topic Re: any advantage to pay off lease early? in Auto Loans

any advantage to pay off lease early?

Anonymous — Mon, 31 Jul 2017 16:29:45 GMT

I think I can pay off a 3 year auto lease in 2 years. At that point, if want a different car, is there a way I can get some money from the paid-off lease? Is there any advantage to paying off a lease early?

Re: any advantage to pay off lease early?

iced — Mon, 31 Jul 2017 21:15:14 GMT

@Anonymous wrote:
I think I can pay off a 3 year auto lease in 2 years. At that point, if want a different car, is there a way I can get some money from the paid-off lease? Is there any advantage to paying off a lease early?

For every lease I've done in the past, the answer is no. The money factor is built in to the monthly price and isn't calculated each month like interest is. If you pay early, all you're doing is paying early - the amount of the lease won't change.

Re: any advantage to pay off lease early?

Anonymous — Mon, 31 Jul 2017 21:32:59 GMT

Ok let’s say the lease-end purchase price is $20,000. Since I paid my lease off early and the mileage is far below the allowed mileage, will the value of the car be determined greater than the lease-end purchase? This could allow me a few thousand dollars down toward another car? Or can I buy the car early at the lease-end purchase price and then trade it in?

Re: any advantage to pay off lease early?

iced — Mon, 31 Jul 2017 21:33:59 GMT

@Anonymous wrote:
Ok let’s say the lease-end purchase price is $20,000. Since I paid my lease off early and the mileage is far below the allowed mileage, will the value of the car be determined greater than the lease-end purchase? This could allow me a few thousand dollars down toward another car? Or would I need to buy the car at the lease-end purchase and then trade it in?

Again, I can't speak for every lease but the leases I have done had a set buy-out/end-of-lease purchase price set at the beginning of the lease, and this isn't going to change based on mileage. Some leases will give back a credit of $250/$500/etc for being more than X miles under on the lease, just like they'll charge you set fees for condition problems or tires with less than a certain amount of tread.

Re: any advantage to pay off lease early?

Anonymous — Mon, 31 Jul 2017 21:46:08 GMT

@iced wrote:
@Anonymous wrote:
Ok let’s say the lease-end purchase price is $20,000. Since I paid my lease off early and the mileage is far below the allowed mileage, will the value of the car be determined greater than the lease-end purchase? This could allow me a few thousand dollars down toward another car? Or would I need to buy the car at the lease-end purchase and then trade it in?
Again, I can't speak for every lease but the leases I have done had a set buy-out/end-of-lease purchase price set at the beginning of the lease, and this isn't going to change based on mileage. Some leases will give back a credit of $250/$500/etc for being more than X miles under on the lease, just like they'll charge you set fees for condition problems or tires with less than a certain amount of tread.

Sounds like I need to buy the car once I pay off the lease and then trade it in. Hopefully I can get a lot more on the trade in than the amount I buy the car for. The buy-out/end-of-purchase price does not change because I pay off the lease early?

Re: any advantage to pay off lease early?

iced — Mon, 31 Jul 2017 21:50:47 GMT

@Anonymous wrote:
@iced wrote:
@Anonymous wrote:
Ok let’s say the lease-end purchase price is $20,000. Since I paid my lease off early and the mileage is far below the allowed mileage, will the value of the car be determined greater than the lease-end purchase? This could allow me a few thousand dollars down toward another car? Or would I need to buy the car at the lease-end purchase and then trade it in?
Again, I can't speak for every lease but the leases I have done had a set buy-out/end-of-lease purchase price set at the beginning of the lease, and this isn't going to change based on mileage. Some leases will give back a credit of $250/$500/etc for being more than X miles under on the lease, just like they'll charge you set fees for condition problems or tires with less than a certain amount of tread.
Sounds like I need to buy the car once I pay off the lease and then trade it in. Hopefully I can get a lot more on the trade in than the amount I buy the car for. The buy-out/end-of-purchase price does not change because I pay off the lease early?

If the car is valued significantly higher than the EOL purchase price, then that approach would make sense. I never exercised this option as the purchase price in my previous leases was on-par or higher than market value (and I was significantly under the lease regarding miles on all of my leases).

Also be aware that buying the car will very likely void any of the credits/fees for end-of-lease, including mileage, as you're not turning the car in.

Re: any advantage to pay off lease early?

Anonymous — Mon, 31 Jul 2017 22:01:21 GMT

Thanks for your very helpful responses!

Re: any advantage to pay off lease early?

