Buying out a lease - work with dealer or go right to bank?

[ShrimpHappens]

Will banks/credit unions make me use a used car loan rate or a new car loan rate?

Since the Jeep has been titled, it's definitely a "used" vehicle. How the lender deals with that is up to them.

The credit union I deal with has it plainly on their website that they do the same rates for 3 year old, <30k mileage as they do for new. But I'd be shocked if the bank my checking is with does the same.

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[Puch]

I'm planning to buyout my lease on my '20 Gladiator Overland due to a strong positive equity position in the truck.

What has been anyone's experience in a Jeep buyout transaction? My lease is with US Bank, do folks go right to US Bank to complete the buyout or have you worked with the dealer? I hear the dealer can maybe do stuff like make it a CPO and help you out with extended warranty coverage, has anyone found that worth it? Or more likely to be a money grab from the dealer?

Appreciate any thoughts or insights!

I bought out a lease on a Cherokee a few yrs back. I went through the lean-holder. It was very easy. My experience with dealers, they don’t do anything for free. I’m guessing they would try to charge something for their “services”.

 

[Koolcarguy]

I'm planning to buyout my lease on my '20 Gladiator Overland due to a strong positive equity position in the truck.

What has been anyone's experience in a Jeep buyout transaction? My lease is with US Bank, do folks go right to US Bank to complete the buyout or have you worked with the dealer? I hear the dealer can maybe do stuff like make it a CPO and help you out with extended warranty coverage, has anyone found that worth it? Or more likely to be a money grab from the dealer?

Appreciate any thoughts or insights!

Ok as a dealer that has worked out buyouts on lots of leases. Your best bet is to go your bank after getting lease buyout amount and have your own bank do the loan. When buying or financing threw a dealer they make back end money as we call it in the business. So to explain further if you go to the Jeep dealer and they tell you they can get you financed on the buyout what will happen is they will tell you something like we can get you financed at say 7.5% interest rate so what that means is the bank said they would take the loan at 5 or 6% rate and the dealer gets paid on the point difference won't be huge on a $20k buyout but they'll make $1500 to $2000 on say a new Jeep they can make upwards of 4 to 5k on financing alone. Always better if you get your own financing if you have good credit

 

[mdh67]

The lease agreement VERY LIKELY describes how any buyout must happen. You may not have a choice.

From US Bank website:


What is a lease buyout loan?
You should start thinking about your plans for the end of your lease term three to six months in advance. One option is to buy out your lease. A lease buyout loan lets you purchase the vehicle for the amount noted in your lease agreement.
If you have a U.S. Bank auto lease, for example, your purchase option price is calculated as the residual value (the value of the vehicle at the end of the lease) plus a purchase option fee as noted in your lease agreement. The total payoff amount will also include applicable taxes, fees and any other outstanding amounts from your lease.

 

[ShrimpHappens]

The lease agreement VERY LIKELY describes how any buyout must happen. You may not have a choice.

From US Bank website:


What is a lease buyout loan?
You should start thinking about your plans for the end of your lease term three to six months in advance. One option is to buy out your lease. A lease buyout loan lets you purchase the vehicle for the amount noted in your lease agreement.
If you have a U.S. Bank auto lease, for example, your purchase option price is calculated as the residual value (the value of the vehicle at the end of the lease) plus a purchase option fee as noted in your lease agreement. The total payoff amount will also include applicable taxes, fees and any other outstanding amounts from your lease.

That describes more what than how. They're cautioning that there will be more to your purchase price than JUST the residual.

As far as how you pay that amount (short of writing a fat check), well that's what this whole thread is about.

 

[JarHeadLV]

Personally, I'd go to my OWN bank or even better a credit union, they have your best interests. Most likely, the dealer has their best interests, not yours. Ultimately, go with who offers you the better deal!

 

[Not2Late]

I would also look closely at what the buy-out number is on the lease as compared to what you could get for the same money if you simply walked away from it and then looked to see what you could buy you on the open market. My (basic) understanding of leases is your monthy payment is all about how much they set the residual at. You are paying on the difference between sale price and residual plus the finance costs and other fees. So, an inflated residual will equal smaller monthly payments. Fine for while you are leasing, but not if you ultimately plan on then buying the car later on.

Of course, you have the benefit of knowing how your vehicle has been treated! So it may make more sense for you to keep it even if you think it would cost you more than buying something else.

 

[ShrimpHappens]

I would also look closely at what the buy-out number is on the lease as compared to what you could get for the same money if you simply walked away from it and then looked to see what you could buy you on the open market. My (basic) understanding of leases is your monthy payment is all about how much they set the residual at. You are paying on the difference between sale price and residual plus the finance costs and other fees. So, an inflated residual will equal smaller monthly payments. Fine for while you are leasing, but not if you ultimately plan on then buying the car later on.

