Automotive

Real value way above residual value near lease end; please advice

  • Last Updated:
  • Mar 13th, 2017 9:27 pm
[OP]
Newbie
Mar 11, 2017
6 posts
1 upvote

Real value way above residual value near lease end; please advice

Hey RFDers,

My current lease (2015 BMW 235i xDrive) will end in June; it's under mileage allowance and literally no part of it ever hit anything. The residual value is 34k.

When I checked on Black Book, it shows that the average asking price for cars like mine is 49k and the average trade-in value is 41k. Both above 34k.

I don't intend to keep this car, but I felt I should make a few bucks rather than just return it to the dealership. Wondering how actionable this is?

SITUATION COMPLICATOR: now I'm shopping for a Mazda, and the dealer was very eager to sell me that Mazda right now, and was willing to write me a cheque to cover the last few months of lease on the Bimmer. I have no issue getting the new car right now, but not sure how it affects the monetization of the equity on the old car.
21 replies
Deal Addict
User avatar
Jul 5, 2011
1419 posts
1166 upvotes
Toronto
Most optimal way of making money:

Buy out the car from BMW yourself - keep in mind you'll need to pay HST on the buyout, and admin fee ($299-$599), safety and emission test the vehicle, plus licensing. Afterwards, sell it yourself.

Less optimal but a lot less work:

Attain your buyout sheet. Approach the dealer and request an appraisal. Request the positive equity to be returned to you in a cheque. I.e. If the buyout is $34000 and the appraisal is $39000, request the $5000 be paid to you by cheque. After you are satisfied about this payoff, then negotiate your price on the new vehicle you are buying.

I would strongly suggest you shop your trade against at minimum 3-4 dealers.

I would also mention that Black Book is quite often not indicative of real market value, and as such can be way high or way low.

Good luck
2013 Wins - $1320 - Woohoo!
Deal Addict
Jan 23, 2017
1012 posts
850 upvotes
Calgary
^All you need to know.

Definitely agree on black book being really hit or miss. Values my 2015 Mazda3 at $11,200 while dealers are pricing around $18-20k and private is around $17k.
Deal Addict
Apr 5, 2016
3947 posts
2569 upvotes
Calgary/Vancouver
You can also sell that car privately as well. This way you won't have to pay taxes.
Current Fido customer.
Ex Koodo customer.
Deal Expert
User avatar
Jul 30, 2007
25752 posts
10800 upvotes
Toronto
It's highly unlikely BMW dealer will write you a Chq of this so called "positive equity" in the car, dealer will simply tell you to buy out the car now and you can sell on your own. You have to realize you don't own the car while under lease, such that you really have no equity in the car.
Deal Addict
User avatar
Jul 5, 2011
1419 posts
1166 upvotes
Toronto
bomber17 wrote: You can also sell that car privately as well. This way you won't have to pay taxes.
He will have to pay taxes on the buyout from BMW - no getting around it. Also an admin fee, guaranteed. BMW especially is notorious for the $599 slammer.
booblehead wrote: It's highly unlikely BMW dealer will write you a Chq of this so called "positive equity" in the car, dealer will simply tell you to buy out the car now and you can sell on your own. You have to realize you don't own the car while under lease, such that you really have no equity in the car.
Sorry, I should have been more clear. The dealer you are "trading" the car into will be writing you the cheque. Sure, you don't own the vehicle, but you do own first rights regarding the buyout. It is not uncommon for people to shop their existing lease for equity... if it's worth more than the buyout, there is nothing stopping a 3rd party (i.e. Dealer or other individual) buyout.

Shop your trade at different Mazda dealers OP if you intend to trade. You'll get an idea pretty quick if there is equity or not... make sure you have the buyout and make sure you know exactly what number is going on your trade independent of the deal you're working on the new car. If you let the dealer know your intention (shopping for positive equity), you may have an easier time.

"I know the vehicle has positive equity - I want to know how much equity you will give me, and after that is settled I want to work on the price for the new car"

You may want to use it as cash down, or multiple security deposits to lower the rate, or you can opt for cash back. You'll avoid the "we can cover the last payments on your BMW lease" stuff if you're straightforward with your intention.
2013 Wins - $1320 - Woohoo!
Deal Expert
User avatar
Jul 30, 2007
25752 posts
10800 upvotes
Toronto
If you deal with bmwfs directly, no admin fee at all. This was confirmed with a few rfders here last year.
Deal Fanatic
Dec 24, 2005
5420 posts
1018 upvotes
bomber17 wrote: You can also sell that car privately as well. This way you won't have to pay taxes.
you can't

you do not own the car
[OP]
Newbie
Mar 11, 2017
6 posts
1 upvote
xjesterxx wrote: He will have to pay taxes on the buyout from BMW - no getting around it. Also an admin fee, guaranteed. BMW especially is notorious for the $599 slammer.



