How do auto leases work? - Buy after lease?
How do auto leases work? If a MSRP is $44,500 is that price negotiated at the time of lease signing or is the "Sale Price" in a lease (maybe 10K less than MSPR) the price if the leasee decides to buy the car in the end? I have never leased a car and I am trying to determine how they work.
Is this wrong? -- if the MSRP is $44,500, the sale price is $37,000, does that mean after 36 months of payments the cost to buy out the lease and keep the car would go down about 10K to approx $27,000 because of all the payments that have been made?
- AlCaponeLv 71 month ago
Leasing is a bit more complicated than. buying with a loan. This makes it easier to make mistakes if you don't know how leasing works. Furthermore, leasing works well for some people but not for others. You must be able to determine which one of these people you are. This web site is a good place to get all this information to be able to learn about leasing and learn how to figure out if it's right for you.
- Anonymous1 month ago
Leasing is just stupid for 99%+ including you.
Leasing with the intent to later buy is even more stupid.
- regeruggedLv 71 month ago
Leasing is the most expensive way to acquire a vehicle. and you are stuck with it if every your needs should change. A dealer won't tell you the value, just the monthly payment. And most leases have a buy back provision which will show what you have to pay if you choose to buy at the end of the lease. Consider taking over a lease. Thousands of people are trying to get out of them. Looks at www.swapalease.com and www.leasetrader.com. You can choose what you want to pay and for how long.
- Anonymous1 month ago
Keep it simple and just BUY the car. Leases are used by companies (and high net worth people) so they can put the lease as operating cost or a tax deduction. Buying after leasing is a losing proposition. The dealer already made money from you when you leased the car. They will make money from you again when you buy it.
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- Anonymous1 month ago
Here's what happens. You negotiate a price just like buying a new car. You could pay the MSRP, or perhaps slightly less if they have any buyer incentives or rebates going on. Just like buying a car, you're also going to pay sales tax, dealer delivery and prep fees, licensing. sand registration, and a loan initiation fee, and document fees. All that can come to several thousand more than the actual selling price.
The lease will specify a length of time - typically three years - and what the monthly payments will be. The contract will also specify a residual value for the car when the lease is up but not all leasing companies will calculate the same value for the same car. On average, you can figure the depreciation is going to be around 50% after three years, so the residual on your $44,500 car may be .as little as $22,250. Dividing the difference of $22,500 by 36 months your monthly payments would be $625 a month plus the interest, plus the taxes and fees mentioned above, so probably over $750 a month. .
When the lease is up, you'll have the option of buying the car for its residual value. If you don't there will be penalties for excess mileage as well as excess wear and tear, which may include penalty for not maintaining the car according to the schedule in the owner's manual. If you decide to terminate the lease early, you'll pay a hefty fee for that too. On top of that, if you don't make a sizable down payment you'll be required to carry GAP insurance (in addition to regular full coverage) that will push your monthly payments even higher.
Altogether, including insurance and Gap insurance, you could easily end up paying $1k a month for that car. Don't plan on being approved unless you make at least 3-4 times that much per month.
DON'T DO IT. Read: https://www.bankrate.com/loans/auto-loans/top-10-l...
- jimanddottaylorLv 71 month ago
I think you have the jest of it. When you sign the lease , you agree to payments for a certain period of time. At the end of that time you can do 1 of 3 options.
a. You can turn the car in and walk away
b. You turn the car in and lease a new one and continue the payments
c. you can buy out the remaining value of the car. (this is what you are talking about) This amount was decided when you originally signed the lease.
The exact amount depends on the car and its depreciation and what you negotiate