The Expert Podcast

…So what should you do at the end of your car lease If you're leasing a vehicle? And that lease is about ready to end Maybe you're a few months away from your lease termination Maybe have a few payments left. Maybe it's pretty much done. You have three options for Disposing of that vehicle in most cases every lease is a little different but this is how most lease contracts have been created over the years Option Number one is you can bring the car back to the dealer drop off the keys and walk away. As long as you…are under the mileage that's the maximum mileage and you have no major wear and tear or damage. You're off the hook You bring the car drop off the keys and walk away However, keep in mind if you do that, you might be walking way from hundreds or thousands of dollars in equity that you didn't even know You had the dealer's not going to tell you. We'll come back to that in a minute. Option number two. Is, you can…Trade it in. For a new vehicle. Now. Be very careful. That if you're trading it in. That you understand the difference between a trade in and a turn in…And here's why. When automotive leases. We're created over the last five 10 years. The way it works is you have a guaranteed buyout at the end of your lease You have a fixed price that you're allowed to buy that car for. At the end of your lease. And that price served a few purposes. First of all. It was used to reduce the amount you had to finance For example if you bought a $30,000 car…And they figured well you know what In. Three years that car is going to be worth. $12,000. What they would do is they would take that $12,000 and take it off of your financing right off the bat They would basically give you a $12,000 down payment. So you only had to pay the 18,000 the difference between what you're paying for it and what it's worth in three years. So you make payments on that 18,000. And at the end of that term if you wanted to pay the 18,000 you could pay it. And. You, you own it, or you could just give it back to them and they use that value to pay the money that they reduce your price from the beginning with now how did they figure that value? What they did was they based it on what they thought the vehicle was going to be worth in three years And they got to be pretty close If they guessed too high. Now they're stuck with the vehicle. If they guessed too low, your payments are going to be too high and you won't buy the car So they have to be pretty accurate and they used. Historical records book values projected depreciation all kinds of factors. And for the most part they're pretty good at this. However. In the last two years. Vehicle prices used Car vehicle prices have skyrocketed. Many cars are actually worth more now than they were when they were brand new. We see car selling all the time. As a used car two or three years old with 20,000 miles. For more than the original sticker price. So…if you have a vehicle that was leased, let's say that $30,000 vehicle and they projected the value was only going to be 12,000. What happens now if. The market has changed in your vehicles worth 20,000. Instead of 12, well guess what? You still have the option to buy it for $12,000 Meaning that if it's worth 20, you can buy it for 12. And either. Sell it for 20 and put 8,000 in your pocket. Or you can trade it in for 20. Minus the 12 would put 8,000 towards your next car, but don't let the dealer. Swallow up that equity. If you just do it. Turn in and buy a new vehicle. That $8,000 They're going to keep, they're going to buy it for 12. Let you buy the new vehicle just for whatever the price was. And not apply that equity to her your new car, unless you really pay attention to the paperwork You may not even know that happened…What happens if you want to keep your car Well that's good because now you're buying a car for 12,000 That if you went somewhere else to buy it is worth 20 in today's market. So pay very close attention to your lease. Turn in, look at your contract. More than likely you have a firm option fixed price to buy that car at the end of your lease. That was in your contract. Can't change it…It doesn't matter The mileage condition if you're buying. it it's your car Now the other advantages of buying that car is you're buying a used car that you know the history you know the prior owner, you know everything about it. How lucky is that most times you buy a used car you're buying a pig in a poke You don't know where that car's been. This car you know where it's been…Plus if for some reason you are over on mileage or there's damage, you buy it that doesn't come into play You don't have to pay a penalty if you're buying the car. Now. There may be a couple of things to keep in mind First is some leases. Require that if you're selling it at the end of the lease you have to buy it. You can't sell it to somebody else right away You have to buy it first and then resell it. You know that's a little bit. You know a little bit scammy but if that's in the contract that's what it is You may also have what's called a disposition fee meaning that you have to pay two or $300 to dispose of the car to buy it. Your contract will determine that if it's not in your original lease contract a dealer can't add it later. So make sure that if the dealer is adding fees for you to buy your own car, make sure they were in the original contract If they're not in there they can't add fees. Some dealers even will go and say look we have to certify your car. Because you're buying a used car from us. So we have to make sure it's safe for the road So you have to pay us a thousand dollars to give you a certification. Check with your local statutes to, to find out what the laws are in your state There's been many dealers have tried to mark up. Cars for people to buy their own car and found out you can't do that. But once you do it, you've agreed to it You may not be able to get that money back So check your contract. Start doing this early start doing this month earlier than the lease ends because if you're pressed for time at the end you may have to accept…Or a contract that maybe. You don't have time to research. Right. also look at financing. If you go to the dealer or they might hit you with higher financing than if you go to your own bank or credit union to buy your own car. And you might be able to do it that way. Make sure that if you do buy out your own car you get the title transferred because that lease car is not titled in your name It's titled in the name of the lease company. So once you buy the car you want the title to be transferred from the lease company to you as the owner, make sure you get that title in your hands. We get a lot of people that contact us that say Hey look I bought my vehicle I never got the title from the lease company Now it's a hassle because. What if that at least companies out of business three years later or they don't know about it, you want to get that title transferred immediately into your name? We have questions about…lease turn in. Let us know put your message in the comments, but this is a good way to get a great deal on a vehicle You know a lot about.