Originally Posted by NOFEER
perhaps you have experience and can guide me
my 2004 volvo s40 t5 awd red auto 28k miles....last lease payment is june 1 (great car, wife loves it, zero probs--18city 34 hwy no joke)
she now wants a red jetta se auto
have any of you done a "lease trade in" i don't want to buy it and i can wait till june but if this makes sense let me know....any obstacles i should be looking at. i don't want to make a costly mistake.
when i called the bank they said i can buy, leave at dealer in june or trade it in on a another car
they said the new car dealer can call for a "trade quote"
but if i can avoid those lease payments and get a new car, well yea!
the deal for the jetta is a different discussion but will start from consumer reports lowest price and work up but the dealer hasn't given me a quote yet, went yesterday doing this on line. right now incentives are 2.9% for 3 years, but there may be more incentives in may, but then that's another lease payment $500.
thanks for any help
OK...well I've done this a lot, so I hope I can help:
First, you should be able to get a new car within 60-90 days of the end of your lease. Most are written that way. There are further incentives for staying with the same manufacturer (they will often waive up to $1000 of damage or extra miles, for example). So you should be ready to go now, though since you want another make/model, you'll might pay a disposition fee if you didn't at signing. I would not buy the last two payments in advance and turn the car in.
If they want you to do that, just wait two months.
Now, let's talk about leasing. Leasing can be good, but one must understand it. Leasing is great if you can stay under the mileage limit and don't mind always having car payments. You get a new car every few years that way, and usually will pay less than with a loan. However, it's been my experience that most people don't understand leasing.
A couple points:
1. Longer leases (more than 36 months) are usually not good because you're driving the car out of warranty and paying the same price you were in month #1.
2. Do not put money down other than the inception fees. Putting money down on a lease is a total waste.
3. There are cars to buy and cars to lease. It depends on depreciation. From what I found, $500 a month is too high for the Jetta. See below.
4. The sticker price of the car DOES matter. Also see below.
You may know all of this already, and if so feel free to ignore....however...as I said, most people just don't get leasing. Really it's simple: You're paying the depreciation on the car over the lease term plus an interest rate. Here's why I think $500 is high. Take a look at your vehicle at Edmunds.com:http://www.edmunds.com/new/2008/volk....html?action=2
I came up with this when I selected some options:
Market=$24,337 (I wouldn't really put much stock in this last one).
Now, let's look a lease. I have a spreadsheet I downloaded which I can give you if you'd like.
Term=36 months/12,000 miles per year
Cap Cost Reduction (down payment)=0
Due at signing: $1,464.77 (first month, security, disposition, etc)
Residual Value: $15,000 (62.5%)
Money Factor (interest rate): .0032 (7.68% APR)Total Payment $408.53
Mind you, that's without even trying. You could beat them up on the sale price even more (the invoice is bullshit, no matter what they tell you...they have holdback on the car and other factory to dealer incentives). You should also try a lower interest rate, which is expressed as a money factor (just for the purpose of confusing us peon consumers). Do not accept a money factor over .0032.
One last tip...shop their lease around. Ask for the quote sheet from all the banks they deal with. All they are really doing is selling the car to a bank (maybe their own). Then, that bank is leasing you the car. Some will have different residual predictions or interest rates, which will affect you A LOT.
Good luck...hope that helps.
EDIT: I just realized you may be looking at buying. If that's the case, I'd make your last two payments...then this summer you can go get a new car. The deals should still be good then. If you're buying, I would start BELOW invoice (not MSRP!) and negotiate up. Get the exact invoice price on the car you want (the exact car with options). Then offer them something unreasonable, like $2,500 BELOW invoice. They'll laugh, but that's OK. Come up $500, then another $500 immediately. Hang around at that price for a while and the grudgingly come up another $500. If they hesitate, tell them you just came up $1,500!
If they balk again, come up another $250. Then I'd hold them firm and tell them if they can do it, you'll sign the deal right now. If not, walk out and come back later. Chances are they will sell you the car UNDER invoice. Just watch.