If the end of your vehicle’s lease is in sight, you may be wondering whether to buy the car (most leases allow this) and wondering if you can negotiate the lease price you will owe the lender . In most cases, the answer is no.
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“The price of the end-of-lease purchase option is set out in the lease agreement and cannot be negotiated down,” said Michael Sin, co-founder of leasing news site Leasehackr. . “It is based on the residual value initially set by the lender.”
But keep in mind that these days you’re probably getting a bargain at this great price. The residual value listed in your pre-pandemic lease was the lender’s best estimate at the time, but times have changed. Your rental car is probably worth a lot more in today’s market of inflated used car prices. For more details, you can use Cars.com’s online valuation tool to check your vehicle’s current value against its buyback price. You can take advantage of this increase by buying your leased car, if only to resell it.
“Yes, almost all leases that were made two or three years ago are in a positive capital position,” said Zander Cook, COO and co-founder of Lease End, a company that helps tenants make end decisions. of lease. “While the buyout amount cannot be negotiated, most consumers will benefit in the current environment by buying out their lease and capturing the capital that has been built up.”
During this time, the lender has no incentive to negotiate on price and would likely prefer to salvage the car to gain equity and help replenish their used car inventory. “Some brands intentionally make it very difficult for consumers to find their current cost price and buy out their lease,” Cook says. Sin notes that some automakers “make it harder for lessees to cash out their lease capital, but prohibit third-party dealerships from buying out leases.” And this year, Tesla and Ford (for electric vehicles) completely eliminated buyout options for new leases.
Things you can negotiate
While the cost price is a given, along with your state taxes and title fees, other factors in the total you’ll spend to buy the car might be worth negotiating.
With the lessor: Some lenders might be willing to negotiate removing any buyout fees from the lease — usually a few hundred dollars charged to sell the car to you. It can’t hurt to try. Also, it’s worth asking about loan rates and any financial incentives for your buyout.
With the dealer: Many leasing companies ask you to manage the lease buyout at one of the brand’s dealers rather than directly; others require it in at least some states. Your lease documents should include this information or you can call the lender for this. If it is allowed to deal directly with the lender, it is cheaper, but it causes more problems. “Customers can save money by buying the vehicle directly from the lender,” says Sin, “but they will have to source the financing themselves (if necessary) and take care of the vehicle registration themselves. .”
If you must use a dealership, be prepared to negotiate fees. The dealer will at least want to charge you a document fee for processing the transaction; these fees are capped in some states, but it is negotiable, especially if you want to sell the car to the dealer or use it as a trade-in.
Beyond that, some dealerships will try to add significant additional fees to the purchase price. All charges should be itemized on your invoice, and before you go to the dealership, you should carefully check your lease documents or call the lender to determine the charges you will owe. Generally, if a fee or amount is not specified in your rental documents, it is negotiable. Beyond the additional fees, says Sin, “Some dealerships will ask you to finance through their lenders at interest rates that are beneficial to them, and this is also an opportunity for them to sell financing products. and additional insurance such as extended warranties.”
Remember that you can return the vehicle to any dealership of the brand, not just the one you purchased the vehicle from, so shop around. You should research the charges at multiple dealerships and know that if you’re hit with surprise charges, you can go elsewhere.
The surprises can be substantial. In a few incidents this year in the New York area, a WABC-TV consumer reporter uncovered a pair of instances in which dealerships attempted to take advantage of unwary lease-buyout customers. In one case, the dealership misleadingly inflated the lease buyout price by $3,000 on the purchase documents, and in the other, the dealership attempted to add a “processing” fee of $3,000.
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