ISO advice from a car dealership employee/former employee/insider
September 21, 2022 6:25 PM Subscribe
I need advice regarding how to make a deal with a dealership that will be most advantageous to me...but it's complicated.
I am at the end of my lease for a 2019 Honda HR-V. The buyout price is $14.5k but KBB puts its worth at $21k. I also have a 2019 Impreza that has been appraised in person by Carmax for $16k (body damage) but there's still $25k on the loan (I know, I know). In the end, I want to either buy out the 2019 Honda or lease a new one, and rid myself of the Subaru. Simply put, what is the best way to do this that is most advantageous to me? I'm asking for a dealership person because I want that insider perspective, but any insight is helpful. Thanks!
I am at the end of my lease for a 2019 Honda HR-V. The buyout price is $14.5k but KBB puts its worth at $21k. I also have a 2019 Impreza that has been appraised in person by Carmax for $16k (body damage) but there's still $25k on the loan (I know, I know). In the end, I want to either buy out the 2019 Honda or lease a new one, and rid myself of the Subaru. Simply put, what is the best way to do this that is most advantageous to me? I'm asking for a dealership person because I want that insider perspective, but any insight is helpful. Thanks!
Would fixing up the body damage on the Subaru be cost effective? Like could $3k or so in repairs let you sell it for the $25k you still owe on it?
posted by jabes at 8:05 PM on September 21, 2022
posted by jabes at 8:05 PM on September 21, 2022
Response by poster: The situation with the Subaru is the complicated part, but let's say for this argument, the damage cannot be fixed unfortunately.
posted by Molasses808 at 8:16 PM on September 21, 2022
posted by Molasses808 at 8:16 PM on September 21, 2022
Best answer: I am not an insider, but here are two or three things that may help you. First, with your lease, selling the right to buy your lease residual is a thing. So instead of you paying the residual buyout of 14.5k and hoping to get 5-6k more, the dealer or a private party may just pay you 4K outright and you assign them the right to buy the car directly for 14.5k. That way you do not have to float the buyout amount yourself or risk them not wanting to pay you close to the estimated value, and it may be better for you tax wise.
Another thing is that in my medium sized city, most of the car dealerships are either Brand Dealerships or used car lots. Most of the Branded Dealerships would not have a lot of interest in your Subaru because they make more in their shop doing warranty work or mechanical repairs. They likely farm out a lot of the body work to local shops. And the used car lots mostly do not have their own shops, so not a lot of interest from them, either. But here we have a couple of dealership groups that own several dealerships and each have a “value” lot that has their own shops that do mechanic and body work. They have the volume that it pays them to value add to then less valuable cars that get traded in, and supplement this with buying auction cars to keep their staff busy. They typically offer more than any other local dealer because a blemished vehicle is worth more to them.
There Carmax may pay you 16k and wholesale it for 19k for a quick profit in minutes, this local dealer may pay your 19k, spend 3k fixing it internally, and sell it for 30k. If you can find a place like this locally, you may be able to offload your Subaru and the residual for the Honda and minimize the extra money you still owe on the Subaru you are upside down on.
At this point you have paid a little money out of pocket to get back to zero, and lease a new car if that is what you want.
posted by Short End Of A Wishbone at 10:18 PM on September 21, 2022
Another thing is that in my medium sized city, most of the car dealerships are either Brand Dealerships or used car lots. Most of the Branded Dealerships would not have a lot of interest in your Subaru because they make more in their shop doing warranty work or mechanical repairs. They likely farm out a lot of the body work to local shops. And the used car lots mostly do not have their own shops, so not a lot of interest from them, either. But here we have a couple of dealership groups that own several dealerships and each have a “value” lot that has their own shops that do mechanic and body work. They have the volume that it pays them to value add to then less valuable cars that get traded in, and supplement this with buying auction cars to keep their staff busy. They typically offer more than any other local dealer because a blemished vehicle is worth more to them.
There Carmax may pay you 16k and wholesale it for 19k for a quick profit in minutes, this local dealer may pay your 19k, spend 3k fixing it internally, and sell it for 30k. If you can find a place like this locally, you may be able to offload your Subaru and the residual for the Honda and minimize the extra money you still owe on the Subaru you are upside down on.
At this point you have paid a little money out of pocket to get back to zero, and lease a new car if that is what you want.
posted by Short End Of A Wishbone at 10:18 PM on September 21, 2022
With the shortage of cars, many of the manufacturers (and their leasing banks) have stopped third party sales of leases. As of last year this included Acura/Honda so you may want to see if that has changed.
They can do this because your lease contract only guarantees the sale to you, not anybody else.
posted by JoeZydeco at 4:50 AM on September 22, 2022
They can do this because your lease contract only guarantees the sale to you, not anybody else.
posted by JoeZydeco at 4:50 AM on September 22, 2022
Response by poster: Short End Of a Wishbone – Thanks for this! Do you have suggestion on how to find a dealership group like this, or can you point to an example of one and I can figure out if there's something like that near where I am?
posted by Molasses808 at 8:41 AM on September 22, 2022
posted by Molasses808 at 8:41 AM on September 22, 2022
This thread is closed to new comments.
The simplest and most logical thing to do would be to pay the buyout price, keep using the HR-V, pay off the loan and sell the Impreza however you like, without involving the dealer, eating the difference between the loan value and the current value. If you can swing that either with your own resources or with financing from your bank, that's going to be the best way forward, but you'll need $40k temporarily and about $25k in the long run. If that's not possible, can you swing the roughly $25k you need in the long run?
posted by ssg at 7:12 PM on September 21, 2022