Dealer Wants to buy My Car...Thoughts?

[avalon652]

Last week I ordered a 2011.75 AW Coupe as the lease on my 08 is up on May 3...Turns out I have some equity in the car as I only owe 38K in change and the delaer has a buyer lined up for my current car right now. So here's the question: I've been offered $4,500 cash to turn my car in this weekend; that will make my last payment of 1K and leave me with $3,500 for the inconvenience of not driving my 08 for its last two months. Does this seem like a good deal? Figured if nothing else it will make me even more excited to get the new one (since it wont be "that" different than my current).

Thoughts?

[SlammedR8]

Its your call...do you care a lot? The best position you can be in when making any decision is the "either way works for me" position. So if your on the fence about it...you have the upper hand and you should say...you guys pay my last month so I can walk away with 4500 clean, as opposed to having to make the $1000 payment. If they take your offer...give it up ASAP. If they decline, say ok.I will glady keep the 08 for another 2 months.

Thats the beauty of negotiation when either way works for you...

[SlammedR8]

by the way, welcome to the forum!

[avalon652]

Originally Posted by SlammedM6

Its your call...do you care a lot? The best position you can be in when making any decision is the "either way works for me" position. So if your on the fence about it...you have the upper hand and you should say...you guys pay my last month so I can walk away with 4500 clean, as opposed to having to make the $1000 payment. If they take your offer...give it up ASAP. If they decline, say ok.I will glady keep the 08 for another 2 months.

Thats the beauty of negotiation when either way works for you...

Good advice; thanks!

[shchow]

Explain how you can have any sort of "equity" in your lease...

[GreasyGinzo]

Originally Posted by shchow

Explain how you can have any sort of "equity" in your lease...

street value is more than the buy out

[fastrack]

let's say the buyout is $25000 but the car is worth $30000

[Dave07997S]

Originally Posted by avalon652

Last week I ordered a 2011.75 AW Coupe as the lease on my 08 is up on May 3...Turns out I have some equity in the car as I only owe 38K in change and the delaer has a buyer lined up for my current car right now. So here's the question: I've been offered $4,500 cash to turn my car in this weekend; that will make my last payment of 1K and leave me with $3,500 for the inconvenience of not driving my 08 for its last two months. Does this seem like a good deal? Figured if nothing else it will make me even more excited to get the new one (since it wont be "that" different than my current).

Thoughts?

This all depends on what is your payoff, forget how many months are left. You may have 1 payment left totalling $1k but if the payoff is $37k and they are selling the car for $45K then its not a good deal. You need to know the details of the sale before you can proceed.

Dave

[Dave07997S]

Originally Posted by shchow

Explain how you can have any sort of "equity" in your lease...

You have equity in a lease just as you could on a purchase. There is a buyout at anytime during the lease, if the vehicle in question is worth more than this, this is your equity. It all really depends on the lease. If the lease is heavily subsidized by the manafacturer with a very high residual than there is probably not going to be any equity during the life of the lease. You just turn this car in unless you really like it and just buy it for residual.

I have sold all my cars during leases and always made money, except for the damm Porsche..out of $6k on that one. My 01 M3 I made $6k and my 04 M3 I made almost $8k..sold the car for $39k the payoff was $31.5k.

Dave

[avalon652]

Originally Posted by shchow

Explain how you can have any sort of "equity" in your lease...

As a few people mentioned I owe less than it's worth to the dealer...My residual was around 38K so basically he is buying it for 42,500...tires are toast, and then he'll CPO it, so he'll be into it for 45-47 and probably sell it for around 49-50ish

[mrkbbd]

I think "making" money is a misnomer here...you just had higher monthly payments than necessary because the finance company assumed values that weren't correct, so you are getting that money back, meaning you still lost money due to the time value of money

[Dave07997S]

Originally Posted by mrkbbd

I think "making" money is a misnomer here...you just had higher monthly payments than necessary because the finance company assumed values that weren't correct, so you are getting that money back, meaning you still lost money due to the time value of money

You know once again it depends on the lease. A lease with a low residual and a good money factor can put you almost in the same position as you would have been in a purchase. Also, most people don't put large downpayments with a lease as well so the upfront costs are lower.

