Lease Buyout Ripoff

[blackbetty14]

I bought out my 18 after a lease and you have two options buy it from the bank that owns or the dealer. The dealer will add fees that get rolled into the loan which was about 2 grand for me vs going through the bank. I bought it right from the bank and it of course still had titling fees and tax. The dealers get a different rate than the banks bc they want to make money and it was evident in the numbers. I bought from the bank and got a load through a credit union at a low 3.5% (in 2022) and within a year or so truck got totaled bc of a stupid kid. Payout of the truck got me into a new 2024 built to serve which I leased bc payments are dumb high with a finance right now 8.99+%. I leased for 39m and got a .8% rate or it might have been .08% through Chrysler capital the rate was amazing.

Leasing doesn’t add that much to the total cost of the vehicle as your paying off the depreciation over the lease term which on a standard 3 year is 45-50%. So a 60k truck will be worth 30k after the lease is done. In a 5 year finance your paying off the same 50% of vehicle within the first 2.5 years so your payments will be about double and that’s not even including interest rate which are horrendous now. It looks like you have the dealer 4-4.5k to process the paperwork which is a lot.

 

[chri5k]

So I ended up buying my 2020 Ram 1500 out. North Edition, Crew Cab, extended bed. Buyout was around $31000. Credit is damaged pretty badly but I had an opportunity to get a cosigner and deal with a dealership where a family friend works out of that delt with the buyout and financing...

This might get into personal information, but I want to know what others have to say about this as this is my first time buying out a vehicle and not leasing and thoughts on what happened...

- Total Loan was about $39,850 (does not include interest @ 72 months with 9.99%)
- Buyout from leasing company was around $31,000.
- Gap Insurance and Warranty was about $1,500.
- Sales tax in OH is about $2,500.00

That leaves $4,850...

How bad did I get ripped off? I am just nervous about trading this in in the next few years if I wanted to and the bad deal I got...

Thoughts?

What do the sales and / or lease contracts say about charges and fees? Have you read them? Hard to tell if you got ripped off since you have not detailed it out any other items other than buy out, I&W and sales tax. I know I would be looking in the those two contracts for any item or items that total $4,850. It is your 5 g's but if it is no biggie to you, it is no biggie to me. Maybe there is a typo or other clerical error.

I purchased a vehicle a few years back near closing time at the dealership. They came to me a few minutes after closing with a ream of papers to sign. I pointed out they had spelled my name wrong and the address was incorrect. Took them bout an hour to fix it all an reprint everything. The finance and sales managers gave the salesman a reaming since that info came from his initial contact form.

 

[PowrRam]

Never leased a vehicle but my understanding is it’s always more costly in the end than buying. You’re just trading lesser up front costs for a screwing at the end. Opinions may vary.

I've done 14 leases between my wife and me (business reasons) in the past 29 years. I've had OK leases and really good leases. Of the 14 leases, only 3 were buyouts. However, most leases were for business reasons and a buyout was never on the table; for tax reasons and cash flow reasons I would re-lease instead of buying. About half of them were buyout candidates based on the buyout price on the lease contract and the book value of the vehicle at lease end.

Now, of the 3 buyouts that I executed they were fantastic deals. Not surprisingly, they were leases that expired during Covid. The demand for used vehicles was incredible in 2021-2023 (and still is for the most part) so we were able to buy vehicles for 20% to 40% less than the going retail pricing. For example, my son bought his leased 2019 Honda Civic for $13,500 and the book price was $22,000. I bought my 2018 Big Horn because Carvana was going to give me $29K for it and I could buy out my lease for $24K.

If the finance company overestimates the depreciation of the vehicle over the term of the lease, a buyout can make sense.

 

[turkeybird56]

I didn't mean that not financing something is bad. Only that your credit report stagnates if you never pay make payments on anything. And having too much available credit is sometimes a warning sign to prospective lenders as some people have no willpower and will overextend themselves too easily. Obviously that is not the case with you. Every time I make an order online I use a major credit card; everything else I use my bank card, unless it's less than $20 then I just pay cash. Between 2 major credit cards and a couple revolving credit cards I think I have about $30k available, of which I never use more than 2% - 3% because everything gets paid off every month. And it's not costing a couple hundred bucks to finance $23k for 90 days. I calculated I'm out less than $50. And I have had my oldest credit card account for 47 years.

