Lease Early Buy-Out

[FrostByte]

2017 HONDA CIVIC EX – Leased 48 months @ 0.99%

Buy Out Cost @ 48 Months - $11,000
Current KM - 56,000
Months Left - 24
Monthly Payment - $0.00 (I chose to do 1 time payment, I think it was 12-13k)


I honestly don't need the car anymore and I'm not sure what my best option would be?

1. Buy out the car and sell it on Kijiji or something (not sure how this works when I already paid for the 4 years)
2. Keep the car since its "paid off" for 2 more years already, and just let my girlfriend drive it and then give it back
3. Keep it, let it sit in my garage and give it back in 2 years, but this is such a waste and im sure the car will be full of neglected problems by then.

Thoughts?

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[jgreen16]

What is your mileage allowance for the full 48 month term?

 

[mechanical42]

Option 2 sounds like the best option if she actually needs it. Also depends on the status of your relationship if she will take care of it and you guys will be together for 2 years. Also would help if she would pay a small lease fee each month for next 2 years.

There is also sites like swapalease where you can have someone else carry out the end of your lease after they pay you a buyout fee. Not sure if they do business in canada or canada has an equivalent service.

 

[FrostByte]

jgreen16 - its 96,000km. Keeping it for 2 years will not put me over but I just dont need it

mechanical42 - Yea I think we will be together, I just proposed last week haha.

I paid the 4 year lease in 1 payment, so I figure I just pay the buyout and then try to resell online? Buyout is 11k CAD, probably could sell for 17-19k CAD.

 

[racer]

Generally speaking...

You've paid $12-13K already (essentially "prepaying" the 4yr lease)

Now, you want to know if you should spend another $11K to buy out the lease early.. so you can sell it? Whats it actually worth in today's market? I guess, what I am saying is, I wouldn't pay, basically, 13K+11K ($24k) to sell it for lets say, $17K.. That doesn't seem to make much sense, unless you can afford to throw out $7K.

If your girlfriend needs a car, or could use a newer car, then that makes the most sense, to at least get your $13K "back", and then turn it in at the end of its lease.

Or, as someone mentioned, there are services that offer to sell your lease to someone else, if you really just want the car gone.

 

[herox]

Generally speaking...

You've paid $12-13K already (essentially "prepaying" the 4yr lease)

Now, you want to know if you should spend another $11K to buy out the lease early.. so you can sell it? Whats it actually worth in today's market? I guess, what I am saying is, I wouldn't pay, basically, 13K+11K ($24k) to sell it for lets say, $17K.. That doesn't seem to make much sense, unless you can afford to throw out $7K.

If your girlfriend needs a car, or could use a newer car, then that makes the most sense, to at least get your $13K "back", and then turn it in at the end of its lease.

Or, as someone mentioned, there are services that offer to sell your lease to someone else, if you really just want the car gone.

Let's run through a few scenarios..

1. OP buys out his Civic for 11k and we assume he pre-paid 13k (vs. 12k) for the 4 year lease. That's 24k and if he does successfully sell the car for 17k the total cost of ownership will be 7k (That 7k cost over 2 years of ownership is about $292/month which isn't bad?).
2. OP doesn't sell his Civic and keeps it even though he doesn't need it. At the end of 4 years it'll cost him the 13k he pre-paid, any additional maintenance, and any bullshit the dealer pins on him upon return of the vehicle.
3. OP decides to sublease his Civic for the remainder of his 24 months. According to swapalease.com, the going rate for his car in my area is about $290/month. They charge a $395 fee for a successful lease transfer. 24 months x $290 per month = $6960. Subtract the $395 fee and he will collect $6565. At the end of 4 years it will cost him $13k - 6.565k = 6.552k. This is assuming the person OP subleases to covers the cost of maintenance and any damage to the car upon return to the dealership.

The OP didn't mention if he has another vehicle and whether or not his girlfriend *needs* a newer car. We also don't know the OP's financial situation and if he can buyout the car. I'm curious to know what happens if a sublease damages the car. Is the OP still liable in the eyes of the dealer? Those are important details in his decision making process. Ultimately the OP needs to weigh the pros and cons, and make the decision for himself. Personally without knowing all the details I would buy out the car and sell it privately.

EDIT: Original sublease numbers were in USD and I converted them to CAD.

 

[jgreen16]

I mostly agree with @racer. If your girlfriend/fiance is in need of a car, that may be the best option. Already paid for the next two years, good gas mileage, plus you say you'll be good on the mileage limit still at lease end.

There are places that specialize in lease swaps, or selling the remaining lease to a new person. I have no idea on the costs of those services though.

As far as buying out the lease early, that depends on what the market is for the car where you are. Paying the $11K in addition to your $13K one-time lease payment, less an assumed selling price of $17K does leave a shortage of $7K. It isn't necessarily throwing the money away however. It just ends up being what you paid to essentially rent the car for the two years you've had it. It breaks down to $291.67 CDN per month. At today's exchange rates it would be $221.67 USD.

 

[Wh1SL3R]

Hey OP,

Just did a search on AutoTrader and 2017 Civic EX Sedans with ~50,000kms are advertised between $20-22k CAD around Toronto.

Lets assume you can sell yours for $21k. If you take your lease costs of $13k, plus your buyout cost of $11k, less your sale price of $21k, that works out to $3k cost of leasing for 2 years, which is about $125/month which is a very low cost of ownership.

Some are suggesting a lease takeover, but I'm not sure how that would work out with Honda Finance if you have prepaid the lease already. The incentive for those who take over leases are for arrangements made with higher down payments, as this would offset the cost of lease transfer compared to the monthly payment.

I think buying out the car and selling it privately is the most cost effective option, unless your new fiancee could benefit from the vehicle.

Just curious as to why the car is no longer required - is it a secondary car that was used for commuting? If so, you could likely negotiate with a dealer to accept your Civic early as a trade-in in addition to your primary car to get into something new or more suitable to your situation.

Cheers.

 

[Shankmeyster]

If it's worth more than what is owed on the lease you can prob get some money back by trading out of the lease. Just make sure you can trade out of it anywhere as some lease companies will only allow you to trade it in at the brand dealer the car is from (you can only trade a honda in at a honda store). But that's normally only if the lease is through the brand, such as a Honda lease from Honda finance.

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