Getting to lease owners/trade-ins before return

[Mitsu3000gt]

I had a thought and maybe it's a dumb idea or maybe it's already being done...but I was thinking it would be awesome to have a way to get in touch with people who are either:

1) About to return a lease (and not buy it out)
2) About to trade in a vehicle to the dealership for another one

My recent shopping has showed me more than ever how huge the variance is between lease residuals and market price, and we all know how badly dealers screw you on trade-in pricing. What if we had a way to get in touch with these people BEFORE they did either of those two things, split the difference, and everyone walks away happy? The seller makes more money, and the buyer gets a deal below market price - win/win.

In the case of a lease, sure you can buy it out yourself and sell it for more than the residual at market price, but there are so many people who can't even be bothered to do that despite a difference of thousands of dollars. People could also just buy it out, undercut the whole used market by a lot, sell it in a day, and still make money - yet so many don't. In the case of a trade-in, well you just get straight boned by the dealer every time so that one doesn't need further explanation. Dealers will give you a trade in value on your car for free, so you could take that number and post it here first to see if anyone wants to beat it.

I am constantly hearing stories about people with these immaculate, hard to find cars and they are just handing them back to the dealer, taking enormous hits. My first thought every time is "damn, if I could have just got to them first..." Or you will tell someone "hey when you go to sell that car, make sure to let me know first", and then you find out a year later they just traded it in for $10K less than you would have paid them and got something else.

Just as one example, last year the Audi dealer had three S6's on their used lot, all lease-backs. The residual on that $100K car is ~37% (or $37K for example sake) after 4 years. Those people literally just handed it back to the dealer, probably leased another one or something else, and market price on a 4 year old S6 is somewhere around $60K. If someone was able to offer them, say, $50K, for that car it would be the easiest decision of their life. Alternatively if they listed it privately for that, it would sell in one day - but nobody does that, and many just hand it back to the dealer.

Example 2: My Honda lease was ~$30K and residual is $12K. Guaranteed it will be worth more than $12K after 4 years, probably more like $17K. If I could sell it relatively hassle free for, say, $15K (assuming market was $17K), I would do that long before giving it back to the dealer.

Maybe I'm just thinking of something that's already being done in some capacity, but what do you guys think? Would it maybe make sense to have a forum section here where people post BEFORE they are about to trade in a vehicle or return a lease with either their buyout amount or the dealer's trade-in offer? Or people can post things like "hey if you have X car and you're going to trade it in - call me first". Thoughts? Dumb idea, or worth pursuing?

[SR54RNR]

www.leasebusters.com

[Mitsu3000gt]

Originally posted by SR54RNR
www.leasebusters.com

That appears to be for lease take-overs which is completely different unless I am missing some other service they offer.

[riander5]

I took over my lease which has a buyout of 21K in two years.... All the bmws and mercedes i looked at were selling for the exact same price on kijiji (35k) but they had buyouts of 28k or more!

Im hoping to make a little bit by buying out and selling... i guess time will tell.

I dont know whats so hard about what you are proposing. Look at your trade in cost, look at market cost (kijiji or autotrader, not dealers cost)

[Mitsu3000gt]

Originally posted by riander5
I dont know whats so hard about what you are proposing. Look at your trade in cost, look at market cost (kijiji or autotrader, not dealers cost)

You're exactly right, it's dead simple yet so many people don't do it. So how do we get to those people BEFORE they willingly get hosed on their trade-ins or lease returns? That's why I thought a forum section might be useful. "Hey guys I'm about to trade in my X car for $X to the dealer - anyone want to beat their offer by a couple grand?" Boom, quick sale. At least that's how I imagine it

[roopi]

2014 GMC Sierra 1500 Denali with 47,000kms. Lease is ending on April 10th. Let's hear your offers.

[vtec4life]

It happens rarely where there is a $15K gap between the residual and market value and that person being lazy/dumb enough to just drop it off. They would have to be pretty rich and not need another car. Most of the time the dealer is trying to get them into another vehicle, and will show them a trade value that is above their residual to make it happen.

Also, not every car is worth more than the residual at lease end. Often times it is worth less in the luxury car market, especially domestic market. There are a lot of factors like accidents, mileage, condition etc.

[civicHB]

Originally posted by vtec4life
Most of the time the dealer is trying to get them into another vehicle, and will show them a trade value that is above their residual to make it happen.

i think this is the case on most lease returns.

[RX_EVOLV]

Keep in mind lease residual doesn't include GST, so factor that 5% in when you compare it Kijiji/Private sale, and if you are trading in your lease vehicle (e.g buy-out then immediately use it as a trade-in, rather than just a lease return), then you can use the GST credit on the residual towards the new purchase, so a few thousands in savings there. A bit of an incentive to trade in/ return the leased car to the dealer to get into a new one.

Also if you compare a car that's about to be returned to the dealer vs the lease-backs that dealer is selling, chances are the lease-back will have new windshield, good tires, full inspection done, extended warranty, and low finance rate (vs bank auto loan), which could justify some of the cost difference.

