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I was wondering if its possible to buy the car out of the lease a year or 6 months early. I am just about to place an order for T4S and am getting a 42 or 48 month lease with 12k km annually. I was just wondering if after 36 months I would be able to buy the car out from dealer. The dealer told me I can trade it in during the last year but I forgot to ask him about buying it out. If it's possible do you guys know how much they charge? will the residual value (buy back price) be the same as the residual on a 36 month lease or will I need to pay more?
Given the values and demand right now, a dealer may be willing to buy you out of your lease. I am hearing more stories of this happening. So, if you’re looking to exit, it may be an especially opportune time to do so.
I was wondering if its possible to buy the car out of the lease a year or 6 months early. I am just about to place an order for T4S and am getting a 42 or 48 month lease with 12k km annually. I was just wondering if after 36 months I would be able to buy the car out from dealer. The dealer told me I can trade it in during the last year but I forgot to ask him about buying it out. If it's possible do you guys know how much they charge? will the residual value (buy back price) be the same as the residual on a 36 month lease or will I need to pay more?
My experience with US leases (the dealer doesn't own the car so you are not buying back from them) - The amount you still owe over the lease term will still be due, so if you choose to buy the car before the end of the lease term you will have to pay more than the agreed-upon residual. It's not a free ride. The leasing company can give you a "buy out price" at any time and usually good for 30 days. There are small administration fees at the end of the lease if you return the car vs. buy it out, probably similar if you buy out early, but these are small especially for a 992 lease.
Leases can be very convenient and offer protection because of the agreed-upon residual buy out price, gap insurance if your car is totaled, you can still turn it in even if your car went through major repairs, etc. The danger is that it can be expensive if you try/need to get out of the lease early, because you may be "upside down" and owe more than what your car is worth. Right now used cars are worth more than expected so it is unlikely that you will be upside down. If you need to get out early, it's easy now. If you're just trying to buy out your lease because you're trying to save finance charges or something, check the details and see how much you're really saving vs. just riding out the duration of the lease. If you need to get out early because you're selling the car to someone else, then it's the same as the buy out scenario and your equity is what you have at that time.
Think of a lease as an option to exit at the end at a specified date for that option you pay a premium (the finance portion of the payment plus any fees).
So at any given time you could pay the remaining payments + the residual as the contract reads plus any back end fees in the contract such as disposition and buy the car.
" upside down" scenario can happen if you lease, or finance
on every monthly statement you should have a payoff amount and this will be the amount you have to pay to buy the car from the financing company not the dealer
there is no return fee for buying out your lease at any time
be careful, if you buy your lease , then in a lot of states you have to pay sales tax on the payoff amount , so you need to add that up to your cost , before you commit to a number with a private party
Sweet spot for lease or finance is about 3-years in. Buying out a lease is easy but too early you take a bath.
How so? A lease has a predefined residual and interest rate. If the lease is 3 years you are just working towards that lease-end residual value. There is no better or worse time to buy it out in terms of “taking a bath”.
That said, I would still wait until the end of the lease to buy it out as you may as well take advantage of the lease benefits. If someone rear ends you the day after you buy out the lease and your car is now worth a lot less with an accident on its record, then you suffer the financial hit. But if you are still under the lease you can still chose to turn the car in at the end and have Porsche take the hit. Or if the proverbial economic bubble pops and all of the sudden 911 values plummet you can again just turn the car in and walk away. Basically, may as well ride the lease out to take advantage of its benefits and mitigate downside risk as you already know what the residual is at the end.
How so? A lease has a predefined residual and interest rate. If the lease is 3 years you are just working towards that lease-end residual value. There is no better or worse time to buy it out in terms of “taking a bath”.
That said, I would still wait until the end of the lease to buy it out as you may as well take advantage of the lease benefits. If someone rear ends you the day after you buy out the lease and your car is now worth a lot less with an accident on its record, then you suffer the financial hit. But if you are still under the lease you can still chose to turn the car in at the end and have Porsche take the hit. Or if the proverbial economic bubble pops and all of the sudden 911 values plummet you can again just turn the car in and walk away. Basically, may as well ride the lease out to take advantage of its benefits and mitigate downside risk as you already know what the residual is at the end.
