Lease Buyout - was: (Who pays for $7500 when leasing?)

[trentr]

My dealer doesn't want me to buyout my lease until after 90 days. They are saying that they paid Nissan Corp $7500 upfront and in order to get it back, they have to wait 90 days. This sounds a little fishy, Nissan corp said I can pay it off anytime. So, does anyone know who pays for the $7500 on the lease? Is this paid by the dealer then they get reimbursed by Nissan? I want to do a buyout to avoid unnecessary interest.

Thanks!

 

[Jimmydreams]

My dealer doesn't want me to buyout my lease until after 90 days. They are saying that they paid Nissan Corp $7500 upfront and in order to get it back, they have to wait 90 days. This sounds a little fishy, Nissan corp said I can pay it off anytime. So, does anyone know who pays for the $7500 on the lease? Is this paid by the dealer then they get reimbursed by Nissan? I want to do a buyout to avoid unnecessary interest.

Thanks!

I think your dealer is full of it. Regardless, what he "wants" you to do isn't want YOU "want" to do. Unless there's a prepayment penalty or something in the lease, you can pay it off. You make your lease payments to Nissan Motor Acceptance Corp, not your dealer. I wouldn't even be talking with the dealer....this is between you and NMAC.....your dealer doesn't have a dog in this fight.

Pay it off!

 

[trentr]

I called NMAC and they said the I have to go through the dealer because I live in CA. I am ready to pay it off, Nissan said go ahead, but dealer says wait 90 days. Very frustrating! There is no prepayment penalty, just the $300 Purchase option fee. I'm not sure what other options I have.

 

[earther]

I called NMAC and they said the I have to go through the dealer because I live in CA. I am ready to pay it off, Nissan said go ahead, but dealer says wait 90 days. Very frustrating! There is no prepayment penalty, just the $300 Purchase option fee. I'm not sure what other options I have.

I'm very interested to hear how this plays out, since I'm in exactly the same boat.
My fallback plan, if my dealer (Boardwalk) won't let me pay it off, is to make my first monthly payment of X-1 -- i.e. Nissan might still officially own the car for the first 90 days, but I'll only be paying interest on one remaining dollar!

 

[trentr]

earther, are you saying that you will only pay some amount that is significantly less than the monthly payment? they might add late fees in the buyout price later on. I'm also dealing with Boardwalk.

 

[earther]

earther, are you saying that you will only pay some amount that is significantly less than the monthly payment? they might add late fees in the buyout price later on. I'm also dealing with Boardwalk.

sorry. I was being unclear. X=total value of the Leaf (not just the monthly lease). So my first monthly payment would be something ridiculous like $27,000+ and then only leave $1 left to be owed on the car to slowly pay off over the remaining 89 days.

 

[evnow]

I called NMAC and they said the I have to go through the dealer because I live in CA. I am ready to pay it off, Nissan said go ahead, but dealer says wait 90 days. Very frustrating! There is no prepayment penalty, just the $300 Purchase option fee. I'm not sure what other options I have.

How much is the payoff amount ?

 

[trentr]

ah, yes that's an awesome back up plan. i will do that as well if Boardwalk plays hard ball. i will be talking to Wahid tomorrow morning to convince him that i have the right to pay it off.

my payoff amount that is good until end of month is $27,884.15 + tax + $300. From my calculation, i'll be down ~$1000 compared to cash purchase - $7500. Advantage of lease of course is that you get the credit right away minus $1000

 

[DaveinOlyWA]

yep, my "penalty" would have been around $1000 counting the purchase and lease fees for payoff in March. wont be paying off until after move which hopefully will happen within a month.

but an instant tax credit is nice especially considering i would have barely gotten half back on a purchase

 

[LTLFTcomposite]

Please help me understand something. You said the payoff now is $27,884. So every month you go without paying off/buying out the lease, the payoff declines, but the decline is an amount less than the monthly lease payment?

 

[DaveinOlyWA]

Please help me understand something. You said the payoff now is $27,884. So every month you go without paying off/buying out the lease, the payoff declines, but the decline is an amount less than the monthly lease payment?

depending on the lease rate, your payoff will decline but total cost would be higher due to additional lease payments made. in my case, my lease payments are $162.02 and i lose about $78 a month for every month i wait

 

[jwhitehouse]

While I don't have any particulars to review, the answer should be in your lease agreement.

