Leasing questions (already purchased)

[vodoo-chile]

I leased My LGT back in May. With my not so great credit, I was able to get 2.75% on a 48 month lease at $324/month. Now, my intention is to keep the car beyond taht and only did the lease to get the lower interest (origonally wanted 8% on regular finance). Well, I looked on the chase website to see what my buyout amount is and it is $22800. Does this mean taht if I pay $22800, I will own the vehicle, with nothing else due or does this mean that I pay $22800 and still owe the residual amount I was told when originally signing up? Thanks,

 

Kyle

[JBLU24]

well im no expert but i would "assume" that your quoted 22,800 buyout would mean if u paid that today the car would be yours- im also guessing that if you were to keep paying your lease to the 48 month mark your residual value (what price the dealer thinks your call will be worth) should be in the neighborhood of 12-15,000.......

[vodoo-chile]

well im no expert but i would "assume" that your quoted 22,800 buyout would mean if u paid that today the car would be yours- im also guessing that if you were to keep paying your lease to the 48 month mark your residual value (what price the dealer thinks your call will be worth) should be in the neighborhood of 12-15,000.......

 

That is what I assumed as well. Just keeping an eye on things. As far as the residual amount, it is actually like $9k, but I did put a coupkle k's down. After all is said and done, with interest and dp, I figured I would pay a total of just under 30k for the car. Wasn't to bad of a deal I think.

 

Kyle

[SKYravefever]

I don't think that's the case, otherwise, that would be a great deal (22800 + (324*6) = 24420). What seems more likely is the 24K + the residual. But I'm no finance guru.

[ONRAMP]

I don't think that's the case, otherwise, that would be a great deal (22800 + (324*6) = 24420). What seems more likely is the 24K + the residual. But I'm no finance guru.

 

If you call Chase for a payoff quote (their number is 800.223.5050 I believe) they will give you a total payout due to own the car outright. Given that your finance rate is given as APR and not a lease factor, I'm guessing that you're actually in a balloon finance (as I am). For what you're looking to do, you're better off if this is the case. The $22800 you were quoted is your principle balance. That is, the remainder of the amount financed. You are paying interest on a monthly basis, but if you pay off the loan early, you don't pay the unearned interest.

 

So no, you don't owe $22800 plus the residual. You only owe $22800 (assuming this is the accurate payoff from Chase).

 

I manage a leasing company that is a division of Subaru of Dallas, and fill in for their F&I manager from time to time. I also have my LGT on a 48 month balloon with Chase / Subaru Motors Finance. Feel free to PM me if you have any questions.

[SKYravefever]

^ As I understand it and for all intents and purposes, a lease is the equivalent of a rental. In vodoo-chile's case, he/she said it was a 48 month term, so it sounds to me like that the cost of using the vehicle is $324 * 48 = $24648. If you take that $24K, and subtract the 5 payments he/she's already made ($324 * 6 = 1944), we come back to ~$22.8K, the outstanding balance.

 

To me, the remaining balance of $22.8K means that if vodoo-chile paid it off today, he/she'll may use the car for the remaining 42/43 months, and that if vodoo-chile intends to puchase it, they'd have to pay the residual value of $9K.

 

Is my rationale flawed?

[ONRAMP]

^ As I understand it and for all intents and purposes, a lease is the equivalent of a rental. In vodoo-chile's case, he/she said it was a 48 month term, so it sounds to me like that the cost of using the vehicle is $324 * 48 = $24648. If you take that $24K, and subtract the 5 payments he/she's already made ($324 * 6 = 1944), we come back to ~$22.8K, the outstanding balance.

 

To me, the remaining balance of $22.8K means that if vodoo-chile paid it off today, he/she'll may use the car for the remaining 42/43 months, and that if vodoo-chile intends to puchase it, they'd have to pay the residual value of $9K.

 

Is my rationale flawed?

 

No and Yes.

 

No. If it is indeed a lease, and the quote given was balance of payments for early termination, then your logic is correct, and he/she would be merely pre-paying the lease payments for the term.

 

Yes. If it is (as I suspect it is) a balloon finance, then the payoff amount given sounds accurate for a principle balance. In this case, the payoff would result in clear title to the owner (vodoo-chile).

[vodoo-chile]

But, if you take teh $324*48 you get roughly $15500. Add to that the residual of about $9k or so and my dp of $4k and you come up with about $28-$29k. Also, I belive it is a balloon lease. This is the first time I have leased a vehicle and only did it because of teh huge difference in the apr. On a regular finance, they were quoting me at 8% or so and $435 on a 60 month note with the same dp. Right now, it fit in my budget for teh lower monthly and it seems as an overall deal.

 

 

Kyle

[SKYravefever]

Ahhh.. makes total sense. My math above was way out of whack (324*48 != 24K). Vodoo-chile's math sounds about right. $15K for usage, $9K for residual, $4K dp, totaling $28K for a LGT via lease w/option to buy.

[ONRAMP]

But, if you take teh $324*48 you get roughly $15500. Add to that the residual of about $9k or so and my dp of $4k and you come up with about $28-$29k. Also, I belive it is a balloon lease. This is the first time I have leased a vehicle and only did it because of teh huge difference in the apr. On a regular finance, they were quoting me at 8% or so and $435 on a 60 month note with the same dp. Right now, it fit in my budget for teh lower monthly and it seems as an overall deal.

 

 

Kyle

 

Not to be picky, but you're not really leasing the car (not a bad thing). In a lease, the bank actually is the owner of the vehicle, and as mentioned above, you're merely renting it from them for an agreed term. When you purchase a car at the end of a lease, you pay sales tax on the residual value, because it changes hands from the bank to you.

 

You are financing your car, not leasing. You do have a residual, or balloon, value at the end of the term, but think of it as your very large 49th payment. if you pay the $9k balloon, you won't pay sales tax, just the $9k. Also, you are listed as the owner of the vehicle on the title, not the bank. The bank is only listed as the lienholder.

[vodoo-chile]

Not to be picky, but you're not really leasing the car (not a bad thing). In a lease, the bank actually is the owner of the vehicle, and as mentioned above, you're merely renting it from them for an agreed term. When you purchase a car at the end of a lease, you pay sales tax on the residual value, because it changes hands from the bank to you.

 

You are financing your car, not leasing. You do have a residual, or balloon, value at the end of the term, but think of it as your very large 49th payment. if you pay the $9k balloon, you won't pay sales tax, just the $9k. Also, you are listed as the owner of the vehicle on the title, not the bank. The bank is only listed as the lienholder.

 

That actually crossed my mind. I am an Insurance agent and with leases, they typically make you carry liability at 100/300/50 to help protect them from a possible lawsuit, as they are technically the owner of the vehicle. I never did have to raise my limits and it was never mentioned to me that I had to. They said I can refinance the residual at the end at the same apr, etc, which would add another 24 months or so to the term. In about a year or so, when finances are more settled due to a newborn, I will just end up paying off the payoff amount and own outright.

 

Kyle