Automotive

End of Lease - Best Approach

  • Last Updated:
  • Aug 3rd, 2017 11:52 am
[OP]
Jr. Member
Mar 7, 2011
147 posts
40 upvotes

End of Lease - Best Approach

Hi All - I have a 2014 mazda3 sedan 6sp w/convenience package coming off lease end of August. It's fairly low mileage @ 45k km out of the 60k km allowance. No damage or accidents.

I checked canadianblackbook which indicates $14,600 average asking price @ an average odometer reading of 55k km. My residual is $12,600.

What's my best course of action? Is there enough equity in the car that warrants me keeping it? Should I be asking the dealership for a better deal or special arrangement on my next lease?

Any feedback would be very much appreciated!
17 replies
Deal Expert
User avatar
Jul 30, 2007
18348 posts
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Toronto
If you like your current car and has little to no issue, then buy it out. If you are itchy in getting a new one (another Mazda), then you do qualify for loyalty credit to begin with.
[OP]
Jr. Member
Mar 7, 2011
147 posts
40 upvotes
booblehead wrote:
Aug 2nd, 2017 1:25 pm
If you like your current car and has little to no issue, then buy it out. If you are itchy in getting a new one (another Mazda), then you do qualify for loyalty credit to begin with.
Thanks - so no way to take advantage of any equity that I might have built up?
Deal Expert
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Jul 30, 2007
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Toronto
No. For leasing, you don't own the car, the car belongs to Mazda Canada FS. In other words, there is no equity in the car.
Deal Addict
Jan 8, 2007
1788 posts
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Calgary
RRRhaire wrote:
Aug 2nd, 2017 1:36 pm
Thanks - so no way to take advantage of any equity that I might have built up?
Yes, you can either trade it in provided dealer will give you over the residual (with tax and any fees). This is highly unlikely given that dealer offers are low.
Or
You can post it for sale and see if you can get more on the private market. It's a bit of work but you may get lucky and make a few hundred $.

I recently sold my leased truck and made back several thousand $ but trucks are in big demand right now especially in USA where they are importing Canadian trucks in large numbers due to our low currency.
Member
Dec 16, 2008
469 posts
126 upvotes
Richmond Hill
12600*1.13=14238. So in the best scenario, you earn 14600-14238=362$ if you decide to sell the cdar immediately after take over. (admin fee was assumed to have been waived by the way).

If you plan to change the car for whatever reason, just return it to them based on the above numbers.

If you are not bored of it and want to drive it for a couple of years more, then buy it out.
Deal Expert
User avatar
Jul 30, 2007
18348 posts
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Toronto
well, you would have it buy the car out first and then hope for the best (for trading in or private sale)
Jr. Member
Oct 27, 2012
118 posts
17 upvotes
kooroshkabir wrote:
Aug 2nd, 2017 2:07 pm
12600*1.13=14238. So in the best scenario, you earn 14600-14238=362$ if you decide to sell the cdar immediately after take over. (admin fee was assumed to have been waived by the way).

If you plan to change the car for whatever reason, just return it to them based on the above numbers.

If you are not bored of it and want to drive it for a couple of years more, then buy it out.
What you mention is basically true, but it doesn't factor in any tax benefit from trading in, which basically cancels out the tax you owe on the buyout.

From my recent experience, the before-tax buyout value is used to determine any negative/positive equity.
Member
Dec 16, 2008
469 posts
126 upvotes
Richmond Hill
Yes correct. I was thinking about trade-in with a lower value car which was my situation. In that case you don't save on tax.

Edit: He can not trade-in the car before paying the tax on buyout value and getting ownership in his name.
Newbie
Oct 26, 2012
30 posts
7 upvotes
kooroshkabir wrote:
Aug 2nd, 2017 2:07 pm
12600*1.13=14238. So in the best scenario, you earn 14600-14238=362$ if you decide to sell the cdar immediately after take over. (admin fee was assumed to have been waived by the way).

If you plan to change the car for whatever reason, just return it to them based on the above numbers.

If you are not bored of it and want to drive it for a couple of years more, then buy it out.
I'm almost certain that the buyout indicated includes taxes. I'm pretty sure it's the total + tax, and using the residual % you have the total payable amount and the buyout - both after taxes
Member
Dec 16, 2008
469 posts
126 upvotes
Richmond Hill
Ok, for me they always have put the number before tax in the contract.
Deal Addict
May 18, 2005
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fatcowxlive wrote:
Aug 3rd, 2017 8:56 am
I'm almost certain that the buyout indicated includes taxes. I'm pretty sure it's the total + tax, and using the residual % you have the total payable amount and the buyout - both after taxes
I'm pretty sure you are wrong :)
Deal Addict
Jan 8, 2007
1788 posts
403 upvotes
Calgary
kooroshkabir wrote:
Aug 2nd, 2017 10:51 pm
Yes correct. I was thinking about trade-in with a lower value car which was my situation. In that case you don't save on tax.

Edit: He can not trade-in the car before paying the tax on buyout value and getting ownership in his name.
I know things are different in Ontario but I've always "sold" the leases without ever putting them in my name. All is done at dealer, and then new owner heads to registry to register the car without me even putting it in my name. Maybe that's why it's more of a hassle out East?

Also we don't pay tax on used cars when we buy privately. So only I would pay the tax on my residual. They buyer doesn't pay any taxes on our agreed price.

OP didn't specify where he is from.
Deal Fanatic
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Jul 12, 2003
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Markham
RRRhaire wrote:
Aug 2nd, 2017 1:36 pm
Thanks - so no way to take advantage of any equity that I might have built up?
Of cos not.
There is penalty if you exceed the KM, but nothing if you have plenty of KM left.
You should have opt for 15000km or 18000km instead of 20k KM when you were leasing it (that lower your payments too). You miss-judge your usage on the car, if you gonna lease another one and will be using it for the same commute. Think about opting for a lower KM/yr.

I sub-leased my Speed3 and end up having a lot of Km left (original leasee use a company car and doesn't drive his car much), I bought it out and drove it for another 6years before I sold it.
Retired Forum Moderator February 2009 - June 2015
Deal Addict
May 31, 2005
1331 posts
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Mississauga
fatcowxlive wrote:
Aug 3rd, 2017 8:56 am
I'm almost certain that the buyout indicated includes taxes. I'm pretty sure it's the total + tax, and using the residual % you have the total payable amount and the buyout - both after taxes
wrong, buyout = residual + tax

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