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ALL About Leasing and Buying

Old 07-06-14, 09:50 PM
  #61  
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We are WAY off topic here...let's bring it back to leasing
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Old 07-07-14, 07:38 AM
  #62  
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Just saw this thread and had a couple of comments.

I may have missed it, but one definition I did not see is that of Capitalized Cost, or the final negotiated price on the vehicle. As mentioned, many folks try to negotiate the monthly payment when they should be negotiating the price of the vehicle. In my opinion, there is actually no need to even discuss a lease with the dealer until a price is negotiated. At that point you can have them plug that number in for Capital Cost in a lease calculation.

Regarding the tax effect of trading in an owned vehicle for a leased vehicle, at least in TN the dealer just buys your car and writes you a check (unless it is a one pay lease). Since tax is not due until the month the lease payment is made, there is not any tax to offset, other than the first payment.

Question regarding assigning a lease: I have a buddy who did a 27 month, one pay lease on a GS. Hypothetically say the residual is 32k and at the end of the lease the market value of the car is 35k. If one of his friends or family wanted to buy that vehicle can he assign the lease to them before the end of the term and the assignee exercise the purchase option?
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Old 07-07-14, 08:27 AM
  #63  
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Originally Posted by wasjr View Post
Just saw this thread and had a couple of comments.

I may have missed it, but one definition I did not see is that of Capitalized Cost, or the final negotiated price on the vehicle. As mentioned, many folks try to negotiate the monthly payment when they should be negotiating the price of the vehicle. In my opinion, there is actually no need to even discuss a lease with the dealer until a price is negotiated. At that point you can have them plug that number in for Capital Cost in a lease calculation.

Regarding the tax effect of trading in an owned vehicle for a leased vehicle, at least in TN the dealer just buys your car and writes you a check (unless it is a one pay lease). Since tax is not due until the month the lease payment is made, there is not any tax to offset, other than the first payment.

Question regarding assigning a lease: I have a buddy who did a 27 month, one pay lease on a GS. Hypothetically say the residual is 32k and at the end of the lease the market value of the car is 35k. If one of his friends or family wanted to buy that vehicle can he assign the lease to them before the end of the term and the assignee exercise the purchase option?


I have no idea what is One pay Lease is, but in regards to your question, YES, you can Sell or Transfer a Lease any time. Please read about Lease Swap in my thread.
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Old 07-07-14, 08:40 AM
  #64  
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A one pay lease is where the lessee makes one payment up front that covers the entire lease term. Depending on who is the lessor, this could be just the total of all monthly payments, but should be a present value calculation of the monthly payments. In my friends case, the Lexus one pay lease was a discounted amount, less than what the total of 27 monthly payments would have been.

My question is whether Lexus would let him assign the lease with the dealer knowing they could make more money if the car was turned in and then sold.
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Old 07-07-14, 08:53 AM
  #65  
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Originally Posted by wasjr View Post
A one pay lease is where the lessee makes one payment up front that covers the entire lease term. Depending on who is the lessor, this could be just the total of all monthly payments, but should be a present value calculation of the monthly payments. In my friends case, the Lexus one pay lease was a discounted amount, less than what the total of 27 monthly payments would have been.

My question is whether Lexus would let him assign the lease with the dealer knowing they could make more money if the car was turned in and then sold.
If your friend already paid for the whole term upfront, that means he already paid the Interest charges for the 27 month, if he want to transfer the Lease, you would have to contact LF and ask them to calculate the 10 day pay off balance. If the new buyer agrees to take over the lease knowing the pay off balance, he will have to submit a credit app with Lexus, if they approve they will process the transfer and send a check to your friend with the refund of the Interest that he may over pay + additional money

This is a very unique situation and I am not familiar with, the best way is to just call the LF and ask them. The new buyer may have to pay the TAX on the payoff amount for registration.

As far as the transferring the Lease goes it has nothing to do with the dealer, the bank is the one who Leases out the cars, Dealer is just sell you the car.

When you return the car from the Lease, the dealer is not the one who takes possession of it , BANKS do. Dealer may purchase it from the BANK but doesn't have to, if the dealer does not purchases the car from the BANK, the cars goes straight to the Auction.

IMO it would be better to wait when the Lease is over , and then just do a buy out for what ever the Residual amount is. Much easier, unless your friend does not want to wait.

Last edited by FastTags; 07-07-14 at 09:21 AM.
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Old 07-07-14, 10:48 AM
  #66  
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Originally Posted by FastTags View Post
If your friend already paid for the whole term upfront, that means he already paid the Interest charges for the 27 month, if he want to transfer the Lease, you would have to contact LF and ask them to calculate the 10 day pay off balance. If the new buyer agrees to take over the lease knowing the pay off balance, he will have to submit a credit app with Lexus, if they approve they will process the transfer and send a check to your friend with the refund of the Interest that he may over pay + additional money

This is a very unique situation and I am not familiar with, the best way is to just call the LF and ask them. The new buyer may have to pay the TAX on the payoff amount for registration.

As far as the transferring the Lease goes it has nothing to do with the dealer, the bank is the one who Leases out the cars, Dealer is just sell you the car.

When you return the car from the Lease, the dealer is not the one who takes possession of it , BANKS do. Dealer may purchase it from the BANK but doesn't have to, if the dealer does not purchases the car from the BANK, the cars goes straight to the Auction.

IMO it would be better to wait when the Lease is over , and then just do a buy out for what ever the Residual amount is. Much easier, unless your friend does not want to wait.
A buyer would definitely have to pay sales tax if the purchase option is selected.

