lease buyout?? - Drive Accord Honda Forums | radio-pro.ru
Reply
LinkBack Thread Tools Search this Thread Rating: Thread Rating: 3 votes, 5.00 average. Display Modes
post #1 of 23 Old 03-12-2009, 07:35 PM Thread Starter
me5po5ito

785654832mve's Avatar

Join Date: Jan 2009
location: Albany, NY
Posts: 37
Thanks: 0
Thanked 0 Times in 0 Posts
lease buyout??

ok, so I am exactly one year into my lease, a little under mileage for the year... I have two years left.

I traded in my '03 EX-L and had about $5000 in equity on the trade. My lease payments are $251.33 for a total of 3 years/45000 miles.

I wanted to buy it at the time I looked at it, but it was kind of an impluse buy after test driving it and I fell for the lease option because I couldn't swing the finance payments (finance rates were 6-7% at the time )

Anyway, I have the option to buy it out now for $21K with taxes included. My guess is that it isnt a great deal but I'd rather have the pride of ownership where I can do some things to the car without throwing my money out the window - and the option to trade it in anytime and/or have some equity again when I am ready to get rid of it.

So.. would is this a dumb idea? Any ideas on whether or not American Honda Finance would be willing to negotiate the buy out price??


'09 RBP EX-V6 Navi Sedan

Previous Accords
'08 NBP EX-L Auto Coupe
'03 GP EX-L Auto Coupe
'98 EX Sedan
'95 EX-V6 Sedan
785654832mve is offline
Advertisement

post #2 of 23 Old 03-12-2009, 07:55 PM
4th Gear

TXACCORD's Avatar

Join Date: Feb 2009
location: Houston
Posts: 240
Thanks: 0
Thanked 0 Times in 0 Posts
Quote:
Originally Posted by 785654832mve View Post
ok, so I am exactly one year into my lease, a little under mileage for the year... I have two years left.

I traded in my '03 EX-L and had about $5000 in equity on the trade. My lease payments are $251.33 for a total of 3 years/45000 miles.

I wanted to buy it at the time I looked at it, but it was kind of an impluse buy after test driving it and I fell for the lease option because I couldn't swing the finance payments (finance rates were 6-7% at the time )

Anyway, I have the option to buy it out now for $21K with taxes included. My guess is that it isnt a great deal but I'd rather have the pride of ownership where I can do some things to the car without throwing my money out the window - and the option to trade it in anytime and/or have some equity again when I am ready to get rid of it.

So.. would is this a dumb idea? Any ideas on whether or not American Honda Finance would be willing to negotiate the buy out price??
I've leased my last 5 vehicles, but the lease terms when I bought my 09 Accord were not as favorable as the incentive finance rates. I tried on my previous 2 vehicles to re-negotiate the buy outs, but I was told both times that I had the chance to negotiate when I leased from the dealer. The finance company, in this case for you I assume Honda Finance Lease Corp, that even though they did not wish to have the vehicle back, they were not in a position to re-negotiate the purchase price...


09 Accord LX-S Polished metal metallic/Ivory
V6 Lip Spoiler
20% Tint All Around
Back Up lights converted to amber turn signals
Drag Specialities 18" Chrome Wheels-Goodyear F1 A/S EMT's 245/40/18

Eibach Pro Lowering Kit-2 in.
Chrome Dual Outlet Exhaust Finisher
DRL Delete

Previous Ride: 07 Subaru STI Limited

"Either Lead, Follow, or get the Hell out of the Way"
TXACCORD is offline
post #3 of 23 Old 03-12-2009, 08:10 PM
4th Gear

eemichael83's Avatar

Join Date: Jan 2009
Posts: 237
Thanks: 0
Thanked 0 Times in 0 Posts
I think that trading in a $10K car for $5K was a dumb idea. You could have easily sold that yourself and gotten much more. I also think that paying $9K to drive a car that you don't even own for 3 years is also, to me, a dumb idea. There's a reason why dealers offer a lease, and thats because its a rip off.
eemichael83 is offline

post #4 of 23 Old 03-12-2009, 08:17 PM
4th Gear

TXACCORD's Avatar

Join Date: Feb 2009
location: Houston
Posts: 240
Thanks: 0
Thanked 0 Times in 0 Posts
Quote:
Originally Posted by eemichael83 View Post
I think that trading in a $10K car for $5K was a dumb idea. You could have easily sold that yourself and gotten much more. I also think that paying $9K to drive a car that you don't even own for 3 years is also, to me, a dumb idea. There's a reason why dealers offer a lease, and thats because its a rip off.