Great points all around. I have sold 2 cars that I leased from BMW to Carmax and got cash back both time because the payoff was less than what Carmax paid me for the car. Good call out on the benefits of leasing that many people don't realize. Leased cars also have gap insurance so if one is upside down on a lease, and the car gets totaled in an accident or stolen, the gap insurance covers the amount you are upside down. If one were to buy the car out, the purchaser would have to eat the gap or pay cash if the purchaser got a loan to buy out the lease and remains upside down on the loan.
Leased cars also have gap insurance so if one is upside down on a lease, and the car gets totaled in an accident or stolen, the gap insurance covers the amount you are upside down. If one were to buy the car out, the purchaser would have to eat the gap or pay cash if the purchaser got a loan to buy out the lease and remains upside down on the loan.
One clarification - When leasing cars, I think one **should always have** gap insurance (guaranteed auto/asset protection) and protect themselves against these situations since it's one of the benefits of leasing. Many factory leasing companies include gap insurance when you lease with them, e.g., Porsche, Mercedes, Audi. But not all do, so read the fine print and if necessary just add gap insurance to your auto policy (it's a small add-on, like less than $50/year). For example, my Land Rover Financial lease does not include gap insurance.
To me, it makes little sense to buy out the car early unless one is planning on selling the car before lease end. With no incentives to cough up the cost of the remaining payments plus residual, why not keep your $’s in your pocket. My DD was a leased 2019 Targa 4 that I decided to exit a year early from as I had another “summer” car (2018 GTS Cab) to drive while waiting for my incoming 992. The Targa was a manual and there was a bidding war on it that resulted in the sale price being approx $12k more than the buyout cost. As it turned out, I sold my GTS cab before the 992 arrived because I got $10k more than expected … it’s a sellers market these days !
To me, it makes little sense to buy out the car early unless one is planning on selling the car before lease end. With no incentives to cough up the cost of the remaining payments plus residual, why not keep your $’s in your pocket. My DD was a leased 2019 Targa 4 that I decided to exit a year early from as I had another “summer” car (2018 GTS Cab) to drive while waiting for my incoming 992. The Targa was a manual and there was a bidding war on it that resulted in the sale price being approx $12k more than the buyout cost. As it turned out, I sold my GTS cab before the 992 arrived because I got $10k more than expected … it’s a sellers market these days !
Off Topic: What is the height of your ceiling? Interested in that lift! Thanks!
Off Topic: What is the height of your ceiling? Interested in that lift! Thanks!
Just shy of 12’ (except for the bulkhead). Not sure if the lift is still available. The only shortcoming is that the max height for a lower car is approx 58”
To me, it makes little sense to buy out the car early unless one is planning on selling the car before lease end. With no incentives to cough up the cost of the remaining payments plus residual, why not keep your $’s in your pocket. My DD was a leased 2019 Targa 4 that I decided to exit a year early from as I had another “summer” car (2018 GTS Cab) to drive while waiting for my incoming 992. The Targa was a manual and there was a bidding war on it that resulted in the sale price being approx $12k more than the buyout cost. As it turned out, I sold my GTS cab before the 992 arrived because I got $10k more than expected … it’s a sellers market these days !
Thats how I thought about it too, even with a 48 or 42 month lease I think I would buy the car a year early just to save up on the interest. How much was the buyout cost for you for Targa 4 compared to the residual you would have gotten the year after?
Thats how I thought about it too, even with a 48 or 42 month lease I think I would buy the car a year early just to save up on the interest. How much was the buyout cost for you for Targa 4 compared to the residual you would have gotten the year after?
I believe the buyout cost was the combined total cost of the payments to the end of the lease plus the residual value. I don’t recall there being any interest saved and that’s why I initially suggested not bothering to buyout a leased car early (unless one intends to sell). Fortunately, a 2 year old well optioned manual Targa 4 is quite desirable …
06-18-2021, 08:40 AM
Buying out 992 car lease early
