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Old 02-25-2016, 02:14 PM
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Question Curious: What numbers to use on lease trade-ins?

Hi folks!

Out of curiosity, I gave Chrysler Capital a call to request a lease pay off quote on my 2015 Summit. Not that I want to get rid of it but I calculated my own little sheet to evaluate were I'm currently standing. I calculated a current pay-off of about $42,500. When I was told on the phone it was $45,330, I was a bit disappointed. Fortunately, the lady on the phone was so nice to send me an e-mail with all the details which I attached:



Currently, I have made 16 of my 39 payments and put 6K miles on it. I'm hoping to have some equity when I'm getting my next (2017) Summit in April of 2017 - so in about 14 months.

My question is: The letter clearly states that this quote would not be valid if I would trade the vehicle in for a different one. So I'm wondering what would change? Would the tax also be due in case of a dealer trade-in?

I could also ask a local dealer but I'd rather ask you. I'm sure there are some folks on this forum who have experience with these transactions..

Thanks for your input!

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  #2  
Old 02-25-2016, 05:43 PM
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Re: Curious: What numbers to use on lease trade-ins?

The tax may or may not be different...that's often state-specific. I'm betting there may be a difference in fees, however.

Of course, this begs the question...what's to keep someone from buying it out this week and trading it in next week? You'd want to know what the "dealer numbers" would be in that situation to make a good comparison...which unfortunately means talking with the dealer.
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Old 02-25-2016, 06:26 PM
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Re: Curious: What numbers to use on lease trade-ins?

Thanks, Jim!

I just returned from my local dealer. I had some other business in the area so I said to myself 'let's give it a try'.

After getting in touch with somebody who seemed to know the business, I was told that the tax wouldn't apply if I would trade the vehicle in and lease another one - which I'm planning to do.

I also just got off the phone with Chrysler Capital and fortunately, they confirmed it.

Tax does not apply and - to my surprise - there is no additional fee of any kind - not even the $350 would apply..

It seems they really want to hold on to their customers.

This puts me in a nice position for next year. Having a pay-off for the trade-in of $42K and a current KBB of about $40K means that building up equity is not too far away. Heck, I really deserve it for paying $780/month on a 3-year lease...
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Old 02-25-2016, 07:58 PM
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Re: Curious: What numbers to use on lease trade-ins?

From what you're saying you paid sticker or more when you signed the lease, just from judging your payment of $780x16 payments on top of the payoff brings you in right at the MSRP when you originally got the car.
Of course this is irrelevant at this point, as long you're happy it doesn't really matter but don't be surprised that you might be upside down or close to break even.


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Old 02-25-2016, 10:53 PM
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Re: Curious: What numbers to use on lease trade-ins?

Quote:
Originally Posted by rszwestko View Post
From what you're saying you paid sticker or more when you signed the lease, just from judging your payment of $780x16 payments on top of the payoff brings you in right at the MSRP when you originally got the car.
Of course this is irrelevant at this point, as long you're happy it doesn't really matter but don't be surprised that you might be upside down or close to break even.
I actually paid 2% below invoice through my Tread Lightly membership. That's the best deal you could get in my area at that point in time. Of course there were the group deals available - but those were thousands of miles away. Driving my trade to those dealerships would have burned up all potential savings.

I got one of the first MY15s and I can tell you that the leasing numbers weren't quite as attractive as they are today. On my 39 month lease, they used a residual of $26K which is about 49%. While this is bad for my monthly payment, it will certainly help with equity.

The reason why my balance isn't lower today is due to the fact that I rolled almost $2K of negative equity from my previous vehicle into this deal. I probably wiped that out already.

No doubt I'm probably slightly upside down right now but I hardly believe that's still going to be the case in April of 2017.
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Old 02-26-2016, 07:26 AM
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Re: Curious: What numbers to use on lease trade-ins?

I got you, the 2k rolled in bloats the monthly. I've been following jeep leasing numbers for a while and it seems like they have attractive offers with cash back specials not so much with residuals which tend to remain more or less the same. I might actually consider financing it instead of leasing and dump the car after 3 years if the payments are similar, of course other forces come into the formula as well.


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Old 02-26-2016, 01:53 PM
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Re: Curious: What numbers to use on lease trade-ins?

Quote:
Originally Posted by GCOverland View Post

...
My question is: The letter clearly states that this quote would not be valid if I would trade the vehicle in for a different one. So I'm wondering what would change? Would the tax also be due in case of a dealer trade-in?

Simple, you are talking about 2 very different scenario's.
Chrysler Capital is just giving you the purchase price for the vehicle based upon your contractual obligation. Plus a $350 fee. The taxes are applied because it is a purchase.