So with that logic, the reason that they offer financing is that it's a rip-off as well?

09 Accord LX-S Polished metal metallic/Ivory
V6 Lip Spoiler
20% Tint All Around
Back Up lights converted to amber turn signals
Drag Specialities 18" Chrome Wheels-Goodyear F1 A/S EMT's 245/40/18

Eibach Pro Lowering Kit-2 in.
Chrome Dual Outlet Exhaust Finisher
DRL Delete

Previous Ride: 07 Subaru STI Limited

"Either Lead, Follow, or get the Hell out of the Way"
TXACCORD is offline
post #5 of 23 Old 03-12-2009, 08:26 PM
4th Gear

eemichael83's Avatar

Join Date: Jan 2009
Posts: 237
Thanks: 0
Thanked 0 Times in 0 Posts
Quote:
Originally Posted by TXACCORD View Post
So with that logic, the reason that they offer financing is that it's a rip-off as well?
Yes... its called interest. If you buy something that you can't afford to pay cash for, then yes, you get taken with interest. Why wouldn't a dealer accept $23,700 for a $20,000 car over 60mos %? Its not as big of a rip-off as leasing but you're still paying more for the car than its established value. I mean think about it, when you're paying about 3,200/yr for a car that you dont own, you've literally taken the value from say $20,000 to zero in just over 6 years.
eemichael83 is offline
post #6 of 23 Old 03-12-2009, 08:38 PM
4th Gear

TXACCORD's Avatar

Join Date: Feb 2009
location: Houston
Posts: 240
Thanks: 0
Thanked 0 Times in 0 Posts
Quote:
Originally Posted by eemichael83 View Post
Yes... its called interest. If you buy something that you can't afford to pay cash for, then yes, you get taken with interest. Why wouldn't a dealer accept $23,700 for a $20,000 car over 60mos %? Its not as big of a rip-off as leasing but you're still paying more for the car than its established value. I mean think about it, when you're paying about 3,200/yr for a car that you dont own, you've literally taken the value from say $20,000 to zero in just over 6 years.
Your logic escapes me, Michael. If what you suggest is correct, there would be very few home owners in the USA, as virtually all of them CAN'T afford to pay cash. America survives on credit. I am well aware of the current housing crunch/downturn but it's not stopping credit worthy people from purchasing and paying interest for things either they can't afford to pay cash for, or they choose to preserve their cash assets for other purposes. And in your six year example, well I don't know that there are too many 6 year auto leases being written. I've done the math and I've come out on the postive side of all my prior leases.

09 Accord LX-S Polished metal metallic/Ivory
V6 Lip Spoiler
20% Tint All Around
Back Up lights converted to amber turn signals
Drag Specialities 18" Chrome Wheels-Goodyear F1 A/S EMT's 245/40/18

Eibach Pro Lowering Kit-2 in.
Chrome Dual Outlet Exhaust Finisher
DRL Delete

Previous Ride: 07 Subaru STI Limited

"Either Lead, Follow, or get the Hell out of the Way"
TXACCORD is offline
post #7 of 23 Old 03-12-2009, 08:47 PM
4th Gear

