Vehicle leasing question!

[ahbert]

Hi, I am leasing a 2002 1.7 EL, and I am entering the 4th yr on the lease. I put $3500 downpayment in it, and the leasing will end feb, 2006 when I will have an option to buy out the car at a residual value.


I am considering to sell the lease out and let whoever buys the lease finishes the last year of the lease. My question is what should I charge it for? The downpayment or a portion of it? What kind of other factors do I have to consider? Will things like condition, mileage, maintenance, gives buyer a chance to negotiate the price?

Thank you!

[Bachelor]

I am considering to sell the lease out and let whoever buys the lease finishes the last year of the lease. My question is what should I charge it for? The downpayment or a portion of it? What kind of other factors do I have to consider? Will things like condition, mileage, maintenance, gives buyer a chance to negotiate the price?

Thank you!
Sorry to disappoint you, but you wont make anything from sub-leasing your car (unless it was a Ferrari, where paying 1.5x your monthly payment is as close as the person will ever come to owning it themself). The only thing you can charge for it realistically is the monthly lease payment. You cant charge the downpayment or any portion of it, which means the person subleasing from you gets a pretty good deal (just paying monthly payments, and zero downpayment). They're just taking over your lease, and nothing more. They're basically doing you a favour, so you shouldnt expect to be profiting from this.

Condition and mileage will probably affect what the buyer pays for your lease, since (I believe) they take over your lease and all the responsibilities that go with it. That means they'll have to pay the penalty if your mileage goes over the limit, if there's excessive wear and tear, and if the car was not maintained (e.g. returned to dealer with the Check Engine light on). If its likely there will be penalties, you'll have to charge the person less than your monthly payment, which means you still pay a portion of your lease.

To sublease your car with likely penalties, you should have a really good reason like you have a free company car and dont need to pay for your own car anymore, or you moved to be closer to work and dont need a car anymore, or you just got married and your spouse has a second car thats already fully paid off, etc. These are situations where you're still better off financially if you sublease for less than your monthly payment (and you pay the difference).

[advantage21]

Getting out of a lease is like selling your new car after a few years: you're going to lose money. Here's a site that might interest you:

http://www.leasebusters.com/

[ahbert]

Thanks for the link and the detailed analysis!
I'm asking because usually I see posts in buy and sell paper, that people are sub-leasing their car and they post something like "40th month in 6 year lease, $299/month, good condition, buyer pays $1500 for downpayment."

Since I am not planning to buy-out the car next year anyways, does it matter whether I sub-lease it now or lease it for another year? I'm guessing it just depends on whether I need to use the car or not.

What if the market value when the lease is over is higher than the residual value under the lease terms? Would people buyout the car and then sell it?

[SoNgMaN]

on lease busters more often then not the person lookingto get out of the lease pays for the lease transfer fees, and sometimes even offers a cash incentive to take it over. there aren't a lot of people that ask for a down payment on that site. ifmarket value is greater then the residual value then what usually happens is the leasee either buys it out, sells it privately or gets a loan from a bank (no cash on hand) and pays it out and either pays the loan back and keeps it or sells it, keeping the profit, my sisters friend had a99 acura in 03 when the lease was up she sold it for $12 or 14K ( can't remember, low milage and lady driven 5 spd...she then paidout the lease which was like $7500 residual and walked away with the profit.

[jed]

Have you contacted your Lease company to find out what your buyout is? Then you know if there is any value in your car or not. And, yes, it is quite possible that the car is worth more than the buyout. The ONLY way to know for sure is to check. Never assume.

[ahbert]

Have you contacted your Lease company to find out what your buyout is? Then you know if there is any value in your car or not. And, yes, it is quite possible that the car is worth more than the buyout. The ONLY way to know for sure is to check. Never assume.

The buyout amount is clearly stated in the lease terms. I just have to wait to see the market value next year

[jed]

You actually have a buyout amount all the way to the end of your lease in the same manner as if this were a loan. It will be the residual plus payments less some interest. You can get out of your lease by paying this amount, the only thing is if you are able to dispose of the car for this amount or more.

[nx2k]

it's not really a profit if market value is higher than residual becuz in most cases, when that happens, it is due to a high downpayment and higher monthly payments therefore creating a lower residual value (lower than market atleast), so in the end, it all just reconciles, you probably won't see a dime in your pocket if you transfer the lease. EL's are a dime a dozen, on the open used market, the price for them will be anywhere from low to high, therefore creating lots of options for potential buyers, plus used car dealers often offer leases. leased cars also carry bad wrap as people tend to think people who lease them don't take care of their cars since they dont' plan on buying it out at the end, i mean to be quite honest, if that was me, and that was my situation, i'd beat the car to shiet too in the last year just enough to give it back to the dealer without penalty.
that's why i don't believe in lease agreements on cars, cuz you're basically living on credit and in the end you don't have anything to show for it.

[cozmo]

X = MSRP amount I pay for a car
Y = lease payments over the full term + buyout amount at end of term

Is X always going to be less than Y? Is interest the only thing that's separating X from Y? Or am I missing something? Is the buyout amount at the end negotiable at all??? Lastly,if a car is leased, does that mean insurance for that car will be less than insurance for a car that is owned? Does it make a big dif?
Thanks.

[nx2k]

X = MSRP amount I pay for a car
Y = lease payments over the full term + buyout amount at end of term

Is X always going to be less than Y? Is interest the only thing that's separating X from Y? Or am I missing something? Is the buyout amount at the end negotiable at all??? Lastly,if a car is leased, does that mean insurance for that car will be less than insurance for a car that is owned? Does it make a big dif?
Thanks.
to my understand insurance will be more on a car that is leased that a car that is owned, it basically falls under the category of a rental car, cuz the car is not even in your name. plus you don't have an option to get liability only or liability + comprehensive, you must pick collision as well, so basically you must get full coverage

[SoNgMaN]

to my understand insurance will be more on a car that is leased that a car that is owned, it basically falls under the category of a rental car, cuz the car is not even in your name. plus you don't have an option to get liability only or liability + comprehensive, you must pick collision as well, so basically you must get full coverage

with the same covevrage it shouldn't matter if it's owned or leased or financed, but owning allows you to skimp on the comprehensive coverage.

[gman]

to my understand insurance will be more on a car that is leased that a car that is owned, it basically falls under the category of a rental car, cuz the car is not even in your name. plus you don't have an option to get liability only or liability + comprehensive, you must pick collision as well, so basically you must get full coverage

The cost of insurance of a leasing a car or financing a car is the same. Unless you are planning to buy a car without a car loan, you must get full coverage regardless.