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Payoff-trade vs, early termination.... (long) Posted by Mike Lynch [Email]  (#81) [Profile/Gallery]
(more from Mike Lynch) on Fri, 26 Dec 2003 11:16:47
In Reply to: 9-3 Lease, Mr. Chez, Thu, 25 Dec 2003 17:38:49 Members do not see ads below this line. - Help Keep This Site Online - Signup |
There are two ways to end your lease.
Get a payoff quote from Saab Financial and compare that to the actual trade in value is one way. With this method the dealer acquires the car in trade.
The other method is to get an early termination quote. This amount will be slightly less than the total of the remaining payments. In this case the dealer pays an early termination amount to Saab and the car is returned to them, Saab Financial, not taken in trade.
Both ways need to be looked at as one might be less than the other. *Ususally* the total of the remaining payments or the early termination amount is substantially less than the payoff and trade number.
With a September termination you probably have Jan-Aug payments left or 8 payments. Say your payment is $400, that total is $3,200 plus the $350 disposition fee because you turned the car back to Saab for a total of $3,550 for early termination. There may be some small unearned interest savings from Saab on the actual quote, maybe not.
If you call for a payoff that amount is going to be roughly the total of the remaining payments plus the residual or lease end buy out. So say your residual is $16,800 plus the total of your remaining 8 payments at $3,200 = $20,000. Now the used car appraiser evaluates the car and notes that he can get nicer ones at the Saab auction for $15,000. That leaves a $5,000 difference if you payoff and trade.
Early termination, pay and give the car back to Saab, was only $3,550. The payoff and trade was $5,000, so your going to go with the early terimination amount.
Early termination or payoff/trade, that amount IS ADDED TO YOUR NEXT LEASE/PURCHASE. You may be quite happy with the resulting figures, the deal on what your lease/buying may be so good that the difference is very do-able.
So the offer to payoff your old lease is a genuine one, you just have to be comfortable with tacking on $3,550 to your best deal on the new lease/purchase. And you have to be comfortable with getting no use or value for that early termination or payoff/trade amount. That is you typically don't receive a significant, if any, discount on the remaining payments, you're making the payments and not receiving the use of the car.
If you're going down-market or staying in the same league likely that difference will queer the deal. If you're going upmarket to a more expensive car it may be more tolerable.
At this time there is no early termination program from Saab. Some lease companies have periods where you can early terminate and the remaining payments, sometimes up to 6 months, sometimes only 3 months, are FORGEIVEN, nobody has to pay them. You can truly walk away from them and not add them to your next lease/but. GMAC has a program now, Saab has had them previously.
posted by 207.158.49...
, Fri, 26 Dec 2003 11:16:47 <-- Viewing This Message
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