Taffylo

I'm thinking about purchasing a used 2017 rx350 negotiated to 37k. Car was leased two months ago brand new by seller. less than 2k miles, he's just not happy with the SUV. The seller showed me an email of his "lease buy out amount" of $38,xxx. MSRP on the car was 47k. He wants me to give him a check for 37k made out to lexus financials, will give me a bill of sale and says when lexus financials clears the checked he will then release the car to me and lexus will forward the title to me. He will pay the difference in buyout cost.

Is this normal? I can't help but wonder why the buy out is so low on a new car. Online most 17 rx350s require 3500 due at signing. Tips, advise?
Much appreciated

Jiggz858

Definitely something fishy about this deal. An email is not an official transaction unless it contains an official copy of the buy out or pay off amount from Lexus. Last time I bought a car still under payment to Scion/Toyota it went like this.

The car is brand new with less than 1200 miles. A comparable car from the dealer costs around $18K. The seller wants $16K for it which is basically what is outstanding payment for the car loaned from Toyota. I told him to ask for an official pay off amount for the loan from Toyota. Since there is no title to the car (still being held by Toyota who is the lien holder), a deed of sale for the car between the seller and the buyer (me) needs to be prepared. Payment will have to be done with a cashier's check payable only to Toyota. If you are taking a loan to pay for the car, you're better off having the bank to make the direct payment to Toyota, again this requires an official pay off amount from Toyota.

As soon as I hand over the cashier's check to the seller, and both seller and buyer signs the deed of sale, the seller will turn over the car to the buyer at the same time. Both will have copies of the cashier's check, deed of sale, existing registration of the car. and driver's licenses. The cashier's check will be mailed to Toyota by the seller. This is better done at the Vehicle Licensing Office with both parties present.

If you personally paid for the car (not loaned), Toyota will forward the title to you. If you loan the payment to Toyota, they will mail the title to the lien holder or from whom or bank you took the loan.

The fishy part of the deal you are given is, "give him a check for 37k made out to lexus financials, will give me a bill of sale and says when lexus financials clears the checked he will then release the car to me" Instead of waiting for a personal check to clear, use cashiers check so there will be no waiting. Besides, if you give him personal check and claim it never cleared or was received by Toyota, who are you gonna ran to to get your money back if the said check was cashed by other than Toyota? And still don't have the car!

If you find it too complicated, the best place to conduct this business is at the Vehicle Licensing Office.

SW17LS

Something’s fishy. His buyout should be sizable right now because he’s so early in the lease, it should be roughly the residual plus all the remaining payments...

tex2670

Maybe he put down extra money up front. But there's no way you do this deal, unless you and the seller go to the dealer, and you see all the paperwork and payments with your own eyes. You can't hand him your payment and trust that he will then take care of everything.

Marqevans

Exactly! You need an actual pay off letter from Lexus/Toyota financial. No way I hand a check to anyone but Lexus/Toyota financial and only after a conversation with them that they agree to this type of payoff outside of a dealer's office.

RX_330

TFS/LFS does not allow lease buy out to third party. Only the person who leased the vehicle can buy it out. For this to work, he would have to buy it out first from LFS (and pay taxes) and then he would be able to sell it to you.

SW17LS

mmarshall

I've seen people do that before. One of my colleagues leases a brand-new ES350 every 27 months. The dealership gives him a discount (not huge, but significant) if he pays the whole deal off, up front, instead of month-by-month. They way, of course, the dealership (and Lexus Financial) doesn't have to worry about a payment-default and/or the car being repo'ed. As for why that used RX has a 37/38K buyout offer after being only two months old, most vehicles typically have a very steep depreciation curve...maximum depreciation in the first year, and progressively less after that. So, the moment a new vehicle is driven off the lot, it has lost a significant part of its value....the biggest single chunk of its eventual depreciation curve.

Definitely agree on this one. In my area, a number of places know me and know that any personal check I write won't bounce (even cash for a new car). But, if there is any question at all, or if you are dealing with people you don't know very well, a cashier's check is like gold. That is the bank's official guarantee that the money will be paid. The only glitch is that any cash transaction of $10,000 or more, by Federal law, is reported into an FBI database....but honest people like you and me, who are not selling drugs or any other contraband, have no need to be concerned with that.

MattyG

It's not the ideal way to do it and really if you run into complications with the financial company (TFS/LFS) and their policies on third party lease buyouts, you're out $37K temporarily until it all gets ironed out, and also minus the vehicle. Why not go back to him and tell him to buy it out himself, get the title and then you two would do a transaction. Yes, he's going to say he doesn't have the money and that's why he's doing it this way, but maybe he can get a short term loan. He's obviously got credit, if he's leasing a 2017 RX.

Generally it's dealers who facilitate transactions because they're the ones who lease and sell these vehicles because they're the ones who are licensed to do so. The finance/lease company is just the money man.

tex2670

A great way for your colleague to get screwed if his car get totaled. The insurance company doesn't reimburse for payments made prior to the accident--only what's owed going forward.

Hoovey689

iTrader: (16)

This. If you want the car, ask the guy to meet you at the dealership and have them process everything.

mmarshall

Depends on the policy. In his particular case (I asked him about it), there's nothing in his policy that I know of that has restriction like that in it. Either the car is totaled during the lease-period, when it is in his name, or it is not. There's no mention of when the lease-payment was made.....for coverage purposes, that's none of the insurance company's business.

Does your own personal policy have that restriction it? Perhaps so. I'm not going to say it doesn't exist. But I have not encountered it with any one I've ever shopped with for a lease. I myself, though, don't lease...I buy.

oldcajun

I don't think this is correct. The insurance reimburses for the value of the car no matter where you are in the payment schedule. Many people do, however, have an issue with the balance of the lease being higher than the insurance payment. Coverage for this is available as "gap" insurance.

SW17LS

The issue is that the value is always less than the payoff, so the downpayment gets lost in the shuffle.

With a one-pay lease like Mike was talking about, I'm honestly not sure how that works...the leasing company would get their residual and you would get whatever is left is my assumption.

tex2670

Insurance reimburses the owner of the car for the value of the car. The lessee has to make up any shortfall--hence, gap insurance. So if you prepay the total payment up front, what happens then? The insurance company gets paid the value of the car, and then what? They reimburse the lessee any overpayment? I'm skeptical.

I've only leased one car, but when I see threads on owner's forums, leasing "experts" always advise against large up front payments. This was my understanding of why. Maybe someone who leases regularly can weigh in.