Quote:
Originally Posted by BiscottiGelato
I thought u meant private party subleasing.
If it's buy out and resell. No it's not profitable at all. This is even if no double taxing is involved and BMW doesn't charge me extra for someone else to do the final buyout. (Buyer pays me a bunch to pay off remaining lease and the buyer directly pays residual for buyout, avoiding double tax). I have listed the vehicle for $2.5k out of pocket and still no dibs
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I don't think you understand how leasing works.
Three steps. Call BMW FS and find out what the CURRENT payout is, not the end of lease residual. List the car for sale for the CURRENT payout plus a small percentage plus tax. If a private buyer is willing to pay that price, you will make the small percentage you listed. Otherwise negotiate for the cost of current payout plus tax, or cost of current payout minus a small amount you're willing to subsidize. Then have buyer cut a check to BMW FS to transfer title over.
Current payout is key. The residual value is irrelevant. Heck if you really want to get fancy, you can even look up private party value on KBB and compare it to current payout to get a sense of what you should list the car for.
I'm about to bore the crap out of you, so if you've already set your mind that you want to lease transfer, STOP reading right now.
Leasing is simpler than you think. All the financial institution is doing, is they're RENTING you the property based on the stated capitalization of the property when new, and based on the number of months you're renting the property for, the difference in capitalization and depreciated value (plus tax on the difference) divided by the number of PAYMENT you make. So we've all heard the old adage that once you drive a new car off the lot, it loses 1/2 of its value, correct? This means, at the beginning of any typical vehicle lease, the difference in what the financial institution has received (CURRENT PAYOUT) vs. the actual value (depreciation) is quite huge. Take, for example, a $40K car. After 2 months in the lease, the payout may only be $39,000, while the car is actually only worth about $34,000. Anyone planing on buying said lease car as a used car will have to come up with $5,000 more than the car's actual worth to own it.
But say, it's 28 payment into the lease. As is right now, payout for the car (the cost minus the $$$ already payed to the financial institution) is $27,000. It's been 2 years, and 4 month into the lease, car's maintained well and mileage is below the allocated 12,000 miles per year. BLUE BOOK value is $26,800 as it currently stands because the car's depreciation is better than projected when the lease was initially drafted up. Say, you sell the car for $26,800 plus tax. The BUYER cuts a check for $27,000 to BMW FS, you pay him/her $200, and buyer assumes the responsibility to pay tax on the transaction.
Or, a better scenario would be, car far outpaced depreciation, instead of being driven 12,000 miles a year, it's only got about 15,000 miles on it after 30 months of payment. With 6 payment of $500 left, the payout is $25,000 but the actual KBB private party value is around $26,500 because low mileage (and it hasn't rolled over to a new manufacturer's year yet). You sell the car for $26,500, pocket the $1,500 difference, rather than pay $3,000 to BMW FS to close out the lease.
But say the flip side of the coin is true. You've got 10 payments left (26 payment into the lease), the car is driven and beaten to heck. 10 payment of whatever it is is around $5,XXX. Currently the payout is $27,xxx, the car's really only worth about $24,000. Instead of paying $5,xxx to close out and terminate the lease, you find someone willing to pay $24,000 plus tax for your car, you're really only out $3,xxx vs. $5,xxx to close it out.
But you won't really know what the close-out cost is for you unless you call and find out what your current pay-off is.