Chrysler Capital Ram Lease Impossible to Trade at Lease-End w/Equity

[Silver21Ram]

Anyone currently leasing or thinking about leasing, Ram or otherwise, needs to read this and understand it, as thousands of dollars in your real money could be lost.

I've leased quite a few vehicles over the years. Mostly Ram 1500 trucks, but also Chrysler cars and Lexus. I've never had a problem getting a deal done to my satisfaction and have been happy with all lease-end outcomes. Until now !!

I have the 2021 silver Bighorn in my photo here. I just made the last of 36 lease payments yesterday. So nothing more is owed and I am now in my final 30 days with this vehicle.

I can, of course, buy it for the Stated Residual Value in the Lease Contract. I have never bought a leased vehicle at lease-end. I have also never turned one back in and paid a fee to do so.

What I have done in each of my own circumstances, is to TRADE the vehicle in on my next lease as I have always had decent equity in the vehicle.

The 2021 has a Residual Value of $30,375.00. The vehicle is in like new condition after 3 years with ONLY 8,460 MILES. Online trade appraisal quotes are 35 to 37,000 dollars.

So the EQUITY would appear to be $6625.00 on the higher end and $4625.00 on the lower end. At any rate, this is decent equity going into another lease. My 2019 Ram with only 13,000 miles had $10,000. equity all going into the 2021 lease. My '21 msrp was $53,200. / capitalized costs reductions of $13,900. and an amazingly low monthly payment of $324.72 ! This is why people lease IF YOU CAN LIMIT WEAR&TEAR and keep your miles under 10,000 per year, sense can be made of it.

Today I find out from Chrysler Capital and while at the dealer to lease a 2025 1500 Crew and with the new 3.0L Hurricane, (the test drive was amazing! With this, I would not miss all my 5.7 Hemi's of the past!) that the dealer cannot take the vehicle in trade using the Residual Value as a Payoff.
Explained to me that the dealer has to obtain Chrysler Capital's determination of "Fair Market Value". It no longer makes any difference what the Residual is. So forget 30K, Chrysler says the new adjusted LENDER PAYOFF IS $37,000. !!

The dealer appraisal is $34,000. and that gives me $3,000. NEGATIVE EQUITY!! VS WHAT COULD HAVE BEEN $6600. POSITIVE EQUITY!!

Iam learning that under this fair market value adjustment, virtually NO ONE will ever again realize Trade-In EQUITY in a Lease!
All trade-in's will carry over negative equity.

The Fair Market Values from the Lenders will look more like and be closer to a DEALER RETAIL VALUE! And for this reason, the dealers really don't want to see these vehicles traded because they own it at a number difficult to show a profit on the front end while being totally dependent on a back-end of finance, warranties, dealer accessories.

There are no disclosures that will inform the lease customers of these things upfront at the time of signing the paperwork.
People are not going to know of this until that day when the lease is done and they think they have a trade-in with EQUITY!
RE: PEOPLE LIKE ME.

Be mindful that you can't trade it; if you attempt to private sell it, you are subject to the same Lender Imposed Payoff. You will be limited to either buying it for the Residual or just simply turning it back it and paying a fee to do that.

A lot of people will be finding that they have Leased their Last Vehicle!

 

[Burla]

What did you do?

 

[Docwagon1776]

What keeps you from buying the lease out for the residual and then trading it to get the $7k you think the difference will be?

 

[oe542bob]

If I follow this, apparently he may not be able to purchase it for the said Residual value because the leasing company seems to be saying it’s a higher pay off???

 

[skates15]

Yeah I'm not understanding how you have equity in a vehicle you never owned you just rented. I've leased many vehicles, always zero down because I don't own the vehicle.

The last 2 leases I had came up during covid and I bought them, then sold them to car max and made a tidy profit

There was a time, before covid where at the end of the lease I turned the vehicle into car max and they paid me the difference between the dealer payoff amount for the vehicle and the appraised value.

Those were good days until covid drove up the used car market to crazy prices and as a result, the banks and car manufacturers who offered financing shut all that down to take the profits themselves. I also had to turn the vehicle back to the dealership, which I didn't have to do before.

Thiis is why later on I had to purchase the vehicles in order to sell them and get the profit.

