I am seriously debating turning in the car and getting something new. What penalties will I accrue if I doso? My lease ends in Aug 2009?Thanks.

 

Assuming it's like my last LFS lease, it's a simple matter of paying off the "payoff" amount showing on your statement.

Just take the amount you can get for your car (whether trade-in or outright sale) and compare it to the payoff amount ... that's the "penalty".

I dumped a leased '07 IS350 after only 3 months, and I had to eat about $3,500. (which was basically the depreciation).

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"I am seriously debating turning in the car and getting something new. What penalties will I accrue if I doso? My lease ends in Aug 2009?Thanks"


For Lexus lease, I don't think there is any panelty imposed by Lexus Financial (I leased 6 Lexus before and only kept 2 to the end of the lease. All the other I terminated earlier than the term of the lease). You can call Lexus Fanancial to find out your payoff amount (the amount that you need to pay Lexus to terminate the lease) for this month (the amount change every month). And you can take your car to your delear to see how much they offer your car (understand that dealer have access to your payoff number from Lexus Financial so they will offer you a price about 3-4K below your pay off number and you will have to make up the difference. They sort of figure that they have you by your throat at that point). If you go this route, dealer will take the car off your hand (plus your check) and pay off Lexus on your car. And you are free and clear. Alternatively, you can advertise the car and try to sell it at retail price... Sometime, you may even make money off the deal. But you will have to collect the money from the buyer and pay off Lexus... So that is more work on this route... by and large, Lexus seems to predict the residual of their lease pretty well and normally you won't be out too much money.. The lone exception in today's environment probably is the LX which seems to use a lot of gas... All the SUV suffer low resale value now... So you may be out of a lot more if your car turn out to be an LX...

 

It's almost impossible to make money. At one time during the 90's with gasoline at 99 cents you could lease SUVs and sell them before the end of the lease for more than the payoff value. Now it's the other way around...most leases assume stable market conditions but almost EVERY vehicle (except small 4 cylinder Hon/Toys and hybrids) is losing value faster than the leases predicted.

In most cases the cheapest alternative is to keep the vehicle until the lease is done. The amount due (not necessarily a "penalty", but just the amount required to pay off the balloon loan...which is what a lease really is) will be FAR greater than the vehicle's value.

As an aside my brother will be turning in (at lease end) a 3 year old Audi A8 that will be worth THOUSANDS of dollars less than the residual. He is just loving the fact that he leased it (and can stick Audi with the shortfall).

 

"As an aside my brother will be turning in (at lease end) a 3 year old Audi A8 that will be worth THOUSANDS of dollars less than the residual"


I am in the same situation with my wife's 05 CLK 55. The lease end residual when we signed the lease a few years back were set at 47K+ and our lease will end at the end of Jun.. Now Mercedes is offereing us 40K+ to purchase the CLK55 at lease end... And it is not an isolate situation. There are quite a few reports for 05/06 E classes that Mercedes offers current lease holders 8K+ discount from the residual to purchase their cars... Car company are going to loss money on most lease in the next couple years as residual of most car are dropping (except the high mileage car, I suppose) and the competition is getting worse. The implication is that leasing will be relatively better than buying in the near future when the manufacturer throwing in all the goodie trying to get the next marginal buyer.

 

For some manufacturers, heavily subsidized leases are the way they cut prices on new cars. Instead of admitting that their $60,000 car can only fetch $50,000, they offer lease payments as if the car was only $50,000 without admitting the issue. Some will still pay the $60,000 cash. And when the $60,000 car comes back worth $20,000 instead of $30,000, they don't have to admit it on the window sticker. I have a friend who gets a new Cadillac every few years. He is Cadillac's stereotypical customer. Drove Buicks for years then "move on up" to Cadillac about 20 years ago. Even has the "10 cars badge" goofy thing on the grille!

Anyway, after taking a huge bath on his 2003 Seville when he went to trade on a 2006 DTS (Seville was gone and the only "old man" car left is DTS), I convinced him that his was a situation PERFECT for leasing, even though he has never borrowed 10 cents in his life other than a home mortgage that is long paid off. I am now his hero because the value of his car is ALREADY below the heavily GM subsidized lease, and he has 11 months to go on it. I can't see how GM made money on that transaction. And certainly they'll have to offer another heavily subsidized lease to get him into the next "old man" car. Maybe they lose money on each individual transaction but make it up in volume!