A few lease questions for the group. A relative of mine has a MY2000 Boxster which is coming off its 3 year lease soon. How receptive are lease companies to a re-negotiation of the buy back terms? This specific is Not with PCNA. I understand that the market for the Boxster is brutally soft at the moment and a tidal wave of lease's are maturing. The buy back amount stipulated in the lease contract is high relative the current market, so we're inclined to make a offer short of or at wholesale. What's the experience of the group? Batt'er up.

TIA

 

Certain banks are more inclined. Bank Amercia is one, has is Bank one, Chase will play, Ford credit will not, Primus credit will not. Gmac will depending on the vehicle. Sometimes they will give a "dealer" a much better break.

 

Debis Financial/Mercedes will not negotiate. They wouldn't budge at the end of my Lexus lease last month (my mother in law wanted the car).

 

Hunnington Bank has told me they will not negotiate on my wife's ML when it comes due, despite the fact that the residual is about $15K higher than market. Bank One wouldn't either about two years ago when I turned a Maxima back in that was about $4k over market.
Doesn't make sense why they wouldn't, I have heard some companies actually buy insurance to cover the difference.
Greg

 

BMW credit would not renegotiate the buy back terms on my 3 series either. If they won’t renegotiate which seems like a foolish business decision if the market is that soft, then turn it back in and take advantage of the soft market.

 

Mike
I manage the loan area at a bank in Springfield,Ilinois. We purchase insurance on all lease residuals. At the time the car is turned in we follow the insurance company instructions to protect our investment in the residual value. Mick

 

I second Mick's comments...I spent many years working at a very large national lessor and the primary reason companies don't negotiate is to protect their ability to make claims under their residual insurance poliicies. Typically under these policies, a "deficiency" between the residual and market value has to be established in order to collect from the carrier and most won't allow that deficiency to be determined by a negotiated selling price. In fact, as odd as it sounds, published values in Kelley, NADA, etc. ususlly won't suffice either, but rather the loss must be determined through an actual wholesale market auction type sale.

I know many people who used to call me saying "These lease companies are nuts??!! My vehicle is worth thousands less than the residual and they'd rather take it back than negotiate with me to buy it out! How dumb can they be?" when in reality they are only doing what they have to do.

There are other reasons that lease companies will or won't negotiate a buy out but the reason described above is very common...long explanation but hope it helps understand a practice that is often viewed by us car folk as insane.

 

Thanks Guy's,
Thanks for the lease info. Gotta be the most expensive method of owning a car - well the truth
is ya never take ownership only possesion.

Thanks again-