[jwslam]

Originally posted by RX_EVOLV
Keep in mind lease residual doesn't include GST, so factor that 5% in when you compare it Kijiji/Private sale, and if you are trading in your lease vehicle (e.g buy-out then immediately use it as a trade-in, rather than just a lease return), then you can use the GST credit on the residual towards the new purchase, so a few thousands in savings there.

"Few Thousand in savings"... Your residual would need to be $40,000 to get $2,000 of GST on it.

On topic: I had told my buddy I'd be interested in buying out his car at the end of his lease for a quick flip and share profits; he forgot and returned it.

[Buster]

You're never going to realize big savings this way. If the residual is way ow, the person will be able to utilize that equity.

If it's a bit lower than market, then maybe they dont care to avoid the kijiji annoyances and will flip it to you. But I bet that number is a grand or less on the average car.

[vtec4life]

Originally posted by RX_EVOLV
Keep in mind lease residual doesn't include GST, so factor that 5% in when you compare it Kijiji/Private sale, and if you are trading in your lease vehicle (e.g buy-out then immediately use it as a trade-in, rather than just a lease return), then you can use the GST credit on the residual towards the new purchase, so a few thousands in savings there. A bit of an incentive to trade in/ return the leased car to the dealer to get into a new one.

That ^^ is actually incorrect:

If you are "trading in" a leased vehicle, there is no GST credit -reason being is on a lease you pay GST on a monthly basis. This is why if you buy out the vehicle you have to pay 5% on top of the residual. Even if the trade number is higher than the residual there is no GST credit because you did not originally pay GST on that extra money.

GST credit's are a bit confusing but the way to look at it is it's a CREDIT, not actual money. For example if you own a $40,000 car and trade it for a $20,000 car you don't get $2,000 back, you get a $1,000 GST credit towards the $20K car because that's all the GST there is.

[Aleks]

I've never returned a lease. The one's I've sold have always come out positive for me. From $500 on a Golf to ~$6,500 on a Forester.

[Mitsu3000gt]

Pretty much everyone's replies are regarding lease backs, but what about the other half - the people who trade in their (owned) vehicles for convenience or whatever reason and take an enormous hit? I've personally come across countless people who do this, they trade in their immaculate cars for next to nothing. If making a few extra grand was as easy as making a post, who wouldn't at least try that first?

[Aleks]

Originally posted by Mitsu3000gt
Pretty much everyone's replies are regarding lease backs, but what about the other half - the people who trade in their (owned) vehicles for convenience or whatever reason and take an enormous hit? I've personally come across countless people who do this, they trade in their immaculate cars for next to nothing. If making a few extra grand was as easy as making a post, who wouldn't at least try that first?

I have helped lots of family and friends buy new cars, sell old one etc. Imo, most people (outside forums like this one) have very limited knowledge about the whole process, where to look for information. Lots just can't be bothered dealing with kijiji or scams that go along with it. Simply trading in is easy and convenient.

[chongkee_]

Ya my issue is if it's worth the hassle of putting it up on sale and dealing with tire kickers or just completely return it.
My 2015 Sierra 1500 4X4 Crew is up in May and if I'm not really going to make much selling it then I would just rather save me the trouble and turn the keys in to the dealer.

[you&me]

Originally posted by Mitsu3000gt
Pretty much everyone's replies are regarding lease backs, but what about the other half - the people who trade in their (owned) vehicles for convenience or whatever reason and take an enormous hit? I've personally come across countless people who do this, they trade in their immaculate cars for next to nothing. If making a few extra grand was as easy as making a post, who wouldn't at least try that first?

A lot of this comes down to personal responsibility and due-diligence. If similar cars are listed on kijiji, autotrader, or even the dealer's lot for, say, $30k, it's no one's fault but their own if someone accepts a trade-in offer of $20k... Often times you can negotiate more on the trade value than on the new car.

Used car departments are major income sources for dealerships and not just from the resale of cars on the lot, but also wholesaling cars to other dealers and auctions. There are already several platforms well integrated into the dealer network that facilitate higher trade offers; it would be extremely difficult to create a consumer-focussed platform from scratch.

[Darkane]

Originally posted by roopi
2014 GMC Sierra 1500 Denali with 47,000kms. Lease is ending on April 10th. Let's hear your offers.

6.2L? What's the buyout?

[chongkee_]

To the people who sold their lease instead of returning it, how does the process go?
Do you put it up for sale first then have the buyer cut two cheques and walk to the dealership together?
Or do you buy it out first then just put it up for sale after?

[rage2]

About 1/2 my leases gets sold (mostly to Prashant) before lease end. Usually I don't ask for any money on top of it, so it's a good cheap price for a fellow beyonder and gives me an opportunity for an earlier upgrade. The exception was the C63 BS (was a 0% finance, but same deal) because it sold for nearly the same buying price after 4 years.

Lease or finance, the process is the same and involves the buyer paying the manufacturer finance dept for the buyout of the vehicle at the dealership through the finance office, just like buying a used car at the dealership. After about a month, if there is any difference in value, they send you a check for the difference. The buyer can also split the payment in 2 checks, one at the buyout amount, and one to you. Both options work.

If anyone is looking for a good deal on an RC-F or a GLA45, let me know. That E63S is really tempting right now haha.