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Old 01-21-2019, 05:04 PM
Status: "I am the Walrus!" (set 21 days ago)
 
Location: Danbury CT covering all of Fairfield County
2,202 posts, read 5,839,148 times
Reputation: 991

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It's way a for them to get in the door, that's all.
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Old 01-21-2019, 06:23 PM
 
Location: Aurora Denveralis
5,074 posts, read 1,682,406 times
Reputation: 7489
Quote:
Originally Posted by JONOV View Post
"They" the dealer doesn't make anything really from the lease itself vs a financed purchase.
I think you're greatly simplifying the situation to those cases where the lease is carried by a third party. Even in those cases, there is a mutual arse-scratching that makes the process maximally profitable for both.
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Old 01-21-2019, 06:57 PM
 
6,470 posts, read 3,593,663 times
Reputation: 8720
Sure. Even possible to cash out any positive equity you have. Carmax will do it simply. What’s really happening is that they’re using your buyout clause on the lease and then buying it from you. Can be a much better solution than turning in at lease end and getting dinged for every little scratch.
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Old 01-21-2019, 07:04 PM
 
Location: Lee County, NC
1,247 posts, read 385,783 times
Reputation: 1501
Quote:
Originally Posted by JONOV View Post
A lease is no different than an outstanding note on a car. The car is worth $X. The payoff amount is $Y. If X is greater, you have equity the same as you would if you bought it.
Exactly.
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Old 01-21-2019, 07:13 PM
 
4,944 posts, read 5,687,457 times
Reputation: 7185
It’s business. It’s a way to get you out of your current lease early and into another lease. There’s no “scam” involved. It’s about keeping you in the leasing cycle with this dealership.
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Old 01-21-2019, 08:38 PM
 
Location: Raleigh
7,522 posts, read 5,556,057 times
Reputation: 10311
Quote:
Originally Posted by Quietude View Post
I think you're greatly simplifying the situation to those cases where the lease is carried by a third party. Even in those cases, there is a mutual arse-scratching that makes the process maximally profitable for both.
???
I’ve never heard of a dealership carrying the lease. Most often it’s the manufacturer’s finance arm. But, that’s still just a bank, albeit one that serves the carmaker to help them sell cars.

They only like leases because it allows payment buyers to be easy sales, with less focus on the sales price. And remember, they’re under pretty stiff pressure from the manufacturer to hit their volume quota. On an individual level they tend to be only slightly ahead of cash buyers for back end (F&I office) profit.

I distinctly remember Toyotathon and Ford’s red carpet events, where they’d be blowing out leases for basically no money factor, and the F&I Managers being p****y when we’d send another one back because it meant very slim back end profits. Also, F&I managers being ticked because they thought they were being fed a bunch of leases and being short shrifted on buys, where they had a bunch more opportunity to make money (extended warranties, rust proofing, Gap Protection)

Whereas, if they financed a $30K car and got the wholesale interest rate, they could mark it up as much as they could get away with. So someone would walk in and say, “I can get 2.9% from my CU for a new car,” and the F&I office would offer 2.8, while their buy rate might be 1.9 or 2.2. I think on average the industry has a 2.5% buy rate markup including used cars.
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Old 01-21-2019, 08:43 PM
 
Location: Aurora Denveralis
5,074 posts, read 1,682,406 times
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Quote:
Originally Posted by JONOV View Post
???
I’ve never heard of a dealership carrying the lease. Most often it’s the manufacturer’s finance arm. But, that’s still just a bank, albeit one that serves the carmaker to help them sell cars.
Right, which closes the loop even more than when it's a third party leasing firm.

They're not separate elements, no matter who technically holds the baton. Dealer, lease bank, vehicle return, vehicle resale... they all form a single transaction and all parties play the "buyer" to maximize the profits.

Anyone who can argue that a lease is the same as a buy, just different, is either in the game or highly deluded. Leases are probably the worst junk food in the consumer spectrum.
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Old 01-21-2019, 09:07 PM
 
1,704 posts, read 1,539,118 times
Reputation: 932
Quote:
Originally Posted by pknopp View Post
If you have leased as often as you say, you know how this works.
yup, leased them and returned it on term end. Even done swap lease. Never had I heard a dealership running low on an inventory. Even when I wanted something that they didn't have they always told me they could get it in shipped from anywhere in the country within a week. Thats the reason I wanted to know if there is a way I can walk out of this without having to lease anything else from them...
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Old 01-21-2019, 09:09 PM
 
1,704 posts, read 1,539,118 times
Reputation: 932
Quote:
Originally Posted by jdhall1 View Post
It's way a for them to get in the door, that's all.
yes and thats what I am trying to avoid when I am not in the market for a vehicle unless the odds are in my favor but based on the comments here it doesn't look like it..
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Old 01-21-2019, 09:59 PM
 
Location: Raleigh
7,522 posts, read 5,556,057 times
Reputation: 10311
Quote:
Originally Posted by Quietude View Post
Right, which closes the loop even more than when it's a third party leasing firm.

They're not separate elements, no matter who technically holds the baton. Dealer, lease bank, vehicle return, vehicle resale... they all form a single transaction and all parties play the "buyer" to maximize the profits.

Anyone who can argue that a lease is the same as a buy, just different, is either in the game or highly deluded. Leases are probably the worst junk food in the consumer spectrum.
Junk Food...I like that description, it’s pretty apt.

You have to remember though, the bank assumes more risk with a lease. It’s one of those things people forget about that contributed to Chrysler’s demise pre bailout. They were famous for leasing Jeep Grand Cherokees cheaply with an overly optimistic residual value. Dealers would flip them back to the bank in and follow the truck to buy them back from the auction for $4K less than the residual.
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