| neide |
I saw a site from Capital One the other day - they now offer a apply-online car loan so you can buyout your own lease. Since I'm 90% sure I'm going to buy my X at the end of the lease, I starting thinking about it.
Here's what I'm thinking, sounds like a good idea to me, anyone see anything I'm missing? My residual is 20,500. Right now the payoff is about 25,000. So if I buy out the lease now, and make two years of payments (thus coinciding with the end of the lease), my outstanding balance would be around 17,000. The payments would be basically the same, give or take a couple of dollars. So it seems to me that I'd be at least 3,000 ahead.
Any thoughts or advice? |
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| neide |
| Oh, and the loan rates are pretty good, 6.25%, and anywhere from 1 to 6 years. |
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| KenF |
6.25 sounds pretty high, my credit union's (NFCU) rates are:
2.9% for 36 months
4.9% 37-48 months
5.5% for 49-60 months
5.9% for up to 96 months, depending on the sticker price of the vehicle.
If you are looking at less than 5 years, I would certainly shop around. The $3000 difference seems too good to be true. Just make sure you are comparing apples to apples. Does the lease payment include your tax? What about the loan, will you still owe taxes on the car if you swap out your lease? |
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| neide |
quote:
Originally posted by KenF
6.25 sounds pretty high, my credit union's (NFCU) rates are:
2.9% for 36 months
4.9% 37-48 months
5.5% for 49-60 months
5.9% for up to 96 months, depending on the sticker price of the vehicle.
I will shop around on the rate, BTW. But I think the rates you're talking about above are for new vehicles. And it seems like they assess a slight penalty in your rate because its a lease buyout.
Taxes is a good question. I'm not sure if I need to pay taxes on the buyout amount? I had just figured they would be about the same amount in the payment, but hadn't really though of the logistics of it. |
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| JeffK |
Dear Neide:
You posted:
Here's what I'm thinking, sounds like a good idea to me, anyone see anything I'm missing? My residual is 20,500. Right now the payoff is about 25,000. So if I buy out the lease now, and make two years of payments (thus coinciding with the end of the lease), my outstanding balance would be around 17,000. The payments would be basically the same, give or take a couple of dollars. So it seems to me that I'd be at least 3,000 ahead.
Any thoughts or advice?
First I would double check and make sure your buy out is only $25,000. I think with two years left on the lease, with a residual of $20,500, I think your buy out will be higher.
Second, do a careful and honest analysis of what a four year old MDX will actually be worth. Clearly if you believe it will be worth more than $17,000 then this deal makes sense, assuming there is no tax involved.
I think you will have to pay tax on the buy out - just as you pay tax when you buy the car at the end of the lease. If you do, then you will have to borrow more to cover the tax.
BTW, how long will your loan be? What will the monthly payment of the loan vs. the lease be?
JeffK |
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