Yes, they want the residual at the time of the buyout (why wouldn't they?, it's only fair they should want what the car is projected to be worth = price paid less the depreciation caused by driving it). But, remaining lease payments is not the case. I've early termed several leases and have never paid interest for time past the early termination.

 

Ben, how can that be? This company made a contract that they would be receiving payments for the term of the lease, and when you end it early, they need interest that they spread over the term of the 'loan' to be reimbursed to them. With MB Credit and US Bank, anyway, both of them require residual AND a portion of the remaining lease payments (interest only).

 

I sold my C4 privately off lease and took a $3500 hit (payoff was $50,500, I got $47K for it). It's the best way to eat as little as possible, but it can be a royal pain in the @$$.

 

They get their interest every month at the beginning of the month for the money they will have out during that month. Once you pay them back their money, they no longer have capital out for which they charge a money factor (er: interest). "Money factor" stops in the same way interest does on a finance once the lender receives their capital back. On top of that, you are paying the pro rata portion of depreciation in your monthly payment - unlike a finance wherein you pay for more than depreciation (hence the higher payments but the eventual build up of equity in the vehicle). However, sometimes they have early term penalties like one month or some fixed $ amount.

"they need interest that they spread over the term of the 'loan' to be reimbursed to them"

IOW, they don't spread interest over the loan but instead you pay the pro rata portion in advance every month for the month in which you are using their capital. Once paid back, you aren't using it anymore.

 

hi guys i appreciate allyour help well i talked to mbz credit again and this is what they told me that the dealer trade-in payoff is 74,000

the 48,000 was the payoff if i was to return the car..

also the mileage isnt 60,000 but is 34,000 sorry got some mis information from my mom lol..

the trade in dealer payoff is really high bec. they traded a leased e320 for the leased s430 ( i think thats the reason why the payoff is off the roof)


i checked kelly blue book the trade in value for the car is aroud 46,000k..

do u think we would be able to get a trade in of around 54,000.00 for it?
if were down 20k i think we'll do it..

i also have a question if we jsut purchase the range rover that my mom wants can we still use the payments for the car as a tax deduction????

 

I doubt you get 54K for the car. You would only be able to deduct the payments if the car is used for business purposes. And even at that, the IRS has limits as to how much can be deducted.

 

Ben is the LEASE MAVEN -- he's right on all points!

 

Based upon what you have said it sounds like the buyout/payoff today is $74K. I think the $48K sounds like to residual value at the end of the lease. Basically, to get out of this lease, MBZ nees $74K. With that mileage, you might be able to get about $50K for the car (private party sale - less if you trade) which means you will probably need to come out-of-pocket about $24K.

 

thats what i thought too, i calculated the projected mileage that my mom would have in four years... if here mileagea right now is 34k... i projected that she will do about 25k per year for the next 3 years. so in total she would probably rack up about 109,000 miles...

109,000-60,000 (allowable miles to the lease) = 49,000. miles x .25 per mile over 60k = $12,250.00 we have to pay when we turn the car in.. at the end of 4 years...


if we are taking a hit of 24k, now , subtract the projected 12,250.00 on additonal overmiles.. = we are essentially down by 11,750.00 hmm...

something to think about.. ill have my mom decide... her money her car...

 

Yea, whatever... It's waaaaay too complicated for me. I simply switched to buying second hand cars, instead of leasing new cars (usually 2yrs old..., after they have taken their major depreciation hit, like my current TT).

Think about it: My TT was around 140k Euros when it was new. Two years and only 12.430 miles later, the same car costs only 80k Euros. Thats a 33% loss after two years for the first owner. For the next two years there's no way the car loses 33% again. I might sell it in 2006 for 60-65k Euros. So I guess this is the smartest way to actually save some of your hard earned money.

 

Arrange to sell the car for near retil, then trade it in on what she wants. The dealer will do an "in and out" traade/sale. You get more money for the ar to applly to pay off your lease, and you get a sales tax credit for your trade-in.

 

HUH?


Please explain this one a bit further...

 

I second that "HUH".

 

Basically you find the buyer and run the transaction through the dealer you are buying the other car from. Some dealers will do it and some won't. Some will do it for free and some will charge a few hundred. Doing this allows the dealer to show it as a trade in on the new car allowing you a sales tax credit for the old car sale value.

However, none of this will probably work on a lease since you didn't pay tax on the old one (except for the pro rata amount in your payment). Also, unless you're buying the new one (instead of leasing) you couldn't utilize a sales tax credit.