[jjthink]

In other words, if one is looking to buy a used E, would one likely get a better deal buying an E that had been traded in or one that had been leased and turned in at the end of the 3 year/36K mile lease period? Or are there too many variables here...?

Thanks for any insights!

 

[Dom.five]

It all depends on the dealer! How motivated he is to sell. How much inventory he has. How many are due in from his lease program, in a given time frame. The number of miles/condition, and last but not least, YOUR attitude !!


Dom

 

[jjthink]

There are many variables, to be sure! But if all other things are equal, I'm trying to understand if a dealer generally makes more on a sale of a leased car turned in or on a trade in.

We can look up trade in value and compare to what a dealer hopes to get retail but what on earth is a dealer's profit from a car that was leased....how does that work..I guess that's what I'm trying to understand as best I can.

The person leasing pays a monthly fee for the 3 years, say $250, or more than $8,000 during the 3 years. Then turns the car in. If the dealer then gets another $15K for that used car, he may make well more than KBB. So maybe, just maybe, a person buying a used car might be able to get a better price on a lease turn in than on a simple trade in? Unless there is something I'm missing here.

Car experts, I need your minds!
JJ

 

[Dom.five]

You do understand, that dealers will charge you the same, don't you ?

That is to say If an 06 E with 30,000 miles is traded, or comes in from lease, to the sales department, it's the SAME car!!

What may give the dealer some incentive, is if he has 5 more 06s with the lease limit of 30,000 miles on them about to come in this month. Then again, he may just sell them off to other dealers that want them.

There is no clear advantage to you ether way.


Dom

 

[jjthink]

I imagine the amount a dealer will accept will depend upon how much profit they stand to make off a particular car (and that amount may vary car to car, depending upon the circumstances [trade in vs. lease etc.]), along with, of course, how much volume they are turning over, since that affects their overall income.

Thank you for your thoughts - I appreciate it.

 

[Chasester]

The person leasing pays a monthly fee for the 3 years, say $250, or more than $8,000 during the 3 years. Then turns the car in. If the dealer then gets another $15K for that used car, he may make well more than KBB. So maybe, just maybe, a person buying a used car might be able to get a better price on a lease turn in than on a simple trade in? Unless there is something I'm missing here.

Car experts, I need your minds!
JJ

Doesn't work that way.

here's the lifecycle of a new vehicle from the factory.

Dealer buys new vehicle from AHM at a set rate. Dealer sells or leases or smartbuys vehicle to consumer at whatever negotiated price. AHM Finance are the ones purchasing the Lease or Smartbuy from the dealer. The dealer earns the same amount (although for leases they generally tend to make higher profit margins, hiding the cost of the car into the monthly payment). Lease / Smartbuy guarantees a value to the consumer of the vehicle at the end of whatever term.

Upon termination of Lease or Smartbuy - Customer has option to "" buy "" vehicle for purposes of trade-in (only done if value of vehicle exceeds the guaranteed amount). They can also pay a disposal fee and walk away, they can refinance the vehicle with their own lender, or they can refinance the vehicle with AHM at the same monthly payment.

Supposing a lease is turned in. The dealership receiving the vehicle has first right of refusal. If dealer refuses to buy that turned in vehicle, AHM takes it to an auction, sells to another dealer, etc.

If Dealer does buy the turned in Lease, than it is put onto the used car lot and sold as a used car (although most likely the dealer would invest in the vehicle and get the Certified Used designation). And like Dom mentioned - makes no difference how the Dealer aquired it.

 

[jjthink]

I really appreciate the info - thanks for taking the time to provide it.

I also get now that a once-leased car may or may not be in the hands of the dealer who leased it in the first place.

This notation you made is interesting:

(although for leases they generally tend to make higher profit margins, hiding the cost of the car into the monthly payment).

Lots to think about!

Waiting to see whether or not maintenance records turn up. Haven't heard back in some days so I have a feeling perhaps there aren't any.

JJ

p.s. Your 2008 E - better gas mileage than seems to usually be the case - is it 2WD or AWD, if I may ask?

 

[Blue Devil]

dealers make most of their money off of service

 

[Chasester]

I really appreciate the info - thanks for taking the time to provide it.

I also get now that a once-leased car may or may not be in the hands of the dealer who leased it in the first place.

This notation you made is interesting:

(although for leases they generally tend to make higher profit margins, hiding the cost of the car into the monthly payment).