eemichael83's Avatar

Join Date: Jan 2009
Posts: 237
Thanks: 0
Thanked 0 Times in 0 Posts
Quote:
Originally Posted by TXACCORD View Post
Your logic escapes me, Michael. If what you suggest is correct, there would be very few home owners in the USA, as virtually all of them CAN'T afford to pay cash. America survives on credit. I am well aware of the current housing crunch/downturn but it's not stopping credit worthy people from purchasing and paying interest for things either they can't afford to pay cash for, or they choose to preserve their cash assets for other purposes. And in your six year example, well I don't know that there are too many 6 year auto leases being written. I've done the math and I've come out on the postive side of all my prior leases.
Correct, but in this situation the only other option is to RENT... which is wasted money. At that point you have to weigh which is cheaper... the amount of rent you'd be paying, or the amount of interest on a home loan you would be paying (minus the tax deductions of course). In addition, under normal economic circumstances, a home will at the least maintain its value and even INCREASE in value. Just slightly different than financing a car that is a want and not a need and will inevitably decrease in value. And as far as the 6 year example, you are right in that there are no 6 yr lease options... but lets say you lease a car for 20k for 3 years, then when the lease expires you lease another 20k car for 3 more years. At the amount of the lease (~3,200 for example) and the end of the back to back leases... you have paid nearly the full $20K and have no car. If you had OWNED the car however, you'd have paid 20K for the car and would have been able to sell if after 6 years for say 10-12K. For a net loss of only 8-10K rather than 20K. I would like to see the math that justifies that you came out on the positive side of paying for a car that you do not own and can not sell. lol
eemichael83 is offline
post #8 of 23 Old 03-12-2009, 09:01 PM Thread Starter
me5po5ito

785654832mve's Avatar

Join Date: Jan 2009
location: Albany, NY
Posts: 37
Thanks: 0
Thanked 0 Times in 0 Posts
Quote:
Originally Posted by eemichael83 View Post
I think that trading in a $10K car for $5K was a dumb idea. You could have easily sold that yourself and gotten much more. I also think that paying $9K to drive a car that you don't even own for 3 years is also, to me, a dumb idea. There's a reason why dealers offer a lease, and thats because its a rip off.
before we get way too off topic, let me reiterate what I originally said.... I had $5000 equity in the trade. AKA I got $13K for the car, but I owed $8K.... value - money owed = equity. Of course I would not have sold a $10K car for $5K! but congrats... you learned a new word today

'09 RBP EX-V6 Navi Sedan

Previous Accords
'08 NBP EX-L Auto Coupe
'03 GP EX-L Auto Coupe
'98 EX Sedan
'95 EX-V6 Sedan
785654832mve is offline
post #9 of 23 Old 03-12-2009, 09:05 PM
4th Gear

eemichael83's Avatar

Join Date: Jan 2009
Posts: 237
Thanks: 0
Thanked 0 Times in 0 Posts
Quote:
Originally Posted by 785654832mve View Post
before we get way too off topic, let me reiterate what I originally said.... I had $5000 equity in the trade. AKA I got $13K for the car, but I owed $8K.... value - money owed = equity. Of course I would not have sold a $10K car for $5K! but congrats... you learned a new word today
I'm very aware of the word equity. You worded it as if you were given 5K for the trade for use as equity in the purchase of the new car. No need for the sarcasm.
eemichael83 is offline
post #10 of 23 Old 03-12-2009, 09:07 PM
4th Gear

TXACCORD's Avatar

Join Date: Feb 2009
location: Houston
Posts: 240
Thanks: 0
Thanked 0 Times in 0 Posts
Quote:
Originally Posted by eemichael83 View Post
Correct, but in this situation the only other option is to RENT... which is wasted money. At that point you have to weigh which is cheaper... the amount of rent you'd be paying, or the amount of interest on a home loan you would be paying (minus the tax deductions of course). In addition, under normal economic circumstances, a home will at the least maintain its value and even INCREASE in value. Just slightly different than financing a car that is a want and not a need. And as far as the 6 year example, you are right in that there are no 6 yr lease options... but lets say you lease a car for 20k for 3 years, then when the lease expires you lease another 20k car for 3 more years. At the amount of the lease (~3,200 for example) and the end of the back to back leases... you have paid nearly the full $20K and have no car. If you had OWNED the car however, you'd have paid 20K for the car and would have been able to sell if after 6 years for say 10-12K. For a net loss of only 8K rather than 20K. I would like to see the math that justifies that you came out on the positive side of paying for a car that you do not own and can not sell. lol
I don't know about you Michael, but I NEED my car.

