Do you have an eye on a sporty BMW 335i but just can’t seem to scrape together the cash for the initial down payment? Many luxury car companies are offering very comely monthly lease rates on their new models nowadays but that still means you usually have to come up with a huge wad of cash at the start of the deal. For example, BMW is offering a $469 a month lease on the 335i but you still need to have about $5,000 when you initially price the contract.
Granted, there are $0 down payment lease offers out there at the moment on some new cars but that doesn’t take into account fixed fees like security deposits and acquisition costs. But there is an alternative.
Did you know that at any time during a lease the lessee can have another person lift over payments? While most manufacturers charge a tiny transfer fee you can always try and get the initial lessee to pay that cost. (Transfer fees vary widely—Mercedes and Land Rover seem to charge the most while Ford Motor Company/Mazda vehicles only require a $75 transfer fee.)
Usually there is just one simple form to fill out for the manufacturer’s leasing arm and then presto! The new owner just keeps paying your monthly lease payment each month until the vehicle needs to be returned.
Finding the Best Lease to Assume—The quickest way to find the best lease assumption deal for you is to turn to the internet. Sites like Leasetrader.com, Swapalease.com and Leasetrade.com all have thousands of listings made by various private parties looking to offload their lease. There are also other sites but most of them work by having the people who advertise on the site pay while “lease assumers” (meaning you) enjoy the benefits at no cost.
Luxury cars are heavily represented in the listings as many of these lessees have either lost their jobs or just can’t afford the payments anymore. If you feel like this is “taking advantage” of someone else’s misfortune, imagine how unfortunate it will be to this other person’s credit rating when their car, truck or SUV gets repossessed. In fact, if you assume someone else’s lease you are really doing what amounts to a public service.
What You Need to Know—For example, ads displayed on LeaseTrader.com show all the information you need to know to understand what you are getting into. For example, it lists how many months are left on the lease, the exact monthly payment, which firm the lease is through (manufacturer leasing companies are the safest bets), the exact option specification, accident history, maintenance history, cost to purchase the vehicle at the raze of the lease, photos and where the vehicle is located.
Many people also use lease assumption sites like this to seek for a new car when they are moving. But if you aren’t going anywhere anytime soon these websites allow you to search for vehicles in your local spot. For example, if you want to lift a lease on a Mercedes ML350 SUV and live in Denver you probably don’t want to look at one that is located in Delaware. Before starting your search, decide how far it is you are willing to drive to pick up the vehicle you intend to lease.
Don’t Be Stupid—These websites are meant to connect you with individuals looking to offload their leased vehicles but none claim to have any proof that these people are in any way honest. If it sounds too good to be true it probably is. And as always, don’t pick up the vehicle until all of the paperwork has gone through with the leasing company. You don’t want to be driving around in a vehicle that is still under someone else’s name.
When you assume a lease realize you will then be liable for any damage that the previous lessee did to the vehicle. Make obvious all bodywork repairs are complete before assuming any lease. Also check that the tires are not bald because when you turn a leased car in with bald tires the leasing company will charge you (and not the previous lessee) for unique ones. Also look out for windshield cracks, burns in carpet and seats, scrapes on alloy wheels and ask for proof of all servicing.
Lastly, never lease a car that is already over the mileage limits. Usually leases give you 12-15k drivable miles a year. Depending on the contract you can pay anywhere from a penny to ten cents for every mile over that predetermined mileage limit when you turn in the car. Sometimes you can get that huge bill waived if you lease a new car from the same automaker at the time of lease return but that is not guaranteed.
Would This Work For Me? —When you attempt to assume a lease do realize that if you have a credit score equivalent to your age that most leasing companies will probably turn you down. You don’t have to have perfect credit, however, as many lease companies see lease assumption as a design to tranquil get paid on a previous contract. When a lease company has to repossess a car they always lose money so lease assumption is their preferred route.
When you “assume” a lease you are leasing what is now essentially a “used” car. Even so, these vehicles are pretty new and should probably detached be under warranty. In addition to the monthly payment you must remember that even leased cars must be regularly serviced per manufacturer’s requirements. So before you lease, say, a Range Rover at a super-low rate be determined that you can afford to own this vehicle. Websites like Edmunds.com and Automotive.com all offer “real cost of ownership” listings (including service costs) for various models on their websites.
Which One Should I Recall? —Part of the fun of lease assumption is the fact that people who bag “bored posthaste” with their cars have a way to inexpensively feed their automotive addiction. It is also quite a bit of fun to be able to see what sort of lease deals people are signing. On Leasetrader.com there was a 2007 Mercedes ML350 that was $970/month while most other ML350 leases (equipped in a nearly identical fashion) on the state were closer to $550/month. Someone got ripped off.
