Re: Buying, Owning, Driving and Maintaining a car in North America Quote:
Originally Posted by Technocrat Why not share it here for everyone's benefit |
Hehe.. Alright, that is actually not a bad idea either.
I leased a 2010 VW Jetta TDI in June 2010 when I had zilch credit history. I got a 15k miles a year lease for 30 months at 380$ a month for a fully loaded car with DSG and Navi and Sunroof and everything else.
I had to leave the US on a personal emergency in November 2011 after having gone through half the lease. I went back to the local VW dealer to ask for a buying out the lease. His valuation of the car was 1500$ dollars below what the leasing company (VW Credit) was quoting for the car. What it meant to me was I and the dealer would together buy out the car and I make an additional payment of 1500$ at that time. Unsatisfied with my options, I went and asked a couple of other folks. I was in a hurry and had roughly a week to wind up everything before heading back. Carmax offered me a price around 300$ less than the asking price from the leasing company for the car and I took that offer making a loss of 300$ in the process.
To dwell a little more into the economics, when you sign up for the lease, what you are also agreeing to are the payoff quote calculations for the car based on your monthly payment. For eg., if you have a 300$ a month lease on a 25k selling price car, your payoff quote after 10 months maybe very close to 22k. However, the market value of the car would be more like 21k or less considering new car depreciation etc. At that time, if you would like to sell the car, you will very likely make a loss of 1k dollars or more. So if BMW offers you a 350$ a month lease on a 45k$ car for 3 years and you want to get out of the lease after half the lease your payoff quote would be very likely around 37k$ but the market value of the car after 18 months is likely to be 32-33k or even lesser. So if you end up in the market trying to buy out the lease, your losses could be in to several thousand dollars.
However there is also another option to get out of a lease, by transferring your lease onto some one else. Not all manufacturers support this option. In case they do, you have to find the person to transfer to, pay a lease transfer fee, the new person has to be credit approved for taking over the remainder of the lease. Not an easy option by any means.
If you are not constrained on how long you will stay here and perhaps your company is paying for your leases, this is an excellent option. Also, for people who want to change cars often, leasing is again a very good option. You are however, responsible for all damage and excess wear and tear for the car at the end of the lease period. Typically lease return cars end up in the dealer lots as certified pre owned as they expect regular dealer maintenance and upkeep for all leased cars.
So, in summary, unless you are very sure about your tenure here, I would always suggest to stay away from leases.
Disclaimer: This is my recommendation based on my personal experience. You may feel differently about it
Last edited by vineethvazhayil : 8th January 2013 at 22:00.
Reason: Adding disclaimer
|