I'm not following your 20K for 3 years example. Take for instance my 07 Subaru lease: MSRP was $35K which I negotiated at lease signing down to $32K. The lease incentive for a 24 month lease provided a residual of $27K. I drove the car for 2 years for 5K, plus the interest which was an effective rate of 4.5%, again with the incentive from Chase Auto Finance/Subaru. The car at the end of the lease was worth 24K in the used retail market, another $3K+ in my favor. I believe that I did better than anyone who purchased and paid cash or financed. Most people who do not lease do not appreciate the fact that you are establishing at lease inception the value at the end of the lease term. I found a company, in this case Subaru, that believed that the car would be worth more after 24 months than I did. It turns out that indeed I was correct.

09 Accord LX-S Polished metal metallic/Ivory
V6 Lip Spoiler
20% Tint All Around
Back Up lights converted to amber turn signals
Drag Specialities 18" Chrome Wheels-Goodyear F1 A/S EMT's 245/40/18

Eibach Pro Lowering Kit-2 in.
Chrome Dual Outlet Exhaust Finisher
DRL Delete

Previous Ride: 07 Subaru STI Limited

"Either Lead, Follow, or get the Hell out of the Way"
TXACCORD is offline
post #11 of 23 Old 03-13-2009, 03:44 AM
Out of Control

kopimon's Avatar

Join Date: Jul 2008
location: Nor Jerz
Posts: 2,183
Thanks: 0
Thanked 1 Time in 1 Post
Send a message via AIM to kopimon
Quote:
Originally Posted by TXACCORD View Post
Your logic escapes me, Michael. If what you suggest is correct, there would be very few home owners in the USA, as virtually all of them CAN'T afford to pay cash. America survives on credit. I am well aware of the current housing crunch/downturn but it's not stopping credit worthy people from purchasing and paying interest for things either they can't afford to pay cash for, or they choose to preserve their cash assets for other purposes. And in your six year example, well I don't know that there are too many 6 year auto leases being written. I've done the math and I've come out on the postive side of all my prior leases.
Difference is real estate is an appreciating asset. When you lease a car, you're pretty much paying for its depreciation.

«
To view links or images in signatures your post count must be 10 or greater. You currently have 0 posts.
»

19" HFP Wheels ¤ Tein SS Coils ¤ Retro Solutions 55W 5000K low beam HID & 35W 3000K fog HID ¤ 3M clear bra ¤ 3M tints (50/50/35) ¤
To view links or images in signatures your post count must be 10 or greater. You currently have 0 posts.



To view links or images in signatures your post count must be 10 or greater. You currently have 0 posts.

kopimon is offline
post #12 of 23 Old 03-13-2009, 06:47 AM
Administrator

andysinnh's Avatar

Join Date: May 2005
location: Merrimack, NH
Posts: 2,391
Thanks: 4
Thanked 26 Times in 22 Posts
Interesting discussion. Trust me, if I could afford to buy everything with cash, I'd be a much happier person. But reality is that with 3 kids, college, a house, etc, I need to finance things. The key is to try and balance the amount you finance with the interest rate, and look at what you'll end up with at the end of the term. Yes, cars depreciate, but that's not new....

The age-old debate about lease vs buy can go on forever in this thread (and probably has in other threads in this forum). People who obtain cars have (in general) two mindsets. First is someone who gets a vehicle and intends on keeping it for many many years. This person will either pay cash, or buy with a purchase term w/financing that, at the end, minimizes his/her cost and they end up with a vehicle tokeep long after the payments are done. I'd assume that eemichael83 falls into this camp.

Others like a new vehicle every few years, and those are the ones that either finance but do trade-ins regularly and really don't gain much equity over the years. Or, leasing is an attractive method here as well. But the real issue here is with folks who put significant $$$ down to reduce their monthly payments- and at the end of the lease, they walk. Net-net is that they pay the monthly payment plus the cap cost reduction amoritized over the lease term. My belief is that if you're gonna lease, don't put the $$ in up front, but rather get something that allows your lease payment to be affordable and don't tie up any more cash - since you lose ALL of it at the end, just as if you'd paid a higher monthly payment.