Imagine the downpayment requirement that would be necessary to have a purchase paymeent that is equivlent to the lease payment. Quite a bit..

Dave

[avalon652]

Originally Posted by mrkbbd

I think "making" money is a misnomer here...you just had higher monthly payments than necessary because the finance company assumed values that weren't correct, so you are getting that money back, meaning you still lost money due to the time value of money

Understood; but I look at it this way...When I signed up for the lease I assumed at the end I would buy it for the residual or turn it in and get a new one with a lower money factor per the loyalty rate. I never "expected" to get money for my leased car in return (since I already made the deal on my new one they aren't just puling from one side of the the deal and putting it on the other). So yeah; you're right, I'm really not making "net new" money here; but I am going to have more in my checking account than I had planned on this spring

[J08M3]

I was just thinking about this as well. My lease is up in 2 months. My buyout is $34k. I think my car is worth about $45k but not sure hard to find comps since I got a car with minimal options. I might consider selling it though if I can take away that much money. I can use that for a years worth of payments on a new car.

[Dave07997S]

Originally Posted by J08M3

I was just thinking about this as well. My lease is up in 2 months. My buyout is $34k. I think my car is worth about $45k but not sure hard to find comps since I got a car with minimal options. I might consider selling it though if I can take away that much money. I can use that for a years worth of payments on a new car.

Hmm...sounds good.

Dave

[MonteCarloM3]

translation: dealer has a sucker on the hook who will pay at least 10K over what it would cost to pay off the car and give you 4500 cash.
maybe you should sell it yourself and lose less money in the transaction?

[persian54]

positive equity is rare in a lease but it can happen

my mom's slk lease payoff was about 29,500

but the dealer gave me more than that when i got the M :P

i say if you have another car to drive, pocket some money :P

[shchow]

If the residual is significantly less than actual resale value, why wouldn't you just buy out the car at the residual and sell it yourself and pocket the difference...

[persian54]

Originally Posted by shchow

If the residual is significantly less than actual resale value, why wouldn't you just buy out the car at the residual and sell it yourself and pocket the difference...

Also note that it won't really work out this way

if he busy it himself, he will have to pay taxes

then when he sells it, the new buyer will have to pay taxes on the car

40k 10% tax is 4k...

also, is all that hassle worth getting maybe an extra 1 or 2k?

this way you are guaranteed 4500

what if you buy it, don;t have a buyer for a while... you have 2 m3s...

[avalon652]

Originally Posted by persian54

Also note that it won't really work out this way

if he busy it himself, he will have to pay taxes

then when he sells it, the new buyer will have to pay taxes on the car

40k 10% tax is 4k...

also, is all that hassle worth getting maybe an extra 1 or 2k?

this way you are guaranteed 4500

what if you buy it, don;t have a buyer for a while... you have 2 m3s...

Well I live in OR so no tax ...but I'm with you on the what if there's no buyer...there are none on autotrader within 75-100 miles so i don't much know what i could actually get for mine...here's whats out there within 150 miles:

-2008: 44,800 (sedan not coupe with about 3k less miles than mine)
-2009: 59,999 (rediculous even if it only had 9k miles)
-2011: 65,000 (only 400 miles)

bluebook is showing for private party value:
-excellent: 48,825
-good: 46,525
-fair: 42,925

...maybe it is worth trying to sell myself...only downside is if I have to go crawling back to the dealer there is NO WAY they give me 4500...

[piloto]

Since you alread have your 2011.75 on order, you might as well take that deal. Unless you know that you can sell it privately yourself, realistically it's usually tough to find a buyer that has this type of cash for a private party sale, and if it's someone that is getting a loan, then you're subject to waiting to see if their loan is approved or not. Sure, if it all goes through, you'll make an extra $1K, maybe $2K, but there are no guarantees. I'd take the dealer's offer.

[Georgeair]

Get them to kick in a loaner from their used car lot until your new M3 arrives to boot and I'd be all over that deal.