Automotive

Buying Out Lease

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  • Aug 27th, 2021 8:25 am
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[OP]
Member
Apr 22, 2019
412 posts
444 upvotes

Buying Out Lease

Hello Everyone, I need some help.

I’ve got a friend that has the lease on their vehicle coming up very soon, it’s residual amount in the original lease agreement is only $12,000 while comparable vehicles are listed at $24,000 to $27,000 (I’m assuming due to the car shortage). This friend had planned on just returning the vehicle. Is it worth getting them to buy it out and then selling it to me for the amount they paid(they have already agreed to do so as they have no interest in spending time dealing with any of this) ? What’s the best way to do this? Any advice would be appreciated.

Thanks!
15 replies
Deal Expert
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Jul 30, 2007
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Toronto
ask the dealer to do the paperwork and have you as the buyout person ... if that's possible. In this case, you will just have to pay the buyout + dealer admin fee + safety + license + taxes.
Sr. Member
Feb 10, 2008
626 posts
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If your friend sells it to you then you have to pay HST on that purchase which theoretically increases your cost of the car. However, even with the increased cost if you can sell it back out for $24K you still make a profit (albeit less the HST you had to pay buying from your friend).

If you and your friend are close why not try to sell his car for him without transferring the ownership and "selling" to you first? Saves a decent amount ($1.6K) in HST you'd be paying.
Deal Addict
Jan 20, 2012
1079 posts
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Toronto
Transfer lease buyout option will save you some tax. If not, you are going to get taxed twice, 1st taxed HST at buyout amount and taxed again at market value when transfer over.
Deal Fanatic
Sep 10, 2008
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Kitchener
booblehead wrote: ask the dealer to do the paperwork and have you as the buyout person ... if that's possible. In this case, you will just have to pay the buyout + dealer admin fee + safety + license + taxes.
DO THIS
[OP]
Member
Apr 22, 2019
412 posts
444 upvotes
booblehead wrote: ask the dealer to do the paperwork and have you as the buyout person ... if that's possible. In this case, you will just have to pay the buyout + dealer admin fee + safety + license + taxes.
Do you know if Subaru does this??
Deal Expert
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Beamerguy28 wrote: Do you know if Subaru does this??
well, you can get your friend to speak to the dealer first. If one dealer says no, maybe try a few more subie dealers and see. The car to be returned can be done at any Subie dealerships, therefore, a few phone calls may make your life so much easier.
Deal Guru
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Jul 12, 2003
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Tokic_o wrote: If your friend sells it to you then you have to pay HST on that purchase which theoretically increases your cost of the car. However, even with the increased cost if you can sell it back out for $24K you still make a profit (albeit less the HST you had to pay buying from your friend).

If you and your friend are close why not try to sell his car for him without transferring the ownership and "selling" to you first? Saves a decent amount ($1.6K) in HST you'd be paying.
Right, and then split the profit with your friend if dealership is not willing to do what booblehead said.
Retired Forum Moderator February 2009 - June 2015
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just one more thing ... better make sure what you said it is worth $24K current going price is the same trim model being bought out at $12K. After all, Subie has so many trim levels. For example, Crosstrek. Base to top trim price difference is as much $7K when new
[OP]
Member
Apr 22, 2019
412 posts
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booblehead wrote: just one more thing ... better make sure what you said it is worth $24K current going price is the same trim model being bought out at $12K. After all, Subie has so many trim levels. For example, Crosstrek. Base to top trim price difference is as much $7K when new
It’s a fully loaded BRZ with low mileage
Deal Addict
Dec 16, 2008
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Richmond Hill
With new BRZ on its way, i would definitely double check the 24K number for your friend's car.
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May 18, 2002
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Brampton
Yeah I dont buy that market price. The first gen BRZ/86 is the one fun car that hasnt gone through the roof in value.
Reputation of low power, engine recall for 2013, and the newer and objectively much better generation coming soon has kept the earlier ones more reasonable.
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Banned
Jun 4, 2020
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Clarington, ON
prod wrote: Yeah I dont buy that market price. The first gen BRZ/86 is the one fun car that hasnt gone through the roof in value.
Reputation of low power, engine recall for 2013, and the newer and objectively much better generation coming soon has kept the earlier ones more reasonable.
That would be an 8 year lease.

Looking at 3-4 year old models, 24K asking doesn't seem too out of line.
Deal Addict
Dec 19, 2004
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If bobblehead's suggestion is not possible, you will have to do it in two steps.

Tell your friend to call the original dealer. Tell dealer he wants to do a lease transfer to you. Dealer will ask you to fill up paperwork and do a credit check on you. Assuming everything good, you and your friend go to the dealer together for the sign over. You will pay dealer a admin fee, say for example $499+HST + small MTO fee . Dealer will process paperwork & transfer plates so that the lease is now in your name. You are now responsible for any remaining monthly lease payments on the car. Inform the leasing company your intent to buyout the car at end of lease.

A week or two before lease expiry, you go back to the original dealer (or another dealer of the same brand) and buyout the car. You will pay the residual $12000+HST and admin fee again for example $499+HST. You will also need to get a Safety certificate for the car ($100 - $200) + a small MTO fee.

In total, you would have paid any remaining monthly lease payments, two admin fees + HST, the residual amount + HST, a safety inspection fee, and two MTO fees
Deal Expert
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KevinM56081 wrote: That would be an 8 year lease.

Looking at 3-4 year old models, 24K asking doesn't seem too out of line.
If anyone is looking at this , 2017 or 2018 brz at $23-24k … why wouldn’t they look at the Toyota 86 at $20k or so (asking) instead . Cheaper and more or less it’s the same car Winking Face
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May 18, 2002
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Brampton
KevinM56081 wrote: That would be an 8 year lease.

Looking at 3-4 year old models, 24K asking doesn't seem too out of line.
it's better than other sports cars. Pre-pandemic some were 29k brand new, with 4yr old off lease around 20k.
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