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Lease Buyout

2704 Views 11 Replies 7 Participants Last post by  JustinTJ
I have a 2010 BMW X5 35D whose lease is ending in February of 2013 - 6/7 months until expiration.

Residual value is $33,000 - nothing wrong with the car, perfect shape, should come right in at 36,000 miles by that point in time (31,000 miles currently).

Car has comfort, premium, tech, etc and currently has a trade value on it of $39.000~.

I can't see it losing 6K in value between now and February (it just took a 2Kish hit due to model year change over) so my question is, if there is positive equity what should I do?

Should I pay the buyout and trade in closer to the end point. Should I just buy it at residual at lease end? Is it likely that I negotiate a lower buy point even if there is some positive equity sitting around?

I've never exited a lease before so just trying to feel out the options.

Anything that would involve exiting the lease now and have it be profitable for me and move to another car?

Thanks
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If the trade-in value is really 6k higher and you do not want to deal with tax issues and reselling by advertising, then take it to a place like carmax and get a big fat check for the difference.

BMW FS likely won't give you a discount if the car is selling for so much over the residual value.

Good position to be in with a lease...
So doing the buyout now swerves the taxes? Or buying out at residual at lease end?
Really? It's not even his car.

It means he overpaid- AND he will likely NOT get all his equity.

Unless he buys a different car, he gets none of it.

OP- tax laws in your state determine the use tax treatment.

Do you want this car, or a new car? Decide that first. Take it to carmax, see what they will pay you.

Finally, the BMW dealer generally gets these lease returns all day long... they will most likely only give you more that residual if you buy a new unit from them.
Good position to be in with a lease...
I don't think we overpaid at all. Residual value is all based on MSRP anyway. Not the deal I negotiated. I paid 11-12K under the MSRP due to a minus invoice deal and then a $4500 eco credit that was offered at the time.

I want to move into another car but I also don't want to walk away from possibly $3000-4000 dollars that may exist between the residual value and the actual value of the vehicle. Simply trying to capitalize on that.
Technically I am saying that if the value on the market is 39k, yet your lease end will be 33, then you 'paid' $6k more than you should have over the life of the lease- thats all.
I don't think we overpaid at all. Residual value is all based on MSRP anyway. Not the deal I negotiated. I paid 11-12K under the MSRP due to a minus invoice deal and then a $4500 eco credit that was offered at the time.

I want to move into another car but I also don't want to walk away from possibly $3000-4000 dollars that may exist between the residual value and the actual value of the vehicle. Simply trying to capitalize on that.
Yeah fair point. Just the inverse of them being off on the residual value. Trying to recoup said capital.
Between taxes and any mark up a dealer would need to take your car, I don't think you're going to see much equity back if you buy the car out now, that balances the risk and costs you'll need to bear.

The only play I see is buying the car out now, and driving it for an extended period, or shopping the car to a dealer (non-BMW) near lease end and seeing if they offer you more than residual. There's no big benefit to buying the car out now vs later if you expect to turn it in or trade it.
Where are you getting the trade value from? Some of those are wildly inaccurate.

Either way, what would be the advantage of buying out now - might as well wait and see if something changes over the next six months and keep your options open (but you'd continue to pay some interest on the lease).
39K valuation is a pretty conservative and real number in my opinion - I may even be undershooting it given the market that I live in. I think consensus dealer retail (mannheim/blackbook/kbb/edmunds) on the car would be $44-45K after a dealer turns it around so it would be easy to get 39-40K for it right now.

My buyout on it is a few K less than that figure and obviously I have 6 payments left. I'm not thinking of doing anything immediately but my plan for the next vehicle is to downgrade into an X3.

Moving from an X5 payment to an X3 one will be a significant monthly reduction the way I see it so I wondered if it was better to do the buyout around Nov/Dec and just move on.

Any thoughts on how the lease buyout is calculated? Is it simply residual + remaining payments? Are lease deals structured so that there is more interest coming off up front and more principal being written down towards the end?
I think you can get a payoff quote right from the BMWFS website. I think they prorate based on remaining outstanding payments. Not sure, but you might avoid paying some interest if you decide to buy now.
39K valuation is a pretty conservative and real number in my opinion - I may even be undershooting it given the market that I live in. I think consensus dealer retail (mannheim/blackbook/kbb/edmunds) on the car would be $44-45K after a dealer turns it around so it would be easy to get 39-40K for it right now.

My buyout on it is a few K less than that figure and obviously I have 6 payments left. I'm not thinking of doing anything immediately but my plan for the next vehicle is to downgrade into an X3.

Moving from an X5 payment to an X3 one will be a significant monthly reduction the way I see it so I wondered if it was better to do the buyout around Nov/Dec and just move on.

Any thoughts on how the lease buyout is calculated? Is it simply residual + remaining payments? Are lease deals structured so that there is more interest coming off up front and more principal being written down towards the end?
A lot of people have had success in the past with carmax cashing out for a few grand. Do some reading.
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