A few years ago I had to lease a car because of financial reasons. I’ve always been against leasing so this is my first experience with it. My lease is up early next year (I think March?) and because my financial situation is only moderately better, I’m going to lease again.
I’m already getting emails from the dealership/GM financial saying I should think about what to do when I turn the car in and that they can give me a great deal on my next lease and all that jazz. The problem is, because I’m a newbie, I don’t exactly know what’s fact and what’s fiction. I definitely don’t know what to do when it comes to actually turning the car in. So I have some questions:
I’m looking to keep my payment the same (lower if I could but we’ll see) and I’m getting messages saying I could turn the car in now if I wanted to…should I? I imagine there has to be some kind of penalty or something they aren’t telling me, but the (probably dumb) part of me thinks “well, if I’m keeping the payment the same, why not?” Tell me why I’m wrong. Is it smarter to just wait until the lease is actually up?
Do I have to take it to the same dealer? After getting my lease at Dealer A, my wife got a new, non-leased car at Dealer B. Dealer B said “When your lease is up, come talk to us!” Can I actually do that? I’d prefer both cars to be in one dealer and I don’t like Dealer A.
If I have a car in mind I’d like to go to, how would I go about bringing that up? Is it just as easy as saying “I’d like to have this car as my next lease, what’s the cost difference?” I can’t imagine the car I want’s price is much different than the one I have and they’re a pretty big dealer group, I’m sure they have it in stock somewhere.
If you leased the car from Dealer A, you have to take it back to Dealer A, but there’s no reason you can’t go to Dealer B for the new lease. But I can’t imagine how your financial situation makes leasing more attractive. I think you’re doing math wrong.
Leasing allows you to have a similar sized monthly payment, but without a large down-payment. So it makes sense for people who are short on cash. The minor downside is that you don’t own a used car at the end of the lease term. You own nothing.
I wouldn’t worry about “looking like an idiot.” Lease terms are complex and constantly changing. Nobody outside the dealer finance manager is an expert. Just go in there and ask whatever questions you need answering.
When I leased a car, I leased it through the BMW’s Financial Services and I could return it to any BMW dealer. The best answer is to read your lease agreement.
You may be saving yourself several hundred dollars if you take a new lease deal from the same dealer or auto brand. Often there’s a disposition fee, mine was like $600 or something, that is charged if you don’t lease another car from them, but waived if you do. Typically as long as you are getting into a new lease with the same dealer, you get out of the last three to six months of lease payments on your current car. So subject to your agreement, odds seem good that the dealer’s offer doesn’t have any big catches to it.
Warning! Unsolicited advice follows! But if money is tight, leasing is the very definition of short term gain, long term cost. You’re getting a new car at a low payment for, say, three years. Then you kind of get backed into getting another lease for three years, and so on and so on. That’s cool if you are the kind of person who feels like they need a new car every three years or they go nuts, but you’re signing up to a low payment each month, for a long time.
If you consider a certified used car, you’re probably looking at a payment in the same ballpark for 5 years, and then you own it.
I know that wasn’t your question but I thought I’d take the liberty.
More unsolicited advice: you are negating a terrible price for your lease. You are looking at the payment, when you should be looking at the cost of the car, and it’s residual value. Look at a website like leasehackrs dot com to learn how to better negotiate a lease, if that’s what you end up doing.
I’m not looking for used car because I don’t trust them. Certified or not, the last three used cars I’ve gotten have cost me more in the long run with a combination of payments and mechanical issues. Each time I got another used car (30-50k miles and certified) I’ve had to replace it within about 4 years or so because something catastrophic happened to it. Suffice it to say, I don’t trust any used car anymore.
My lease is through GM Financial, which is why I think I can switch dealerships with it.
There’s one used car available to you that you’re thoroughly familiar with. You don’t have to turn in your current car, you can buy it. It’s possible that your lease even includes a pre-negotiated buyout price. In my one, long-ago experience with a lease, the buyout at the end was essentially the same as what the down payment would have been if we’d bought the car up front.
