Is buying out the end of a wrangler lease contract a terrible idea?

Themallcrawler

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Hey all,

I've been looking around trying to get into a 2-door JL. Have been looking at both new and used. If you've looked at prices recently, you'll know that they are crazy. 2019 Sport S JLs with 20k miles have depreciated like 1-2%, so it makes almost no sense to buy used and instead buy new - but new Sport S's are $40-$45k.

I've found a new wrangler with only 2k miles on it that has 20 months remaining on its lease. Lease payments are $360, so it's about $7.2k for almost 2 years of use.

I want to buy a wrangler eventually, but the latest inflation data (CPI) just came out today, and they said 1/3 of the inflation happening in the country right now is happening in automobiles. It just seems like if you're buying now, you're buying at the peak.

Is taking over someone else's lease for 20 months, for about $7k, a terrible idea?





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Chupacabra

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I think we need more info. "A new wrangler" could be anything from a stripped Sport to a loaded Rubi.

It could be a good idea or a bad idea depending on what trim it is, and what the residual is, mileage allowance, etc.
 
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Themallcrawler

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I think we need more info. "A new wrangler" could be anything from a stripped Sport to a loaded Rubi.

It could be a good idea or a bad idea depending on what trim it is, and what the residual is, mileage allowance, etc.
Sport S, 2021, 30k miles allowed over 3 years, 28k miles remaining, 20 months left.
 

xtalfu

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Typically a lease payment covers: the interest (over the total cost of the car) and the depreciation. On a Jeep, depreciation is very low. So most likely the person who leases a Jeep is going to pay for much more depreciation than needed. Buying the car at the end of the lease could be a way to recover the money paid for the depreciation that did not really happen, but before taking over the lease, I'd want to know how much I would have to pay to buy the car at the end of the lease, including the fees that Chrysler Finance and the dealer are going to add just to conduct the transaction (will be more than $500.00, maybe much more).
 
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Themallcrawler

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Typically a lease payment covers: the interest (over the total cost of the car) and the depreciation. On a Jeep, depreciation is very low. So most likely the person who leases a Jeep is going to pay for much more depreciation than needed. Buying the car at the end of the lease could be a way to recover the money paid for the depreciation that did not really happen, but before taking over the lease, I'd want to know how much I would have to pay to buy the car at the end of the lease, including the fees that Chrysler Finance and the dealer are going to add just to conduct the transaction (will be more than $500.00, maybe much more).
I wouldn't buy it out at the end, and I will insist seller pays all fees.
 

LarryB

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I always thought of a lease as a bit of an insurance policy. If you have a lemon, it is covered under warranty until you give back the keys. However, there is a cost for that privilege, namely interest.

if you are talking 1-2% leasing rates, it is not much of a penalty if you buy it out. Much more than that, it is not likely worth it.

As pointed out, though, you May end up way overpaying the depreciation if Wranglers continue their trend of ultra low depreciation. Find out what residual rate they are basing the value of the vehicle on at the end of the lease.

Finally, you may have some tax gains while leasing, depending on your situation.
 

dalema

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Hey all,

I've been looking around trying to get into a 2-door JL. Have been looking at both new and used. If you've looked at prices recently, you'll know that they are crazy. 2019 Sport S JLs with 20k miles have depreciated like 1-2%, so it makes almost no sense to buy used and instead buy new - but new Sport S's are $40-$45k.

I've found a new wrangler with only 2k miles on it that has 20 months remaining on its lease. Lease payments are $360, so it's about $7.2k for almost 2 years of use.

I want to buy a wrangler eventually, but the latest inflation data (CPI) just came out today, and they said 1/3 of the inflation happening in the country right now is happening in automobiles. It just seems like if you're buying now, you're buying at the peak.

Is taking over someone else's lease for 20 months, for about $7k, a terrible idea?
Have you looked into some of the forum friendly Dealers on here that you can still buy (or lease from) at 7-8% below invoice? Why wouldnt you get a new one that way - no inflation impact there. its the used car prices that are out of control.

look on here, pick your options and see the below invoice price : https://www.jlwranglerforums.com/fo...ng-worksheets-for-2021-jl-jlu-wrangler.52566/

check out here for the good dealers - Gupton is one I hear a lot if you’re up for a bit of a drive to pick it up (order over email): https://www.jlwranglerforums.com/forum/threads/recommended-dealers-list.1227/post-1522376

not sure why you’d mess around with someone’s old lease - seems messy
 

JoeB

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You may want to find out what the buy-out is on the lease (you can buy out a lease at anytime). If the current leasee put sizable down money on it, and they must have to get the payment sub $400, then the buyout is likely far lower than it's current value, perhaps mid to low 30's. At that point you could keep it and get an almost new Jeep at a steal, or sell it for big profit in this inflated market.
 
