topic Re: Lease Question in Auto Loans

Lease Question

Anonymous — Mon, 06 Jul 2015 10:17:24 GMT

My DW has a 2015 Audi Q3. We are in year 1 of a 4 year lease. We have $10K (residual amount) left on the lease. She wants to upgrade to a Q5. Does a lease work the same way as trading a car? Does the “value” left on the lease …gets rolled into the new lease?

Re: Lease Question

faze2988 — Mon, 06 Jul 2015 10:39:50 GMT

It depends. The dealership will look for the cheaper option. Either roll all your leftover payments into your new lease or they will find out your payoff for them to buy the car vs how much the car is worth to see which option is cheaper.

Re: Lease Question

Anonymous — Mon, 06 Jul 2015 12:36:25 GMT

@Anonymous wrote:
My DW has a 2015 Audi Q3. We are in year 1 of a 4 year lease. We have $10K (residual amount) left on the lease. She wants to upgrade to a Q5. Does a lease work the same way as trading a car? Does the “value” left on the lease …gets rolled into the new lease?

Doesn't quite work like that. You would need to roll in the $10K and the remaining payments or just pay off the remaining payments and be done with current lease. Very difficult to get out of a 4 year lease after one year. The state you live in also affects how the transaction because some require you to have to purchase the leased vehicle and pay taxes on it before you can use it as a trade in.

In short, your options are very limited and to do it, would be very costly.

Re: Lease Question

Anonymous — Mon, 06 Jul 2015 12:51:25 GMT

@Anonymous wrote:
My DW has a 2015 Audi Q3. We are in year 1 of a 4 year lease. We have $10K (residual amount) left on the lease. She wants to upgrade to a Q5. Does a lease work the same way as trading a car? Does the “value” left on the lease …gets rolled into the new lease?

Your best option will be to try to get the payoff for the car and try selling it to pay the owed amount. If you got the lease through a broker, they are very good at getting people out of a lease before the lease ends by selling without you losing money.

And no, the lease does not work as trading in a car.

Re: Lease Question

Anonymous — Mon, 06 Jul 2015 13:44:53 GMT

@Anonymous wrote:
@Anonymous wrote:
My DW has a 2015 Audi Q3. We are in year 1 of a 4 year lease. We have $10K (residual amount) left on the lease. She wants to upgrade to a Q5. Does a lease work the same way as trading a car? Does the “value” left on the lease …gets rolled into the new lease?
Doesn't quite work like that. You would need to roll in the $10K and the remaining payments or just pay off the remaining payments and be done with current lease. Very difficult to get out of a 4 year lease after one year. The state you live in also affects how the transaction because some require you to have to purchase the leased vehicle and pay taxes on it before you can use it as a trade in.

In short, your options are very limited and to do it, would be very costly.

We live in SC...it looks like we will be keeping this car a bit longer.

Thanks Irish80

Re: Lease Question

Anonymous — Mon, 06 Jul 2015 13:45:41 GMT

@Anonymous wrote:
@Anonymous wrote:
My DW has a 2015 Audi Q3. We are in year 1 of a 4 year lease. We have $10K (residual amount) left on the lease. She wants to upgrade to a Q5. Does a lease work the same way as trading a car? Does the “value” left on the lease …gets rolled into the new lease?
Your best option will be to try to get the payoff for the car and try selling it to pay the owed amount. If you got the lease through a broker, they are very good at getting people out of a lease before the lease ends by selling without you losing money.

And no, the lease does not work as trading in a car.

Nope we got it through the dealer.

I guess my DW will be keeping this car for now.

Re: Lease Question

Anonymous — Mon, 06 Jul 2015 13:49:58 GMT

@Anonymous wrote:
@Anonymous wrote:
@Anonymous wrote:
My DW has a 2015 Audi Q3. We are in year 1 of a 4 year lease. We have $10K (residual amount) left on the lease. She wants to upgrade to a Q5. Does a lease work the same way as trading a car? Does the “value” left on the lease …gets rolled into the new lease?
Doesn't quite work like that. You would need to roll in the $10K and the remaining payments or just pay off the remaining payments and be done with current lease. Very difficult to get out of a 4 year lease after one year. The state you live in also affects how the transaction because some require you to have to purchase the leased vehicle and pay taxes on it before you can use it as a trade in.

In short, your options are very limited and to do it, would be very costly.
We live in SC...it looks like we will be keeping this car a bit longer.

Thanks Irish80

You're welcome. Unfortunately you have to be farther into the lease to make it even close to financially doable without breaking the bank. Q3 is a nice vehicle so it could be worse :-)

Re: Lease Question

Anonymous — Mon, 06 Jul 2015 18:00:53 GMT

@Anonymous wrote:

And no, the lease does not work as trading in a car.

not correct. Trading in a lease works the same as trading in a car w/ a loan. The vehicle has a current market value (KBB, whatever) and it has a current buyout amount.

If they're the same, you can trade it in and not lose any cash. (very very rare). If the current buyout amount is higher than the car's worth, you need to pay that amount. You can either pay it out of pocket, or roll it into the new loan/lease (assmung you don't exceed the LTV requirements)

Re: Lease Question

Anonymous — Mon, 06 Jul 2015 18:38:56 GMT

@Anonymous wrote:
@Anonymous wrote:

And no, the lease does not work as trading in a car.

not correct. Trading in a lease works the same as trading in a car w/ a loan. The vehicle has a current market value (KBB, whatever) and it has a current buyout amount.

