End of Lease

[hursey]

I ALWAYS lease and then buy out at the end… I have never had a vehicle that was worth less than the buy out and more often then not, turn around, sell it for a modest profit and get into a new lease.. unless I am so in love with the vehicle that I keep it for a few more years…??‍

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[Invzibl]

I am a leasing fan. I quit buying vehicles in the early 2000's after I realized I never kept them longer than 3 or 4 years and I always had a monthly payment.

Since that realization I have actively worked to find the best lease deals available when my lease was coming to an end. I have bought out leases a few times, not to keep it, but because the residual was much lower than the market value.

In those cases I'd buy and sell in a period of a few days or even the same day, selling to the dealer I initiated a new lease with.

Only time will tell which end of the residual you'll be, favorable or not. The benefit of leasing is that there's only upside benefit. You already know the cash flows and the value at lease end, if the residual is higher than market, lease something new, with all of the attendant benefits of new tech, reliability etc.. If the market value is higher, buy it at a "bargain" and feel good about keeping your familiar ride at a good price.

Ah fellow Jeep man! 2012 JKUR here!


I would only add to this that I had a Gladiator Mojave on lease through US Bank. This sucked because, in the end, they made it so that the cost to a dealer was considerably higher than if I wanted to purchase at the end of the lease. This was problematic because I wanted an R1T, and Rivian would not work with US Bank for my trade-in because of this.

I, too, made quite a bit off of lease equity up until this point, so I ended up leaving a lot of money on the table to go from my Gladiator to my R1T. Hopefully, when this lease is up, I can get back to a fair deal when leasing the next R1T.

Normally leasing is a great way to drive a car, however stay away from US Bank as they reap all the benefits of lease equity. Not you. Lesson learned.

 

[Schroederhc]

My first lease. I have heard that Chase is fair to deal with at the end. US Bank is pretty much a nightmare to deal with in all aspects of business

 

[7FCvin]

How much did you put down, if anything? would you factor in how much you already paid into the car (down payment + monyhly payments) and add that to the residual to see whether leasing was overall worth it? Or with this equation will it always be more expensive overall to lease?

My understanding is that adding up all of your incurred costs with the residual is certainly important in determining overall value -- I put zero down, took a trade-in, and the $7500 EV tax credit I received makes it such that if I exercise the purchase option at the stated residual at the end of the lease, with all the subsequent taxes/fees I will be close to the original purchase price of my R1T, and possibly just under it (especially if I'm taxed on the residual value and not the original purchase price - don't know how this works yet).

Leases seem to vary quite a bit depending on the state you live in and obviously with different Rivian configurations. Technically speaking, it's probably safe to say that it is usually 'more expensive' to lease vs buying, but the delta is significantly decreased with the $7500 EV tax credit that is part of Rivian leases (to date) compared with model year 2024 Rivian R1 purchases that are >$80k (because those do not qualify for a tax credit under the law as currently written). Seems like many of the model year 2023 leases that were offered just before the release of gen 2 had even lower money factors, and I was pretty happy with mine (<1%).

 

[ARGi]

If you are self employed, lease is the way to go.

interesting. I want to learn. Can you elaborate?

 

[DD4ST]

I’m one of those that usually purchases outright with no financing. My Rivian lease was my first, ever, mainly due to the tax credit but I also reaped a Rivian lease discount. For those in my situation another aspect of leasing is that your money stays in the bank or stocks where you reap income. In rough numbers, for $80K leased over three years, and a yearly investment return of just over 6%, you’re looking at about another $10K in your pocket than if you bought outright.

 

[LL75]

interesting. I want to learn. Can you elaborate?

Definitely consult with your CPA about it. There are plenty of stuff out there online that you can search for about leasing vs. buying out right for business. DD4St above stated one example of it.

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