Of course, you have the benefit of knowing how your vehicle has been treated! So it may make more sense for you to keep it even if you think it would cost you more than buying something else.

You're exactly right; this is what articles about leasing vs. buying talk about. The thing to remember, though, is that we're likely not in a situation where we're looking at a $18,000 buyout on a car that's selling for $17,000.

My situation is that my buyout is about $7k less than market value. So doing a regular-old lease return where you turn in the keys and walk away would be dumb, when I could latch on to that value. Sounds like the OP's is the same or better, which is why he's talking about buying his out.

 

[SamMR]

I bought my US Bank lease out late last year. I am located in Massachusetts.

Assuming nothing has changed there is a bit of strategy and timing with working with US Bank.

I waited until shortly after a monthly payment was due to ensure I had a good stretch of time where I know the buyout number wouldn’t change (even if the quote expired).

You need to call US Bank and request a buy off quote. There was an option to go all automated or you could talk to a person. First I went the automated approach which gives you a verbal price and asks if you want them to mail you the documents. Problem is the quote is only good for like 10 days and it took 12 days to get to me.

So in that light just talk to a person and ask them to fax it if you have access to fax since they got it to me in about 20 minutes.

Before I requested the fax I applied for a loan through a local credit union which took a few days, then I set an appointment up to fill out and sign for the loan basically the day after I received the buy out paperwork.

The bank sent the check to US Bank which includes sales tax. About 3 weeks later I received a packet from US Bank with the title, a check to Mass DOT for the sales tax, and a bill of sale.

I would of preferred to have had my insurance agent do my title and registration paperwork and get my plates without going to the RMV but because of the check made directly out to Mass DOT I had to go to the RMV myself. Basically I had to go with my registration and title form listing the credit union as the lienholder, bill of sale, and check for sales tax, and then pay for the other fees with another form of payment and BAM… new plates and registration. If you are from mass make sure you have a stamp from your insurance company on your RTA form.

Hope this helps.

 

[Junior88]

I bought my US Bank lease out late last year. I am located in Massachusetts.

Assuming nothing has changed there is a bit of strategy and timing with working with US Bank.

I waited until shortly after a monthly payment was due to ensure I had a good stretch of time where I know the buyout number wouldn’t change (even if the quote expired).

You need to call US Bank and request a buy off quote. There was an option to go all automated or you could talk to a person. First I went the automated approach which gives you a verbal price and asks if you want them to mail you the documents. Problem is the quote is only good for like 10 days and it took 12 days to get to me.

So in that light just talk to a person and ask them to fax it if you have access to fax since they got it to me in about 20 minutes.

Before I requested the fax I applied for a loan through a local credit union which took a few days, then I set an appointment up to fill out and sign for the loan basically the day after I received the buy out paperwork.

The bank sent the check to US Bank which includes sales tax. About 3 weeks later I received a packet from US Bank with the title, a check to Mass DOT for the sales tax, and a bill of sale.

I would of preferred to have had my insurance agent do my title and registration paperwork and get my plates without going to the RMV but because of the check made directly out to Mass DOT I had to go to the RMV myself. Basically I had to go with my registration and title form listing the credit union as the lienholder, bill of sale, and check for sales tax, and then pay for the other fees with another form of payment and BAM… new plates and registration. If you are from mass make sure you have a stamp from your insurance company on your RTA form.

Hope this helps.

Super helpful! Thanks a ton, I’m also in MA so this is incredibly helpful.

 

[Rainman519]

The one thing people forget, is that when you buy-out a lease, you have to pay (add-in) the sales tax to the financed amount, that's why the financed total is more then the "owed" total when purchasing. It varies with situation, but since you've owned it since new, the positive equity combined with knowing the history /maintenance of the vehicle from day one makes the decision easier to swallow.

 

[talljeeper]

I scored huge on my JT LE. Had the guaranteed buyout price which was way lower than current used value to purchase. Went to my employee credit union and finance for 2.43%. Total Win.

 

[Erievon]

I work for a bank and can't touch that. Nice!

 

[RobertRinAustin]

I will also be in this same situation soon

You're screwed and will have to go to a dealer and pay them about $1k for the privilege because of Florida law.

 

[krivanj]

You're screwed and will have to go to a dealer and pay them about $1k for the privilege because of Florida law.

My brother and I did it with US Bank from Florida back in February. Worked just like people reported above. The dealership said they had nothing to do with this. Call US Bank as stated above and get your information.
Right after we had the title, my brother signed it over to me. We took it to the county vehicle department and we were done. ( I had paid the payoff to US Bank.)

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