If they're the same, you can trade it in and not lose any cash. (very very rare). If the current buyout amount is higher than the car's worth, you need to pay that amount. You can either pay it out of pocket, or roll it into the new loan/lease (assmung you don't exceed the LTV requirements)

I think I didn't make myself clear in the first post. I still stand by what what I said. Trading in a lease is not the same as trading in a car purchased. This should clear things up for you. http://www.leaseguide.com/articles/trade-leased-car/

Re: Lease Question

Anonymous — Mon, 06 Jul 2015 19:30:39 GMT

that article says what i said - "The dealer pays off your old lease balance, buys the car from the lease company for his used car lot, gives you trade-in credit for the car, and either adds or deducts any difference to your new purchase or lease."

Re: Lease Question

Anonymous — Mon, 06 Jul 2015 19:35:50 GMT

@Anonymous wrote:

that article says what i said - "The dealer pays off your old lease balance, buys the car from the lease company for his used car lot, gives you trade-in credit for the car, and either adds or deducts any difference to your new purchase or lease."

There some factors one needs to consider before going to the dealership and trading in a lease. It is not simple and straight forward. That is what I am arriving at. I am sure OP knows they can go to a dealer but is that just it?

Methinks they want to know more about what is involved in doing so-

Re: Lease Question

Anonymous — Mon, 06 Jul 2015 19:51:28 GMT

@Anonymous wrote:

that article says what i said - "The dealer pays off your old lease balance, buys the car from the lease company for his used car lot, gives you trade-in credit for the car, and either adds or deducts any difference to your new purchase or lease."

It doesn't just work that way in many cases and states. Some states require you to repurchase the off lease vehicle as a used car, pay sales tax and fees before you can trade it in. It definitely does not work like a trading in a financed car.

Re: Lease Question

Anonymous — Mon, 06 Jul 2015 20:39:56 GMT

Thanks for all the feedback. We were just trying to see what the most financially sound way of getting an upgrade. Maybe I need to see what the rules are for trading a car in SC.

Re: Lease Question

jkjklkjkl — Mon, 06 Jul 2015 22:47:01 GMT

Why not just go to the horses mouth, and ask the dealership(s). You can email them the details, and ask how it would be handled. Easy-Peasy!

Re: Lease Question

Luscher — Mon, 06 Jul 2015 23:05:22 GMT

I remember when I leased my car, the guy kept emailing me every once in a while and checking up on how I liked the car yada yada. Why not just email or call the same guy you leased from and say hey, I am looking at this new car and want to end my lease early, what can you do for me?

We can speculate on here all day, but its easier if you just pick up the phone and call, or go in a see somebody. They want your money as much as you want to spend it.

Re: Lease Question

Anonymous — Mon, 06 Jul 2015 23:21:51 GMT

Good point Luscher. I think I will do just that.

Thanks

Re: Lease Question

creditnocash — Tue, 07 Jul 2015 03:50:55 GMT

i leased my camry and then ended up financing after 3 years because i liked the car.

my mom has leased 4 cars now in 2/3 year terms all toyota. she hardly puts miles so in 3 years she usually has 15/20k miles on her cars.

she had 4 months left on her last lease and traded in her car from a 12 rav4 to a 15 venza.

the dealer bought the car from the lease company because it only had 16k miles and all the features. she got the difference from kbb and payoff amount put towards the new lease and it lowered her payments a little(kind of like putting cash up front)

we live in mass, ymmv based on condition of car.

Re: Lease Question

Anonymous — Sun, 12 Jul 2015 19:11:19 GMT

@Anonymous wrote:
@Anonymous wrote:

that article says what i said - "The dealer pays off your old lease balance, buys the car from the lease company for his used car lot, gives you trade-in credit for the car, and either adds or deducts any difference to your new purchase or lease."

It doesn't just work that way in many cases and states. Some states require you to repurchase the off lease vehicle as a used car, pay sales tax and fees before you can trade it in. It definitely does not work like a trading in a financed car.

Irish, in your situation it is the same or worse. If you finance (or purchase) the car, you're paying the full amount of tax up front and even worse is you're paying interest on it. Leased vehicle tax is deferred until you make the payment. In my situation (in Hawaii), if you trade in a leased vehicle, the dealership only pays a half percent tax as opposed to the standard 4.712% general excise tax.

Re: Lease Question

Anonymous — Sun, 12 Jul 2015 20:40:55 GMT

@Anonymous wrote:
@Anonymous wrote:
@Anonymous wrote:

that article says what i said - "The dealer pays off your old lease balance, buys the car from the lease company for his used car lot, gives you trade-in credit for the car, and either adds or deducts any difference to your new purchase or lease."

It doesn't just work that way in many cases and states. Some states require you to repurchase the off lease vehicle as a used car, pay sales tax and fees before you can trade it in. It definitely does not work like a trading in a financed car.
Irish, in your situation it is the same or worse. If you finance (or purchase) the car, you're paying the full amount of tax up front and even worse is you're paying interest on it. Leased vehicle tax is deferred until you make the payment. In my situation (in Hawaii), if you trade in a leased vehicle, the dealership only pays a half percent tax as opposed to the standard 4.712% general excise tax.

It really depends on where you live. It finally changed here in Illinois on the first of the year, but prior to that when you leased a car the entire purchase price of the car was used to charge sales tax. Now you only pay tax on the the purchase price minus the residual. But that tax is rolled into the lease upfront so you're paying interest from day one. The city of Chicago also charges a lease tax. Your monthly payment has 9% added to it.

Re: Lease Question

Anonymous — Tue, 14 Jul 2015 17:52:28 GMT

I am in a similar situation but confused as to how to proceed. I am currently in FL and have a 2014 leased for 36 months through ally with 27 months remaining and $9500 in payments, I put 1500 down. I am trying to figure out the best way to get out of the lease or move to something with a lower monthly payment which is currently $380. Ally's website gave me a payoff estimate of $7850 but not sure what this means or what other information I need or am missing.

Any help would be greatly appreciated. Thank you!