Hi guys,

Got a question for you lease experts or car salesman (if there are any here) I actually posted this in another thread figured I would have a better chance if I post a new one.

Here it is:

What if you pay off the lease on the day you pick up the car. Say you lease it for 3 years. Then, either during that 3 year period, or at the end of the lease, you pay off the remaining "buy out" price. Would you be paying any interest or additional fees this way? Wouldn't it be the same as paying for the car upfront except your able to hold on to that money for a few years?

Probably to good to be true and I am sure they charge some extra fee(s) in this case.

The dealer I talked to said it's cheaper to pay the entire lease upfront (he probably meant no interest not sure).

Anybody know? I'll check out that leasing link and see what I can find there.

Thanks, Jason

 

Your question is a bit confusing. I don't know whether you intent do actually buy the car or just hold it for the lease period.

If you are just leasing, there is an option where you pay the entire lease in 1 payment when you take delivey, instead of every month for 3 years. You DO NOT own the car with this option, you are just paying off your lease in 1 payment instead of 36 (for a 3 year lease).

If you pay up front you will pay less because you are not paying interest.

Whether that is a better deal or not depends on the interest rate you would have to pay on the lease verses what you could get for a return on investing your money instead of paying it all up front.

If you're getting a special low interest rate like 1% - 2% you're most likely better off with the regular lease (not paying up front).

If your interest rate is 5% or higher you're probably better off paying the lease up front.

If you intend to own your car you should NOT be getting a lease. In general leasing and then buying the car at the end of the lease will be more expensive than buying it outright, even if you finance the purchase. There are some expecptions to this, like when the manufacture has a special lease deal with very low interest rates and special rebates on leases. This only occurs when the manufacturer is having trouble selling a particular model. The 2005 Mustang will be a hot seller so I would not expect any of these sweetheart lease deals on it.

 

Thanks V10,

Actually what I was try to say was this.

I plan to pay cash for my new mustang. What I was wondering was this:

If I lease it first but pay for the entire lease upfront. Then pay off the buy out of the car at the end of the lease so there is no finacing for or either the 3 year lease or the final buy out purchase.


Example

Lets say the car was $25000 out the door and the lease for it was $15000 for 3 years.

If I paid cash for the 3 year lease upfront ($15,000).

Then at the end of the lease, I paid cash for the remaining $10,000 left on the buy out.

Wouldn't that elimate finacing charges and allow you to hang on to that $10,000 for another 3 years?

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Does that make more sense? I wonder if they have another fee of some sort to keep people from doing this?

I have leased quite a few times but have never done this.. I have always just paid monthly.

Thanks, Jason

 

The problem with your example is that you will not owe 10,000 at end of lease. You will owe the residual price negotated at time of lease. If residual is high, than cheaper lease but higher value at end of lease and opposite for low residual. Either way, you will lose money doing it your way because of other charges you pay on a lease.