Anonymous — Mon, 31 Jul 2017 23:50:13 GMT

You can buy the car at any time if you want to go that route, as you identify you would need to determine the amount needed to buy the car outright and then go from there. Chances are high that your best approach would be to simply continue to make your lease payments and turn the car in at the end. As stated above every case is a little different, what are you trying to accomplish overall?

Re: any advantage to pay off lease early?

Anonymous — Tue, 01 Aug 2017 00:38:56 GMT

@Anonymous wrote:
You can buy the car at any time if you want to go that route, as you identify you would need to determine the amount needed to buy the car outright and then go from there. Chances are high that your best approach would be to simply continue to make your lease payments and turn the car in at the end. As stated above every case is a little different, what are you trying to accomplish overall?

I’ve now decided I don’t want a car but need a truck. I want to to get rid of the car and get a truck. I’ve seen the lease swap sites. I feel like the large down payment I placed on the lease would now be a waste if I use a lease swap.

Re: any advantage to pay off lease early?

Strogen — Tue, 01 Aug 2017 19:32:37 GMT

@Anonymous wrote:
@Anonymous wrote:
You can buy the car at any time if you want to go that route, as you identify you would need to determine the amount needed to buy the car outright and then go from there. Chances are high that your best approach would be to simply continue to make your lease payments and turn the car in at the end. As stated above every case is a little different, what are you trying to accomplish overall?
I’ve now decided I don’t want a car but need a truck. I want to to get rid of the car and get a truck. I’ve seen the lease swap sites. I feel like the large down payment I placed on the lease would now be a waste if I use a lease swap.

Thats right, the down payment would be a waste. Thats why people use those lease swap sites, they know they can get a much better deal doing that than going to a dealer. also, you cant always use those sites, well I guess you could but some leasing/car companies dont allow a full swap to another person. Basically, you can "transfer" the car to them but you might still be financially liable if they dont make the payments.

Research the lease company, most arnt like that though but I think VW and a few others are.

Im 2 years into a 3 year lease, I want a new car badly as well but ultimatly the only non financially retarted thing for me to do is just wait the additional year and use my car.

There is no advantage to paying off the lease early UNLESS you have positive equity somehow (some hondas usually). Meaning, the car is worth more currently than the remaining lease payments and residual added together. Run a "payoff quote" on the creditors site and if your car is worth nearly the same or more then congrats, you might be able to get out of the lease relatively unscathed.

A dealer will just roll the remaining payments into your next loan/lease as negative equity/trade basically. Unless you absolutly have to have to HAVE a truck right now I would just wait it out.

Re: any advantage to pay off lease early?

Anonymous — Tue, 01 Aug 2017 20:42:54 GMT

Strogen you are right. I better just wait until the lease is over.

Re: any advantage to pay off lease early?

DeeBee78 — Sat, 05 Aug 2017 06:42:58 GMT

@Anonymous wrote:
I think I can pay off a 3 year auto lease in 2 years. At that point, if want a different car, is there a way I can get some money from the paid-off lease? Is there any advantage to paying off a lease early?

I'm also feeling the urge to get a new car, and I'm about 2 1/2 years into my three year lease. The only thing stopping me is the thought of being $50,000 in debt, vs. the $22,000 payoff I have on my current lease. Over the past 30 months, I've been fortunate enough to save a bit of money towards the lease buyout, and won't have to deal with refinancing the vehicle as a purchase.

It's been really hard for me though. Audi put me in a 2018 Q5 while my car was being serviced last month, and if a salesperson would have said "Hello," to me, I would have ordered one right then and there

Re: any advantage to pay off lease early?

Anonymous — Sat, 05 Aug 2017 12:28:40 GMT

@DeeBee78 wrote:
@Anonymous wrote:
I think I can pay off a 3 year auto lease in 2 years. At that point, if want a different car, is there a way I can get some money from the paid-off lease? Is there any advantage to paying off a lease early?
I'm also feeling the urge to get a new car, and I'm about 2 1/2 years into my three year lease. The only thing stopping me is the thought of being $50,000 in debt, vs. the $22,000 payoff I have on my current lease. Over the past 30 months, I've been fortunate enough to save a bit of money towards the lease buyout, and won't have to deal with refinancing the vehicle as a purchase.

It's been really hard for me though. Audi put me in a 2018 Q5 while my car was being serviced last month, and if a salesperson would have said "Hello," to me, I would have ordered one right then and there

I know the feeling!! I’m kind of glad the lease is only 3 years, allowing me to get into a new vehicle soon.