I am sure these have existed and are nothing new but today I saw an advertisement for a consumer open end lease. I assume they make this very clear. Why would anyone agree to such terms?
Available only to qualified customers through Mercedes-Benz Financial Services. Monthly payment discount available to first-time lessees only. On select models. Plus tax, title, license, and dealer fees. Security deposit included. $0.25 per mile over 30,000 miles. $5,043 due at signing includes $549 first month's payment, $3,699 capitalized cost reduction, and $795 acquisition fee. An extra charge may be imposed at the end of the lease term where the lessee's liability (if any) is based on the difference between the residual value of the leased property and its realized value at the end of the lease term. With approved credit. Not all customers will qualify. Not available with some other offers. Residency restrictions may apply. See dealer for details.†Expires 1/31/17
Is this a situation where the lessee gets the risk of low resale value and the lessor gets the rewards of high resale value? Or does the lessor pay the lessee if the resale value exceeds the residual value?
speedracer714 said: Me: I'd like to return my lease vehicle.
MB: The actual value of the vehicle is less than the residual on the lease agreement.
Me: What's it worth then?
MB: Actual value is $15,000 instead of $35,000 on the lease agreement. You owe $20,000.
Me: Okay, I'll buy it for $15,000 and sell it to Carmax for $16k. Pocket $1k for doing less than a few hours of work.
Extreme example, but nonetheless shitty clause. †Lessee is ALWAYS better off returning a leased vehicle to the highest bidder. † I don't see how that gets you out of owing them $20,000 as in your example.
The key is to not get attached to any particular vehicle. Look at a range of acceptable vehicles and lease from whoever has the best subsidized lease deals from the manufacturer's finance company. There are amazing lease deals possible if you are willing to go with what happens to have the best deal active when you are ready to get a new vehicle.
gnopgnip said: The manufacturers are pretty good about predicting the residual. Even if they are wrong you would be better off buying the car, and then selling it in a few years 98% of the time. †† Can you explain?†
Moosy said: gnopgnip said: The manufacturers are pretty good about predicting the residual. Even if they are wrong you would be better off buying the car, and then selling it in a few years 98% of the time. †† Can you explain?† †† It's hard for him to explain because he's not making any sense. If the manufacturer predicts a high residual, then you pay less over the course of the lease and the manufacturer eats the loss when the car is turned it. For instance if they estimate that the car is worth 60% at the end of the lease and it's worth 50%, you paid for 40% and got to use 50%. On the other hand if they say it's worth 50% and it's really worth 60% at trade in, that means you paid 50% and it was only worth 40%. You can get some of that back by just buying the car at least end. That's just a bad deal though, the best deal is when the manufacturer selects an artificially high residual and you can confirm that by checking to see what used cars of the same model are selling for now that are lease returns. Then the manufacturer is basically subsidizing the cost of the lease and eating the loss at the end. That's why leasing can be good, take 10% off at the top and the if the residual is too high, you're getting another bonus when turning the car in and if you apply the rebate just to the lease period, the lease works out cheaper than buying.†
The craziest part of an open ended lease is that the greatest depreciation takes place at the beginning of the lease, but the payments are averaged out over the life of the lease, you're actually paying more by keeping it longer.†
ryanthompsonastic said: Hello guys, Iím planning to buy latest BMW on leasing from past 2 months but I canít found any good deal on it. So, Can anyone tell me the good car leasing dealer? † The dealer nearest your house.
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