Buying a New Used Car. Or What AM I Doing?

[chopper]

I found a used 2013 car I like. Owner is selling as he has to move.

I have not thought it all through yet, but his email to me seems maybe odd? Isn't this guy just needing someone to take over his lease?

Some of what he wrote in an email last night...

Any thoughts on this?

So a couple of things I have to consider if selling the vehicle. The car is still under lease through *******. That won’t make any different to you, and won’t change the price of the vehicle. However it does affect my bottom line of what I can sell for without losing money. After calling *** credit yesterday, I would have to sell for a minimum of $30,663 to cover the lease buyout and the lease termination fees.

I am including a couple screen shots from 2 of the most trusted vehicle valuation sites available, Kelly Blue Book and NADA. They will both show that this is a very fair sale price for the vehicle. I have priced it where it is because in order to make the quickest sale as I will be moving within the next couple months. But it would not make any sense for me to lose money on a transaction.

If we were to move forward, I would have to do a transaction through a car dealer. Basically, they would be buying the car out from VW and sell it to you for the price WE agree on. It’s called a pass-through. The dealer doesn’t make anything on the transaction, but they can buyout the lease without paying tax/registration. If I were to buyout the car myself I would have to pay tax and register it in my name, which would have to drive up my price and would be of no benefit to either of us.

Going through the dealer would also be a benefit in this situation as they could help you process the tax and get the vehicle registered in your name, saving you a trip to the DMV.

[cbelt3]

His lease agreement may not allow 'buy out'. Contact a local dealer for that kind of car where he lives and ask about it. AND the car may be all goinked up and not pass lease inspection, or have too many miles for the agreement, etc... Be careful, you may end up holding da bag.

[Speedy]

Obviously you will be buying from the dealer, not from the private party. The dealer will back the sale assuming the dealer is reputable. Read the fine print on the contract (you should anyway) and you should be good to go.

[Michael]

I wonder what dealer would be willing to do this without making any profit?

Also, he says that it wouldn't make any sense for him to lose money on the transaction. Well, I think it make all sorts of sense for him to lose money since he is trying to end his lease very early. I'd bet you'd find that the value book that the dealer uses (the infamous "Black Book") shows a lower value than NADA and Kelly Blue Book.

Also, he notes that if he buys out the lease he'd have to pay tax and register it in his name. Here in GA, leased vehicles have the tax paid on the whole value when they leased, so this would not be relevant in our state--of course other states do what they do.

At the very least, I'd go to a VW dealer and ask the used car manager whether this is something that makes sense and also what they'd pay/sell that used vehicle for. This may be a good deal, but it's an odd enough situation that I'd be VERY careful.

[Mr645]

"The dealer doesn’t make anything on the transaction, but they can buyout the lease without paying tax/registration."

Yea, right.

First, a VW lease has 2 different buyout prices. one is the contracted value to the customer. The other is a "Fair Market value" for any other entity or dealer that wants to buy the car. This FMV may be more or less then the contracted lease residual value based on the market and condition of the vehicle.

Example, I wanted to trade in my 2008 VW R32 with 3 Lease payments left. My buyout price was just under $18,000, plus sales tax on that amount. The dealer called to get a buyout price and they were given a value of $21,000. I ended up buying the car from VW leasing for the $18k and then delivered the car to the dealer and signed over the title.

Several years prior, 2006 Chevy Trailblazer. The residual value was $18,500, but the local Chevy dealer was ab le to buy the truck from the leasing company for $15,900. I then bought the same truck back from the dealer for $17,500 but since the dealer bought it, they were able to sell it as a "certified Used Car" and I had a 5 yr, 60k factory warranty back on it plus I saved $1000 on buying the truck if I tried to buy it from the leasing company

[DRR]

But it would not make any sense for me to lose money on a transaction.

That's kind of his problem. It's his lease, he's the one moving, sorry but he's probably going to have to take a bit of a loss on it.

In other words, make a deal that's good for you. His financial situation is not your problem.