A friend of mine is currently leasing a Nissan through NMAC for $500/mo (excl. tax) on a 39mos contract. He has had the car for about 13 months (13 payments), which equals totals payments made so far about $6500 dollars. The lease matures in Feb 2010. Which to me says he has about $13000 dollars more to pay. Now here is where I got confused, when he called NMAC they told him the payoff quote was $28,000? Does that include an early termination fee or something? Because all together (all his payments )he would have paid about $20,000 to lease a $32,000 Nissan. What do you guys think? Bad deal or about right? Where did the extra 8,000 come from?
2007-12-19 09:12:48 · 5 answers · asked by hiddengem 4 in Cars & Transportation ➔ Buying & Selling
Based on what you say about this deal; The way I see it he has spent $6500.00 dollars so far and $2,500 of this went into interest to the leasing company and $4,000.00 of depreciation was paid down because you say the pay off is 28,000.00 on a $32,000.00 dollar car. This is assuming that he didn't pay anything upfront. If he paid a "down payment" upfront to secure the lease he has to add that to the cost of of the lease. It could be for any tax, doc fees etc. If he completes the lease for the 39 payments he pays a total of $19,500.00. If he pays the remaining $13,000.00 left on the lease he is only paying the rest of the lease deal he made. It has nothing to do with the current payoff value of the vehicle. You have to take into account that the leasing company wants to make money from each payment for loaning your friend the money to drive their vehicle. If he wants to know the residual value of the vehicle (what it will be worth at the end of 39 months) it should be listed in his contract as "residual value". I would think that the current payoff you speak about is $28,000.00 to buy the car on that particular day. You can't subtract his 13 payments from the $32,000.00 because only the paid depreciation or devaluation is subtracted from the original listed lease value.
2007-12-19 14:33:27 · answer #1 · answered by Timer2 3 · 0⤊ 1⤋
The quote you received was the vehicle payoff amount which includes the remaining payments and the residual(the guaranteed future value of the vehicle set by the lessor which is what you can buy the vehicle for at the end of the lease) Hope this helps.
2007-12-19 09:21:44 · answer #2 · answered by Rhettski 4 · 2⤊ 0⤋
What most people do not realize is with a lease there is what they call the "residual value". When you lease a car for 36 months how they figure your payments is to estimate what the car will be worth in 36 months and you pay payments on the difference. So for instance if you lease a $30000 vehicle for 36 months, they figure in 36 months that car will be worth $10000 wholesale at auction. So the depreciation of that vehicle over 36 months is $20000, and that is the amount you pay them in 36 monthly payments, plus there interest fees etc. Hopefully that made sense to you!! But most people do get screwed royally on new car leases.
2007-12-19 10:07:59 · answer #3 · answered by Jake B 2 · 0⤊ 2⤋
Lease payments are made up of two parts: a depreciation charge and a finance charge.
The depreciation part of each monthly payment compensates the leasing company for the portion of the vehicle's value that is lost during your lease.
The finance part is interest on the money the lease company has tied up in the car while you're driving it. In effect, you are borrowing the money that the lease company used to buy the car from the dealer.
You repay part of that money in monthly payments, and repay the remainder when you either buy or return the vehicle at lease-end.
2007-12-19 09:27:03 · answer #4 · answered by Anonymous · 0⤊ 3⤋
That may be the payoff to buy the car. He needs to clarify that.
2007-12-19 09:17:01 · answer #5 · answered by Butterfly Lover 7 · 3⤊ 1⤋