Do you have any car lease buyout strategies?

[cgallery]

however as I noted you can ultimately care less how they get there as long as it meets what you are looking for.

Like I said, I've never leased a car. Do you pick out a car and then they quote the monthly payment? Is there room to negotitate that payment? If yes, what is your negotiating position other than the initial and residual values?

[gwyneth]

If yes, what is your negotiating position other than the initial and residual values?

"Let me see how that compares to what OtherManufacturer Leasing says it will do."

[affyx]

I have a friend who has picked up two cars through swapalease.com - he has taken over the leases near the end of their terms - might be a way out of your lease: have someone else take it over.

I've lost money on leases the three times I tried them. My '05 Nissan Frontier is the first vehicle I have owned outright since 1985 and it feels good! Doesn't have the bells and whistles of the Mercedes or Caddy I used to think I needed, but that just makes it more satisfying for me: less debt and a basic pickup that has lots of power and unlimited trunk room!

Between my wife and myself, I have wasted a LOT of money on vehicles:

(F)=Financed
(L)=Leased
* = Owned it!

'72 Impala* - Great first car: "the hearse!"
'76 Charger* - P.O.S.
'84 Celica (F)
'87 Shadow (F) - P.O.S. should have learned my lesson on Chrysler products.
'89 Civic (F)
'91 Explorer (F)
'91 F250 (F)
'92 Mustang (F) - Awesome Red 5.0 LX Convertible!
'92 929 (L)
'93 F150 (F)
'94 Explorer (L)
'95 Explorer (F)
'97 F150 (F)
'98 Expedition (F) - Totaled, this big truck saved my life.
'98 Contour (F)
'99 E320 (L) - Mercedes = money pit
'00 Durango (F) - bought to replace totaled Exped. what a P.O.S.!
'00 Excursion (F) - Best vehicle I ever owned - should have kept it.
'04 SRX (F) - Lemon! Got a full refund after 18 months.
'05 Expedition (F) - Wife's current vehicle, not as high quality as the '98
'05 Frontier * - I love my little pickup!

[Jeffrey Schronce]

"Let me see how that compares to what OtherManufacturer Leasing says it will do."

Exactly. You just sit there and look at the salesman real dumb and say "I can only afford $200 per month. Leased cars are supposed to be $200 per month. I see them on the commericals all the time." LOL!

Jeff - who heard that argument 10,000 while slinging new cars to pay his way through college and quit that racket the day he graduated!

[cgallery]

Exactly. You just sit there and look at the salesman real dumb and say "I can only afford $200 per month. Leased cars are supposed to be $200 per month. I see them on the commericals all the time." LOL!

Jeff - who heard that argument 10,000 while slinging new cars to pay his way through college and quit that racket the day he graduated!

But then the typical dealer come-backs are: (1) Sure, we can do $200/month. We're just going to need a $6500 CR (capital reduction). (2) Can't do an Accord for $200/month, but maybe a used Honda Civic.

[Jeffrey Schronce]

But then the typical dealer come-backs are: (1) Sure, we can do $200/month. We're just going to need a $6500 CR (capital reduction). (2) Can't do an Accord for $200/month, but maybe a used Honda Civic.

Clearly one would never admit to having money for capital reduction. You have NO money in your pocket, no money in your bank account, and you want a $30,000 for $200 per month. Simple! Yes, there really are folks who think this seems logical.

[gwyneth]

In my experience, which has been buying almost 30 used and new cars and trucks, a dealer has an enormously powerful weapon--the emotions (acquisition, fear, intimidation, more) most buyers bring to the table.

The only way to knock that weapon out is to sever any emotional tie to the transaction. And even if you're all foggy about the financials, they don't need to know it.

The buyer who is willing to walk--and does so--will almost always hear back from the dealer.

The buyer who shows the dealer that the prospective transaction is just one of several under consideration clearly gets a better deal than the buyer who is attached to the car or that particular purchase right then.

The way I bought a new Mustang convertible in Florida in 1988 may be of interest. I believe they were averaging about 16k (4 cyl, 5 sp.).

I called up every Ford dealer within 40 miles of St. Petersburg and asked what they'd sell me one for. After I got the first round of prices, and eliminated the dealers who did not have a manual transmission (or tried to strong arm me into an automatic or 8 cyl), I started calling again. I told each what the current lowest price was, and asked what they could do. Eventually I got the price down to 12.5, with super duper extended warranty.

When I went to that dealer, they wanted me to take a test drive. Of course, I wanted to see exactly what I was buying, but when I put the top UP and turned off the stereo, the sales manager was startled. I told him that virtually all convertibles felt fine with the top down and stereo playing and that there was no point 'testing' it that way.

The owner happened to be passing through and heard the last part. He patronizingly said that just for me, they'd toss in the zillion-watt extra special boom-boom stereo (a "xxxx" value--free). I sweetly asked how much the option would cost if it weren't 'free'. When they said some figure-something like another grand--I said that I'd be happy to take the money instead. When they wouldn't do it, I said that I had to think some more, and started to head out. They did knock the price down a few hundred more bucks. Bottom line: 11,888. Remember, the first prices on the phone had been up near $20k (to make the average sale about 16.)

