Opinion: Buy Out Lease?

adboyd06 · Oct 12, 2017

I am currently leasing a 2015 RAM 1500 Laramie Sport, fully loaded except push button start and front and rear sensors. I picked up the truck with 200 miles on it in August 2015, signed the paper work for a three year less with 12,000 miles per year.

Today the truck has 22,000 trouble free miles and I have the opportunity to buy out the lease for $31,624 plus tax and tag. Which seems like a very reasonable price. At the end of the lease, in August 2018 the residual value of the truck is around $28,*** (I forget the exact amount). My goal as of the past few months is to eventually not have a truck payment, which obviously would never happen while leasing.

After doing a bit of research I could not find a comparable truck for anywhere near $31,624. Would you buy out the lease at that price?

AzRamLover · Oct 12, 2017

You'll obviously eat the theoretical $3K difference between the residual & the lease buyout.

But you have to keep in mind that the difference is just in theory - as you've stated, you're unable to find a similar truck anywhere for that lease buyout price.

If you're happy with the truck, you may decide it makes sense to "eat" the $3K theoretical difference. Given your situation (you've owned & maintained the truck since mile 200), it seems like a decent tradeoff.

Others may feel differently but we definitely know it'll be more work to try to avoid eating the $3K theoretical difference if you want to try to replace the truck. Plus you might still be behind because the dealer will charge you for the mileage overage if you try to return the truck w/ 22K miles instead of 12K.

atc06jh · Oct 12, 2017

Leasing is always a bad idea. You pay them to rent a truck and then give it back? Makes no sense when you could pay for it and own it for the same payments (maybe cheaper) each month. But if they're gunna give you credit for what you've already paid and you like the truck, then I'd say go for it.

adboyd06 · Oct 12, 2017

AzRamLover said:
You'll obviously eat the theoretical $3K difference between the residual & the lease buyout.

$31,624 is the buy it now price. $28,*** is the buy it in August 2018 price.

From now until August 2018, I will make 10 additional payments of $475. Essentially I would be "saving" about $2,000 if I buy it now instead of waiting until August 2018. The 10 payments totals $4,750 would bring the amount down to $26,874, not the $28,*** residual value. If anything I would be saving money by buying out now.

Also I am no where near being over my miles. Currently the truck has 22,000 and according to the lease terms I could be at 26,000.

adboyd06 · Oct 12, 2017

Thank you both for the input.

I would also disagree with getting a cheaper monthly payment by purchasing over leasing, unless of course you put a ton of money down. Two years ago I wasn't in a position to do so. Granting you a throwing your money away.

Dodge This · Oct 12, 2017

AzRamLover said:
Plus you might still be behind because the dealer will charge you for the mileage overage if you try to return the truck w/ 22K miles instead of 12K.

The lease is 12k per year, so he's actually under the mileage by 2k.

Dodge This · Oct 12, 2017

adboyd06 said:
Thank you both for the input.

I would also disagree with getting a cheaper monthly payment by purchasing over leasing, unless of course you put a ton of money down. Two years ago I wasn't in a position to do so. Granting you a throwing your money away.

The only way you lose money on this is if you just turn in the lease and walk away. As long as you're trading it in for another vehicle or buying out the lease, you'll keep the equity you've earned so far.

Ratket · Oct 12, 2017

If you like it... and it makes sense to you then buy it.

AzRamLover · Oct 12, 2017

Whoops, sorry I missed the 12K miles a year.

Agree w/ Ratket - it does seem like if you have the means it may make sense for you to buy it.

StinkyHotChocolate · Oct 12, 2017

You know and like the truck, can afford it, and can get it at a better price than you've found elsewhere...what are you waiting for?

patchelect · Oct 12, 2017

I too agree with the "buy it now" idea. No sense paying the remaining rent payments only to have buy the same truck for "less" when it fact the total amount will be more. If you like the truck and are happy with the financials, then go for it. You might even get really brassy and spring for the factory Lifetime warranty, but only if you NEVER plan on selling the truck. I just got my '14 Certified Used and did go for the lifetime warranty, but I already planned to never replace the truck given my age and life situations. I owned my '01 Dakota for 16 years and the 90 Dakota before it for 10 so changing trucks isn't exactly like changing my shorts to me!

huntergreen · Oct 12, 2017

Would be the best risk free used vehicle you ever purchase.

