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Auto Lease Ending. What Can I Expect If I Purchase Vehicle
June 12, 2014 10:33 AM   Subscribe

The current 3 year lease on my car is about to end. I have decided to purchase the car. What are the next steps? I want to be prepared when I go back to the dealership. I will be paying a $150.00 purchase option fee. Will I be negotiating the monthly payment? Will there be anything else I will have to negotiate. I also purchased a lease protection program t. The lease ends next month. The vehicle does have scratches and dings. Does the protection cover the vehicle within the lease or does it apply only when the lease ends and the vehicle is returned to the dealer. Any other insights appreciated.
posted by goalyeehah to Work & Money (7 answers total) 2 users marked this as a favorite
 
If you have any warantee left on the car, that will stay with you. It's usually Miles/Years.

You can show up at the dealership with a check for the residual amount and taxes, fees etc and buy the car outright if you want, or you can go through the dealer for financing if you prefer.

As for the stuff on the car, it's immaterial if you plan on keeping it, since they won't have to recondition the car for you.

I got hoodwinked years ago when I bought out my Mercedes lease, the dealer said that I had to get it into Pre-Owned Certified shape, and that cost me some dough. It's bullshit.

If you like, call the company financing your lease directly, ask them for the payoff and send them a check.

You can get financing for your vehicle from a bank or credit union and probably avoid the dealer all together if you'd rather.

Also, be sure you want to buy the car, if the residual is more that what it's worth, it doesn't make sense to do it. So get a valuation first. (The credit union can walk you through this.)
posted by Ruthless Bunny at 10:42 AM on June 12


The whole point of a lease is that the residual value is set from the start. You can probably look at you contract and see what it will cost you to purchase the car at the end of the lease or just call the leasing company so you can make sure that the dealer is telling you the same number.

You should also check and see what cars just like yours are selling for. Look at actual listings in addition to valuation tools like kbb.com or edmunds.com. It's unlikely but you might find out that you can buy a car just like yours for thousands less than your residual value. In which case, you'll want to just hand your car in and go buy a different one just like it.

If they happen to be selling for a LOT more than your residual value, you might consider buying it out, selling it, and leasing a new one.

I would do a bit of shopping around to find the best rate you can and get pre-approved for a loan then let the dealership try and beat that rate (including all fees). They can usually beat it.

Anything and everything that the dealer might try to sell you is negotiable. The only major thing I can think of that some people consider is a service contract/extended warranty. I don't buy them myself and I still have family in the car business so I get to buy them at cost. If it's something you want, you can negotiate that price. If you do, let me know and I can try and find out what the ballpark markup on them is.
posted by VTX at 11:31 AM on June 12 [1 favorite]


Taking the purchase option at the end of the lease should be just like a normal used car purchase. The main difference is that you've got a lease agreement stating how much you'll be paying for the car - so, no negotiation is necessary.

Dents and dings, mileage overages, etc. shouldn't be a problem for you since you're buying the car. They're only a problem when you decide not the buy the car, and turn the car over to the dealership.

You will probably be offered an extended warranty or other dealer add-ons, and you could negotiate on those if you wanted to... but as far as the price of the vehicle, it should be as stated in the lease agreement.

If the dealership hassles you about the price or condition of the car, call the lease financing company as Ruthless Bunny said, and try to work with them directly.

One thing to note - even though you're buying the car off lease, and that technically makes you the only owner of the car, Carfax (AutoCheck, etc.) will show you as the second owner. To some people, that makes a difference in the value if you choose to sell it private party later. Just something to consider.
posted by plutosmaster at 11:32 AM on June 12


Your lease agreement presumably dictates the residual value - but everything is negotiable. Go to the dealer's used car lot and find other models like yours - same year, same trim level, similar miles. If they are selling for less than what your lease says you should pay, then negotiate. Tell them you will simply return your car and buy the exact same one off the lot for $xx less unless they will bring down the price on yours. If you're really assertive, you can even lowball them further once they agree, by pointing out that you keeping "your" car in this purchase means one less car they need to service, clean, and detail before it can go onto the sales lot - so by saving them that cost, you expect a portion of that as an additional discount.

If used models like yours are selling at the same or higher price though, there's probably no negotiation that will work.

...unless your miles are significantly under your allowed maximum. The purpose of the lease agreement is to pay for a set amount of wear and tear on the vehicle - and the pre-determined buy-out price reflects that. If you are under your miles, you have already paid (via lease payments) for wear and tear that isn't actually on your vehicle. It means you have, in a sense, overpaid for what you actually got out of the car, and you may be able to negotiate a lower purchase price to make up for that.

If your lease protection program automatically covers removal of scratches and dings, take it into the service center now and say you want to use your protection program to get the car in good shape before you turn it in.
posted by trivia genius at 11:49 AM on June 12


No, that is not how leases work.

The dealership doesn't keep the car, they send it to the lease company who will then sell it at an auction. They can try to buy it from the lease company if they want to have it on the lot to sell. They might want the car if it's the same dealership that you originally leased it from since that makes for a nice story but that's between the dealer and the lease company.

If you tell them, "you will simply return your car and buy the exact same one off the lot for $xx less unless they will bring down the price on yours." They'll say, "Great, let's do that!" They'll send the lease return back to the lease company for them to deal with and will have made a sale.
posted by VTX at 12:47 PM on June 12


@VTX - I guess it depends on where you go. My parents did exactly this (it was a high-volume dealer, so maybe that matters) and the dealer came down on the price. Apparently they kept a good portion of turned-in leases - they had a very large pre-owned sales operation and presumably preferred to source their lot from their own lease returns rather than going to auction.
posted by trivia genius at 1:21 PM on June 12


@trivia genius, I would guess that they had developed enough of a relationship with the lease company that they knew they could buy it from them at a good price (or they might have called the lease company). If the lease company could have consistent way to bypass the auctions (the associated fees and other costs), it would make sense that they might regularly sell those lease returns to the dealer where they were turned in, probably at prices close to what they sell at auction for. I'm nearly certain that the dealer is under no obligation to buy it though.
posted by VTX at 12:41 PM on June 13


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