The buyout amount is set by NMAC over the course of the lease. The dealer (any Nissan dealer) administers the buyout, but the costs are dictated by your lease agreement. The dealer typically takes the contracted purchase value, and adds the buyout fee for your total purchase price. They will then calculate tax, title, and license fees for transferring the title and registration of the vehicle into your name. Historically, lease customers have always had the option of buying out their lease at any time during the contracted term. If I were NMAC, and the $7500 federal tax benefit required a period of 'ownership' time before I could qualify for it, I would reflect that in the buyout price available...and I don't believe the dealer would be involved. It is NMAC that has allowed the $7500 credit at the front end of the lease, and it is a very convenient way to take advantage of the federal program.

 

[wwhitney]

Please help me understand something. You said the payoff now is $27,884. So every month you go without paying off/buying out the lease, the payoff declines, but the decline is an amount less than the monthly lease payment?

Yes, exactly. The difference is that month's interest.

Cheers, Wayne

 

[Desertstraw]

I am totally confused by this post. I am going for a one-pay lease which costs $19,159 with a residual of $15,153. This is a total of $34,312 and includes a sales tax of $3, 074. If I add the sales tax to $27,885, it is $30,959. There is a difference of about $3200. At least part of the difference comes from interest on the residual. If I pay off the residual in one month, will I get a rebate for the interest on the residual?

Although this question has been raised before, does anybody know as a fact not guess whether the federal law that gives the $7,500 discount on a lease permits early buy-outs of the residual?

 

[Jimmydreams]

I called NMAC and they said the I have to go through the dealer because I live in CA. I am ready to pay it off, Nissan said go ahead, but dealer says wait 90 days. Very frustrating! There is no prepayment penalty, just the $300 Purchase option fee. I'm not sure what other options I have.

I would send a check for the total lease amount (all remaining lease payments minus the $300 purchase option fee) to NMAC. In fact, electronically make the payment if possible. Then, once that deposit is recorded, grab your bank paperwork showing the deposit and walk into the dealer with your $300 purchase option check. Sit there until they figure it out.

 

[LTLFTcomposite]

depending on the lease rate, your payoff will decline but total cost would be higher due to additional lease payments made. in my case, my lease payments are $162.02 and i lose about $78 a month for every month i wait

So every month you pay $162 but the payoff balance is only reduced by $84? If you could get a couple percent on that $27k that would offset $45 of it, meaning the "real" loss every month is more like $39. Of course you have to pay income tax on the $45 but you don't get to deduct the $84, so the after tax loss is a bit greater.

So the choice is to either buy or lease, and if you choose to lease, there is the option to buy it out, not just at the end of the lease, but rather at any point during the lease term.

 

[trentr]

I would send a check for the total lease amount (all remaining lease payments minus the $300 purchase option fee) to NMAC. In fact, electronically make the payment if possible. Then, once that deposit is recorded, grab your bank paperwork showing the deposit and walk into the dealer with your $300 purchase option check. Sit there until they figure it out.

I called Nissan corp, they won't accept my check for the purchase price. They said I need to go through the dealer to complete the transaction. This is ridiculous, Nissan doesn't want my money.

earther, so this payoff amount - 1 to avoid further interest, might not work. Nissan corp will refuse the huge payoff check.

 

[davewill]

My dealer doesn't want me to buyout my lease until after 90 days. They are saying that they paid Nissan Corp $7500 upfront and in order to get it back, they have to wait 90 days. This sounds a little fishy, Nissan corp said I can pay it off anytime. So, does anyone know who pays for the $7500 on the lease? Is this paid by the dealer then they get reimbursed by Nissan? I want to do a buyout to avoid unnecessary interest.

Thanks!

The $7500 will get sorted out, have no fear of that. What the dealer is trying to protect is their commission on selling you the lease. If you pay it off before 90 days, they probably don't get it. That said, I'd go ahead and help my dealer collect their commission...why not, the difference isn't worth fighting over. They might even be willing to reimburse you the couple hundred it costs you to wait if you ask politely.

Unless they've been real jerks, then I'd show up with the money and the second they balked, call Nissan corporate to complain right from their showroom.

 

[Desertstraw]

When someone actually buys out the lease, I hope that he/she will post the final cost compared to simply buying the car.

 

[trentr]

UPDATE:

So, Boardwalk is willing to convert the lease into a purchase. This is not a buyout of the lease, but an actual conversion to purchase. So, the price will be like buying the car with cash. So, the $7500 question will be, will I still qualify for the credit at the end of the year? Dealer said yes since I am buying it new, not used. This is a bit tricky and it now shifts to uncle sam. I will ask the dealer if the lease becomes null. Any accountants out there, anyone familiar?