Author: BOUNCEwithB

Selling Your Lease

Published by BOUNCEwithB

Situation: Mrs. B decides she wants a new car.  But must do so without loosing money on current lease.
Current Lease: 2007 VW Jetta GLI with 10 months remaining and a $17,500 payoff (total payoff).

So I set off to find the best possible way to get out of the remaining 10 months and get her in to a new G37 sedan. My initial thought was to use leasetrader or a similar service. However with VWcredit, the original lessee still remains liable for the car even after a lease transfer. There are some ways around that, but involve excessive fees and an additional credit company. Transferring lease = no longer an option.
2nd option was to trade the car in on the G37. But trading in = rolling $3500 negative equity into the G37 lease. Trade-In = Not an option.
3rd option is to find a buyer and sell them the car outright for my payoff amount. So, I put the car on auto trader. No real leads until I upgraded to a “premium listing” with them. Then I started getting good leads. Funny how that works. Anyway, I found a legitimate buyer in Texas. He was very nice, communicated very well, and wanted to use his credit union to finance a loan. So far so good. His credit union agrees on our price of $17,500, his credit is excellent, they send me a few pieces of paper work to sign including me signing my permission to allow the credit union to payoff my lease. Credit Union then contacts VWcredit and ATTEMPTS to payoff my lease. Get a call back from his credit union, “VWcredit will not put the title in a 3rd parties name even with your permission. It must be put in your name if they are to issue a title. Therefore we cannot send payment.” So after a full headache filled day of calling around and verifying this, I was ready to give up. But, thanks to my excellent salesman at Sewell Infiniti of North Houston (plug) I learned that an In and Out would take care of this problem (note: not all dealers will do an in and out, some restrictions apply, see your dealer for more information :). I trade the GLI in to the dealer for $17,500 and at the same time they provide financing for my buyer and sell him the car for $17,500. Because I’m trading the car in to a dealer, the whole putting my name on the title thing becomes a non-issue. Everybody wins.
In summary, getting out of a lease is possible but can cause heartburn, headaches, and money loss. But if your car is in good shape, and can sell at or above its payoff amount, then you might want to consider this In and Out process at a participating dealer.

The 2008 Short Bus (BOUNCEwithB’s new 08 Cooper S)

Published by BOUNCEwithB

Here he is all clean and purty.  My only complaint so far is the harsh runflats.  Thanks to Adam @ Brian Harris Mini for the excellent experience and the free floor mats.

Used the lease figures from G’s June post for the Cooper S.  Got 16k for my GTI.  Security deposit waived, approx 700 down to cover title, license, first month’s payment.  Right under $400/month for 36 months.

Mellow Yellow 1Mellow Yellow 2

Mellow Yellow 3Mellow Yellow 4

Leasing Is More Than Just Monthly Payments

Published by BOUNCEwithB

My simple definition of leasing = a sometimes cheaper and easier way to get in and out of a car over a given period of time. Leasing is not for everyone. But if you do decide to join the car rotation club, you need to make sure you understand all of the costs involved in a Lease.

Let’s use a current Lease incentive of one of the most popular cars in the world. The BMW 3 series.

$429 Monthly Payment
36 Month Term
$2500 Down Payment
$450 Security Deposit
10000 Annual Mileage
Lease is based on a 2008 328i Sedan equipped with automatic transmission, Premium Package and destination charge included. Dealer contribution may affect terms.
$3379 due at signing.

Thank you Edmunds for the info above.

Monthly Note: $3,379 due at signing with $2500 being a cap cost reduction, 10k miles per year. Not too bad other than the $2500 cap cost reduction. Lets say you sign all the papers and drive off the lot. You pull 5 feet off the lot and a car broad sides you.. totaling the car. It just cost you your first monthly payment and $2500 to drive 5 feet. Don’t put money down on Leases. Back to the point… What are the hidden costs involved in this lease?

G’s Thoughts: As B says, it’s never a good idea to put money down for cap cost reduction. A lot of folks fail to understand what inception and money down is. Inception is the 1st month payment and the fees you pay at drive-off. Down payment is the money you put down to lower the price of the vehicle. You don’t put money down, period.

Insurance: BMW requires 100/300 50k property damage liability and a 1000 max deductable. For some not a big deal. For this example lets say you have a good driving history, 30 years in age, with 0 points. Your monthly insurance is $190/month.

G’s Thoughts: 100/300 is the bare minimum recommended coverage. If you own a home or any sort of property, this should be the bare minimum you should insure your vehicle anyway, unless you want to potentially lose some or all of your assets in the event of a big accident.

Lease end fee: So you were thinking you will get that Security Deposit back…. Ha. You loose $350 of it for BMW’s “disposition fee”. Of course you can get this money back if you re-lease another beemer. In this example we are not going to lease another bmw thus you lose $350 of your $450 security deposit.

G’s Thoughts: Luckily, some automakers such as Infiniti and Acura, do not charge a disposition fee nor require a Security Deposit. Acura even offers a $1500 damage waiver during turn-in. Woot!

Wear and Tear: At this point you are slated to get $100 of your security deposit back. I’d love to see a statistic of how many leasers actually get this back. Now is the time to read your wear and tear description from your leasing company. In BMW’s case… Any scratch or ding more than an inch long is considered excessive. You will now be paying full retail price to have them repaired 🙂 There are other wear and tear details that I won’t go into because each leasing company have their own guidelines. In this example lets say you only have 2 “dings” more than an inch long and they will cost $250 to repair. Oh, and that 8 inch crack along the windshield. Guess what… new bmw windshield = $700. Do yourself a favor and repair the windshield before turning in the lease. But in this example we didn’t know. Total wear and tear costs = $950

G’s Thoughts: Wear and Tear is pretty painful part of leasing. You have to literally baby your car. Just because you rent it, doesn’t mean you can mistreat it. Specially expensive cars such as the BMW. Best advice is to treat it as if you own it, who knows, you may want to buy it at the end of your lease.