But in this case, here's someone who paid $$ up front and then did a lease, but now wants to buy out the lease and not lose the up-front cash like he would if he just let the lease run out. This is goodness - but not total goodness - since the lease is treated just like a loan in terms of early-termination. If you go to Honda's online payment system, you get a buyout price each month - and you can choose to either do that buyout, or pay the remaining lease payments plus the residual value of the vehicle as termed in your lease. In many cases these figures may be the same - but the numbers can vary.

The real question is - would that buyout match what you could buy the same car for at a dealer's lot today (age and miles included)? If you did a $0 down lease, the answer would be a big NO during the first year of a lease, since you're very early on in the payment cycle. But having put $$$ down up front, the answer would be Yes - just as if you'd have a down-payment with that vehicle off a dealer's lot today.

Bottom line - you can buy it out today or at the end of term - and you'd realize some of that $$ you paid up front. But the question is - would you pay cash for the buyout? Or would you finance the balance and then start paying off the car as an equity loan vs a lease? You'd have to run THOSE numbers to see if they added up to you.

Cheers - andy
andysinnh is offline
post #13 of 23 Old 03-13-2009, 07:21 AM
4th Gear

Join Date: Nov 2004
Posts: 233
Thanks: 1
Thanked 3 Times in 3 Posts
Quote:
Originally Posted by eemichael83 View Post
Correct, but in this situation the only other option is to RENT... which is wasted money.
hate to burst your bubble... but most renters are renting from someone who FINANCED (CREDIT) the property.

You are trading someones ability to get credit (landlord) for someone who does not (renter)... this is not always the case, but in cases it is.

There are other times when renting does make sense ... it is not always $$ wasted. It is a trade off.

As an owner, you have little things like, maintenance, taxes, repairs to property (roof, siding, etc) and appliances. All of these things are exposure to failure or increase at some point. For someone not willing (or able) to assume this risk, transfers this risk to the property owner, and pays for these services in the form of RENT.

Many times, rent is cheaper than ownership, and allows for a comfortable lifing at a reasonable cost without the ownership issues or headaches...you pick up the phone and it is someone else's problem.

People were able to buy houses based on low or no $$ down (which is why many were renting in the first place) and low interest rates.... usually bad times for those with apartment buildings (tell me about it!)

Now that the credit is shrinking, more $$ is required for down payment (lets not get in to forclosures for now) this is usually a good thing for apartmentowners...because people can no longer qualify... so the rental market is usually better.
marinakorp is offline
post #14 of 23 Old 03-13-2009, 06:14 PM
4th Gear

eemichael83's Avatar

Join Date: Jan 2009
Posts: 237
Thanks: 0
Thanked 0 Times in 0 Posts
Quote:
Originally Posted by marinakorp View Post
hate to burst your bubble... but most renters are renting from someone who FINANCED (CREDIT) the property.

You are trading someones ability to get credit (landlord) for someone who does not (renter)... this is not always the case, but in cases it is.

There are other times when renting does make sense ... it is not always $$ wasted. It is a trade off.

As an owner, you have little things like, maintenance, taxes, repairs to property (roof, siding, etc) and appliances. All of these things are exposure to failure or increase at some point. For someone not willing (or able) to assume this risk, transfers this risk to the property owner, and pays for these services in the form of RENT.

Many times, rent is cheaper than ownership, and allows for a comfortable lifing at a reasonable cost without the ownership issues or headaches...you pick up the phone and it is someone else's problem.

People were able to buy houses based on low or no $$ down (which is why many were renting in the first place) and low interest rates.... usually bad times for those with apartment buildings (tell me about it!)

