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Author Topic: Residual question  (Read 4038 times)

Offline Wheelboy

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Residual question
« on: September 01, 2011, 09:37:22 am »
A question for ya - my daughter has a lease car that is due back on Oct 2nd.  Are the lease companies interested in a buy-out offer at all?  One of her options being considered is to buy the car as it's been a good one, has low km (48k) and she loves her ragtop..

The residual is $17,282 and I see them on AutoTrader and Kijiji for between $18,000 and $23,995 with 20k being the average.

Any advice to offer?
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Offline inco

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Re: Residual question
« Reply #1 on: September 01, 2011, 10:02:02 am »
If market value is higher and the buyout number is correct - buy low and sell high later if she wants. She likes it so why not keep it. Down the road it may still be worth more than what she paid.
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Offline Cord

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Re: Residual question
« Reply #2 on: September 01, 2011, 10:12:48 am »
I've never seen it happen. Although there's always someone that claims they have. I know that Ford Credit will not listen to any buyout offer. Phone the lease company and ask.
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Offline tpl

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Re: Residual question
« Reply #3 on: September 01, 2011, 10:15:36 am »
???    Is it not her right in the lease contract to buyout for the residual plus applicable taxes?   I have only leased once ( in Ontario) and I had the right to buy the car for the residual + taxes.
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Offline Cord

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Re: Residual question
« Reply #4 on: September 01, 2011, 10:20:13 am »
Quote from: tpl on September 01, 2011, 10:15:36 am
???    Is it not her right in the lease contract to buyout for the residual plus applicable taxes?   I have only leased once ( in Ontario) and I had the right to buy the car for the residual + taxes.

It sounds like the OP wants to offer the lease company an amount lower than the buyout.
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Offline tpl

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Re: Residual question
« Reply #5 on: September 01, 2011, 10:23:42 am »
Ok I did not read that into the original message... the opposite in fact, that the residual was less than the perceived  worth of the car.
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Offline Wheelboy

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Re: Residual question
« Reply #6 on: September 01, 2011, 10:28:21 am »
Quote from: tpl on September 01, 2011, 10:23:42 am
Ok I did not read that into the original message... the opposite in fact, that the residual was less than the perceived  worth of the car.

My original question was "Are the lease companies interested in a buy-out offer at all?"  I guess I didn't stress the word "offer" though.  I'm aware that she can buy it out but I guess the question should be, to remove all ambiguity "Are they open to an offer lower than the stated buyout price?"
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Offline Gardiner Westbound

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Re: Residual question
« Reply #7 on: September 01, 2011, 10:29:48 am »
Quote from: Wheelboy on September 01, 2011, 10:28:21 am
My original question was "Are the lease companies interested in a buy-out offer at all?"  I guess I didn't stress the word "offer" though.  I'm aware that she can buy it out but I guess the question should be, to remove all ambiguity "Are they open to an offer lower than the stated buyout price?"

The lessor generally won't budge on the stipulated buyout price, usually significantly higher than the actual transaction cost for a comparable used vehicle.

Buyout Upside: Prevents bogus, extortionate vehicle wear and tear charges.

Buyout Downside: Vehicle cost and stealth fees may make the transaction uneconomic.
« Last Edit: September 01, 2011, 12:34:16 pm by Gardiner Westbound »
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Offline initial_D

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Re: Residual question
« Reply #8 on: September 01, 2011, 11:00:55 am »
Buyout value is stated on a written and signed contract, don't think the lease company is willing to negotiate. Have not heard anyone had luck with that.
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Offline 2latecrew

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Re: Residual question
« Reply #9 on: September 01, 2011, 12:39:28 pm »
What have you got to lose? Ask  if they will accept a lower price. If they say no you can still buy it out at the residual. You lose nothing. If they say yes you have save $. I agree chances are that they will not lower the price. They will take it back in and either the leasing dealer gets first crack at it or they send it straight to auction. Its something that many people do not take advantage of in life. Always ask for the sale or ask for a discount. It costs nothing other than your own fear of rejection. If you ask and someone gets in a huff who cares?

In this case it sounds like the residual is either lower or close to the actual selling price of comparable vehicles. your daughter likes it so I'd go ahead and buy it out. The low miles are worth something but knowing how the vehicle was cared for is worth even more. Better the devil you know.



