Early Lease Termination

[Norm Peterson]

By doing this, you are kinda shooting yourself in the foot because it is easy to get someone out of their current car, just make the new one more expensive or not negotiable in price. If you work out a deal on a new car then throw in at the end you are trading, they have already given their best price (or the best price you may be able to negotiate) and they will be more willing to get you out of your current car to make the sale.

Sorry, but I'm not following this very well. Even without throwing the notion of leasing (which I don't understand at all) into the mix.


Norm

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[jstump2490]

you should write a book on car deals or work professionally with all your wisdom.

I detect a hint of sarcasm in there haha. But for real, I do this for friends and family because car dealers are shady and I kind of enjoy sticking it to them. If I didn't, most would go in starry eyed and sign on whatever dotted line was placed in front of them to get the new cool car including $2000 of add ons and useless warranties or massively undervalued trade ins.

 

[Nagare]

Sorry, but I'm not following this very well. Even without throwing the notion of leasing (which I don't understand at all) into the mix.


Norm

If you negotiate only on the price of the new car, you should be able to get their best price up front and not worry about that. Then you bring up that you'd like to trade your car in and they'll give you whatever offer they do on that.

If you tell them you have a tradein up front, they'll say they can give you 2k over book value on the tradein but now they're going to have a lowest price OTD on your new car that is 2k higher to compensate for the difference. That way they're still technically making the same money on the sale either way BUT the idea is if you tell them later about the trade, you've already got the best price on the car and since you're thaaatttt close to buying, the dealer wants to make it happen and will maybe take the hit on the tradein.

 

[jstump2490]

Sorry, but I'm not following this very well. Even without throwing the notion of leasing (which I don't understand at all) into the mix.


Norm

What I was saying is basically if you go in and tell them you need to break even on your trade before even looking at new cars, they can say "sure, no problem" then just add it into your new car payment somewhere or refuse to negotiate a lower price on your new car because they need to recoup the loss on negative equity from the trade in.

So they say "Sure, we will pay off the $13,000 you owe on the car even though it is only worth $11,500" then they start showing you the shiny new cars, getting you all excited thinking you are driving a new car home and when it comes to negotiating the price of the new car, they won't budge or only offer like $100 off because they need to recoup the negative equity and still make money on selling the trade and they know they have you hooked on the idea of a new car. They say "Well, we are already putting an extra $1,500 into your old car to get you out of it so we can't move on the price" They know YOU are invested now and you are more likely to buy at full MSRP because you have had in your head this whole time you are getting a new car today and getting rid of your old under water car and it sounds like a fair deal.

Now let's say you negotiate the price of a new car first. You have done your research and know the actual dealer cost after hold back is $4000 less than MSRP. You start a little below there and say you want to pay $30,000 for the $35,000 car. They have to make some money so you negotiate and end up at $32,000. You are now saving $3,000 and they have spent a couple hours getting things approved by their boss (or claiming to) and think they have a deal. THEY are now invested and then you pull out your trade. They have wasted hours on you and they want to make a sale so they find some way to do it. They know they can mark up your old car and most likely break even on the $13,000 so they take the trade, make the deal and you still saved $3,000 on the new car.

It is all a big game and has a lot to do with emotions and who is controlling who.

EDIT: Looks like Nagare beat me to the punch haha

 

[Norm Peterson]

It is all a big game and has a lot to do with emotions and who is controlling who.

Kind of what I was thinking with my comment about the deck being stacked more heavily in favor with the dealer with leasing, where there seems to be more going on (and potential limitations on my use).

I don't buy cars all that often*, which probably puts me at additional disadvantage in understanding the game.


*model years 1972, 1979, 1987, 1995, 2001, 2008, 2010, and I've had as many as five of those in the driveway at the same time.


Norm

 

[TomcatDriver]

Kind of what I was thinking with my comment about the deck being stacked more heavily in favor with the dealer with leasing, where there seems to be more going on (and potential limitations on my use).

I don't buy cars all that often*, which probably puts me at additional disadvantage in understanding the game.


*model years 1972, 1979, 1987, 1995, 2001, 2008, 2010, and I've had as many as five of those in the driveway at the same time.


Norm

Buy and hold is always cheaper. I have traded in a car once. Generally I keep a car for 10-15+ years and sell it private party when the time comes. That way my new car purchase is clean, no confusion about trade-ins. I know the price, the price is the price. Yes, selling PP is a bit inconvenient, but ask yourself if you would be willing to deal with a little inconvenience for a few thousand bucks? People are willing to drive miles and stand in line for deals on new TVs or shoes, but will squander thousands because doing a private party sale is too hard.

 

[cgreen5150]

What I was saying is basically if you go in and tell them you need to break even on your trade before even looking at new cars, they can say "sure, no problem" then just add it into your new car payment somewhere or refuse to negotiate a lower price on your new car because they need to recoup the loss on negative equity from the trade in.

So they say "Sure, we will pay off the $13,000 you owe on the car even though it is only worth $11,500" then they start showing you the shiny new cars, getting you all excited thinking you are driving a new car home and when it comes to negotiating the price of the new car, they won't budge or only offer like $100 off because they need to recoup the negative equity and still make money on selling the trade and they know they have you hooked on the idea of a new car. They say "Well, we are already putting an extra $1,500 into your old car to get you out of it so we can't move on the price" They know YOU are invested now and you are more likely to buy at full MSRP because you have had in your head this whole time you are getting a new car today and getting rid of your old under water car and it sounds like a fair deal.

Now let's say you negotiate the price of a new car first. You have done your research and know the actual dealer cost after hold back is $4000 less than MSRP. You start a little below there and say you want to pay $30,000 for the $35,000 car. They have to make some money so you negotiate and end up at $32,000. You are now saving $3,000 and they have spent a couple hours getting things approved by their boss (or claiming to) and think they have a deal. THEY are now invested and then you pull out your trade. They have wasted hours on you and they want to make a sale so they find some way to do it. They know they can mark up your old car and most likely break even on the $13,000 so they take the trade, make the deal and you still saved $3,000 on the new car.

It is all a big game and has a lot to do with emotions and who is controlling who.

EDIT: Looks like Nagare beat me to the punch haha

Dude is right. I was a sales manager at a Ford dealership for 4 years. Pretty much how it works. Most will do this if they NEED the sale. Some won't if their numbers are good that month (and their egos get in the way!)

 

[P2]

This is why I NEVER lease a vehicle.

 

[Zodiac]

This is why I NEVER lease a vehicle.

Cool thanks for the insightful information.

 

[pmr2000]

It all depends on the use case- a lease can be cheaper depending on what unit of measurement you equate to cheaper. If you go by months, miles etc. of utility. Did the car cost me $x to drive x miles or use for x months?

Generally cheaper to keep a car 7 or so years but again depends on how many miles you drive and other factors.

And if you really want the least car expenses buying used will most likely work out lower!

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