Lots to think about!

Waiting to see whether or not maintenance records turn up. Haven't heard back in some days so I have a feeling perhaps there aren't any.

JJ

p.s. Your 2008 E - better gas mileage than seems to usually be the case - is it 2WD or AWD, if I may ask?

2wd with the CAI.

 

[mkh]

...agree with the above. When a car is "leased" out - the person leasing it is usually "paying" the full retail price of the vehicle, i.e. the lease is being calculated on the full price. The lease payments take care of the (estimated) depreciation on the vehicle. At the end of the lease, what is left "owing" on the vehicle should be pretty close to what list Dealer Wholesale price for the that vehicle/year/mileage is. So the dealer takes it back, or buys it at auction at about listed used wholesale, and sells it at a used retail. To the dealer, it's just another used car.

There are some sites that list vehicles for owners who want to get out of their lease - i.e. have someone take over their lease so they don't have to pay a huge penalty for ending their lease early. Some of these can be good deals - you can get a vehicle with a year or so left on low lease payments, and can refinance/buy the vehicle at the end of the lease - at the wholesale amount left owing on the contract, instead of through a dealer after their markup. (Make sure the lease allows this first).

 

[jjthink]

I am very grateful for all of the info that has been shared here in response to my post - thanks ever so much.

For this car KBB trade in value in good condition is $14.5K, private party value in good condition is $17.2K and retail value in excellent condition is $20.4K.

The car is in good condition I would say, definitely not excellent.

If you can endure taking this one step further, were it any of you, what would you consider a good deal for everything included, except taxes? I notice a lot of people on this site in this economy getting cars for below KBB by a surprising amount with both dealer and buyer pretty happy.

Should a cash deal help, if I can manage that?

Many thanks.

 

[Dom.five]

I am very grateful for all of the info that has been shared here in response to my post - thanks ever so much.

For this car KBB trade in value in good condition is $14.5K, private party value in good condition is $17.2K and retail value in excellent condition is $20.4K.

The car is in good condition I would say, definitely not excellent.

If you can endure taking this one step further, were it any of you, what would you consider a good deal for everything included, except taxes? I notice a lot of people on this site in this economy getting cars for below KBB by a surprising amount with both dealer and buyer pretty happy.

Should a cash deal help, if I can manage that?

Many thanks.

If you can get it in the 17,500 to 18,500 range you would be doing well.

Then I just love to bust dealers nuts. I'm so bad with them the wife will not go car shopping with me. I have been asked to leave some dealer ships. When I would not go, they came down on the price. I still did not buy the car from them. It was fun though!

As far as the cash goes, Dealers will no doubt give you a better price if you get the loan through them. They get a kick back for writing the loan.

Just make sure it has no penalty for early payoff. Then you can pay it off after the first payment goes in if you wish.

Good luck!

Dom

 

[jjthink]

Hey, I think you're just the guy to bring with me! Anyway, thanks very much for your take.

I had earlier missed out on an '08 with only 8,000 miles, at a dealership 100 mi away. Someone on EOC recommended offering $17.5K for that one. The dealer was very slow in answering questions - though asserted it was available - and then poof - it was gone. I am somewhat reluctantly now considering this '07 with 36K miles, mostly because the dealer is only 15 minutes away! But then again, an '07 will hopefully cost me less than an '08, so there is that up side!

Interesting about the loan thing. Someone had said that it is a bank and not the dealer who makes money on the loans and that cash would be very appealing to the dealer. I am glad to read what you wrote because I should perhaps reconsider the cash thing now.

 

[mkh]

Interesting about the loan thing. Someone had said that it is a bank and not the dealer who makes money on the loans and that cash would be very appealing to the dealer. I am glad to read what you wrote because I should perhaps reconsider the cash thing now.

Dom is 100% correct. The two big profit centers for a Dealership are their Service Dept. , and their Finance Dept. They get a pretty nice loan origination fee from the lender for selling you the financing. They get nothing if you pay cash or finance through your Credit Union or bank on your own. Years ago, before Dealerships "sold" financing, it would take Banks weeks to close on their consumer loans, and pay a Dealer - so Dealers would give a discount for the quicker cash-flow of cash deals. Those days are long-gone.

 

[jjthink]

Thanks very much. I'll plan to leave 'cash' out of the discussion!

