Lease buyout - Is my thought process wrong?

[Steemax]

I have a 2022 Rubicon 4XE that has less than a year left on it's lease with a buyout of $42k (Taxes included) at the end of the term. According to KBB my trade in range is $32k to $35k.

I've searched around for similar threads and the consensus is to let the bank take the hit here and why should you pay $42k for a vehicle worth $10k less.

In my situation this still doesn't make sense to me. Financially for a turn in to make sense I would have to purchase another used vehicle with unknown history. In my zip code I would have to find a vehicle with a max purchase price of $37K plus TTL. In that price range locally I'd have to downgrade from a Rubicon to a Willy's based on what I'm seeing for sale on average.

Reliability wise my 4XE may be more likely to breakdown but since I'm in CA my 4XE has a 10yr 150k mile Hybrid warranty to rely on plus the 5yr 60k mile power-train warranty. So I'm not sure reliability is a point of argument to move to a gas only 2.0T/3.6.

Am I wrong to think even though I'd be purchasing this at a loss at the end of my lease term it still makes to do so. There's literally no comparable vehicle I can get into for $42k that isn't used, with less features, and higher miles.

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[Stetson]

Sounds like you have already made the decision. Don’t worry about what people on a forum say, do what you want to do, for reasons you want to do it

 

[Wbino]

You probably saved a few hundred per month on the lease vs if you bought and financed.
So the money you saved as a lease is now coming home to roost.
The dealer is going to put that on his lot for 50k.

 

[Steemax]

You probably saved a few hundred per month on the lease vs if you bought and financed.
So the money you saved as a lease is now coming home to roost.
The dealer is going to put that on his lot for 50k.

That's what I'm thinking, the MSRP on my vehicle was $58k when I purchased (minus discounts/rebates)... you see regular Sport models with MSRP's now in the $50's after options which is crazy to me even if they are being discounted.

 

[Fitzz47]

Lease another is an option. Or extend your lease

 

[kah.mun.rah]

Keep in mind that you will pay sales tax and registration fees when you buyback the Jeep and possibly have to pay down the negative equity to be approved for the loan (if you are financing).

 

[Steemax]

Lease another is an option. Or extend your lease

I want to have a paid off vehicle for once in my life otherwise I would.

Keep in mind that you will pay sales tax, license and registration when you buyback the Jeep and possibly have to pay down the negative equity to be approved for the loan (if you are financing).

The $42k figure they provided me was all fees & taxes included. USbank sent me a document with the breakdown.

 

[kah.mun.rah]

Looks like a used one of the same year would probably cost you more. That with the other things you mentioned sounds like a better deal to keep it if you like it. If you are financing and have a few months left on the lease, I would wait as long as possible before you do it since there are rumors of interest rate cuts this fall.

 

[Steemax]

Looks like a used one of the same year would probably cost you more. That with the other things you mentioned sounds like a better deal to keep it if you like it. If you are financing and have a few months left on the lease, I would wait as long as possible before you do it since there are rumors of interest rate cuts this fall.

Good point regarding interest rates, hopefully there's some movement there, I'm in the process of re-fi my other vehicle and they are giving 4.6% right now which is much better than the 6% I got offered a few months ago.

My Rubicon is not as loaded as that one but still I think I'm doing the right thing.

 

[kah.mun.rah]

Good point regarding interest rates, hopefully there's some movement there, I'm in the process of re-fi my other vehicle and they are giving 4.6% right now which is much better than the 6% I got offered a few months ago.

My Rubicon is not as loaded as that one but still I think I'm doing the right thing.

Wow!! 6.39% is the best I have seen for used car loans. 4.6% is fantastic!

 

[Wbino]

Like a wife cheaper to keep her and you know where she's been. (You hope).

 

[Steemax]

Like a wife cheaper to keep her and you know where she's been. (You hope).

That's the other benefit ... at least I know i've taken good care of my Jeep.