But lease assumption really works best when an interested party knows exactly the car he or she wants. That way you can tell the search engines on these websites to look for an Audi A4 sedan and then all you have to do is check the listings for the best lease assumption deal. Finding the best deal on a lease has never been easier or more fun.
Sample Prices from the Internet:
2007 BMW 335i—($467.96/14 months)—(20K Miles Left on Lease)—Seller paying lease transfer fee
2008 Mercedes C350—($500/23 months)—(31K Miles Remaining)–$595 lease transfer fee
2008 Audi A4 2.0T—($341.53/20 months)—(19K Miles Remaining)–$100 transfer fee
2007 Lexus IS350—($485/36 months)—(33K Miles Remaining)–$200 transfer fee
2007 Infiniti G35 Coupe—($375/15 months)—(18K Miles Remaining)—No transfer fee
2009 Acura TSX—($399/23 months)—(29K Miles Remaining)—No transfer fee
2006 Range Rover Sport HSE—($664/29 months)—(30K Miles Remaining)—$650 transfer fee
2008 Volvo S40 Sedan—($328/39 months)—(34K Miles Remaining)—$650 transfer fee
2008 Jeep Wrangler Unlimited—($358/27 months)—(27K Miles Remaining)— $300 transfer fee
2008 Honda Civic—($258/23 months)—(27K Miles Remaining)—No transfer fee
2008 Toyota Yaris Hatchback—($215/45 months)—(48K Miles Remaining)–$50 transfer fee
2008 Mazda3 s Hatchback—($292/24 months)—(24K Miles Remaining)–$75 transfer fee
2007 GMC Yukon Denali—($499/14 months)—(15K Miles Remaining)–$595 transfer fee
2008 Ford Mustang GT—($341/12 months)—(14K Miles Remaining)–$75 transfer fee
Sources:
Swapalease.com
Filed under Edmunds Insurance by on Feb 18th, 2011. Comment. 
When I started my website as a tool to offer my services to sales companies, I never considered that consumers would be viewing it as well. Recently I’ve started getting inquiries from consumers on how and when to buy a car. So intellectual what I know, here goes.
If you mediate about it, the anxiety associated with buying a vehicle is directly caused by the fear of negotiations. Over the last few years I’ve often wondered why more manufacturers don’t simply go to a one-price marketing system. Many dealers must glimpse a problem because I see a grassroots effort happening all over the country in one-price shopping.
1) Make a conscious decision to buy within a certain time frame.
2) Research vehicles you intend to reflect on the manufacturer’s website. Your research should include dealer invoice, warranty, fuel efficiency, standard features, options, finance or lease plans and at least two dealers advance you. If you are purchasing a pre-owned vehicle try to purchase one that is certified. Do some online comparison pricing on similar vehicles with similar miles. When you come by to the dealer ask for a Carfax report. Not that Carfax knows all, but it might have distinguished information. Look for fluid leaks beneath the vehicle. If you intend to buy, and it’s not a certified car then you may want to select it to an independent mechanic.
During your research you will likely arrive across articles that are titled something like this, “what is the dealer hiding” or “tricks that dealers will play on you” or “what to be leery of when buying a car” or blah, blah, blah. Absorb me, there are no clandestine conspiracies among dealers to do anything other than serve the public. Dealers have nothing to hide. As a matter of fact if you do your research, the dealer will be negotiating from a disadvantage. The information highway has brought all of the information right to your fingertips and every dealer is just a mouse click away. Now, that’s not to say there aren’t some accelerate and gun, shoot from the hip, horse trading, high pressure crasfty rascals still out there. Impartial go with your gut feeling, you’ll know within minutes if you need to put your boots on. I had a guy in chest waders once. He told me he’s already had on his puddle slippers, knee boots and hip boots. So I asked him…”is this your last pair of boots? ” I knew I had him.
Be mindful that dealers, just like all business owners need to make money, so don’t secure your kicks by wringing the last few dollars out of a deal. Take pride in the fact that a deal is fair for everyone. After all, the dealer did invest millions to sell and service automobiles. You will want them around when it is time for service.
Ok, things you may not be aware of; dealers utilize an average of $350.00 – $700.00 per car sold in advertising. It costs them almost $200.00 to get you in the door whether you buy or not. Dealers also incur thousands of dollars in interest charges each month (floor idea expense) to finance their new vehicle inventories. Now on the other hand, you have 4 fingers and a thumb. Ha! Most manufacturers pay their dealers’ holdback, a 2%-3% margin built into the invoice cost to help offset expenses. Many manufacturers also pay floor plan assistance when dealers effectively manage their inventories. In other words, when dealers turn their inventories quicker, they can buy more cars more often and in turn, the factory will help defray floor plan expenses. Dealers also get paid a stipend to prep the vehicle so it’s checked and ready for sale. These are the hidden income streams you will read about.