A pain getting titles, etc but worth it for the extra money and car max made it easy peasy, give them docs and they gave me crisp clean checks. I gave the reps gift certificates to Outback which was next door as a thank you lunch for making it easy.

 

[skates15]

If I follow this, apparently he may not be able to purchase it for the said Residual value because the leasing company seems to be saying it’s a higher pay off???

Yes, the financing company can sell for profit.

 

[Docwagon1776]

If I follow this, apparently he may not be able to purchase it for the said Residual value because the leasing company seems to be saying it’s a higher pay off???

The buyout should all be in the original lease agreement, unless the OP signed a contract that said "we can charge you whatever we want at the end of this" then it's set in stone at the original time of purchase. That's one of the benefits of a lease, it removes some risk from your side of the equation. Value tanks, let it go. Value is better than residual, buy it out and sell it/trade it.

I'm not following the OP either, you can't trade a leased vehicle any more than you can sell a rented house. You have to buy the lease out to gain ownership, then transfer ownership to the dealer. Obviously the dealer generally just holds the vehicle, has you do a limited power of attorney, and handles all that for you.

 

[GTyankee]

Back in around 1973
a friend that i worked with, told me that the Only way to get a lease vehicle, was to form a Corporation.
He leased 4 vehicles, the vehicles were driven by corporation members, his direct family.

Being as most of them lived in California, the leases were done in Arizona, where everything is much cheaper

 

[blackbetty14]

I bought out after my lease on my 18 Laramie and the residual was the residual and didn’t matter that I was a few thousand under mileage that was with USBank my lease bank. Truck got totaled and I got payout. Put 5k down on My 2024 BTS was leased and Chrysler capital at an amazing rate. My residual will be 30,500 which is what I will buy it out at likely again. If I only put 20k miles you don’t get the residual difference with a lower mileage that’s not how it works. Your payments are based on predicted depreciated value. The dealer can buy your truck back at the residual and upsell it for more since you put less miles thus making the truck more valuable. Also never buy the truck from the dealer they charge you thousands to process the paperwork and you save all that if you deal with the bank yourself. You won’t get any money back if you return at a lower mileage so bank on using the mileage and returning at net zero or if you want to keep the truck drive it as many miles as you want and just buy it out bc they don’t care about the mileage if your buying it out.

 

[Burla]

Learn something new everyday, had no idea of residual value. Good to know, I'd die twice before leasing any vehicle now. thanks for the public service thread to be honest.

As bad as this is, it will be far worse in the future with the absolute untested garbage ram is planning on putting out 2025 and beyond.

 

[Burla]

So if you have positive equity the bank gets it? But negative equity you have to pay it? That is like legal robbery of the working man?

 

[Docwagon1776]

So if you have positive equity the bank gets it? But negative equity you have to pay it? That is like legal robbery of the working man?

Yeah, I think something is getting lost in the mix and the OP hasn't been back because that's not how leases work. Maybe his dealer just tried to screw him over, but I'm still not getting what he's talking about.

When you lease a vehicle, everything is in the initial contract, including your buyout costs. At the end, if you don't want to buy it you can just turn it in and walk away (assuming it's not damaged, miles are under what you contracted, etc). If there's any disposition fee at the end, it's whatever you agreed to up front and isn't a surprise.

If you *do* want to buy it, you pay the agreed upon residual and whatever buy out fee there is. It's usually small and is similar to a processing fee with a purchase.

 

[chri5k]

As I understand it, the residual value is the lenders (lessors) projection on what the vehicle would be worth to them at the end of the lease. In the past, the residual value pretty well tracked the used car market. In the past, it seems if a lessee kept the vehicle in good condition, it might be worth a couple grand more to the lessor than the residual value. It seems they were applying this "equity" as a credit on a new lease as an inducement to the lessee to sign another lease. As used car prices have climbed, I suspect the lessor is finding a vehicle in good condition is worth significantly more than the residual value. In the OP's case about $6,600 more. The lessor is no longer willing to part with that increased value as an inducement to sign a new lease. The lessor is stuck with the residual value clause so the lessee can pay the residual value and obtain ownership of the vehicle. The new owner can now sell the vehicle and keep anything over the residual value they paid for the vehicle.

