Buy or give back lease?

Question

I have a 2003 Honda Civic lease due in Sept. 2007. My payoff on the car is aprrox. $9,500 and it currently has 57,045 miles on it. The buy back at the end is $7,511. My question is would be economically stupid to buy this car at the end or would it be best to just give it back?

Answer 1

From a purely economic stand point, you need to go to nada or kbb website and figure out what your car is worth. Honda's hold their resale value *very* well, so if it's worth more than the buy back, you should keep it....pay it off and roll with no car payment.

In the greater picture, it really depends on what you want. Are you happy with this car? Is there any reason to get rid of it? Do you want something else? If you are looking to move into something else, then let it go back and pick up something new!

Answer 2

Question. Are you leasing from the dealer / mfr? Or are you leasing from a bank or other financial institution?

The reason I ask is that a dealer will be happy to get the car back, as they'll have a used car to clean up and sell. A bank on the other hand does not really want a car back. They end up selling them off to some other company.

What this means is, $9,500 may be the initial offer by the bank, but as you get closer and closer to the lease end date, they'll likely start offering better terms, especially in the last couple of weeks. So if you are leasing from a bank, just sit on it for a while and wait to see what happens.

Answer 3

I recomend to all my customers checking what the comperable car is selling for in the area and compare it with what you can buy it out for. Just looking at the numbers you put up, figuring that it is a base civic coupe (cheap as possible) it's retail value still exceded your buyout. So if you want to buy it for yourself it would be a good deal. So you need to decide if you like the car and want to continue to drive it or if you want something different. You probably won't be able to trade the car in and have equity but you could buy it out and get a good deal on a car you know the history of. If you want something different to drive I would recomend letting it go back or letting a family/friend buy it from you at your buy out and let them get a good deal.

I also noticed one of the other responses said to wait and negotiate with the bank. Unfortunatly the bank doesn't negotiate with you because the dealership you bought the car from has first right of refusal to buy the car at the end of the lease for what the residual value is. If the dealership didn't want the car then MABEY the bank would let you save a few hundred dollars. The problem is your car has a good value so both the dealership and the bank want the car. The dealership will buy it and resell it and the bank will take it to the auction with a bunch of other cars they are going to loose money on and sell it and use the profit to help offset the losses on the other cars. The bank counts on cars like yours to help ease the sting of other cars.

Your best bet is to decide if you want to keep it. If you do you might as well buy it out now and the leasing bank will cut you a break on the remaining interest and you will save a few hundred dollars then if you make all the remaining payments and then buy it out.

example: monthly payment 250.00
5 payments left = 1,250
Buy out = 7,500
Total Out of Pocket = 8,750
call and get Payoff
Payoff est. 8,000
Save est. 750
It may not be that much but if you want to keep it then it's worth the call to get the current payoff.

Good Luck!