So, let’s just say for simplicity sake that all the dealer’s costs associated with advertising and floor idea expense are offset by subsidies paid by the factory. If this is a close assumption, then invoice price is the cost to put a new vehicle on a dealer’s lot ready for sale (not withstanding expenses like rent, payroll, gas, electric, etc, etc.). So, as a consumer, if you truly believe you should be able to buy a original vehicle below invoice… then I suggest you take your 3-10 million dollars and go buy a dealership. The factory will be happy to oblige you with more vehicles then you could possibly buy at below invoice pricing. Then you can have the pleasure of dealing with all the people just like yourself. Oh, and something else you may want to know; after the dealer does pay their employees and all other expenses, the average dealer in America puts 2 pennies to the bottom line for every dollar spent in their store. So you better be a damn wonderful operator after you put up your 5 mil. Any other funds that dealers receive such as year end close-outs, etc are published everywhere.
3) Now, let’s get back to buying a new vehicle. Email at least 2 dealers in your area for a price on a specific vehicle with your desired options. This will educate you on where the market is and how flexible you may need to be regarding models and options. Have at least 2, maybe 3 colors picked out that you would consider. If the dealer doesn’t quote online pricing then they probably have a valid reason, so don’t disqualify them from your search. They may be the best overall candidate to buy from. It really doesn’t matter anyway because they could tell you anything to get you in the door. Also, the vehicle you’re shopping for is already in your impress range or you wouldn’t be considering it right?
4) Research your trade-in if you have one. Go to kbb.com, nada.com, and/or Edmunds.com. Be sure to choose the “trade-in” category, not “retail” or “private party.” Value your vehicle logically, not emotionally or you will be setting yourself up for disappointment. If you have a nice vehicle the dealer will try hard to trade it. If you have a sled, admit it to yourself. Regardless of how you interpret what the guide books say, do not value a 70,000 mile vehicle as gracious condition. It has 70,000 miles worth of wear and tear. If your vehicle is starting to nickel and dime you, keep that in mind. Has your vehicle had previous damage? In the eyes of a dealer, an excellent condition vehicle is no more than 4 model years old, driven 10,000 miles or less per year, 1 owner, never been smoked in vehicle with new tires, no body or paint work and a current state inspection sticker. Is that your vehicle?
5) If you use websites other than the manufacturer to get invoice pricing, be aware there are legitimate, miscellaneous itemized fees that will show up on an invoice i.e. port fees if applicable, destination charges (also on the sticker), ad association fees, etc. Do not accept any costs that are hand written on the invoice unless they are accessories already installed. Most dealers will reveal you the invoice, but if not, don’t be concerned, you pretty much know the numbers. Being prepared and knowledgeable are your best resources when buying anything.
Now, let me suggest a notion that you as a consumer may think absurd, ready? “A fair designate to pay for a vehicle is the MSRP or sticker price on the window.” “There you go, I said it, so how do you like me now? ” I make this suggestion with 1 valuable consideration to bear in mind; and that is, salesmanship. Did the salesperson satisfy your needs by showing you the right vehicle, did he or she remember your name(s), did they create enough value in their presentation to convince you that sticker price is a fair price, how was the test drive, did they provide answers to all your questions, did they value your time, what is their customer satisfaction rating, etc? Could you buy it for less, sure? However, as soon as you drive away happy the price becomes unimportant.
Manufacturers are also helping create value by lowering the MSRP on vehicles instead of offering rebates. Contemplate of it this way, if a manufacturer can give you a $3,000.00 rebate then they’re charging you $3,000.00 too much to inaugurate with. Also, in some states consumers pay sales tax on rebates. Therefore, the fair thing to do is lower the MSRP, which is precisely what they are doing.
Support in mind that due to supply and demand some vehicles command sticker price. But in my opinion, only if the salesperson has salesmanship, make them work for it. Just because they have a hot vehicle doesn’t mean they don’t have to make the exertion.
When shopping, have a good concept of how payments relate to price. Don’t expect to finance $25,000.00 with no money down for 60 months at $400.00/mo. Even at 0% interest the payments are slightly higher than that, be prepared. Be open to a lease, especially if there’s a high probability you won’t keep the car, the bank owns it regardless. As a consumer, you’ve been conditioned by advertising to believe that the end of the month is the best time to capture a vehicle. Yes, dealers do need to hit their volume objectives, but they start achieving that on the first day of every month. Every deal everyday is important, so there’s no need to wait.
6) Try to buy in your community. Most dealers consume a lot of money supporting ball teams, high schools, hospitals, scouting, hospice and other charitable causes. YOU ARE NOW READY TO VISIT A LOCAL DEALER. Be confident, you have a reasonable expectation of what your trade is worth. You have a pretty good belief of what the dealer paid for the current vehicle. You’ve done some online comparison pricing. So let’s go.
