HarryTheSpider

Our car 2 yr lease is up for renewal at the end of December.

The car value when the lease began was about $25k. The projected residual is $14k. The car is in excellent condition, about 15,000 miles on the clock. Locally they are being advertised second hand for around the $18-19K mark.

It would seem to make sense to buy the car for it's residual value and sell it privately...

The car company might argue that the residual value is more...

What we would like to do is get new leases for 2 cars - spare me the 'leases are daylight robbery' blah - the decision is based on cash flow and maintaining savings for a house purchase...

So, any suggestions on tactics/ways to proceed?

Any options not mentioned here that we should consider?

I should add that we're waiting on GC. L1 must be renewed by next Sept if the GCs haven't come through by then...

SpoogleDrummer

Have you factored in all the costs of buying and then selling the car? Such as taxes and other fees they'll add on. Then the hassle and costs of selling the car on top, that may well eat in to the 4-5K difference. Do you also intend to lease the other 2 cars whilst trying to sell the other car or hold off on the leases until the car sells? You'd have to factor in insurance, tags etc in too if not holding off.

But if you're set on buying it (and I've really no clue if that's a bad idea or not) then I'd say you're in a very good position to negotiate the price as they won't want to lose a customer leasing 2 cars from them just to get an extra 4-5K on the price of a car as they'll easily make that back on the leases.

fatbrit

You've just demonstrated with your own experience what bad value a lease was.....and are now thinking of taking out another two leases. I don't know how anyone could advise without offending.

HarryTheSpider

Ah ha, young Fatbrit, I didn't think you could resist commenting!!

As per my first post on this thread, and other posts on other threads, the driver here is monthly cash flow, not total cost of ownership. If you have some objective insights, I'd genuinely love to see them.

If you have subjective barbs, please do them in the style of Bob - I'm always on the look out for new ways to express invective in that style!!

Rete

Who in the private market is going to buy your used car for $18 or $19 thousand when they can mostly like to the dealership and get the same make and model for a few thousand less and have at least a limited warranty on the vehicle. People who have that kind of money won't want to buy used but would prefer new.

As for monthly outgo, the entire picture needs to be looked at and not just the 1 month pixel of the picture.

I just purchased my 2013 vehcile with the trade-in value of my 2005 plus additional cash down and my payments are less than what a lease would have been. The additional cash down would be the c/d you would have to put on the rental so that is a washout but I had a decent vehicle with low mileage for a trade-in and I go a great new car with 2% interest on the loan

HarryTheSpider

Thanks Rete for your observations.

Based on them I went back to the web to take note of who is selling my make/model/year at between $18-$19k and it seems to be mostly dealers, so a private sale would need to ask less to make sense (a new car would be around $23-25K) - which I think is your point!

Prompted by the responses so far I asked some different questions of myself and the web. The fly in the ointment seems to be down to when the GCs come through. Until they do it's all down to the L1 which expires next Sept. nobody is going to lease me a car, or give me loan finance beyond that date.

So immediate options are
1 - buy a used car using savings put aside for a house deposit. Down side is spending a big lump sum upfront.
2 - rent a car until the GC comes through or visa gets renewed. Up side is we'd be paying monthly and the savings don't get hit - very important to us.
3 - see if we can extend the lease as long as possible while waiting for the GC, the quid pro quo being we buy/lease new from the car company at the end if it (I.e. order the new cars at the time we sign on for any extension...)
4 - buy new, with finance. The visa/GC issues are still there, and credit score is not great, so this would/could take monthly cash flow in the wrong direction.

Still, I have clarity around options, something firm to investigate further that I didn't have a few hours ago!

Thanks all.

cluedweasel

My last car was worth about $5k more towards its lease end than the residual. I ended up trading it in for a new car about 2 months before the end of lease and getting the difference between the pay off and the trade in value put towards the new car.

AdobePinon

My two cents: If your house buying plans can be sunk by a car purchase, you're likely better off saving longer and getting the house later.

As for the car prices, I'd plan on taking at least $2-3k, maybe more, off the dealer's price if I was going to buy from him.

HarryTheSpider

We're some way away from buying - need to save more, have better credit and also the GCs under our belts. Spending too much on upfront costs for new cars would only delay things further!

To your second point - absolutely!!

TimNiceBut

Talk to the lease company - most of them are only too happy to have you extend the lease on a month-by-month base. Given the uncertainty until the GC arrives, anything but returning the car and buying a cheap car to tide you over looks like a bad idea to me if extending the lease on a fairly non-committal basis is out.