Low Miles in Queens, High Miles in Houston, and Who Can Buy Your Lease

0:00 Hey everybody, welcome to Keys or Keep. I'm Joe, managing director at Champion Auto Finance. This is the show where we take your lease-end questions and work through the one decision that matters: hand back the keys, or keep the car.

0:12 Quick note before we start. The questions on this show are based on the kinds of questions people ask us. Names and details are changed. And nothing here is legal or tax advice. Your contract and your state's rules always win.

0:24 Alright. Three questions today. Let's get into it.

0:28 So we got a question from Jessica in New York. She says, Joe, I live in Queens. I leased a small SUV three years ago, and honestly, I barely drive it. I take the train to work, and the car mostly sits on the street while I play the alternate side parking game. My lease ends in three months. I'm at about eighteen thousand miles on a thirty-six thousand mile lease. The dealership keeps calling me about a new lease. Should I just do that, or should I buy this one?

0:53 Jessica, first of all, alternate side parking for three years? You've earned a medal.

0:58 But here's the thing. You might be sitting on something valuable, and the people calling you know it.

1:04 When your lease was written, the leasing company guessed what the car would be worth at the end. That guess is the residual value, and it's built into your buyout price. They made that guess assuming you'd drive close to the full mileage. You drove about half. A three-year-old SUV with eighteen thousand miles is usually worth more than the same car with thirty-six thousand.

1:24 And here's the part a lot of people miss. Most leases don't pay you back for the miles you didn't use. If you turn it in, those unused miles mostly go back with the car, and they're worth something to whoever gets it next. Check your contract, because some leases do have a credit, but don't assume yours does.

1:40 So here's what I'd do. Step one, call your leasing company, the name on your monthly statement, and ask for your payoff in writing, with every fee listed. Step two, look up what your exact car is worth right now. Use a few sources, and get at least one real offer, so you're not relying on one website. Step three, compare.

1:57 If the car is worth more than the payoff, that difference is your equity. You can buy the car and keep a low-mileage vehicle you already know. Or you can at least walk into any new deal knowing what your car is really worth.

2:10 One more thing. Buying usually means sales tax on the purchase. How that works varies by state, and New York has its own rules, so ask the leasing company and your lender to show you the tax on the quote. No surprises.

2:22 And Jessica, if you buy it, keep doing what you're doing. Low miles on a car you own is how you get a long, cheap life out of it.

2:32 Next up, we got one from Marcus in Texas. He says, Joe, I'm outside Houston and I commute a lot. Like, a lot. My lease allows thirty-six thousand miles, and I'm going to come in around forty-five thousand. My contract says twenty-five cents a mile over. The dealer says I'll owe that at turn-in. Is there any way around it?

2:53 Marcus, Houston traffic plus a long commute, I believe every one of those miles.

2:59 Let's do the math together. Nine thousand miles over, at twenty-five cents a mile. That's two thousand two hundred fifty dollars, just for the miles. And that's before any wear-and-tear charges from the turn-in inspection.

3:13 Now, here's the important part. Excess mileage charges are usually billed when you return the car. If you buy the car instead, there's normally no turn-in. No inspection, no mileage bill. The car is just yours.

3:24 But, and this is a big but, don't buy the car just to dodge a fee. All those miles also lower what the car is worth. So you need to compare two paths.

3:33 Path one, you return it. You pay the mileage charge, plus any wear and tear, and then you still need a car. With your commute, you definitely need a car.

3:42 Path two, you buy it. You pay the buyout price for a car you already know. You know how it's been maintained. You know it hasn't been in a flood. You know its quirks.

3:52 If the buyout price is close to what the car is worth, or even a little above it, path two can still come out ahead. You skip the mileage bill, and you're not shopping for a replacement in a used market where you don't know the history.

4:04 If the car has had real problems, or the buyout price is way above market value, that changes things. Then paying the mileage charge and moving on might be smarter.

4:14 One more tip, Marcus. If you're going to buy and finance it, think about what you'll drive next. With a commute like yours, plan on keeping this car a while, and pick a payment that's comfortable for the long haul.

4:27 Last one today. This is from Dana in Ohio. She says, Joe, I want to buy out my lease, and I already have a lender I like. But the dealership told me I have to buy it through them. Is that true?

4:37 Dana, great question, because the honest answer is, it depends on your leasing company.

4:43 Every leasing company sets its own rules for buyouts, and those rules can change. Some let you buy the car directly and use any lender you want. Some send the purchase through a dealership. And some limit buyouts by third parties. I'm not going to tell you what any one company's policy is today, because I'd rather you hear it from the source.

5:01 So here's the move. Skip the dealer for this one question, and call the leasing company itself. Ask them three things. One, can I buy the car myself, directly from you? Two, can I use my own financing? And three, exactly what paperwork do you need, and who do I send the payment to?

5:16 Write down the name of the person you spoke with and the date. If they say yes, ask for a payoff quote in writing, with a good-through date, and send it to your lender.

5:25 And if they say the purchase has to go through a dealer, that's not the end of the road. Ask the dealer for the full price in writing, with every fee listed, and compare it against your payoff quote. Any difference should be explained.

5:39 Alright, let's wrap it up. Three takeaways from today.

5:43 One, get your payoff in writing, with every fee and a good-through date. Everything starts there.

5:49 Two, compare that payoff to what your car is really worth. Low miles can mean hidden equity. High miles can mean buying beats paying the turn-in charges.

5:59 Three, when you're not sure about a rule, ask the leasing company directly. Not a forum, not a guy at the dealership. The leasing company.

6:07 If you've got a lease-end question, send it in at lease end live dot com, and it might end up on the show.

6:14 Champion Auto Finance helps arrange financing for drivers buying out their lease, nationwide. We are not a lender, and approvals and terms are subject to lender underwriting.

6:24 That's Keys or Keep. I'm Joe. Thanks for listening, and I'll talk to you next time.