now. My buy now price, including the early lease termination fee is in the middle of the wholesale price range for the car. The $1500 savings will pay for a 7/70,000 Lexus Platinum warranty. The cash is earning just over 1% and the lease interest is 5 3/4%. Seems to be a no brainer.
3. I calculated that leasing the car instead of buying it two years ago, cost me an extra $11,000. Leasing was a huge mistake for me, but I made the decision and can't undo it.
4. Buying the car now gives me peace of mind that I will not have to deal with the matter at the end of the lease.
5. In two or three years, I can always sell the LS or trade it in on something else. The LS should still have a decent value at that time.

Have sent the bank the funds and am waiting for the title. I will be sticking around on this excellent forum for quite some time to come.

bsl888

Clean1, good decision on buying. I leased once and found out that it's not for me either. I take good care of my cars and frankly don't get sick of them as quickly as others do. I like having no car payments, and hate having to return to the dealership to haggle over price every 3-4 years. I always research extensively before deciding on a car, and have never regretted owning any of my previous or current cars.

topgun04

Have sent the bank the funds and am waiting for the title. I will be sticking around on this excellent forum for quite some time to come.

Good luck and enjoy the car...

daryll40

Clean1, I think you made a good decision based on the circumstances you posted. You will enjoy your LS for a long time.

OSU

I agree. You know your car inside an out and if you're getting a good deal, go for it. Don't spend too much time analyzing "how much money you'll save" & "you may actually only save $1600 if you didn't buy it now", "if the money not spent would have made you money", or something like that. Really, people get too wound up about something that is not an investment. At the end of the day, just get a good deal man!

madlad

Would the purchase @ $41K or $34,250 be 100% financing? If not, factor in the down payment and compare the price with similarly equipped cars in your area. You're not really saving $2K. Also, check the lease agreement for early termination clauses and make sure the dealership doesn't add the unexpired lease payments on top of the asking price. I'd let the lease expire and then negotiate a price based on the retail price of comparale vehicles. If they won't deal, let them take it back and go elsewhere. Typically, they don't want to take it back unless they can make $5-6K on a re-sale.

Clean1

This post was idle from last September until two weeks ago. I do not know why it was reopened, but I am happy to report that I did buy it in September, 11 months before the lease expiration. I now have about 28,500 miles on the car and am still loving it.

My wife is really happy I bought it, otherwise I would now be shopping for a new car and driving her crazy.

We plan on keeping it for at least another 3 or 4 years.

Thanks to all who replied.

rolloman

Happy wife, happy life!! Talk about a great investment! No brainer!! Great job.

madlad

I read some articles yesterday on early lease buyouts. The consensus was never, ever do this. You've made your decision and your wife is happy about it..that's what is important, keeping the wife happy. Enjoy your purchase and welcome to the forum.