I just have a question on lease termination, or rather buyout.

I understand you have the option (on most lease contracts) to buyout the car for a predetermined price at the end of the lease (usually residual plus some fee).

What I am asking about if early payments and early buyout. First, is early buyout possible and how is the price determined for an early buyout? Depending on how the early buyout price is determined (either set residual at that time or if it is a negotiated price), if the lease company doesn't budge and I won't pay their asking price, am I stuck? What kind of penalties are associated with an early buyout? I am told that sometimes it is considered an early termination and that can lead to fees and trouble.

Along the same line, can I just pay several monthly payments at one time... say the remaining balance and then face buyout at that earlier date?

That "predetermined" buyout price -- negotiable or not?

 

The predetermined buyout is not negotiable. You can do an early buyout. It isn't advisable to make early payments, because if you get into an accident where the car is totaled, you don't get that money back. It's the same reason why one shouldn't put a down payment on a leased car.

 

The predetermined buyout price IS negotiable. I've done it twice already.

pahn, you need to call the leasing bank and ask these questions. Sometimes they will work with you but no matter what you will need to pay all of your lease payments. Whether you pay in payments or in one large payment, you'd have to ask the bank. I don't think you will be able to negotiate much on the buyout price so early in the agreement, however.

Also, are you sure that you are "leasing" or do you have the smartbuy (balloon) lease? They have different terms and you might be able to pay everything right now.

Just out of curiousity, why are you asking?

 

Hmmm, I've tried it and I didn't get anywhere. The predetermined residual is a factor in calculating your payment. Maybe leasing laws in your state are different.

 

I'm not sure that laws have anything to do with it.

Look at it like this:

If the car's agreed value at the end of the lease is lower than the initial buyout price but I still want to buy it and the bank/dealer still wants to sell it, why shouldn't we be able to negotiate a better price. Alternatively, I could turn it in, come back a day later and buy the same car for a lower price.

I'm not sure how the law is written, but it probably states something about having a residual price agreed upon up front to determine the payments, etc. I doubt it states anything about that price not being negotiable after the term expires. Then again, we're talking about laws and there are plenty of laws that make less sense.

 

Actually, I got curious and looked it up.

Some lessees, whose leases contain a purchase option, consider it advantageous to be able to decide whether or not to purchase the vehicle at the end of the lease, after they have lived with the vehicle for several years. The purchase option price may be the vehicle's residual value, another price stated in the lease, or a price based on the vehicle's end-of-lease Blue Book value (or the value set by a similar readily-available publication), plus a fee charged by the lessor.

This is from the California Dept of Consumer Affairs website.

That was the closest thing I could find to the topic anyway.

 

APWALSH -

I'm a couple years away, but I MAY buy my 05TL once the lease is up. I, as mentioned earlier, wanted to *try out* the car (knowing that technically, I would waste some $ in the end) via a lease and treat the car like I might buy it at the end. My 3 Accords I had no intention of ever buying so I didn't treat them as nice.

Anywho... Any tips on negotiating that buyout price? Or any other helpful info?

 

You have to know how much the car is worth at the end of the lease, so it's hard to tell you now. If your buyout is listed as 18,000, and the car is worth 21,000, you will have a hard time negotiating lower than 18K. If the car is worth less than the listed buyout, or close to it, you should be able to get a deal.

It will also depend on the person you are talking to, you will have to be able to read them well. I cited the extra wear and tear on the car that was caused by us, as my base for negotiating a better buyout. I didn't say anything about us causing it, I just said that it was an abnormal amount of wear and tear and it was due to the poor quality of the car, and cited some of the problems and recalls for the vehicle during the lease term, yada, yada. I pretty much played the Jedi mind trick on them, but I'm sure they wanted to get rid of the car after we were done with it anyway.

On another note, if the actual worth of the car is higher than the buyout at the end, lets say the 18,000 - 21,000 example again, you could theoretically buyout the car, and flip it and make a couple sheckles in the process.

I'd recommend you beat the crap out of the car for the lease term and then if you want to buy it, buy either a new one, or a certified used one with low mileage and an extended warranty.

Good luck

 

AP:

Thanks for the info... I think my buyout is actually around 18k. I'm sure the value will be higher than that at the end of my lease though. I still plan on babying it and keeping good records on service and improvements I've made and I'll either keep it, or sell it and make a few grand... (I hope) So far so good... I really like the car... New tires, an added lip spoiler, synthetic oil, some tint, some ceramic brake pads and a couple other little things and I think it'll be perfect for me. I'd like to make this into the 10 year car if possible... I usually want new ones all the time but I'm hoping I can make this exactly what I want... I want to know that feeling of "running a car into the ground..." ROFL

Again, thanks...