From speaking in the past with both Lexus and Acura dealers they typically buy the lease returns so the vehicles never hit the auctions. Plus you have to go through the dealer to process the lease return. The idea would be to get the lease assigned prior to the end of the term. While I have not read a Lexus lease, I have doubts that Lexus Financial or the dealer would let someone other than the lessee walk in and exercise the purchase option after the lease is over. If this could not be done at the end of the lease and the lessee wanted to let a friend/family member buy the car, he would buy it and pay tax, then transfer it to the friend/family member who would also pay sales tax on his purchase (or cut some kind of deal with the dealer and have them buy the vehicle from Lexus Financial and sell it to the friend/family member).. I just thought someone on the forum may have been in this situation before.
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Old 07-07-14, 10:59 AM
  #67  
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Originally Posted by wasjr View Post
A buyer would definitely have to pay sales tax if the purchase option is selected.

From speaking in the past with both Lexus and Acura dealers they typically buy the lease returns so the vehicles never hit the auctions. Plus you have to go through the dealer to process the lease return. The idea would be to get the lease assigned prior to the end of the term. While I have not read a Lexus lease, I have doubts that Lexus Financial or the dealer would let someone other than the lessee walk in and exercise the purchase option after the lease is over. If this could not be done at the end of the lease and the lessee wanted to let a friend/family member buy the car, he would buy it and pay tax, then transfer it to the friend/family member who would also pay sales tax on his purchase (or cut some kind of deal with the dealer and have them buy the vehicle from Lexus Financial and sell it to the friend/family member).. I just thought someone on the forum may have been in this situation before.
You misunderstood, i mean to say is IMO its best to buy just before the Lease is over, say 3 weeks prior contact LF get a pay off balance and tell them you have a buyer and thats it. Bank does not car who buys the car as long as the car is paid off.
The new buyer sends the bank a check, the bank send the owner the title and then you transfer the title to the new buyer. Done.

Obviously it will be to late to buy after you have returned the car.

I repeat, the dealer has nothing to do with Buying off the vehicle, its between you and Lexus bank

Last edited by FastTags; 07-07-14 at 11:31 AM.
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Old 07-07-14, 11:08 AM
  #68  
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What are the pros and cons of trading leased car to dealer/carmax vs private party? If there is positive equity, does buyer send check for payoff amount to lfs and check for positive equity to me?
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Old 07-07-14, 11:22 AM
  #69  
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Most of the time it is better to sell the car to an individual. Sometimes it may come out the same if you trade the car if you can get a 1.TAX break 2.your car is worth about the same as the payoff.

Also you can se the car for more than you owe, then you get the buyer give you an additional check for positive eq.

When you sell a leased vehicle the process is the same, the new buyer sends a check to the bank, banks releases the title then you transfer the title to the new owner.

I would strongly discourage to sell or buy anything from CARMAX. They rip people off, the offer very little money for trade in and they sell with a very high profit margin.

Last edited by FastTags; 07-07-14 at 11:29 AM.
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Old 07-07-14, 11:56 AM
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How long does the process of bank releasing title take? I wonder if buyer would have patience to wait week(s) when title is not in hand.
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Old 07-07-14, 12:05 PM
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Originally Posted by joebruin View Post
How long does the process of bank releasing title take? I wonder if buyer would have patience to wait week(s) when title is not in hand.
good Q. usually it take about 3 weeks. But in some cases you can expedite, you will have to contact the BANK and ask them to process it faster.

The reason why it takes that long is because they are verifying the CHECK.

So, make sure that the buyer gets a CASHIERs check!
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Old 07-07-14, 12:25 PM
  #72  
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Lets break it down real quick.


Price you paid $50,000
Tax you paid 7% (3,500$)
Residual is $25,000
You make $400/m payments
You still have 4 month to go, which equals about $1600

So a 10 Pay off will be $25,000 + $1600= 26,600 (this is how much you / or the NEW car buyer would have to pay to own the car right now)

If you sell the car for $26,600, you don't owe anything. If you transfer the Lease, you don't owe anything. The bank doesn't care how or who owns the car as long as they get their $26,600

Your car worth is about $28,000
Trade in value from $23,000-26,000
Say you trade the car for $24,000 (and you get $1,680 tax break)

Upside down amount if you trade the car for $24,000 is $2,600. ( $26,600-$24,000 )

Then you take $2,600-$1,680= $920 (is your TRUE upside down amount)

Is $900 is a negative equity, Sure, but it maybe worth to just trade the car in and swallow the $900 Loss. Depending on whether you over the mileage, or you simply want to get out of the vehicle.

But, if you trade your car for say $25,000, it becomes a wash. If you trade it for more than $25,000 you can make $$. Or if you make another payment, and now you upside down only $500

Normally you would not want to trade in your Lease, if:
1. You are not over the mileage
2. Your car does not worth a lot more than the Residual.

Last edited by FastTags; 07-07-14 at 01:03 PM.
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Old 07-07-14, 01:17 PM
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It would be easiest to just turn in the car at end of lease but I do not want to leave any equity on the table for the dealer to take.
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Old 07-07-14, 01:24 PM
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Originally Posted by joebruin View Post
It would be easiest to just turn in the car at end of lease but I do not want to leave any equity on the table for the dealer to take.
post some real numbers, what you have, how much you owe etc...

Of course if your car is worth far more than the Residual, its a no brainier to either sell or trade it.

Now remember, you are more likely to get a higher trade in value if you are buying a car from a dealer.

If you just want to sell it to them, you are likely to get a lower value.
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Old 07-07-14, 01:28 PM
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I'm still far ways from doing anything at this point. Right now payoff is $37.2k and car has about 5900 miles on it. 2013 es300h 27 months lease, 18 months left, msrp $46577. I'm thinking in about 2 more years, after possible lease extension to about 36 months, car will have maybe 25k miles and payoff will be $28k. I'm guessing car will be worth about $30k at that point.
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