What happens when my car lease is done?
July 3, 2018 1:30 PM Subscribe
2.5 years ago I leased an all-electric VW Golf. I had a short commute, a brand new baby, and a partner with a hybrid that would bail me out of a charging emergency. Now my lease ends later this year, I still have a short commute, the baby is a toddler and the same partner has the same hybrid ... what next?
At the time, I had a 16 yo Jetta that was crapping out. I didn't buy the golf outright because I wanted to make sure the electric car worked well for my lifestyle (it does), and because I didn't want to be stuck with old tech if the battery life improved a lot (?). There were really significant Federal and State tax breaks in place when I bought, so I got a big refund the next year. Now the lease ends in December, and I don't really know what to do next.
I like the e-Golf a lot; I don't adore it.
What I like: It's very fun to drive, performs well (drives like a regular car), it's quiet inside, and it's not ugly. Sight lines are good for me (a lot of cars they are not since I am short.) I like not having to go to the gas station. (For comparison, my husband has a C-Max which is a perfectly good car that I loathe driving - it's sluggish, it's loud, sightlines are bad.)
What I don't like: it has cloth seats, which have some stains (the stains may be removable, I haven't really tried), I swore I'd never get cloth seats but the upgrade was too costly. The stereo can be annoying (my phone does not play as nicely with Apple Play as I'd like and the volume knob is fussy). The battery capacity is ok for me, but every once in a while I have to strategize if it's not fully charged.
I could mitigate a few of these using money: I could install an upgraded charger at home, if I wanted (I just use a regular outlet). I could get a new stereo, or maybe there's some trouble shooting I could do to improve my issues. Cloth I can just live with and get cleaned more often? I don't know, I have a toddler, so cloth isn't great (not planning for more kids, so the size of the car is fine). In reality, I just don't spend that much time in my car (like 45 minutes a day total) - this could change if we moved house, I changed job, or with kid school/activity commitments: nothing there is planned but nothing is certain.
The car itself is not in terrible condition, but it's not perfect; it lives outside, has a few dings from other car doors, and the staining on the seats may not come out it. It's probably scraped a bit underneath because my driveway is too sloped. It has less than 10k miles on it. I got some package to cover minor damage, it's not clear to me how much of what is imperfect will be covered by the package if I decide not to keep it.
So: I could buy the car (the terms are like 12k to keep it; I have this money). I could lease a new e-golf (this kicks the can down the road a little, but doesn't seem cost effective; I see stuff online that the battery life for the 2019, due in Nov, is expected to increase somewhat?). I could lease or buy something else, new or used?
Is there some kind of common wisdom/best practice around car leases, like never ever buy them, or they're a good deal if you like the car? Is it common to negotiate the terms at the end? (I believe the dealers will be pushing 2019s, not sure if this means they will or won't be amenable to negotiating).
I haven't done much research yet, but curious if anyone else is in the process or has some wisdom and what you're thinking?
At the time, I had a 16 yo Jetta that was crapping out. I didn't buy the golf outright because I wanted to make sure the electric car worked well for my lifestyle (it does), and because I didn't want to be stuck with old tech if the battery life improved a lot (?). There were really significant Federal and State tax breaks in place when I bought, so I got a big refund the next year. Now the lease ends in December, and I don't really know what to do next.
I like the e-Golf a lot; I don't adore it.
What I like: It's very fun to drive, performs well (drives like a regular car), it's quiet inside, and it's not ugly. Sight lines are good for me (a lot of cars they are not since I am short.) I like not having to go to the gas station. (For comparison, my husband has a C-Max which is a perfectly good car that I loathe driving - it's sluggish, it's loud, sightlines are bad.)
What I don't like: it has cloth seats, which have some stains (the stains may be removable, I haven't really tried), I swore I'd never get cloth seats but the upgrade was too costly. The stereo can be annoying (my phone does not play as nicely with Apple Play as I'd like and the volume knob is fussy). The battery capacity is ok for me, but every once in a while I have to strategize if it's not fully charged.
I could mitigate a few of these using money: I could install an upgraded charger at home, if I wanted (I just use a regular outlet). I could get a new stereo, or maybe there's some trouble shooting I could do to improve my issues. Cloth I can just live with and get cleaned more often? I don't know, I have a toddler, so cloth isn't great (not planning for more kids, so the size of the car is fine). In reality, I just don't spend that much time in my car (like 45 minutes a day total) - this could change if we moved house, I changed job, or with kid school/activity commitments: nothing there is planned but nothing is certain.
The car itself is not in terrible condition, but it's not perfect; it lives outside, has a few dings from other car doors, and the staining on the seats may not come out it. It's probably scraped a bit underneath because my driveway is too sloped. It has less than 10k miles on it. I got some package to cover minor damage, it's not clear to me how much of what is imperfect will be covered by the package if I decide not to keep it.
So: I could buy the car (the terms are like 12k to keep it; I have this money). I could lease a new e-golf (this kicks the can down the road a little, but doesn't seem cost effective; I see stuff online that the battery life for the 2019, due in Nov, is expected to increase somewhat?). I could lease or buy something else, new or used?
Is there some kind of common wisdom/best practice around car leases, like never ever buy them, or they're a good deal if you like the car? Is it common to negotiate the terms at the end? (I believe the dealers will be pushing 2019s, not sure if this means they will or won't be amenable to negotiating).
I haven't done much research yet, but curious if anyone else is in the process or has some wisdom and what you're thinking?
Something else to consider is that the international trade war that is on the verge of exploding in the next week or two may add 25% to the price of a new car in the very near future.
I don't know if that would apply to cars already on the lot, but I could see both automakers and dealers trying to cover their balance sheets in the meantime.