Odd thing - the Honda dealership still can't seem to round up maintenance records for this once-leased car. It's been on the road 3 years.... They said the leases don't require any kind of upkeep but that they'd be able to tell if the car hadn't had oil changes and that every 10K miles is okay anyway (with regular oil). Really? They also said they haven't been able to reach the owner and that the place they think the car may have been serviced can't give out info without the original owner's permission - do you suppose that's true? Long story short, I don't know if I should walk away if no service records can be rounded up.

Also, and I digress, I saw the car before and then after they officially cleaned it up and the back seat upholstery still has notable stains that did not come out (get the heebie jeebies wondering what was spilled and soaked in...hoping not kid's drinks like milk that would fester underneath the fabric - why oh why is the upholstery not waterproof when the flooring in an E is so wonderfully practical?). In other areas, they could have done a better job cleaning - sticky cleanser - so I'd have to clean it myself again. Other than the stains, it's not too bad. There's a tear in the pockets behind the front seats and something seems missing on the back of the front seat - all these loopy things with nothing attached to them...seems like there should be some kind of elastic bungees or something. Test drive revealed a couple things I hadn't realized. Sun/moon roof in back is as good as having none at all as it's very dark above driver's seat area - was used to a sunroof all these years. And why on earth front windows start so high up such that one can't rest an arm on an open window without raising elbow unnaturally I just cannot imagine. Same issue for me and also a taller fellow so his height did not negate this being a problem. Bugged me more than I thought it would that the back windows and the pop up sunroof all open only extremely slightly. Also, the dashboard seems so high that it's like an obstacle in front - I think one would get used to this once they forgot how other cars feel. Ugh - I have pined for an E for a long time but am just discovering some of these nonsensical quirks. Okay, whiny observations over now! .

 

[GaryS]

Based on the above, I'd walk away. There has got to be another E better than this one.

 

[jjthink]

I hear ya' Gary! I could hold out for another E if things don't come together on this one. The alluring part was/is that they have my color which doesn't turn up all that frequently and it's a dealership very close by. That said, I can definitely wait if this doesn't gel in a way that feels comfortable. Thanks much for taking the time to read and comment.

 

[TeKNiC3]

...agree with the above. When a car is "leased" out - the person leasing it is usually "paying" the full retail price of the vehicle, i.e. the lease is being calculated on the full price.

Usually is such a vague term. At our place, "paying" full retail price hardly happens. Even the advertised leases are not based on full price.

 

[Chasester]

If you mean Honda Advertised ones - very true, they can and often do tweak some things for a specific deal. When they do that - the marching orders come down to the dealer.


One point to add about loan origination fees.

if the contracted rate is a special - either from AHM or a bank - the dealer will receive a flat rate on the origination fee - the rate designated ahead of time by the lender. However if it is a normal buy / contract rate - the dealer makes the difference between the two. i.e. the dealer is told the lender will "buy" the loan from the dealer at a set rate - and they suggest a "contract" rate for the dealer to sign the customer up at. The dealer makes the profit between those two figures - and can often be a negotiation point to make as much money as possible but not so much the customer walks.

Interesting point. say you arrange financing at bank Y. bank Y tells you your rate is x.xx%. You go to the dealer who arranges financing with the same bank Y - at the same x.xx%. Even though to you it is the same rate - bank Y will often have a buy rate to the dealer for less % to them - usually due to the dealer doing the legwork on the deal.

 

[mkh]

Based on the above, I'd walk away. There has got to be another E better than this one.

I agree - somethings not right. Either the sales guy is blowing smoke and hasn't even bothered to try and get the service records, or there was no dealer service done on it at all. Honda computer/tracks all service. Any dealer would be able to pull up that E's service records by entering the VIN. Could be the previous owner/leasor had it serviced at a local quick-lube. Could be the previous owner never serviced it al all.
That being said, my E is at 25K and has no Dealer service records, as I get all my service done at an Indy shop I've used for years. But all my service bills are tucked into a zip folder, with the owners manual, in my door pocket.

Many lease cars aren't treated very well - the driver knows he doesn't own the thing, and will be turning it back in before things start going wrong - if it was treated badly.
That "needs owner permission to release service records" sounds like BS from the sales guy. The Dealer is now the owner - they should at least be able to get a "yes it was serviced here regularly". And if they are not being truthful about that....