Tires: This can be a wear and tear issue. But do yourself a favor. Understand now that most modern performance tires will wear out before the end of your lease and that you WILL be buying AT LEAST one new set of tires. In our example the OEM replacement tires are Bridgestone Turanza EL42 RFT’s. $900 after shipping, mounting and balancing. You “can” get away with buying a cheaper tire but some dealers have been known to make judgment calls and say that your tires are not the same quality as the OEM tires. Enter more fees.

G’s Thoughts: This is part of the reason why 24-month leases have become more and more popular. In 24 months, chances are, you won’t be paying for new tires unless you enjoy burning rubber on a daily basis.

Routine Maintenance: This can include everything from oil changes to brake pads to a new clutch. This can be a wild card depending the type of vehicle you lease. BMW is actually a pretty good car to lease in this regard. They take care of most maintenance costs for the first 4 years or 50k miles. This easily gets you through a 36 month lease. Just be careful because they don’t (I may be wrong) cover clutches if you wear one out in your 6 speed manual. For this example we have an Automatic. We will assume $0 for routine maintenance.

G’s Thoughts: Hurray for $0 cost maintenance. Audi used to have it, so did Mercedes Benz, but that is no longer the case.

Excessive Miles: This varies by company. 20 to 25 cents a mile in most cases. In our example we will assume that we are not going over our allotted 10k miles/year.

Summary:

$465.47/month x’s 36 = $16,756.92 monthly note including a 8.5% sales tax

+ $2,500 down payment (don’t do it)

+ $900 in licensing, acquisition, other local county/state fees

+ $190/month x’s 36 = $6840 insurance

– $450 security deposit we get back at lease end

+ $350 disposition fee at lease end

+ $950 wear and tear

+ $900 new tires

+ $0 routine maintenance

+ $0 excess miles

= $28,746.92

Now in saying all of this and being overly naive with the example above… I have leased my last 5 cars and will continue to do so. What have we learned? Don’t put money down on a lease, know the costs involved in insuring your new lease, take into account lease ending fees, take care of wear and tear issues yourself as soon as they occur, replace worn tires yourself with a cheaper but comparable name brand, find a car maker that has a maintenance warranty built in to the price of the car (or at least find a car that requires little maintenance), and plan out ahead the number of miles you will drive in a lease. Some companies (BMW included) offer the option of buying additional miles at a discounted rate up to half way through your lease term.

G have I missed anything?

G’s Thoughts: You got it B! The leasing experience will be as good as you make it. If you get ripped off for not reading the fine print, or not doing your research. You kind of deserve it. Take care of your lease as if you own it and you will not have any problems. Lastly, nationally advertised deals on TV are the worse because they are based on MSRP pricing. Best deals you can cut are the ones you do yourself.

Top Gear NBC must succeed in the US

Published by BOUNCEwithB

This is a bit off the topic of leasing, but it’s been on my mind as of late so I thought I would vent.

I’ve long been a fan of Top Gear, and to an extent Fifth Gear, which both air as separate TV series in the UK. For the sake of simplicity I will focus on Top Gear in this rant.

Top Gear… it’s the best car show on TV in the world. Combining real world tests, comedic skits, daredevil stunts, segments such as the “cool wall”, and a mysterious racing driver who simply goes by the name “Stig” all combine for a terrifically entertaining and informative hour of television. Is it available in the US…. Ehhh sort of. You can watch 10 month old episodes on BBC America. And sometimes an episode may show up on another cable network. But for diehard fans your only real choice is to keep up with the series on www.finalgear.com where you may or may not find a link to a questionably legal recording of the show. Do I download these episodes as soon as they are released? Yep. Have I seriously looked into whether or not this is truly legal… No. I don’t care.

Here in the US we have a few TV series which TRY to cover the same type of material. They mostly focus on fixing up hot rods, drag racing for pink slips, installing huge wings on rice rockets, and in the case of a show with a name similar to Motorweak (WEAK being the focal point) try to test, review, and pass on opinions of new cars. My problem with these shows, especially the ones that review new cars, is that they all seem to have skewed opinions. The persuasion of sponsors and pressure from the US automotive industry seem to have a negative effect on our US based Car shows. Rather than really calling a car out as being a POS they will meander around the fact that the car is crap and try to focus more on the “excellent value” or how much better it is than the previous generation. Top Gear… they call it as they see it. The three hosts of the show speak their opinion without the pressure or persuasion of the big three here in the US. They are the Simon Cowell of the Automotive Industry. They call it as they see it and have no regret for making a car company cringe when their new car is called out for being “rubbish”.

Enter Top Gear US (NBC). The first episodes are to be aired on NBC this fall. Adam Carolla has been chosen as the host. Adam seems to have a good taste in cars and has the aggressively opinionated attitude needed for this type of show. My main concern is with the sponsors of the show and in particular with the American automotive industry. The show will have commercials. And the majority of those commercials will be automotive related. Now the question is… can Top Gear US stay true to its British roots? Can it call out Chrysler for whoring its dreadful interiors across every single one of its cars… only to be followed by a commercial for the all new Chrysler Challenger?

This is a critical time for the automotive industry. The transition from big trucks and SUVs to smaller, more fuel efficient vehicles is happening today. Consumers are looking to the media/internet to provide them with the information they need to make that next purchase. NBC has a great chance to capitalize on this transition with a successful import of a good TV series. So will it be “The Office” of car shows or will it be a prime time version of MotorWeak?

B