I do the same thing and wala, my oldest CC is 47 YOA. Recently, I contacted Lowes Bank Synchrony and downgraded available credit. It was listed at $19,200 for my Genny purchase install. Since paid off, I did not want to lose the "Heloc" type card, but I downgraded the available to $5,000. I also just paid off my windows. I had a Green Sky Finance account (Used by Anderson DBA), (owned by Goldman Sachs for the uninformed which carries a 29.99% APR), available at 30K and closed the account. Having monster accounts around with Monster available credit there, just hits your credit rating like TULE stated above. Being reasonable on that stuff helps. Like/unlike TULE, though, I have no Major revolving like say a House or Vehicle, and that hurts your Credit Score also and I also do not carry balances on cards.

FYI: The rates on about all gas cards just went to 31.94% APR, so carrying a balance on a gas card get ugly quick too. I do use all my cards once a year and leave a small amount on the card and let it carry for 1-2 months just to keep card usage and prevent accounts being "closed" by the "bank". I end up paying a few dollars in finance charges, but U have to use a CC on an account now like once a year or at least once in 2 years and balance forward an amount or the "bank" will close those accounts. EXXON/MOBIL cancelled my gas card because I had it for travel, and there is no EXXON/MOBIL close to me since EXXON local was bought out so they closed my gas card.

ADDED: All above just something to peruse about, and all IMHO.

DA BOIRD

 

[turkeybird56]

I've done 14 leases between my wife and me (business reasons) in the past 29 years. I've had OK leases and really good leases. Of the 14 leases, only 3 were buyouts. However, most leases were for business reasons and a buyout was never on the table; for tax reasons and cash flow reasons I would re-lease instead of buying. About half of them were buyout candidates based on the buyout price on the lease contract and the book value of the vehicle at lease end.

Now, of the 3 buyouts that I executed they were fantastic deals. Not surprisingly, they were leases that expired during Covid. The demand for used vehicles was incredible in 2021-2023 (and still is for the most part) so we were able to buy vehicles for 20% to 40% less than the going retail pricing. For example, my son bought his leased 2019 Honda Civic for $13,500 and the book price was $22,000. I bought my 2018 Big Horn because Carvana was going to give me $29K for it and I could buy out my lease for $24K.

If the finance company overestimates the depreciation of the vehicle over the term of the lease, a buyout can make sense.

My son, continually leases his vehicle, and sells it back after 3 years and releases again. HE just re-leased again and went from a 21 RAM to a 25 RAM. I absolutely hate that he does this, but his "rice bowl", so his problem. Would I ever lease, HECK NO, but I also do not own/operate a business where a lease with Bizness write offs may make sense. Each to their Own I Say.

 

[Tulecreeper]

I do the same thing and wala, my oldest CC is 47 YOA. Recently, I contacted Lowes Bank Synchrony and downgraded available credit. It was listed at $19,200 for my Genny purchase install. Since paid off, I did not want to lose the "Heloc" type card, but I downgraded the available to $5,000. I also just paid off my windows. I had a Green Sky Finance account (Used by Anderson DBA), (owned by Goldman Sachs for the uninformed which carries a 29.99% APR), available at 30K and closed the account. Having monster accounts around with Monster available credit there, just hits your credit rating like TULE stated above. Being reasonable on that stuff helps. Like/unlike TULE, though, I have no Major revolving like say a House or Vehicle, and that hurts your Credit Score also and I also do not carry balances on cards.

FYI: The rates on about all gas cards just went to 31.94% APR, so carrying a balance on a gas card get ugly quick too. I do use all my cards once a year and leave a small amount on the card and let it carry for 1-2 months just to keep card usage and prevent accounts being "closed" by the "bank". I end up paying a few dollars in finance charges, but U have to use a CC on an account now like once a year or at least once in 2 years and balance forward an amount or the "bank" will close those accounts. EXXON/MOBIL cancelled my gas card because I had it for travel, and there is no EXXON/MOBIL close to me since EXXON local was bought out so they closed my gas card.

Years ago I had a AT&T Universal MasterCard. I pretty much never used it for the 10 years I had it and one day I got a letter saying they had closed the account. Several years later I got a letter from Chevron saying "use it or lose", which was fair because I hadn't used it in probably 3 years. I went that day and put $5 on it. From then on I used it once a year to keep it open. It is the card I've had for 47 years.

 

[Justin33]

I leased my truck in 2015 and bout it out for 21700 3 years later I think. My interest rate was nothing like that but that was then and this is now. My credit union marched what Chrysler Capital wanted think it was a 2.74…leasing does seem like bad idea but after three years I had like 10k for mileage, felt like it made sense to buy it out.