atomarchio

My 36 month 06 RL lease is due in March. I have about another 6 weeks worth of miles left.

Looking at new leases right now for TL and RL but of course they are much higher than 3 years ago. I can't lease a TL now for the same price I paid for the RL 3 years ago.

As a result, I am thinking of buying my RL out of the lease.

However, that deal is not good either as the car is not worth 31K with 4 payments to go.

Is it possible to negotiate with Honda Financial to get the purchase price of the vehicle down to a more reasonable number? I would think that is preferred over giving them the car back at the end of the lease.

Please let me know your thoughts on this. Thank you.

gbriank

Shop your car around. Take it to a few Acura dealers and get them to give you an idea of how much its worth. This will give you a starting point to negotiate with Acura.

DoctorTuna

Unfortunately with the RL, purchasing a lease may not be a great idea. I also considered doing the same on my 05, with a residual of $29300. At the time though, 05 RL were selling used for $25000, so it seemed I would be paying $4000 more than I had too. Plus, despite the fact that my net capitalized cost was $43K, the money factor was close to 6%, so factoring all that in, buying was definitely not in the cards.

When you have a high residual, as I did at 59%, you pay for far less of the car, especially if depreciation hits the car hard, as it did with RL. Acura would love for you to buy it as you will get the depreciation hit. I gave mine back and moved on.

In regards to negotiating the residual value, it is stated that it is non-negotiable in the contract. Then again, you can always ask, and all they can do is say no. If something reasonable is offered maybe they would bite. If they have their leases insured though there is no advantage to taking anything less than the contracted residual value.

Leasing is going to become less and less advantageous in the coming years. Very few auto makers are offering reasonable residual values, most are in the low 50% range which drives up the payments and puts the depreciation onus on the consumer. Plus, finance rates may only stay competitive on purchases as we have seen plenty of 0% and 0.9% offers floating around. I did see a 0.9% offer on an Audi A6 lease earlier this year though. Acura has never been that low on lease and with low residual/high money factor there's no wonder you're current lease prices aren't attractive. I found a MUCH more competitive lease arrangement with Infiniti, and a very fun car to drive to boot.

Good luck with your decision.

davidshaps

Some car companies would rather you hand the car in and then they sell the car at auction and perhaps get even less than you would offer than negotiate you with a lease end residual option. I once had a residual of $28,000 and I offered $25,000 when the car was really only worth $24,000 but since I had it and took car of it for 3 years I felt it was worth it to pay $1,000 more, but the financial arm of the manufacturer would not accept my offer. I later found out that they only got $22,000 for it at a dealer auction. Oh well.

DrJohn

Buying a car...lease it first, buy it later and save money

How to minimize car ownership Lease the car you always wanted.............................then buy it later.

Pity the automotive industry. Whereas the airlines are hurting under unsustainable wages and benefits, i.e. health insurance and pension contributions, they are likely to reduce them both in coming negotiations, whereas the automotive industry is saddled not only with these same problems, but worse, not enough customers and too many plants worldwide making vehicles.

If China's car industry enters the United States in three or four years with the "Cherry" automobile, a talked about vehicle made in China with Chinese wages, the situation will only get worse. Compounding the problem for some of the manufacturers is that their labor contracts are so juicy that they are better off continuing to give away cars rather than to close a plant and pay continuing benefits to lay off employees.

This situation will not change for several years until consolidation, plant closings, or bankruptcies have cured the problem. And plant closings will be a last resort. Therefore the glut of new cars will likely continue for a few years. And the subsidized lease will continue to be offered. During that time, new cars will be a real bargain.

Question: How best to minimize long-term car ownership.
Simply put...lease it now, buy it later.

In the past, the auto manufacturers moved cars by subsidizing leases. Without getting into the math, the monthly lease cost was lowered by increasing the residual value, thereby selling (leasing) more cars. But the value of the vehicle at the end of the lease was almost always less than the contracted residual and each of the off-lease cars then had to be sold in the wholesale market at a loss of several thousand dollars.

Hence several of the big backers of lease financing, Chrysler, some New York banks, and others, each lost several hundred million dollars in each of the past two or three years because they had to sell the off-lease cars on the open market for less than the residual value.

So why lease a car now instead of buying one right now?
Because by initially leasing a car, the maker is essentially offering a price that can't be beat. It's actually lower than the "employee cost" widely advertised. Then buy the car at the end of the lease.

At the end of the lease the company financially backing the lease most likely will sell the car on the open market at a loss. Why not intervene at that point and buy the car for less than the residual value and put that "loss" into your pocket as money saved?

A true-life example:
A business friend of mine had a three-year-old leased car with a contract residual value of $28,000. Looking at the used car lot he found he could buy one just like it for $24,000. He assumed the company that financed the lease would lose at least $2,000 in selling it for less than the contracted residual value. Through the dealer he offered $22,000 to buy the car as is and his offer was promptly accepted, including 3%, 3 year financing. His dealings, all by phone (no face to face negotiations needed) were with the company financing the lease.

So lease the car of your dreams today if you ultimately want to buy it. Let the companies financing the lease continue to subsidize your monthly lease payment. About three months before the end of the lease, cruise the used car lots and notice what your car is being offered at and then buy the car (no commissions paid to anyone on this transaction) at the end of the lease and keep several thousand smackers in your pocket.

About The Author
Ralph Hoffmann graduated from the Univ. of Wisconsin, majoring in Applied Mathematics. He has ten years experience raising venture capital and added business experience developing real estate properties. He has used his math background to develop web site http://www.AutoTruckData.com for anyone intending to lease or buy a new car.

larrynimmo

dr john...while you make a good arguement for leasing...one that may work with the big 3 or others...but apparently there is no evidence that Honda of America will let the same vehicle be sold below the residual value. If they would, and your lease interest rate was lower than what you would pay for a purchase, then it would in fact be cheaper to lease/then buy, as opposed to just buying....