Car Buying Q & A

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Forum: Car Buying Q & A
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Lease buy-out question

I'm currently leasing a 2006 Honda Accord, which ends on 1/28/09. I'm not interested in buying the car, nor am I interested in getting another Honda product at this time. However, my father-in-law needs a new vehicle and he is interested in purchasing my car for the lease buy-out amount when I turn it back in. He wants mine b/c he knows the history of the vehicle (no issues)...and based on the buy-out amount, it's lower than what I've seen for similar cars on Autotrader/cars.com. Here's my questions....

1. Are there any issues with having him buy my leased car that we need to be aware of? Can the dealership take care of this? Are there "additional" fees involved in doing this, other than taxes and standard fees (i.e. dealer administrative fee on top of the standard fees for such a transaction)? I don't want to have to buy the car and then sell it to him separately (I would assume in that scenerio that we would both pay taxes on the car).

2. Is there any chance Honda would be willing to negotiate the lease buyout amount? I doubt it b/c the KBB value for private sale and dealer retail pricing is higher than my buy-out amount (although, trade-in value is a few thousand less than the buy-out amount). I know that buying a car at lease end is usually not a great deal, but again, he wants the car b/c he knows the history and is OK with the amount (but would like to pay less if possible...of course). Also, I was seeing similar cars online (same year, style, and mileage) going for $1-3k more than the buyout.

3. Should I discuss this with Honda Finance or with the dealership where I originally leased the vehicle? Honda Finance called me last week to find out what I planned to do with my Accord. The dealership has also called me over the past month, but I have not yet spoke to anyone...mainly b/c I was not sure what I wanted to do with the car until the last few weeks. Does it matter who I speak with? Is one better than the other?

Any thoughts you could share would be appreciated. Thanks in advance for your help!

Re: Lease buy-out question

You did not state your location - laws vary in some states

Honda Finance will not be willing to negotiate the buy out, but call them and ask what will be involved for your father -in law to make the buy out to save the double tax factor, on the other hand subject to your location a vehicle can be switched to another family member with a transfer fee only with no double tax involved, call your local DMV for details, there is a link on the website called DMV, look it up for a location near you.

The dealership can also make this switch, but will only get involved if they can realize a profit, and that means for you to do business there.

Honda Finance will be your first avenue for a solution.

Re: Lease buy-out question

Thanks Ray. We are in Ohio.

I'll call Honda Finance first and see what they say about making the switch. I'll then call the DMV and ask about the rules here in OH. Hopefully, it will be an easy transaction at a minimal cost. I appreciate your help!

Re: Lease buy-out question

Well, I called Honda Finance and they told me the dealership should be able to take care of the transfer to my father-in-law. We went to the dealership yesterday and they agreed to do the transfer (assuming we purchase a vehicle from them, which we planned to do). They said we would still need a vehicle inspection. This would allow them to "ground the vehicle". What does that mean exactly? They said this would allow them to inventory the car and then sell it to my father-in-law for the lease buy-out amount. They said no other fees would be associated with the transaction (other than taxes, registration fees, etc). They also said if anything was noted during the inspection by SGS (Honda's third party inspection group), they would not be applicable and we would not have to pay anything b/c my father-in-law is willing to purchase the car "as is". I just wanted to see if you saw any "red flags" with this process. Honda Finance originally told me I wouldn't need an inspection b/c we were going to purchase the vehicle. Any thoughts/comments? Thanks!

Re: Lease buy-out question

As I mentioned earlier the dealeship can make the switch and will be more than happy to do so providing you do business there. I don't see any " red flags "

Re: Lease buy-out question

Hello..
There are many factors which should be kept in mind before signing the agreement of the lease. It is very important to follow all the clauses for better dealing.
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car leases doesn't just make sense financially, there are other benefits too.

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Re: Lease buy-out question

Yes, i agree with you
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