The lessee does not own the vehicle unless and until they pay the agreed upon residual value amount and obtain title to the vehicle. They have no equity or other benefits of ownership of the vehicle until they actually obtain the title to the vehicle.

 

[CanRebel]

There are some strange posts on this forum and this is one of them.

OP in this one clearly doesn't understand how leasing works. If they thought/or thinking, they were financing, his story would make sense.

With a lease. You don't own it. You have zero "Trade" value. You have no equity. The title is always in the Leasing company name, with plate in yours.

As @Docwagon1776 mentioned above it's all in the contract. Monthly payments, for how long, Buyout amount(Plus Fees, tax, title, etc. ) which can be either paid in full or financed.

Many people do as @skates15 does/did for years. Now it's even easier because of the web base sites. They get their inventory from buying all leased(or trades) vehicles they can, usually over paying for them.
I know some guys in Cal. that do this as their business/job. They run around to all Ford dealers everyday with cash buying all trades/leases. They usually don't even take it off the dealer lot.
They claim they are making $3000-$6000 a per F150 they flip.

 

[Docwagon1776]

As I understand it, the residual value is the lenders (lessors) projection on what the vehicle would be worth to them at the end of the lease. In the past, the residual value pretty well tracked the used car market.

This is correct. It's both an art and a (actuarial) science. Set the residual too high and the leasing company takes a bath. Set it too low and the payments aren't competitive for customers.

In a way, it's a sort of like a "used car cash value" warranty. You are paying someone else to assume the risk of values plummeting.

 

[Burla]

Maybe we are missing something, because I believe the guy, I believe the guy is getting this info from the dealer, something now I believe to be bogus info thanks to members who know better, but still I believe the dealer sees him as a mark and they are trying to milk him.

 

[CanRebel]

Maybe we are missing something, because I believe the guy, I believe the guy is getting this info from the dealer, something now I believe to be bogus info thanks to members who know better, but still I believe the dealer sees him as a mark and they are trying to milk him.

I don't think so. Technically Dealer has nothing to do with it. It's signed contract between two parties and nothing to do with dealer.

I might be wrong, but I think the OP, mistyped. Reading what he wrote. It really sounds like he financed it. Dealer would not do an appraisal on lease. The Buyout is the buyout.

 

[Burla]

I don't think so. Technically Dealer has nothing to do with it. It's signed contract between two parties and nothing to do with dealer.

I might be wrong, but I think the OP, mistyped. Reading what he wrote. It really sounds like he financed it. Dealer would not do an appraisal on lease. The Buyout is the buyout.

you may be right, I read it again, now maybe a little clearer, in the past he got money for trade, now he has negative equity, meaning my guess is he can turn in the truck and wash his hands, but no money for a trade. Now, I almost feel sorry for the banks, lol. I surrender, maybe I should avoid posts with too many big words.

 

[Docwagon1776]

I don't think so. Technically Dealer has nothing to do with it. It's signed contract between two parties and nothing to do with dealer.

I might be wrong, but I think the OP, mistyped. Reading what he wrote. It really sounds like he financed it. Dealer would not do an appraisal on lease. The Buyout is the buyout.

OP said "I can, of course, buy it for the Stated Residual Value in the Lease Contract." Early on, I asked why he can't buy it out then trade it. My guess is the dealership doesn't want his truck for the price he thinks he can get based on his online valuation from kbb or whoever he got it from. But, we'll probably never know since OP went radio silent.

 

[CanRebel]

OP said "I can, of course, buy it for the Stated Residual Value in the Lease Contract." Early on, I asked why he can't buy it out then trade it. My guess is the dealership doesn't want his truck for the price he thinks he can get based on his online valuation from kbb or whoever he got it from. But, we'll probably never know since OP went radio silent.

Ah. I guess it's way he wrote it. Just doesn't make sense.

Like this part, and some other parts. It's lease. You aren't trading anything, cause you don't own it, you have no equity.
As you said above, you either drop it off or buy it based on the contract.
/quote
What I have done in each of my own circumstances, is to TRADE the vehicle in on my next lease as I have always had decent equity in the vehicle.
/quote

Lease is over, drop it off. Go lease 2025.