Monday, May 16, 2022

If You’re Driving a Leased Car, You May Have a “Happy Ending” Surprise




Leasing has become more and more popular, and today about a third of the cars on the road are leased. If you leased your car two or more years ago, the leasing company didn’t know what was going to happen to the price of new and used cars as the result of the COVID pandemic.
 
The main variable that determines the size of your monthly lease payment is the depreciation of the vehicle you’re leasing. The total depreciation is calculated by subtracting the estimated value of the leased car at the end of the lease from the cost of the new vehicle. To some extent, leasing companies must “look into their crystal balls” and estimate what the market value of the new car they lease you will be worth as a used car in 3 or 4 years. There are guidebooks for residual values based on historical supply and demand for different makes and models of vehicles. But these studies didn’t anticipate the Covid pandemic and resulting surge in demand and supply chain stoppage that sharply reduced supplies, especially of vehicles.

Consequently, depending on when you leased your vehicle and what make and model you leased, the actual market value may be thousands of dollars higher that your option to purchase it. Many people who lease cars never knew they have an option to purchase it at the anticipated residual value. Most people, if they did know, don’t exercise this option. People generally lease new vehicles because they like to drive a new car every 3 or 4 years and aren’t used car buyers.
 
Today, you should check the residual value of your lease that is on your lease contract. It’s not prominently displayed and will require some searching on your part. You should then compare this amount with the current market wholesale value of your leased vehicle. It’s easy to get this today because of the huge demand and low supply of used cars. All car dealers are frantically looking for and buying used cars. New companies have sprung up during the pandemic to exploit the high demand and low supply of used vehicles. Some of the new ones are www.WeBuyAnyCar.com, www.Carvana.com, and www.Vroom.com. www.CarMax.com has always been a good place to sell your used car. Include the used car lot for the dealer that sells the make you’re leasing. Get at least three bids to maximize the price you’ll get. You might be able to buy your leased car for thousands of dollars less than what you can immediately resell it for.
 
The biggest problem you’ll encounter is buying your leased car back from the leasing company at the promised option price. This is because you must go through a franchised dealer for the make of car you leased even though you’re buying it back from the leasing company. There are some leasing companies that will sell you your car back directly, but most require you go through a franchise car dealer for that make.
 
Almost without exception, the car dealer will try to add profit for himself to your purchase option price, amounting to thousands dollars. You should object strongly, check with other dealers of your make to see if they will be honest with you and call the leasing company directly. The leasing company, even if they won’t buy it directly, can direct you to a dealer who won’t take advantage of you.
 
Recently, lessees in South Florida have sued two dealers, Gunther Volkswagen, and Brickell Motors for adding profit for themselves to the purchase option prices in their lease contracts. This was reported last month by investigative reporter, Jeff Weinsier, for WPLG, Channel 10 in Ft. Lauderdale. The attorney representing the two lessees is asserting the law that states you cannot charge anything extra for an off-lease car that’s not in the initial lease agreement. The two attorneys suing these dealers are Josh Feygin and Jonathan Kane in case you have a problem with your option to purchase.
 
Thousands of unwary lessees are returning lease cars to dealers and leasing companies daily and losing the large profit opportunity, thousands of dollars, because they didn’t know or remember they have an option to purchase their lease vehicles at the end of the lease. Please spread the word if you have a friend who’s leasing.

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