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Themallcrawler

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Have you looked into some of the forum friendly Dealers on here that you can still buy (or lease from) at 7-8% below invoice? Why wouldnt you get a new one that way - no inflation impact there. its the used car prices that are out of control.

look on here, pick your options and see the below invoice price : https://www.jlwranglerforums.com/fo...ng-worksheets-for-2021-jl-jlu-wrangler.52566/

check out here for the good dealers - Gupton is one I hear a lot if you’re up for a bit of a drive to pick it up (order over email): https://www.jlwranglerforums.com/forum/threads/recommended-dealers-list.1227/post-1522376

not sure why you’d mess around with someone’s old lease - seems messy
Helpful, thanks. Although there don't look like good leasing options with Gupton.

Any recommended dealers for leases?
 

csjlu

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Hey all,

I've been looking around trying to get into a 2-door JL. Have been looking at both new and used. If you've looked at prices recently, you'll know that they are crazy. 2019 Sport S JLs with 20k miles have depreciated like 1-2%, so it makes almost no sense to buy used and instead buy new - but new Sport S's are $40-$45k.

I've found a new wrangler with only 2k miles on it that has 20 months remaining on its lease. Lease payments are $360, so it's about $7.2k for almost 2 years of use.

I want to buy a wrangler eventually, but the latest inflation data (CPI) just came out today, and they said 1/3 of the inflation happening in the country right now is happening in automobiles. It just seems like if you're buying now, you're buying at the peak.

Is taking over someone else's lease for 20 months, for about $7k, a terrible idea?
The majority of the CPI bump came from used automobiles, if I'm not mistaken. A function of stimulus checks, a return to the office + a general reluctance to take public transportation + more remote work in smaller towns with less robust transportation infrastructures, and car rental companies replenishing fleets ahead of a fast rebound in consumer travel (after they sold off their fleets during the pandemic to generate cash). New car sales prices have also jumped, but not as much, because of the high used prices and fewer manufacturer incentives to dealers from curtailed production..

It's a perfect storm that makes buying a car difficult right now, but i think the worst is likely over. If you can hold out, you should see better selection and prices in 6-12 months.
 

dalema

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Helpful, thanks. Although there don't look like good leasing options with Gupton.

Any recommended dealers for leases?
are you saying that based on looking at their website - as that’s somewhat irrelevant? I guess what I’m saying is there are really no lease deals - most dealers have the same lease companies available to them, it’s just if they give you the best of what they have available vs marking things up in the lease inputs ie interest rate (money factor) and fees. The residual is fixed but can differ between the bank they use.

there are some threads on how to lease you may want to look at. https://www.jlwranglerforums.com/forum/threads/lease-numbers-not-adding-up.71183/

In a nutshell you agree on the sales price of the Jeep first, then determine the lease aspect (just like any financing). You will want to know if they will give you the lease rate with no premium added and understand the fees to make sure no bogus ones are in there. Then I’d recommend not putting any money down - rally doesn’t make sense to, even if it makes the payments higher. Keep that cash in your pocket.

dont focus on the payment - you’ll get taken for a ride.

shoot Daniel over there an email, I’m sure he’ll be upfront and walk you through it. Just don’t get focused on the payment Up front, that’s just the output at the end!
 

BlueSV650

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I am planning to buy my lease at the end. I have a 2018 JL Unlimited Sport S. I wasn't sure a year ago but now that I see the price for a similar new one has gone up a few thousand and used values are way up, it makes sense for me. I leased for the low rate and since it's a 2018 JL, I was a little worried about quality issues on a new platform. I have been very happy with it with no issues (besides stabilizer recall). It is a 3 year lease and I put down $1k with payments of $308/month. Ally does not charge any fees at the end of the lease and the buyout price is $28k. I'll only have about 12,000 miles on it so it will be much lower than buying a new one or even a used one. To me it makes sense but I'm always interested in others' opinions to make sure I'm making the best choice.
 

dalema

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You may want to find out what the buy-out is on the lease (you can buy out a lease at anytime). If the current leasee put sizable down money on it, and they must have to get the payment sub $400, then the buyout is likely far lower than it's current value, perhaps mid to low 30's. At that point you could keep it and get an almost new Jeep at a steal, or sell it for big profit in this inflated market.
This is a good point if you wanted to flip it - but assume the person trying to offload the lease may have looked into that too? I haven't done the math on what a payment on one of these would be if you get a 7-8% off invoice sales price to really dig into it though.
 

dalema

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I am planning to buy my lease at the end. I have a 2018 JL Unlimited Sport S. I wasn't sure a year ago but now that I see the price for a similar new one has gone up a few thousand and used values are way up, it makes sense for me. I leased for the low rate and since it's a 2018 JL, I was a little worried about quality issues on a new platform. I have been very happy with it with no issues (besides stabilizer recall). It is a 3 year lease and I put down $1k with payments of $308/month. Ally does not charge any fees at the end of the lease and the buyout price is $28k. I'll only have about 12,000 miles on it so it will be much lower than buying a new one or even a used one. To me it makes sense but I'm always interested in others' opinions to make sure I'm making the best choice.
Might be worth checking what VROOM, Carvana or Carmax may give you to buy it - with the used prices right now?

And then get a new one at a significant percentage off invoice and new warranty. It's like most of the world doesn't know you can get such a good deal on a jeep based on what they are paying for the used ones ;)

I hear you on the price going up over time though.
 

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