Lease

[shimmy825]

That's what I was told, would need to buy out lease. Which means paying the taxes.

I read somewhere that some states allow you to forego taxes if you're keeping the vehicle less than x amount of days, but I couldn't find clarification. I also don't know how that would work with a title transfer to the new buyer - unless you just never did the title transfer in your name temporarily? But, surely there are rules against that.

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[BroncoAZ]

High used car values are great for lease returns. This topic was on Autoblog recently. Manufactures are attempting to limit your options when returning a leased vehicle.


https://www.autoblog.com/2021/07/26/gm-honda-lease-return-policy/

I saw another article about the auto manufacturers blacklisting Carmax/Carvana/etc from being able to purchase out the leases at all in the last 6 months. The list of manufacturers was long. Paying the tax to buy it out then selling it may be the only option left, and I would do it just to screw the OEM for having such a policy.

 

[LarryZiegler]

You don’t have to buy the lease out. Just trade it in and the dealer or carmax or vroom will pay off the lease company. You will avoid paying tax on the lease buyout.

I just got done doing this with my CTSV lease. With the crazy used car values I ended up with $20K equity, so I dumped that equity into a new car purchase.

I just saw recently and supposedly, that GM & Honda have joined Ford in not allowing lease turns to competitor or CARMAX agencies due to the used car shortage. They want their franchised dealerships to have those lease returns for their pre-owned inventory.

 

[CTS-V]

We are literally in the process of doing this now. However, if the lease is through Ford Motor Credit (or whatever it's called) Carmax, Carvana, etc etc won't buy it out. We are having to pay cash for the vehicle (and fortunate enough to be able to do so) but then will turn around and sell it.

Wonder why they won’t do lease buyout through Ford? Didn’t have any issue with GM financial.

A Forum member stated that Carvana, among others, required 60 days to a complete lease buyout. Did you come across any timeframe restrictions?

Well, I ultimately didn’t do Carvana or the others, so I don’t know about any 60 days requirements.

 

[GoTigersGoBronco]

Almost everyone that has a lease expiring right now has positive equity in their vehicle and would be crazy to not buy out the lease and then sell the vehicle (get quotes from carvana, vroom, and carmax because they're going to offer more than your dealership).

If you simply turn it in you're likely giving up thousands of dollars in equity.

About half the brands have cracked down on this. They’re making the renters buy it and title it themselves to get the low residual.

 

[bdub2you]

About half the brands have cracked down on this. They’re making the renters buy it and title it themselves to get the low residual.

Yeah I've read about that, I wouldn't be surprised if that's the case for every company by the end of the year since it seems like they're all following suit after the first couple did it.

 

[Hornet]

I just saw recently and supposedly, that GM & Honda have joined Ford in not allowing lease turns to competitor or CARMAX agencies due to the used car shortage. They want their franchised dealerships to have those lease returns for their pre-owned inventory.

I can confirm that to be the case. I even checked with local Jeep dealer - can no longer by you out of your lease within 120 days of lease end. And checked with Carvana and they can longer buy out a Ford lease. So Ford is building a wall around their leases. You have to buy the auto yourself and pay state taxes and fees etc to remove Ford from the title and then you can sell it to another dealer, Cavana, etc

I owe $22k on my Explorer Carvana gas offered me $26500. So I'll do the extra work. F you Ford !

ps my local Ford dealer lot is at least 80% empty and some of the cars on the lot are used. So they have no inventory and claim they can't buy my lease out either inside of 120 days so they don't get to put the car on their lot - soy they say.

 

[AZ_Liberty]

You have to buy the auto yourself and pay state taxes and fees etc to remove Ford from the title and then you can sell it to another dealer, Cavana, etc

I have never leased a vehicle in my life. Can someone explain why one would have to pay taxes when buying out a lease? Does one not pay sales tax up front? (thus the State wants their taxes at the "sale")

Some states allow you to deduct the trade-in price from the taxes you pay on a new vehicle. In those states, wouldn't it be a wash? (tax wise)

 

[BroncoAZ]

I have never leased a vehicle in my life. Can someone explain why one would have to pay taxes when buying out a lease? Does one not pay sales tax up front? (thus the State wants their taxes at the "sale")

Some states allow you to deduct the trade-in price from the taxes you pay on a new vehicle. In those states, wouldn't it be a wash? (tax wise)

Correct, sales tax for leases is collected on each monthly payment, not the entire amount of tax up front like a purchase.

 

[CMBRONC]

I have never leased a vehicle in my life. Can someone explain why one would have to pay taxes when buying out a lease? Does one not pay sales tax up front? (thus the State wants their taxes at the "sale")

Some states allow you to deduct the trade-in price from the taxes you pay on a new vehicle. In those states, wouldn't it be a wash? (tax wise)

It's based on the transfer of ownership, from Lessor to Lessee, some states collect sales tax on the buyout amount, CA for example. Selling your vehicle to Carvana, etc. avoids having to pay these taxes.

 

[LarryZiegler]

It's based on the transfer of ownership, from Lessor to Lessee, some states collect sales tax on the buyout amount, CA for example. Selling your vehicle to Carvana, etc. avoids having to pay these taxes.

Except many manufactures, Honda, Gm, & Ford among them won’t let you trade a lease in to a dealership other than their own. You must buy out the lease first, and in Calif, that means paying sales tax on the purchase, thus taking ownership first. On top of that, I believe an early termination fee also applies

 

[Bob 07064]

I've been extending the lease on my Explorer - Bronco build was July now Aug. currently with the strong market for used cars it appears my payoff to buy the Explorer is thousands $$$ less than Kelley blue book trade in value. Anyone buy their Lease vehicle then trade it it?

I bought out my 2017 edges lease before the market shit the bed. Now I can sell it back for a tidy profit...

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