A Question about buying out a lease

[Anonymous]

So I took a walk through a Ford dealership today and had a little chat with a sales person. Since I was only on my lunch break, I didn't ask all the questions I wanted. He did mention though that the Ford Fusion Energi was having a $10,000 incentive to lease.

Now, the car starts off at about $36,600, but with the incentive and at the end of the lease ($10857 over 3 years), would the buy out price be $15,700 (Incentive + lease cost) or would it be $25,700 (Lease only)? Now I know it sounds too good, but since I've always have driven my amazing Saturn around, I never had the feeling to even want to buy a new car until recently.

[Anonymous]

The buy out price on a lease is going to be based on your purchase price and residual value.

I would never recommend going into a lease with the idea that you're going to buy it out at the end. You'll most likely be on the losing end of that transaction. You're better off just buying it from the start.

The incentives sound great, but why do you think it is that they have to offer that much off to lease that car - most likely the residuals are crummy, the car isn't selling well, etc. they are doing it to get rid of something that's not moving, not to give you a good deal.......

[Dj4Money]

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@Anonymous wrote:
The buy out price on a lease is going to be based on your purchase price and residual value.

I would never recommend going into a lease with the idea that you're going to buy it out at the end. You'll most likely be on the losing end of that transaction. You're better off just buying it from the start.

The incentives sound great, but why do you think it is that they have to offer that much off to lease that car - most likely the residuals are crummy, the car isn't selling well, etc. they are doing it to get rid of something that's not moving, not to give you a good deal.......

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 Exactly!

 Lease the Fusion Energi don't buy it! Put some money in MSD to drop your money factory if you don't have a EX FICO over 700 which will get you Ford's lowest MF.

 You would have an amazing cheap lease payment and driven carefully excellent fuel economy.

[fury1995]

The purchase price has no influence on what the lender determines the residual (buyout price) will be. The residual (buyout) is determined by the year, make , model, trim level, term (number of months) and stated mileage that will be driven over the term. It is strictly based on a percentage of the MSRP for that specific vehicle so long as it does not exceed the lenders' MRM (maximum retail value).

The purchase price only influences the monthly payment (monthly depreciation plus monthly lease charges) which is determined by the gross cap cost (purchase price plus taxes and fees) minus the cap cost reduction (down payment, cash incentives) added to the money factor (lease charges/interest on the whole amount) dividend by the term.

[Anonymous]

Probably just the tax credit