I have a lease that's due in about 6 months and I was considering trading it in, but now I'm thinking I should just buy it out until the storm passes.
posted by JoeZydeco at 2:31 PM on July 3, 2018 [4 favorites]
I don't know if that would apply to cars already on the lot, but I could see both automakers and dealers trying to cover their balance sheets in the meantime.
I have a lease that's due in about 6 months and I was considering trading it in, but now I'm thinking I should just buy it out until the storm passes.
posted by JoeZydeco at 2:31 PM on July 3, 2018 [4 favorites]
Yeah, take it Carmax and find out what the market is for it. You may have some equity in the car that you can absolutely use to negotiate a new car, whether you buy or lease, with the dealer.
Generally it’s a bad idea to buy a car at the end of a lease because when all is said and done, you will have paid a lot of finance fees and interest (more so than otherwise), and you are stuck with the sales price you agreed to at lease inception, which may not reflect the actual market (see above).
Something else to consider: you may be able to extend the lease for another six months or a year, maybe even “month-to-month” so you can end it whenever. This will take away any “act now” pressure you may be feeling. Contact the leasing company.
posted by notyou at 5:09 PM on July 3, 2018 [2 favorites]
Generally it’s a bad idea to buy a car at the end of a lease because when all is said and done, you will have paid a lot of finance fees and interest (more so than otherwise), and you are stuck with the sales price you agreed to at lease inception, which may not reflect the actual market (see above).
Something else to consider: you may be able to extend the lease for another six months or a year, maybe even “month-to-month” so you can end it whenever. This will take away any “act now” pressure you may be feeling. Contact the leasing company.
posted by notyou at 5:09 PM on July 3, 2018 [2 favorites]
I bought out my lease last year because it was significantly under mileage and the trade in value was more than the buyout. I was going to turn it in for a newer model and new lease but I was kinda meh about it. Given the current economic climate, I think I made the right decision.
posted by Ruki at 6:48 PM on July 3, 2018 [2 favorites]
posted by Ruki at 6:48 PM on July 3, 2018 [2 favorites]
The lease terms are in the contract that you signed with the dealer - so there's nothing available to negotiate.
That may be true in general, but it is NOT true for electric car leases. People renegotiate the buyout on EV leases all the time. The leasing company's willingness to do this waxes and wanes depending on the market conditions. If your contracted buyout is $12k, and they know that they're only going to get $8k for the car if you return it, they may take $9k from you. YES this totally happens.
So call two places: call the financing arm that your lease is with (probably VW), and call a VW dealer (*any* dealer, not just the one you leased from), and tell them that you're considering buying it out if they slash the price.
All that said, nooooooo I would not buy a VW e-Golf. Lease, sure, but not buy. That is a compliance car, a science project on wheels, and VW will drop support for it as soon as they can. I have no doubt that VW does plan to support EVs in the long term, but the current e-Golf is not that car.
Further, it's just a tiny bit too early to be buying any EV outright. We are on the verge of seeing 100+ kW charging hit the market (this fall), and that capability enables you to use the car for roadtrips. Until then, you should be leasing.
You might consider a lease takeover. I stilll need to do a writeup about that ...
Personally I'm a huge fan of the BMW i3. Both the BEV (pure electric) and the REx (EV plus gas range extender) have their pros and cons, but in general it is very well appointed and a freaking thrill to drive. It's a BMW, after all. If buying used, or doing a lease takeover, see this used BMW i3 reference.
December is a great time to be shopping for a bargain. I timed my current car so that I'll be negotiating the next one in late December. *rubs hands in anticipation*
posted by intermod at 7:53 PM on July 3, 2018 [3 favorites]
That may be true in general, but it is NOT true for electric car leases. People renegotiate the buyout on EV leases all the time. The leasing company's willingness to do this waxes and wanes depending on the market conditions. If your contracted buyout is $12k, and they know that they're only going to get $8k for the car if you return it, they may take $9k from you. YES this totally happens.
So call two places: call the financing arm that your lease is with (probably VW), and call a VW dealer (*any* dealer, not just the one you leased from), and tell them that you're considering buying it out if they slash the price.
All that said, nooooooo I would not buy a VW e-Golf. Lease, sure, but not buy. That is a compliance car, a science project on wheels, and VW will drop support for it as soon as they can. I have no doubt that VW does plan to support EVs in the long term, but the current e-Golf is not that car.
Further, it's just a tiny bit too early to be buying any EV outright. We are on the verge of seeing 100+ kW charging hit the market (this fall), and that capability enables you to use the car for roadtrips. Until then, you should be leasing.
You might consider a lease takeover. I stilll need to do a writeup about that ...
Personally I'm a huge fan of the BMW i3. Both the BEV (pure electric) and the REx (EV plus gas range extender) have their pros and cons, but in general it is very well appointed and a freaking thrill to drive. It's a BMW, after all. If buying used, or doing a lease takeover, see this used BMW i3 reference.
December is a great time to be shopping for a bargain. I timed my current car so that I'll be negotiating the next one in late December. *rubs hands in anticipation*
posted by intermod at 7:53 PM on July 3, 2018 [3 favorites]
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The lease terms are in the contract that you signed with the dealer - so there's nothing available to negotiate. Your choice is to return the car (not counting any mileage charges & damage) or buy the car at the price on the contract.
If you are way under on miles, you might want to see if it's worth more at a private sale and/or Carmax. If they offer more than the residual, that's equity you can cash out or use as a down payment on another car.
Depending on the car and dealer you might be able to negotiate an early return of the car. But that's a different transaction than the lease contract.
posted by JoeZydeco at 2:06 PM on July 3, 2018 [3 favorites]