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Offline Wheelboy

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Re: Residual question
« Reply #10 on: September 01, 2011, 12:49:46 pm »
Quote from: 2latecrew on September 01, 2011, 12:39:28 pm
What have you got to lose? Ask  if they will accept a lower price. If they say no you can still buy it out at the residual. You lose nothing. If they say yes you have save $. I agree chances are that they will not lower the price. They will take it back in and either the leasing dealer gets first crack at it or they send it straight to auction. Its something that many people do not take advantage of in life. Always ask for the sale or ask for a discount. It costs nothing other than your own fear of rejection. If you ask and someone gets in a huff who cares?
In this case it sounds like the residual is either lower or close to the actual selling price of comparable vehicles. your daughter likes it so I'd go ahead and buy it out. The low miles are worth something but knowing how the vehicle was cared for is worth even more. Better the devil you know.

Good answer.  She's just trying to decide what she really wants/needs and is gathering info for an informed decision.  She loves her Beetle Ragtop but it's dysfunctional in a few ways (mostly space!) so a small SUV is also in her sights.  Only she can decide.  I'm just the dad doing some background work to help ease her dilemma. 
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Offline ArticSteve

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Re: Residual question
« Reply #11 on: September 01, 2011, 02:45:25 pm »
She will no longer need to E test the car to register it in her name assuming she resides in a E test zone.

Still needs safety

Needs to pay tax on the 17K.  Probably the biggest negative for her.



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Offline Wheelboy

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Re: Residual question
« Reply #12 on: September 01, 2011, 02:56:50 pm »
Quote from: articsteve on September 01, 2011, 02:45:25 pm
She will no longer need to E test the car to register it in her name

Yep that all changed as of today.
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Offline Julie

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Re: Residual question
« Reply #13 on: September 01, 2011, 07:47:25 pm »
I've heard of people try but I've never heard of anyone succeed.  What would be the advantage for the lessor?  There would be none.

Perhaps if the buy-out is substantially higher than the market value of the vehicle and the lessor would be stuck taking a loss on it when trying to re-sell it... ??  But the opposite is true in this case. 
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Offline Wheelboy

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Re: Residual question
« Reply #14 on: September 01, 2011, 08:01:21 pm »
Quote from: Julie on September 01, 2011, 07:47:25 pm
What would be the advantage for the lessor?  There would be none.

How do we know what their cut-off level is for wanting to sell a lease car for a profit or wanting to dump it  because the market value doesn't make the effort worthwhile?  I'm sure they know where their bottom line is.

Quote
Perhaps if the buy-out is substantially higher than the market value of the vehicle and the lessor would be stuck taking a loss on it when trying to re-sell it... ??  But the opposite is true in this case. 

For all I know, even if the residual is lower than the market value they may still be willing to dump a car as the profit made might not be worth the effort.  I guess there is only one way to find out.
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Offline Cord

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Re: Residual question
« Reply #15 on: September 01, 2011, 10:13:26 pm »
Please let us know what they say.
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Offline Wheelboy

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Re: Residual question
« Reply #16 on: September 01, 2011, 10:25:57 pm »
Quote from: Cord on September 01, 2011, 10:13:26 pm
Please let us know what they say.

Oh I will.  I've suggested to my daughter that she call the lease company and ask a few questions, #1 of which is whether they will entertain an offer to purchase (lower than residual!).
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Offline ArticSteve

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Re: Residual question
« Reply #17 on: September 02, 2011, 12:19:34 am »
Whose is the leasing company.  ???  If it's VW Finance, forget it.

If it's a third party leasing company at that mileage, forget it. 
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Offline johngenx

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Re: Residual question
« Reply #18 on: September 02, 2011, 12:23:08 am »
The only lease I ever had was on my Mercedes, and I negotiated the residual PRIOR to the contract, lowering it to raise the payment to match a car allowance/tax benefit at the time.  They had no resistance as it actually placed them in a stronger position should I turn the car back in.
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Offline Ex-airbalancer

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Re: Residual question
« Reply #19 on: September 02, 2011, 07:47:12 am »
Is there many cars coming back on a lease?
was it it 3 years ago when some companies stopped leasing.

ALso would the VW take a bigger hit now with the new model coming out?
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