Jared26 · Oct 12, 2017

Gotta agree with everyone else, if you're in the position to do so by it now.

adboyd06 · Oct 13, 2017

Thanks everyone. It makes sense to me, just kinda wanted to make sure I wasn't out of my mind.

Lifetime or extended factory warranty is an interesting thought, didn't think of that. Never kept a vehicle long enough before!

baum · Oct 13, 2017

I lease my wifes vehicles and we have for the past 10 years.

1. the payments are usually cheaper.
2. usually keep you in a vehicle that is under warranty

If you decide to buy it out keep in mind at the 31k you can buy it for thats about $500+/month on a 5 year note. In theory you will be spending that for about 7 years total.

With a couple of ours we have walked with equity so we traded in the lease on a new one to get the equity. on a couple we walked away.

adboyd06 · Oct 13, 2017

baum - Yea the payment is actually $594 per month for 5 years financing the total out the door price of $33,700 (tax, title, fees). Yeah the payment is more then I pay for the lease but it get's me one step closer to not having a payment.

Also if I were to buy a new truck I'd probably have to take it out for 84 months to have a payment near $600.

RaftingDave · Oct 13, 2017

FWIW, we're leasing our new ride at $185/mo, with a residual at 3yrs of ~23K. We've started a "truck fund" to buy it out cash at lease end. I want to keep this truck, and preferably no more payments after that.

I know it raises my effective monthly payment (lease payment and saved cash every month), and not everyone can do this...but we leased because the factory incentives were $5K more on leases than buys.

mtofell · Oct 13, 2017

atc06jh said:
Leasing is always a bad idea.

My accountant disagrees and I'm going to trust him on this one

I agree it doesn't always make sense but there are times leasing is a better financial option. I have 2 delivery type vehicles for part of what my company does and leasing is a better option for a variety of reasons.

I do buy my own truck on traditional payments since I will keep it a lot longer and don't as accurately how many miles per year I will put on.

Leasing lets me deduct 100% of everything I pay for the vehicle
Payments are much less
I don't have to worry about repairs since the cars are always under warranty
I can just walk away when done with the lease
My company looks better being represented with newer vehicles

The most recent car I leased is a 2017 Hyundai Tucson (actually, a pretty nice vehicle) - AWD, decent stereo , backup camera, lane change sensors and a bunch of other bells and whistles. Payment is $220/month for 3 years with only $1000 down. The annual miles are low @ 10K but it works for how I use the car. I know this is apples and oranges with the OP but leases aren't always bad.

adrianp89 · Oct 13, 2017

mtofell said:
My accountant disagrees and I'm going to trust him on this one

I agree it doesn't always make sense but there are times leasing is a better financial option. I have 2 delivery type vehicles for part of what my company does and leasing is a better option for a variety of reasons.

I do buy my own truck on traditional payments since I will keep it a lot longer and don't as accurately how many miles per year I will put on.

Leasing lets me deduct 100% of everything I pay for the vehicle
Payments are much less
I don't have to worry about repairs since the cars are always under warranty
I can just walk away when done with the lease
My company looks better being represented with newer vehicles

The most recent car I leased is a 2017 Hyundai Tucson (actually, a pretty nice vehicle) - AWD, decent stereo , backup camera, lane change sensors and a bunch of other bells and whistles. Payment is $220/month for 3 years with only $1000 down. The annual miles are low @ 10K but it works for how I use the car. I know this is apples and oranges with the OP but leases aren't always bad.

Spending 9k on a car for three years and not have to worry about anything is great. Especially a Hyundai, those things loose 9k as soon as you drive it off the lot.

baum · Oct 13, 2017

adboyd06 said:
baum - Yea the payment is actually $594 per month for 5 years financing the total out the door price of $33,700 (tax, title, fees). Yeah the payment is more then I pay for the lease but it get's me one step closer to not having a payment.

Also if I were to buy a new truck I'd probably have to take it out for 84 months to have a payment near $600.

around me you can get a new sport for 38-40k at a 6year loan that like 590 a mo (depending on credit)

Opinion: Buy Out Lease?

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