Automotive

Lease buyout markup

  • Last Updated:
  • Aug 31st, 2021 4:26 pm
[OP]
Newbie
Jun 21, 2020
89 posts
51 upvotes
Toronto

Lease buyout markup

Hi guys, so I like to know if this a normal practice that dealer does or that i’m missing something.
So i have a lease that i want to buyout mid way.
Can dealer markup the buyout?
Not talking about fees. Basically from the calculation i got and what dealer told me is around 7k difference.
basically the buyout is higher then what my otr was..
I asked my sister who’s a cpa told me in corporate finance, this is malpractice and outright illegal.
But maybe consumer is different?
Would really appreciate your thoughts before deciding on my next move.

Thank you
103 replies
Deal Fanatic
Jul 26, 2007
6724 posts
4294 upvotes
Toronto
Go to another dealer, or if your car brand let you buyout directly from the leasor, do that.
Sr. Member
Feb 10, 2008
628 posts
486 upvotes
Most manufacturers have their own financial services website where you can see all the details of your account/lease. Does your car's manufacturer's FS have something like that? If so, just go online and look at the current lease buyout price. I experienced it with bmw and audi and basically can just print that buyout quote (which is updated after each lease payment) anytime and bring to any dealer to request early buyout.

edit: this quote obviously does not include admin fees etc (but shouldn't be $7K of fees).
Deal Fanatic
Sep 1, 2004
9235 posts
8503 upvotes
Talk to the lease holder and not the dealer. Dealer want you to return the car so they can make 30-40% reselling it or in this case up front. You are probably thinking the same.

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Deal Expert
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Jul 30, 2007
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OP, your calculation is based on ? your own ? lessor's account balance ?
Deal Addict
Jan 20, 2012
1081 posts
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Cookimonster wrote: Hi guys, so I like to know if this a normal practice that dealer does or that i’m missing something.
So i have a lease that i want to buyout mid way.
Can dealer markup the buyout?
Not talking about fees. Basically from the calculation i got and what dealer told me is around 7k difference.
basically the buyout is higher then what my otr was..
I asked my sister who’s a cpa told me in corporate finance, this is malpractice and outright illegal.
But maybe consumer is different?
Would really appreciate your thoughts before deciding on my next move.

Thank you
Your buyout amount at the end of the term is the same as what stated in your contract. The car is owned by finance company, not the dealership. Dealership can't markup anything on the car that they don't own. What may cost the difference between your calculation and dealer's word could be confusion. Dealer may thought you want the buyout cost now which including all remaining payment until end of contract terms. Call the finance company directly to confirm your buyout cost. Then shop around dealers to see whomever offer cheaper fee to process it.
[OP]
Newbie
Jun 21, 2020
89 posts
51 upvotes
Toronto
booblehead wrote: OP, your calculation is based on ? your own ? lessor's account balance ?
The calculation is based on the contract which my sister did the calculation. Shes an accountant.
Sr. Member
Feb 10, 2008
628 posts
486 upvotes
Cookimonster wrote: The calculation is based on the contract which my sister did the calculation. Shes an accountant.
Accountant or not. Easiest way is to call the manufacturer's financial services customer service and ask for a buyout quote as of today for your lease. No more guessing.

However, if you want to continue guestimating then just add the sum of all your outstanding lease payments ontop of the lease end residual value. That should be what you can expect your current buyout price to be.
Deal Expert
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Jul 30, 2007
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Your monthly payments do compose of Principal & Interest. Is her formula correct then ? Unless interest rate is at 0%
[OP]
Newbie
Jun 21, 2020
89 posts
51 upvotes
Toronto
So its ford credit who is the owner of the car.
Online account doesn’t show the buyout or any information relate to that.
I called ford credit and basically they told me they don’t have any information on the lease. All they do is collect payment from me… which is stupid slilly. They are the leaseholder and they don’t or wont disclose that is beyond my logic.
They said all information relate to lease is with the dealer that i bought and i can only get it from them.
So no i cant go around dealers to get that info cause what i was told is that original dealer would be reluctant to give it to another ford dealer.

