Buying out a lease (3rd party)

[Eff-1]

Has anyone had experience with buying out a Honda lease? Lots of questions here.

Have people been successful in negotiating the buyout price to a lower amount that's stated in the lease agreement? What about any fees? In this situation, would you recommend dealing directly with Honda Finance, or talk to the dealer?

And lastly, can anyone suggest ways to avoid paying double tax in the case of a 3rd party (me) wanting to buy a car that is being leased by a friend? The lease expires this year, and the friend has decided he wants a new car.

And lastly, is it possible for me to include my car's trade-in value as part of the deal?

Thanks

[Rich Sandor]

What you have to understand, is that a lease is a contract. When you assume someone else's lease, you are resuming that contract. There is no negotiation, because the original person is still on the hook for the full amount until someone else takes over. Why on earth would Honda take a bath because the original leaser wants to get rid of it???

If it's a factory lease, it should be a closed ended lease, and the "lease end value/buyout/residual" is NOT negotiable. It will have been set by Honda at the time of the lease. Same with the interest rate. Non negotiable. All you can do is pay the fees and assume the lease. You WILL have to pay whatever doc fees and taxes are applicable. The same applies for the buyout; you HAVE to pay taxes on it, because it is another purchase seperate from the original lease. You would be paying tax on the buyout even if you were the original person leasing the vehicle.

The only thing you could negotiate, is having the original person who leased the vehicle, actually PAY YOU to take over the lease. That's it. Some people will actually do that in order to be off the hook whatever term they have left on the lease.

But you cannot negotiate with the manufacturer. They don't care about you, they will simply rather hold the initial leaser responsible for the original amount.

If you are assuming a 3rd party lease, like JP or WS or Tricor, the same principles apply, except they are all open end leases which will leave you on the hook for the lease end value if the car is worth less. (or you can buy it out and sell it if it's worth more)

Your best deal for a lease takeover is to find a lease where someone has put down a stupid amount of money, like $5000 or $10000 and you only have to take over the small monthly payments, or if someone is willing to pay you $5000 to take over their lease. Otherwise, you may as well just lease a brand new one yourself.

You can't include a trade in for a lease take-over. Like I said, you are simply assuming a pre-exisiting contract. You cannot change the terms part-way through. There is no provision to enter a trade-in valuation X months into the lease and recalculate the whole thing. You might be able to have the sales manager give you wholesale value for the trade and cut you a cheque, but you may as well just sell it on craigslist.

[Eff-1]

Thanks for the reply. I do understand how a contract works.

In this case nobody is looking to significantly renegotiate the terms of the lease contract, other than hoping to negotiate the buyout, with the hopes that buying out the car would be in the dealer's and/or Honda's best interest. I wasn't sure if the dealer would be able to have a way of doing that, in cooperation with Honda Finance.

Here's the end goal. His lease is up in a couple months. It's a closed lease with Honda. He has no problem with continuing to pay the lease as it stands, but has no interest in keeping the car once the lease is up.

Once the lease is up, I want the car and will pay the lease buyout. Because my friend has no interest in keeping the car, 100% of the cost of this transaction would be covered by me. So, the question is how best do we do that so that I avoid having to pay any significant fees, double taxes, etc?

[Rich Sandor]

So, the question is how best do we do that so that I avoid having to pay any significant fees, double taxes, etc?

Ok. With most closed end, manufacturer leases, the person currently leasing it is the ONLY person allowed to buy it out. If you take over the lease BEFORE it's over, you then become that person, and have the choice to buy it out.

After the vehicle is dropped, the dealerships have a small window to buy the vehicle at a lower price than your buy-out, before it goes to auction.

If no one wants it (because it's a POS or the price is set too high) it will go to auction, with an even lower reserve, and will probably sell for a couple thousand less than what the dealer-lease-end-buyout was.

If you take over the lease before it's over, you will have to pay a lease transfer fee, and at least one month's payment, and then the buyout + fees + GST and PST on the buyout.

If you wait and let the dealer buy it, you can buy it from the dealer - BUT they will then put a markup on it, which will probably make it more expensive than what the above option would cost you.

No matter WHICH way you do it, you WILL pay both GST and PST on the vehicle only once. (The only way you'd pay taxes twice is if your friend bought out the car, and then you bought it from him, but that's NOT what you want to do)

[Rich Sandor]

BTW, since a lease is a contract, it can and does vary between manufacturers, and some of them may have really petty rules that might make what I've said above irrelevant. For example some leases might not allow lease-transfers with less than 3 months remaining in the lease, etc etc. Look over the lease carefully.

IF the buyout on the car is reasonable, take over the lease ASAP, and buyout the car. (At least you then have 2 months to figure out of you really want to keep it!!)

If the buyout on the car is too high, fuck it, let it go to auction and then ask the dealer to keep an eye on it and let them know you will pay $XXXX on the spot for it.

[Eff-1]

Thanks for the info.

[icemiko]

I used to lease a car with Acura and I post it for sale and someone bought it out, he paid the months I owed (without interest) + buyout price + gst + pst.