Now that the credit is shrinking, more $$ is required for down payment (lets not get in to forclosures for now) this is usually a good thing for apartmentowners...because people can no longer qualify... so the rental market is usually better.
You're not bursting my bubble. I'm aware that these properties are financed, but then you rent them at a premium. Do you really think that landlords are going to lease out their property for free or at a loss? No, they are making money from it. And yes, the maintenance and repairs services are covered under rent, but the large majority of the time these services are not needed and yet you pay for them every month regardless. If you had kept readin, you would have also seen that I stated that there ARE some circumstances in which renting is better than buying I wouldn't, however, say that rental is usually better though. You've pointed out that there are hiddin costs to ownership such as maintenance and repairs,etc... but you fail to mention the tax deductions, which if you are in early stages of your amortization schedule can be 80%+ of your mortgage for the year, of which 28% of that, you get back! You also fail to mention that rent generally increases every few years (sometimes more frequently) to keep up with inflation. A fixed rate mortgage will not. Just imagine how much rent will be 30 years from now. Additionally, the property value will historically doubles every 7-10 years. Given the circumstances of the economy, we wont be able to expect that kind of return, but it will at least increase over the course of the 30 yr loan. So... you get the benefit of avoiding inflation from renting and will also be increasing your equity. Something you'd never get from renting... sorry to burst YOUR bubble.
eemichael83 is offline
post #15 of 23 Old 03-13-2009, 06:19 PM
banned

Join Date: Feb 2009
location: MPK 626
Posts: 287
Thanks: 0
Thanked 0 Times in 0 Posts
Send a message via AIM to V1etxb0iz626 Send a message via Yahoo to V1etxb0iz626
just get watever u like man no need to think too long
as long as u like it and think it is good for u then take it if not then leave it

V1etxb0iz626 is offline
Advertisement

Reply

Quick Reply
Message:
Options

Register Now



In order to be able to post messages on the Drive Accord Honda Forums forums, you must first register.
Please enter your desired user name, your email address and other required details in the form below.
The answer to the random question may be found under the Off Topic section of the forums and in the "Drive Accord Forums" category.

User Name:
Password
Please enter a password for your user account. Note that passwords are case-sensitive.

Password:


Confirm Password:
Email Address
Please enter a valid email address for yourself.

Email Address:
OR

Log-in









Human Verification

In order to verify that you are a human and not a spam bot, please enter the answer into the following box below based on the instructions contained in the graphic.



Thread Tools Search this Thread
Show Printable Version Show Printable Version
Email this Page Email this Page
Search this Thread:

Advanced Search
Display Modes Rate This Thread
Linear Mode Linear Mode
Rate This Thread:



Posting Rules
You may post new threads
You may post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are On

For the best viewing experience please update your browser to


Related pages


honda key fob not workinghonda accord 1994 specshonda accord electrical problemsakebono pro-act98 honda accord recallsr132arexing2008 honda crv timing belt replacement schedulehonda civic hybrid radio codeevo x megan exhaustprelude alternatorhow to clean iac valve350z rims specscallahan brakes and rotorsreplacement headlamp assembly2007 honda civic dash kit2001 acura tl type s specs1999 acura tl mpgyonaka clutchhondapartswarehouse1995 honda civic owners manualkicker cvx 12 specshonda accord v6 3.0average cost to repair brakesdifference between 215 and 225 tire sizeodyssey amplifiercost to repair bent rimwhat happens when the starter solenoid goes badpurolator l14610what do sway bar end links docat crap defoggerhematite metallichonda mower registrationhonda accord diesel reviewhonda crv trouble codesmotive products brake bleeder1999 honda accord problems350z bolt onswagner brakes reviewhonda fit b1272155-sda-a01honda civic 2006 air filter1992 honda accord body kits2003 mitsubishi eclipse throttle bodymaaco package prices6x9 speakershonda civic front strutshonda valve cover gasket replacement1995 honda accord2000 honda accord lengthbosch oil filter 33232007 saturn vue redlinemotorcraft 5w30 5 quarttsw spa wheels2006 honda civic wiper blade replacementsuper tech antifreeze msdskirkland car battery costcoacurazine.comvsa on honda accordhalf shaft replacement costdifference between 350z and 370zcost of replacing cv axlehonda civic 2006 check engine lighthonda leather cleanernexus 7 in dash mountreplace starter honda accord2003 accord exlh22 cb71995 honda civic radio codecar wheel stud patternshow much does a hyundai sonata weigh2010 mazda 3 wheel bolt patternprorated warranty1999 honda civic sun visorair intake leak2002 honda accord automatic transmission problemshonda civic transmission codescoverking leatherette seat covershfp body kit