But here is the kicker. I got the buyout cost from another dealer somehow and he gave me a actual print out of buyout and it was off by 7k. After that i did another calculation with my sister that came to similar number.
[OP]
Newbie
Jun 21, 2020
89 posts
51 upvotes
Toronto
booblehead wrote: Your monthly payments do compose of Principal & Interest. Is her formula correct then ? Unless interest rate is at 0%
Its actually very complicated calculation because the interest rate is 3.99%. So gotta consider the amortization which itself is quite complicated and add on compound interest plus tax and so on… that I don’t understand myself. Only way i could catch it because they asked me for more than i paid new.

Oh and when i told the sales about this logic, they told me the number based on my lease contract is inaccurate and they don’t base their buyout on the lease contract ….wtf so my lease contract is a decoy?
Last edited by Cookimonster on Aug 27th, 2021 1:39 pm, edited 1 time in total.
Deal Expert
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Jul 30, 2007
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Cookimonster wrote: Its actually very complicated calculation because the interest rate is 3.99%. So gotta consider the amortization which itself is quite complicated and add on compound interest plus tax and so on… that I don’t understand myself. Only way i could catch it because they asked me for more than i paid new.
why don't you simply call up your lessor and ask for them to send you their lease amortization schedule and then you and your sister can then compare line by line. After all you are dealing with a car manufacturer that other manufacturers will likely use the same or very similar financial lease calculating tool.
[OP]
Newbie
Jun 21, 2020
89 posts
51 upvotes
Toronto
booblehead wrote: why don't you simply call up your lessor and ask for them to send you their lease amortization schedule and then you and your sister can then compare line by line. After all you are dealing with a car manufacturer that other manufacturers will likely use the same or very similar financial lease calculating tool.
Again i say, ford credit told me they have no information on my car and that i should go to the original dealer…again i ask if this is a normal….
Deal Expert
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Cookimonster wrote: Again i say, ford credit told me they have no information on my car and that i should go to the original dealer…again i ask if this is a normal….
really ? they are the one taking your $ from your bank account every month. LOL.

If that's that case, maybe the buyout is $0 then since they have no information of your account. Just saying as this sounds so stupid of them.
Deal Expert
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Jul 30, 2007
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If you came into with no resolution, then may I suggest to just keep on paying the monthly lease and then do the buyout at the end of lease term.
Deal Guru
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Jul 12, 2003
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So when you lease the car, they did not give you a lease agreement? On that document, it shows the buyback amount.

Your buyback is Buyback amount base on the lease agreement + HST + your monthly lease payment X months left on the lease + Admin fee (this is set by dealership) and some small fee on inspection and plate.

There is no need of an accountant to calculate this. :rolleyes:
[OP]
Newbie
Jun 21, 2020
89 posts
51 upvotes
Toronto
booblehead wrote: really ? they are the one taking your $ from your bank account every month. LOL.

If that's that case, maybe the buyout is $0 then since they have no information of your account. Just saying as this sounds so stupid of them.
It is very very stupid. The logic is beyond me. So the rep from ford credit said, technically ford credit owns the car but their role is only collecting payment and everything else is done by the dealer. So they have no authority or information on this.. wtf….
Deal Guru
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Jul 12, 2003
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Cookimonster wrote: Again i say, ford credit told me they have no information on my car and that i should go to the original dealer…again i ask if this is a normal….
booblehead wrote: really ? they are the one taking your $ from your bank account every month. LOL.

If that's that case, maybe the buyout is $0 then since they have no information of your account. Just saying as this sounds so stupid of them.

No, it is not normal, it is a pure BS or simply doesn't want to talk to you.
Call again and talk to another rep.
Retired Forum Moderator February 2009 - June 2015
[OP]
Newbie
Jun 21, 2020
89 posts
51 upvotes
Toronto
MP3_SKY wrote: So when you lease the car, they did not give you a lease agreement? On that document, it shows the buyback amount.

Your buyback is Buyback amount base on the lease agreement + HST + your monthly lease payment X months left on the lease + Admin fee (this is set by dealership) and some small fee on inspection and plate.

There is no need of an accountant to calculate this. :rolleyes:
You need to take out the interest and tax on the remaining amortization payment and add to the end of lease buyout plus tax. That would be my current buyout plus whatever fee.
Deal Expert
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Jul 30, 2007
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Cookimonster wrote: It is very very stupid. The logic is beyond me. So the rep from ford credit said, technically ford credit owns the car but their role is only collecting payment and everything else is done by the dealer. So they have no authority or information on this.. wtf….
wow. I am speechless. They take your $ and yet they have no idea what account to apply to ?

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