Sorry, I should have been more clear. The dealer you are "trading" the car into will be writing you the cheque. Sure, you don't own the vehicle, but you do own first rights regarding the buyout. It is not uncommon for people to shop their existing lease for equity... if it's worth more than the buyout, there is nothing stopping a 3rd party (i.e. Dealer or other individual) buyout.

Shop your trade at different Mazda dealers OP if you intend to trade. You'll get an idea pretty quick if there is equity or not... make sure you have the buyout and make sure you know exactly what number is going on your trade independent of the deal you're working on the new car. If you let the dealer know your intention (shopping for positive equity), you may have an easier time.

"I know the vehicle has positive equity - I want to know how much equity you will give me, and after that is settled I want to work on the price for the new car"

You may want to use it as cash down, or multiple security deposits to lower the rate, or you can opt for cash back. You'll avoid the "we can cover the last payments on your BMW lease" stuff if you're straightforward with your intention.

It sounds like you suggested me deal with Mazda regarding the equity on the BMW if I'm not mistaken. Can a Mazda dealership buyback a BMW?
Jr. Member
Feb 1, 2017
166 posts
141 upvotes
milolai wrote: you can't

you do not own the car
Will BMW allow a third party to buyout the car? Or, can only the lessee buy it out?
Deal Fanatic
User avatar
Nov 2, 2013
5306 posts
1178 upvotes
Edmonton, AB
That's how a lot of leases are... the residuals are lower than the actual market value... but most leasers (not accusing you or anything) are just looking to drive the newest fanciest thing to show off their (perceived) wealth and don't care. Porsche is especially horrible; if I recall correctly when I was sitting down with them it was about 1700-1800+/month. for a 24 month. Residual was in the low 7x%. You see 2015 Porsche 911s easily exceeding that here (mid $80Ks). The manufacturers make another pretty penny taking in your car back for below market value, and reselling it.

Anyways if you're willing to go through the trouble of re-sale, best is to buy the car then resell.
Consultant
- Oilfield & Industrial Services - Finance - IT -
In the Alberta Oilfield since 2013
Deal Addict
User avatar
Jul 5, 2011
1419 posts
1166 upvotes
Toronto
milolai wrote: you can't

you do not own the car
You can, but you need to buy it out before you sell it.

The lessee always has right of first refusal for the buyout.
rex911 wrote: It sounds like you suggested me deal with Mazda regarding the equity on the BMW if I'm not mistaken. Can a Mazda dealership buyback a BMW?
Yes, it is called a 3rd party buyout.

Totally normal and done frequently.
2013 Wins - $1320 - Woohoo!
Deal Addict
Jan 8, 2007
2452 posts
968 upvotes
Calgary
milolai wrote: you can't

you do not own the car
I have sold most of my leases. Always worth more than RV. No different than selling a financed car before term is up. You don't even have to use your own money to do this. If you sell your lease privately, the leasing company couldn't care less where the money comes from, as long as it is paid for. For this you need your local dealer to do some paperwork. Or in BMWs case you don't even need that. Can deal directly with BMWFS.

OP, where are you located? I know in Alberta there is no safety, emission etc. So just pay RV + GST + (admin fee if applicable). Your best bet is to post the car for sale now and see what happens. If you truly can sell it in the 40s, it's worth the extra effort in my opinion. Even trading it in, you will leave a few grand on the table.
[OP]
Newbie
Mar 11, 2017
6 posts
1 upvote
aleks wrote: I have sold most of my leases. Always worth more than RV. No different than selling a financed car before term is up. You don't even have to use your own money to do this. If you sell your lease privately, the leasing company couldn't care less where the money comes from, as long as it is paid for. For this you need your local dealer to do some paperwork. Or in BMWs case you don't even need that. Can deal directly with BMWFS.

OP, where are you located? I know in Alberta there is no safety, emission etc. So just pay RV + GST + (admin fee if applicable). Your best bet is to post the car for sale now and see what happens. If you truly can sell it in the 40s, it's worth the extra effort in my opinion. Even trading it in, you will leave a few grand on the table.
Thank you for the success stories!

I'm located in ON. So basically I just need to find somebody (a person or even a dealership) willing to offer me something above RV; then I pay RV + GST to BMWFS, do some vehicle tests if needed, transfer the car to the buyer, and keep the rest of the money, correct?

Top