Because eventually the warranty ran out and the problems happened while the warranty was out and I was still making payments. It was longer ago when I had to stretch the payments out to kingdom come, but it still happened often enough that it soured me on used cars.
I’m also just not looking for a used car, so there’s that too.
Buying a car made my payments X, leasing the car made my payments X-$200 a month. I took less payments. It’s why I’m leasing a car in the first place.
Yes it’s a short term solution…paying more in the long run…blah blah blah I know all that, it’s why I’m doing this in the first place. I’m not looking for reasons why I’m dumb for having a lease or lectures on what are better solutions, I’m looking to see my options come March.
This will definitely be a part of the conversation, but I’m not crazy about the car I got. It looks great and does work for me, but the quality of the car isn’t what I was hoping. After only driving it for three years the leather is starting to flake away on the steering wheel and there’s some discoloration on the ceiling panel. I’d like to see if the car I’d really like to have is available because I’ll be more apt to buying out the lease in the next three years than I am now
Not necessarily. For example, Toyota Certified Used come with a 12-month/12,000-mile bumper-to-bumper and a 7-year/100,000-mile powertrain warranty, but the latter dates from the original in-service date; GM brands come with a six-year/100,000-mile powertrain warranty from the original date of purchase, plus one year or 12,000-mile bumper-to-bumper coverage from the date you bought it. In either case, it’s quite possible to have a certified used car you’ve had for less than two years that has zero warranty coverage left.
It’s not too early to think about how to deal with your car but, IMHO, it’s probably too early for you to act on getting a new lease now. Yes, the dealers are all very excited to lease you a new car. They will be equally excited in February or March, so prepare to deal with them then.
I generally think leasing a new car is a bad idea. You may not have to repeat that mistake. If you like and trust your current car, one option you have is to buy it at the end of the lease for the residual value plus any fees you have to pay to end the lease. Generally, the fees are less to buy the car at the end of the lease than to turn it in because you won’t have to pay the lease disposition fee. You can get a loan from a bank or credit union to pay for the car. Because you are financing less money on a used car, your monthly payments could be the same or less and you will be purchasing a car instead of trapping yourself in an endless cycle of debt. Call your lease finance company and ask exactly how much it would cost to buy your car at the end of the lease. (This will be based on the car’s residual value and whatever lease termination fees, if any, are due.) Do you think it’s worth at least that much?
You should read your lease agreement to find out but, yes, there are penalties for early lease termination. The dealers making offers now are likely just planning to roll that lease termination fee into your new lease contract. So, you will either need to make a larger down payment or make higher monthly payments so the finance company can recoup this fee.
Generally, no. You can probably go back to any dealer from that same new car brand. And stop buying cars from dealers you don’t like, otherwise they will never learn.
Different dealers may also assess the damages on the car differently, so some dealers might wind up costing you less to turn the car in than others. If your car is in high demand, has a low residual value, and is in good shape, some dealers might even be willing to give you more for your lease turn in than the residual value, which means you would owe less to terminate the lease and might leave you with a few dollars to use as a down payment on another car. This generally wouldn’t be a huge amount of money but it can’t hurt.
This is called shopping by monthly payment. Car dealers love people who do that because they can take advantage of them the easiest.
I’ll admit, I cheat when I buy cars because I pay cash. There is only one number on the bottom of the page that I care about. It’s easy for me to keep track of the best deal. It’s the one with the lowest bottom line.
Leases are exponentially harder to negotiate because there are so many other factors to keep track of. There are upfront costs, monthly costs, and end of lease costs. You want to keep your monthly payment the same but dealers can do that easily while still giving you a shitty deal by tweaking:
the amount of the down payment.
the length of the lease
the number of miles you are allowed to drive without a penalty (low mileage leases that allow less than 12,000 miles per year are cheaper but if you drive more than the allowance, you may have to pay 25 or so cents per mile extra, which adds up quickly).
the lease termination fees and final lease payment amounts (they can build a big balloon payment into the back of your lease just for giving you the privilege of returning the car).
So, if you tell them all you care about is the monthly payment, they will tweak these other factors to give you the worst deal imaginable consistent with your stated monthly payment. You have to be smarter than that.