If you trade, the purchase price quoted has nothing to do with the actual trade value of your car. If dealers are selling every used '15 Summit they can get their hands on, then the trade value may work in your favor. Since they're already discounting leftover new MY '15's, and nice rebates on MY16's then your trade has less appeal to the dealer. He would want to see an opportunity for a fair profit on your used '15, and realizes that it would be competing with brand new models at very close to the same price. Obviously that will drag down the trade value. Your $41K purchase price is your number from Chrysler Capital. The dealer doesn't care at all about that, he is only looking at what he could sell your car for, and how much profit he wants for his trouble.




I don't mean to come off as a jack wagon, but you are not coming out ahead with "equity" on a lease. Ever.
The dealer may spin it that you have equity, but he's just moving numbers around to make you feel better. He might show you more for your trade, but he's giving you less discount on the new vehicle.

Leases are rarely a good financial move for the consumer, if you're speaking strictly in terms of actual cost. Leases are usually an instrument to get you into a car that is nicer than you can afford, or want to pay for on a monthly basis. You'd be further ahead in your equity dilemma if you would have purchased the car in the beginning and financed it for 5 years. If you were to sell / trade at 36 mos. and subtract your gain from your original expense, you would most likely see an amortized cost of less than the $782/mo. that you've been paying.
Most people who lease are looking for the "nicer car / less $$ per month" magic bullet....but cannot tolerate the higher monthly payment if they did a straight finance purchase of the same vehicle.

Not casting judgment here, but why would you expect that scenario to ever work in your favor? The car dealer holds all the cards. He has you contractually bound to a deal that guarantees you are paying the depreciation on the vehicle, plus a fee for the privilege to do so. He also can ding you for extra wear & tear, excess miles and so on.

It is very rare that a car is worth more at the end of a lease than what your buy out number is. The car industry counts on that so that you will be encouraged to buy/lease a new one. If your car IS worth more than your buyout number, you can buy it and keep, or sell outright and use the equity for a new purchase. Either way, you would have been further ahead to have bought it originally.

Leasing companies are carrying some risk, think about all those VW diesels that have suddenly dropped in value. The lessee's are in a better position than the folks who bought, because they can simply walk away at the end of the lease. But those circumstances don't come along very often.

In the end, trying to figure out what trade in number to use is a waste of energy. The only way to know is to start shopping it around to a few dealers and see what they are willing to offer. And like always, they aren't going to roll over and give you a great number until you are ready to go on a new car... that's time consuming and painful to just get a trade in number. I would count on a clean walk at the end of this lease (assuming low miles and no excess wear) and just try to do as well as you can on the next one. Early turn in's will give them leverage against you.
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Old 02-26-2016, 02:36 PM
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Re: Curious: What numbers to use on lease trade-ins?

Your lease numbers are offensive lol

Did you say you have 16 payments remaining or paid 16 payments ? I can't go back now to look on phone.

My jeep was $50,085
After my Verizon pricing and leasing incentives it was $42,xxx

After 30 months it would be 24,xxx for the buy.

I did the math before hand and with no money down it would have been $619.00

With $2500 down (that includes first month payment ) so actually $2,xxx down my payment went to $559.67

I'm probably going to buy this thing as long as it holds up. I like it more than almost all of my cars in the recent past



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Old 02-26-2016, 02:46 PM
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Re: Curious: What numbers to use on lease trade-ins?

So your lease is for 36 months? What's your mileage allowance?

My Overland out the door was $50,xxx. That includes tax and max care. My payment is $790. So your payment is not bad at all.
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Old 02-26-2016, 02:47 PM
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Re: Curious: What numbers to use on lease trade-ins?

Quote:
Originally Posted by petey2133 View Post
Your lease numbers are offensive lol

Did you say you have 16 payments remaining or paid 16 payments ? I can't go back now to look on phone.

My jeep was $50,085
After my Verizon pricing and leasing incentives it was $42,xxx

After 30 months it would be 24,xxx for the buy.

I did the math before hand and with no money down it would have been $619.00

With $2500 down (that includes first month payment ) so actually $2,xxx down my payment went to $559.67

I'm probably going to buy this thing as long as it holds up. I like it more than almost all of my cars in the recent past



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So you put $2500 down to save $1800 in monthly payments?


Brilliant!
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Old 02-26-2016, 02:59 PM
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Re: Curious: What numbers to use on lease trade-ins?

No I had an objective to get my payment to a certain dollar amount.

And I also considered purchasing it before putting the money down on it.

Your going to pay the $2500 or the $1800 either way you look at it, merely paid it up front.

For every $1000 down it was basically a $30 swing. Not sure what your point is. Even with no money down my payment was still reasonable at 619.00


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Old 02-26-2016, 03:02 PM
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Re: Curious: What numbers to use on lease trade-ins?

Quote:
Originally Posted by Blkfenders View Post
So you put $2500 down to save $1800 in monthly payments?


Brilliant!
$2500 included first months payment.
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