 

[Deki]

That's what I'm thinking, the MSRP on my vehicle was $58k when I purchased (minus discounts/rebates)... you see regular Sport models with MSRP's now in the $50's after options which is crazy to me even if they are being discounted.

Base Willy’s MSRP now is 58k, you won’t find a Rubicon for under 45k used. And like you said, if you buy a used one, you’re getting unknown history.

 

[krayjay]

Good point regarding interest rates, hopefully there's some movement there, I'm in the process of re-fi my other vehicle and they are giving 4.6% right now which is much better than the 6% I got offered a few months ago.

My Rubicon is not as loaded as that one but still I think I'm doing the right thing.

At best, you should expect one 0.25 or 0.50 interest rate cut from the Fed this year (this is one rate cut when they predicted six - they are usually VERY wrong on predictions) so don't expect it to influence auto loan rates enough to care.

If you want to buy this vehicle, just think about how long you will have it and if you will want it then. You had it for 3 years and then will probably finance it for another 5 years. In 3 more years, are you going to want this enough to overpay for it? You will be paying about $800 per month for 5% interest on 42k for 60 months.

Alternatively, you can get a new 4xe on a lease, get a deal on the price because they aren't moving, and also get the full incentive to reduce the monthlies again. I don't know current lease rates but bet they are much better than $800 per month. You can drive a brand new 4xe for much less, offload the current one, and get the 2024 upgrades. You can probably get a Willys too which will be even less than a Rubicon. Unless you are seriously wheeling, you don't need all those things in the Rubicon.

Ask yourself if you are going to be happy with this thing in 5 more years and want to keep it for more time when it's paid off or whether you are going to want to offload it at any point and find something new, in which case you will get crushed on the difference between what you owe and the resale (which you can offload right now back to the company who leased it to you).

You are better off financially leasing something new and saving the difference if you ask me. Also get a new car. If you were ahead on the lease, i.e. it was worth 45 and the residual was 35, it would make more sense to me because if you decide to get rid of it in 2 years, you won't be upside down.

 

[Steemax]

At best, you should expect one 0.25 or 0.50 interest rate cut from the Fed this year (this is one rate cut when they predicted six - they are usually VERY wrong on predictions) so don't expect it to influence auto loan rates enough to care.

If you want to buy this vehicle, just think about how long you will have it and if you will want it then. You had it for 3 years and then will probably finance it for another 5 years. In 3 more years, are you going to want this enough to overpay for it? You will be paying about $800 per month for 5% interest on 42k for 60 months.

Alternatively, you can get a new 4xe on a lease, get a deal on the price because they aren't moving, and also get the full incentive to reduce the monthlies again. I don't know current lease rates but bet they are much better than $800 per month. You can drive a brand new 4xe for much less, offload the current one, and get the 2024 upgrades. You can probably get a Willys too which will be even less than a Rubicon. Unless you are seriously wheeling, you don't need all those things in the Rubicon.

Ask yourself if you are going to be happy with this thing in 5 more years and want to keep it for more time when it's paid off or whether you are going to want to offload it at any point and find something new, in which case you will get crushed on the difference between what you owe and the resale (which you can offload right now back to the company who leased it to you).

You are better off financially leasing something new and saving the difference if you ask me. Also get a new car. If you were ahead on the lease, i.e. it was worth 45 and the residual was 35, it would make more sense to me because if you decide to get rid of it in 2 years, you won't be upside down.

Well the goal is to roll over the payments on the other vehicle to this which would be $1200 payments until paid off since the other vehicle doesn’t have much of a balance left.

We love this Jeep, it’s our weekend/adventure vehicle and if I were going to replace it, it would be another Jeep so yes that would mean I’d like to have a Wrangler for the next 10 years at least.

That’s why I’m not subscribing to it being financially better to just keep leasing vehicles. Incentives and all, the $10k potential loss in this lease is minuscule compared to the life long shackles we have to banks. I’d like to see what no payments is all about for a little while at least while this vehicle has its 10yr 150k mile warranty.

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