My opinion is I wouldn’t pay a dime down payment to lease a car, that’s just frugal me. Why would I pay a down payment to pay monthly payments on a vehicle I don’t own?
My other opinion is I would look at used cars again, 4-5 years old with about 40,000 miles is the sweet spot, you can often get a car for 1/2 the price of new but still plenty of life. Insurance is lower, taxes are lower, payments are lower. Look at Honda or Toyota, stay away from GM and Dodge/Chrysler.
If I’m understanding the OP correctly he doesn’t want to buy used (I gather so that he always has a car that’s under warranty and I can’t say as I blame him)
Argument in favor of leasing new - cost of ownership. Many new cars come with free scheduled maintenance. That, and they are new so things won’t need fixed/replaced. With a car like this in a 3 year lease, I know pretty much up front exactly how much I will spend on it over the 3 years. With a used car, there is the risk of unanticipated maintenance costs.
Have you tried looking at vehicle reliability reports? Consumer Reports does a very good job with this, especially with used vehicles. Full access to their database costs money, but is justifiable when you consider how much you spend on cars and car repairs. You can also get access at many libraries.
Anyway, GM vehicles aren’t particularly noted for their reliability (though they have been improving in recent years), IIRC.
I recently replaced a 2004 Toyota 4Runner with 240K miles and a 2003 Subaru Outback with 235K miles. Neither vehicle had any significant maintenance issues until they were well past 200K miles.
FWIW, my usual practice is to buy new vehicles with good predicted reliability and keep our vehicles for a decade or more. For the first 5-6 years we have car payments, but ideally little in the way of major repairs. For the next 5-6 years, we have more frequent repair bills, but no car payment. It seems to work out for us.
Definitely check out leasehackr.com. I think there are people on there that lease just for the fun of it or as a challenge to see who can get the best deal. There is a calculator that helps you understand the math and other terms that make leases complicated. There are brokers you can hire to do all the work for you, if you want. There are GM dealers that post deals they are offering. It’s a nice little community but don’t expect to be hand fed a deal. Read the FAQs and a bunch of threads to get an idea of what info you need to include when you are ready to deal.
Regarding your questions:
This can work a couple different ways. Most likely they are looking to roll the rest of your payments into the new lease. However, some companies do offer “pull ahead” type deals where if you lease with them again they waive the last 2-3 months. I think you’re too early for that type of offer, but the folks at leasehackr will be able to tell you what’s typical for GM.
No, you don’t have to return it to the same dealer. GM Financial owns your lease, not the dealer. If Dealer B is the same company as Dealer A (for example, both Chevy), then you can definitely return it there and give them a chance to earn your business on a new lease if you have your eye on the same make.
I would negotiate the price of the new car separately from the lease return if you can. At the same time, research any incentives that might be offered for returning (if it’s the same company) or conquest (if it’s a different company) leases and other incentives. Then stack those onto whatever discount the dealer is offering. Here again, the folks at leasehackr will be able to give you an idea of what a fair discount is on most makes/models and you can read the forum and see the deals other people are getting.
(I may be stating the obvious: )
The dealer is contacting you because they’d like you to contract a new lease with them before your current one expires; getting you in their showroom before you go shopping somewhere else is a good first step. In many cases the company allows the dealer to shorten your current lease by <=N months without penalty if you lease with them again; they know that the Toyota/Fiat/Roll-Royce/Lada dealers can’t offer you that.
Do NOT turn it in early. You’re still on the hook for the remainder of the existing lease; the new dealer will simply roll that into the cost of the new car. Whether that means a larger monthly cost, a larger down payment, or a larger residual payment at the end, I don’t know.
Which means that 4 years from now (or however long the new lease term is), you’ll STILL BE PAYING FOR THE OLD ONE.
Leasing is so very, very, very, very rarely a good idea. I doubt you “need” a new car right now - honestly, you’re better off purchasing a used one. I doubt the payments would be any higher than a lease on a new car would be. If you like the car you have now, consider buying it out - but look VERY carefully at the residual cost, which might be more than the car is truly worth.
