The lease on my '06 G35X is about to end. The lease is with Infiniti/Nissan Financial. The car is in good shape and I want to buy it. I contacted the dealer to determine the purchase price. I was told that the residual is not negotiable - even the dealer would have to pay the full residual if they wanted to buy the car.

Infiniti Financial gave me the same answer. Their explanation is that the lease is insured for the amount of the residual. When I asked what happens when the car goes to auction and sells for less, there was no answer.

Is there a strategy for negotiating the residual? Any other advice?

Thanks.

Mark

 

They simply won't negotiate.

They have nothing to lose since they have them insured.

 

lol, I am in the same boat. Check out my thread going back months. Someone said they knew someone who negotiated an FX and IFS's reply to me was give us a name b/c they are full of $hit basically. Seems like b/c they have the insurance on the gap b/t FMV and Calculated Residual they don't need to care. My view is they need to care if they want to keep me as a customer...

 

I know several people that have tried w/o success on various brands.

 

IFS said American OEMS will negotiate b/c they were too cheap to buy the insurance...which whether too cheap or too stupid...if they don't have the insurance I can see doing that, but if you do, like IFS does, they have you by the *****.

 

I didn't know about the insurance angle....
that makes sense now, why they are so hard lined about it.

 

Sorry to say you should have negotiated your residual value at the time of purchase. There is almost no way you can negotiate that now. I'll give you an answer to your "what happens when it sells less at the auction". It simply won't. 90% of time it sells for same or more. You see Residual Value is calculated with the allowed miles that you decided on at the beginning of lease, value of car after lease is over, which means MANHEIM (one of the biggest auctions that dealerships use) will pay very very close to what that residual value is if not more. It's all about numbers, once you learn them, and learn the specifics you will understand more. What happens is that when you finalize the lease, the dealer sells the car to the leasing company at the price that you have agreed upon. (The price of the car is called the capitalized cost or "cap cost").

When you lease a car what you're basically doing is financing the depreciation of the car for the period of the lease. Therefore, if the car sells for $25,000 and the leasing company estimates that it's trade-in value at the end of three years will be $15,000 (which 90% of the time it will sell for this or more at auction), what you are doing is financing that $10,000 of depreciation over a three-year period.

My only recommendation to you is go to KBB.com type in the amount of miles currently on your vehicle, all the specifics, and click on TRADE-IN value. If it's less than what you owe, print it out and try to start your negotiations there,also tell them that you have access to MANHEIM REPORTS and that the car is going for less at auction, and that if they sell it to you for less it's a win win situation, they get more for the car and they keep a customer happy, but I'll tell you right now most likely you will not get anywhere. You need to talk to IFS NOT the dealership, keep trying until you talk to someone helpful or a manager or something.

Let me know what happens!

 

Thank you VERY much. I will print this out and see what's what.

Take care, and I will update on what I decide to do. At this point, I have no idea. I drove a G8 GXP last night...Great Room, Great Engine/Tranny/Brakes, but missing so many ammenities we are used to in the USA that AUS just doesn't care about I guess and I would be bugged by those. Next up is the G37 Sedan Sport, but man do I love the way my Coupe looks, Drives, and is laid out inside.

 

I went through a 3rd party leasing company and negotiated my outright purchase at lease end last September.
Some factors to consider:
1. Current economic conditions
2. Current demand for your type of car.
3. Buy out vs. drop off. ALL leasing companies want you to buy the car out at the end of the lease, none of them want to take the car back and have to deal with storage and auctioning off especially if they will get less for the car than simply selling it to you at a lower price. I waited until almost the end of the lease term before I showed interest in purchasing the car, but made them very aware that I was familiar with the auction value of my car.
4. Whether or not you have low mileage/over mileage will depend on how much leverage you have in renegotiating the outright purchase (for me, I only had 24k miles on my 4 year old car, but I didn't let them know this during the negotiation.)
5. Auction value of your car (this will be price normally set lower than Kelley Blue Book "Trade-in" price of your car, this is what your car is worth to the dealer.)

I got an additional $2k knocked off the residual value when I purchased my car outright. It's possible that my residual was too high, but it never hurts to ask at lease end. Infiniti leasing may treat this differently than 3rd party leasing companies.)

 

From what I understand the insurance they purchaset negates the worry of having to deal with all the market pricing differences...but yes, they still have to pay for the inspections and the transactions associated with the dealer and auctions...

 

I don't understand what insurance you guys are talking about? GAP is NOT an insurance for the lease companies AT ALL. GAP waivers provide protection for consumers when a "gap" exists between the actual value of their vehicle and the amount of money owed to the bank or leasing company. Meaning if you total your car and your primary insurance company values your car at $19,000 but you owe $25,000 then the GAP insurance will cover that gap so YOU don't have to. It was nothing to do with leasing and or the market.

Like I said in my previous post, When you lease a car what you're basically doing is financing the depreciation of the car for the period of the lease. Therefore, if the car sells for $25,000 and the leasing company estimates that it's trade-in value at the end of three years will be $15,000 (which 90% of the time it will sell for this or more at auction), what you are doing is financing that $10,000 of depreciation over a three-year period. Since you have just paid their depreciation, they only have to worry about selling the car for what the value currently on the car is, which usually will be no problem at all.

Like I said, call the leasing company, talk to as many people as you need to until you are satisfied. Tell them all that you know the ADESA, Dixie, Manheim, TNT,(the list is LONG depending on your state. ) etc etc auction prices for the same car, same miles, and that the price you want to buy it for is resonable and win win situation.

 

Well, to me, even if the residual is a little more than what the market is, if the car is good, and you like it, it would be good to buy. Especially since you already know the cars history, and what if any problems there have been. I have to say, if my '07 stays this good when my lease is up, I may very well buy it, we'll see. Of the three G35's I've had, this is by far the best and the nicest of them all! Actually if it were feasible to buy it now, I would!

 

Infiniti does not negotiate residual. The payoff/residual is what it is on your contract. If the lessee does not purchase the car for the stated payoff, then the grounding dealer has the opportunity to purchase the car at the same payoff/residual. If the dealer does not purchase w/in 24 hours of grounding the vehicle, the car is picked up by Infiniti and then auctioned off amongst dealers (usually ends up selling for more than the residual/payoff btw!)