Lease end question

I've been down this highway a few times. The bottom line is that Ford KNOWS they are going to take a loss on the vehicle with a residual that is 3grand higher than planned. (I think they even know that when they WRITE the leases but have no choice to keep the metal moving). That being said, they would rather take back the vehicle and sell it to one of their dealers at auction than sell it to you at a discount. Your dealer might buy it at auction or another might. It's very difficult for you, the consumer, to control how to get that vehicle back, and you very well might spend close to $3000 more than market (what you'd pay anyway) to buy it from a dealer who knows you are "hot" for "that" vehicle. In the end I just turned them in and moved on. Unfortunately leasing doesn't really make sense unless you plan to continue leasing every time a lease is up.

On the other hand, if you had paid cash or financed the vehicle, you would have spent that $3000 upfront and it still would only be worth the paultry amounts that 13MPG SUVs are now worth (I have an '03 so misery loves company). So consider yourself 3 grand ahead of the game. I guess I'd say to buy someone else's used vehicle, because availability and price will be better than trying to chase your old bug smasher. As one last resort you MIGHT just tell the dealer you want THAT vehicle and they should buy at auction for you (and you'll pay a markup). Unfortunately many dealers will lie about what they bid and, again, you'll be close to the extra 3 grand you are trying to save.

For what it's worth, GM is the same way. My father wanted to buy a Park Avenue off lease that was worth 3-4 grand less than the residual. Again, they told him they'd rather give that price advantage to one of their dealers because it helps the dealer and many customers will end up leasing a new GM vehicle. I am sure they have run the numbers and know that they're ahead of the game by NOT letting the consumer get the benefit of buying a vehicle at market price (less than a planned residual).

D.D. Palmer wrote:

the advantage is to a lease vs. a purchase. They are so complicated to me I can't tell what a good deal is. I only drive about 5000 miles a year would a lease be good for me? I'd like to drive a new car every 2-3 years.

You could probably get a low mileage lease. It's not that complicated, really. Just shop the dealers against each other for the lowest cost for 3 years you want the vehicle for. Another approach is to buy a Honda or Toyota and just trade it in. They retain their value the best. Truthfully, 5000 miles a year is so miniscule that a new car every 3 is VERY costly when you figure the cost per mile. I get bored with cars too but unless you are rollin' in the dough I'd recommend keeping the car at least twice as long.

D.D. Palmer wrote:

Thanks for the info. I like your idea of buying a Honda or Toyota. It sure is a big loss to trade in an Explorer every 3 years with only 15000 miles on it.