The point is, your biggest weapon is not being impressed, quietly jotting down figures into what looks like a comparison chart, and saying you need to think about it and see what the other dealers will do for you.

You will NEVER lose by leaving and coming back the next day.

Conducting the first round of "looking" on the telephone can save thousands of bucks. Not only is it more efficient, it looks more business-like and detached. It also keeps the purchase more abstract in your mind so you're less pre-attached.

[scorrpio]

Internet.

When you come at 'em over the 'net, they don't mess with you. You are not at their office. You got the world at your fingertips, you have done your research, you have all the specs and options down, and you likely got quote requests mailed out to every dealer in 50 mile radius.

Unless you want a car that is so hot there is a line for it, the Internet negotiations begin at Invoice and go down from there. (My latest buy, Honda Pilot EX '07, 31k MSRP, 28k invoice, 25.5k final price).

Now with lease, they subtract projected sale price of the car after 3 years from purchase price (usually MSRP) and loan you the balance at an APR similar to what a regular loan would be. Means that if you can put down the projected value, and negotiate off an internet-obtained below invoice price, you can get a MUCH better deal by financing the balance. Case in point: this spring, they had this "amazing" deal for Accord 07 EX - 2k down, 225/month for a 3 year lease.
The MSRP is 23.5k. 225/month at 6% over 3 years means 7.5k principal, that is a 9.5k balance total. Given that Accord EX '04 trade in is 13.5, your "amazing deal" turns out to be $500 below MSRP. Now, invoice bein 21k, I would have no difficulty gettign a 20k deal. And with 13.5k on the table, I could finance with no further down and $200 monthly.

In short, if you are willing to pay up front the value of the car is expected to beiin 3 years, going for a lease is a lunacy. If you make an initial cash investment in the beginning, and choose cars with low depreciation factor, you can upgrade to a new car every 2-3 years, with a monthly way below lease.

[gwyneth]

And even people who know way less about the financials than scorrpio can say "OK, I'll get back to you after I compare your figures to OtherDealer's," and either walk out the door or hang up before they start wheedling you.

The ability to show that particular deal is optional to you is your most important weapon.

[Scottydont]

After working in the business for 27 years I have posted on car buying so many times here, I should just write a book!

FYI lease companies will sometimes entertain offers on a payoff. Your residual at the end of the lease was basically a pre-negotiated dollar amount on the estimated equity value of the vehicle. The dealer is not the person to discuss this with it is your leasing company. That same residual does not reflect the true cost that same vehicle would be sold back to the dealer or be sold at auction. 10-15% is approachable with some companies. They have costs for collecting, transporting, reconditioning and reselling that vehicle. You buying it from the lease company for less than your residual can save them and you money.

When buying there are two aspects to negotiate from price or terms. Price for a payment buyer it might be to monthly payment. For a price buyer it might be selling price or the length of term. Do you have trade in? Is it paid off? How much down do you have? The more of these variables there are in a car purchase, the more dealers can play the shell game to work towards to the spefic term you are fighting for.

My philosophy is simple, limit the variables that dealers work to their advantage not yours! LISTEN UP HERE IF YOU WANT TO SAVE THOUSANDS!!!

1) NO trades! Sell your own vehicle. It is one less item to throw into the mix. Private party sales are the most profitable. Other dealers often will be cars outright even tough you are not buying one. They buy cars regularly at the auctions.

2) Bring your own financing (BYOF.) Aside from the occasional competitive rate sponsored by the manufacturers, you can almost always get a better rate with private financing. Dealers financing is subject to the buy rate vs. sell rate they have to negotiate with ( or money factor in the case of a lease.) Pre qualifying is easy with private lenders. They will provide you with a pre-qualifying letter. DO NOT give the dealer the letter until you have agreed on a final price. You may have a letter disclosing the amount and term. That is none of the dealers busniness until it you have negotiated a "one pay" contract based on the terms of your prequalifying letter.

I prefer using my credit union because they usually have better rates and give me an extra .5% interest off for having my payment deducted from my paycheck.

3) NO Accessories or add-ons! These are all high gross profit items for the dealers and they can almost always be purchased outright for much cheaper later.

4) NO GAP insurance, extended warranties or any add ons period! Again these are all high gross items that can be purchases later for cash much cheaper.

So, with no trade, bringing your own financing, no add ons, and no F&I insurance products what's left?

It's the price of the car! The only variable is what model and options you would like. Be upfront and state your terms. Ask for a written offer with an equipment listing. Any dealer that won't give you these does not deserve your business. Do your homework, spell out your terms and be willing to walk. In the end you get what you want at a very fair price. If the Sales manager wears a watch or shoes that are more expensive than yours, do not feel guilty about using these techniques!