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Not sure if this has been discussed before, but I learned some info about lease residual purchases this week.
Helping my girlfriend pick a new car as her 04 Audi quattro lease ended this week (great car, wish she had bought it). We were looking for both new deals and CPO cars, and were frustrated by the lack of CPO inventory at SAAB and Audi dealers.
In the old days I recall that you could call your leasing company at lease end and ask them to waive payments and buy the car at something less than the stated residual. Often the leasing company realized that the residual values were overestimated three years earlier and that current market prices were lower, so they would negotiate a buyout at less than the contractual residual stated in the lease. Plus, the leasing company had inspection, shipping and repair costs to incur, so there was room to negotiate. Good deal for the lessee.
It seems that now the leasing companies buy residual insurance when they write the lease, so whatever they get at auction will be made up by insurance to bring them up to the contract residual. This way their lease portfolio won't suffer a loss. In fact, two dealers said that even if they tried to buy her car when it was dropped off, they would be typically be quoted a price above the residual, thus the lack of CPO cars on the lot, as the cost left no room for profit. It seems the dealers were not happy with this. The leasing companies take a shot at gaining a profit by marking up the car above stated residual, if they don't get it, then they auction the car and collect insurance to hit their yield on the lease.
Now when we dropped off the Audi, I noticed that the dealer immediately entered the car's VIN in the "national auction database" on the computer. I asked what would happen and he said dealers would bid on the car and possibly buy it, other wise a truck would pick it up in about a week and it would go to an auction center for processing.
So it would seem that under the new rules of the game, you could turn in your car, arrange for a licensed auction buyer to get into the auction pool and bid for your just turned in car at less than residual over the computer system and pay him his standard flat fee for his services. If that total is less than your contract residual, the leasing company collects insurance, and you get your car back cheaper than dealing directlyoff lease at the stated residual amount. Then you just return to where you turned in the car, sign your papers and drive away.
Anyone explore this area of off lease car purchasing? I think I have found a weak spot in their system.
posted by 67.86.17...
, Thu, 26 Jul 2007 12:16:04
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