7) When you get to the dealer, be prepared to spend at least 1.5 hours to walk through the process. Be prepared to retract a vehicle, get a presentation, steal a test drive, enjoy out a credit application and be prepared to buy. Never rush into a dealership and tell the sales associate how valuable your time is and you need the cheapest price on a vehicle you haven’t driven. I once had a manager ask me if I ever sold a vehicle to someone who didn’t test drive, I had to say no. Also, don’t let your salesperson start qualifying the deal until it’s time to negotiate. No effect talk, no payment talk or down payment talk until you’ve reached that step. They have to sell the car first before they sell the deal. If you don’t like the vehicle, the rest doesn’t matter. Now, as long as you’ve committed yourself to spending thousands of dollars, enjoy the process. You have already thought this decision through, you’ve done your due diligence and the negotiating cards are stacked in your favor. So let the salesperson do their job and you’ll both have fun. Joke with the salesperson and tell them “I request to see the best presentation you’ve ever done.” “I’m prepared to spend a lot of money today, so I need to see value.”
When negotiating, always come to a bottom line first, and then figure down payment and monthly payment. Do not throw out ridiculous offers below what you already know is reasonable. Don’t let negotiations turn into a bartering contest. Why waste your time? Everyone needs to be credible and honest. Keep in mind that the word profit is not a 4 letter word. People in business need to make profit. Unless you work for the government, your job also depends on profit, which allows you the luxury of that nice new car. Say this to your adept sales rep, “show me the numbers on the road including taxes and license fees and if I feel it’s fair, we’re done.” “If I think you need to sharpen your pencil, I’ll tell you, I’m here to select.” If the salesperson doesn’t ask you to pay sticker impress then shame on them. They must know in their heart they don’t deserve it. If you want to have some precise fun, say this to your salesperson “I know you have to make money and I want you to be able to eat…I just don’t want to recognize you gaining any weight.”
If you have to stretch your payments past 60 months on a purchase or 42 months on a lease, then you probably can’t afford the vehicle. Most people like to think they will sustain their vehicle beyond the term of the loan, but in reality, they trade within 42 months or sooner. Most people never consider their negative equity state until they try to trade before their loan is paid off. The longer the loan, the more negative equity.
Never assign a lot of money down on a lease, only what’s required. If you drive more than the standard miles allowed then ask the dealer to calculate the additional miles into your payment, or what it would cost to buy the miles up front. It might not be to your advantage to lease at that point. Often times a 36-39 month lease has a similar payment to a 60 month loan. Insurance premiums typically go up with a lease.
On a 60 month loan, if you keep your vehicle in good shape with reasonable miles, you might advance an equity position around 42-45 months, depending on your initial down payment. If you added negative equity from a prior car, you’ll probably never arrive an equity site unless you covered your negative equity with down payment. The point is this; it’s nice to be emotional and ecstatic when buying, just be logical when justifying your payments.
Regardless of whether you buy or lease, take good care of your vehicle. I fill in letting the dealer do all the maintenance so you always have recourse at the source. You may pay a bit more, but simple things like the wrong oil filter can cause irreparable hurt to your engine, I’ve seen it happen. Hold in mind that all vehicles lose value, so you might as well keep yours in tip top condition. Besides, when you get to the dealer, you’ll want to visit with your gregarious, gracious, grateful, well groomed, affable sales representative.
9) If you’re going to buy a service agreement, always buy the top of the line. Be sure it covers at least the term of the loan and the miles you will drive. The reason I suggest buying the best service agreement is because everyone hates hearing the words, “I’m sorry, but that share isn’t covered.” The best way to have your salesperson or business manager thunder a service contract is to have them tell you what isn’t covered first. If you are leasing, I don’t recommend a service contract because most factory warranties are at least 36 months or 36,000 miles. Always buy gap insurance. Gap insurance pays off your negative equity in the event of a total loss. Gap is typically built into a lease.
If in the past you’ve had a few bumps in the road where credit is concerned, allow a little extra time for the dealer to place your loan. Bear in mind that dealers are often charged hundreds, sometimes thousands of dollars in fees by higher risk banks to secure loans. A deal has to make sense for all concerned.
10) Be sure you’ve been properly introduced to someone in service and your first oil change is scheduled. Then www.hugyoursalesperson.com, give them a kiss on the cheek, thank them very much and like your new dawdle. Tell everyone you know what a great buying experience you had because you were prepared. Now, because the automobile business is all about the deal, what’s in it for you when you originate referring everyone you know? This is so much easier than teaching salespeople how to sell a vehicle.
Filed under Edmunds Insurance by on Dec 16th, 2010. Comment.
