Hello Everyone,

Let's say I lease a S550 and they say that the residual on a 134K MSRP car is going to be $80k (Real world example). Let's say I want to buy the car after the 3 year lease but the market says the car is really only worth 65k. Can I negotiate with them? Or would I have to turn the car in and try to buy it again? As who would pay $80k if similar cars are selling for 65k

Thanks,

 

Yes, you can negotiate the buy out at end of lease. Only thing I am sure you cannot negotiate at end of a lease is over miles charges if you are turning it in.
-Matt

 

Not exactly

MBFS is now like a few other OEMs where they no longer *directly* negotiate the buy out; they used to negotiate years ago

But, you can make a deal with your dealer i.e. ask him for his buy out price (always lower than yours), and see how much of the savings he will pass your way

 

off-brand sorry

the VW ID BUZZ is coming very soon.

Should we buy it or lease it? It's hard to predict its depreciation curve because it does have the potential to become a collectable car?

 

Off brand and a 8 year old thread lol.

Ev…lease it. Not going to be a classic anytime soon, they’re going to make a ton of them. Do you intend to keep it for 30 years, and not drive it? Only shot at it being a classic.

 

many are talking about potential mark ups on that car in the first years...

 

That doesn't mean its going to be collectable. Its going to be a mass produced car that anybody can go down to the dealer and order, thats the opposite of collectable.

 

If you are going to hijack my 8 year old thread, I'm going to have to come back and say something

IMHO: Purchasing cars can be viewed as an investment, but they often carry a higher risk compared to traditional investments. I doubt that the Volkswagen ID.Buzz will attain collectible status and wouldn't consider it an investment-grade vehicle..Electric vehicles tend to depreciate faster than gasoline-powered cars. Leasing can serve as a protection against significant depreciation. If you lease the car with an average interest rate of 8% and compare it to a 10% return from the market, the financial outcomes are roughly equivalent. If, at the end of the lease, the car's value is below the predicted residual, you've effectively saved money. Conversely, if its value exceeds expectations due to unforeseen collectible status, you can choose to purchase it at the predetermined residual price.

The challenge arises when the residual value of the car is set at, for example, $35k, but its actual market value is only $20k. In such scenarios, you might prefer to return the car. However, the dealer might be hesitant to negotiate. For instance, the dealer buyout might be $25k, which is $5k over the market value, and they don't want the car. This often leads them to decline accepting it on a lease return, and the car might end up at an auction organized by the manufacturer. In such a case, I'd simply buy another car and save the $15k difference. And if the difference is only $2k? Well, it's negligible. I would have paid that $2k anyways if I had chosen to buy the car outright from the beginning.

My general rule for cars is to always buy the most cost-effective option that meets your needs. If interest rates are below 10%, it's typically best to lease in order to hedge against depreciation on higher end or electric vehicles. For a $20K Civic, I'd recommend paying cash to achieve a guaranteed 7% return through savings on interest loan rates. Typically, the lease-end residual value is set higher than the car's actual market value, which means there's limited potential to save money by choosing not to buy it out, especially for more affordable vehicles.

The primary reason companies set the lease residual value higher than the actual market rate is to incentivize leasing. They anticipate that many consumers will opt to purchase a new car every three years. If the monthly payment for a loan based on the residual value matches that of a lease for a new car, it encourages continual leasing. A strategy that many high-end car companies use.

P.S: let's say there's a $50,000 markup on this car whether you pay cash or lease it it's irrelevant. The same concept will apply as above.

 

I realized I used this information 8 years ago when I bought my car and I never said thank you. Thank you !!