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How
to Buy a Used Car and Not Get Taken
7.
End of Lease
Let's say you come to the end of your lease, and the lease
company has set your residual value at $15,500. You now
have the option of buying the car for that amount. Or, if
you prefer, you can simply walk away. Now, let's further
assume that the leasing company made a mistake and that
they missed the residual by two thousand dollars. (In a
few cases the leasing company has been off by as much as
$5,000.) Or possibly, at the time you leased the car, they
were quoting high residuals-i.e., supporting the lease-to
help reduce the payments and make the price more attractive.
For
illustration, we'll say that the car has an actual wholesale
value of $13,500. Understand that when you signed the lease,
the leasing company based your monthly payment on the residual.
You paid only for what they estimated would be the depreciation
of the car - assuming it is kept in good condition-over
the term of the lease. The leasing company intended to wholesale
the car for a price equal to and maybe even slightly higher
than the residual value to recoup their investment and make
a profit.
But
what happens if the wholesale value is under the residual
estimate? Very simply the leasing company is out the $2,000.
They're going to have to wholesale it for the going price
and eat the loss. Plus, they're going to have to pay to have
it picked up at the dealer where you turn it in and transport
it to the auction. That costs money, which only adds to their
loss. If you like the car and think you might want to buy
it or think that you may be able to sell it yourself, you're
in a perfect position to offer the leasing company the current
wholesale price. Chances are they will jump at the chance
to have you take it off their hands. At the very least, they
will save the time and money associated with having to take
it to auction.
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Selling
your leased car
If you're thinking about selling your leased car at
the end of the term. you might want to consider the
following:
-
Two months before the end of the lease, have the
car appraised by three different wholesalers to
see if the car has fallen below its residual.
-
Call the lease company and tell them that you'd
like to buy the car, not at the residual figure
in the lease agreement, but at the current wholesale
price. If they agree, and chances are the-. will,
you're free to market the car aggressively. By
starting the process two months before the end
of the lease, you will have ample opportunity
to sell the car without investing any of your
own money-other than a nice detail job.
-
Advertise
the car. (See "About Selling Your Car.")
Put a price on it that is about 20 to 25 percent
higher than the original estimate of the residual.
4.
Once you have a buyer, write up an agreement and ask
for a deposit. After all, if the dealers can ask, so
can you. Tell the buyer it's good-faith money to hold
the car until the close.
5.
Should the car sell before the end of the lease, call
the lease company, make your final payment, and make
arrangements to buy the car. If necessary, you can help
finance your purchase by arranging a short term-30-day-loan
at your bank. They can hold the title for collateral.
6.
On closing day, have the buyer bring a certified check,
cashier check, or cash to the bank. Have the bank recertify
that the check is good and then sign over the title.
Once the buyer leaves, pay off the bank and pocket the
profit.
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