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Are there ANY benefits to open-end leases?


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There seems to be a TON of write-ups and cons on open-ended leases, but are there ANY benefits? If a person frequently jumps in and out of cars, is this a reasonable route?

 

I understand that depreciation of vehicle happens in both lease and finance scenarios, and sooner you move out of a car, higher the likelihood of negative equity. But does a lease scenario (particularly an open-ended) provide an advantages? thanks in advanced!

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It offers no benefits over a closed ended one. Exotic cars used to only come w open ended because actuarial tables couldn't predict how the cars would depreciate and the lessor didn't want to be stuck with an asset that depreciated more than they accounted for. Closed end leases on exotics are a boon but if you look at them they are stupid expensive.

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Open end is rolling the dice at the end of the lease. To close out the lease fair market is determined. You could pay nothing car went up in value over lease time or pay out your ass because it dropped like a rock and the last is something in the middle

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It offers no benefits over a closed ended one. Exotic cars used to only come w open ended because actuarial tables couldn't predict how the cars would depreciate and the lessor didn't want to be stuck with an asset that depreciated more than they accounted for. Closed end leases on exotics are a boon but if you look at them they are stupid expensive.

 

But you do know what your total payments are for the closed ended lease.

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ok, here's the rough scenario:

 

- got an approval from PUTNAM for open-ended lease 60 months for a 2015 huracan.

 

- about $3300 a month.

 

- about $9500 (first and last month payment, and fees)

 

- $110,000 balloon at end

 

 

but here's the parts i'm trying to understand:

 

a) if i wanted to get out of this car in about 1.5-2 years, what would that cost me to do it? not looking for a number, but basically an idea. i know with finance it's pretty much (Payoff - Trade In or Market Value = What i OWE or make) and i know that with such short term ownerships, i'll be in a negative scenario more times than not. but does this change with the above lease?

 

B) what would i have to pay for or look at when getting out of this car in about 1.5-2 years?

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You don't pay the entire sales tax of the vehicle

 

True unless you buy it out at the end. Also in Pa you pay 9% on a lease and 6% on a purchase.

Also in pa you get the sales tax benefit rolled into the next purchase, with a lease you loose all of the sales tax credit. Did it once and will never do it again. Look at woodside credit for long term financing as an option.

 

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Actually there is one important benefit that most people forget, and it's really important if you're dealing with exotics. On a closed end lease, you are responsible for all of the lease payments regardless of when you get out of the car. So if you signed up for a 36 month lease, made 20 payments and your financial position changes, you're still on the hook for the remaining 16 payments, plus early termination fees, mileage, etc.

 

On the other hand, and open end lease allows you to refinance into another lease at lease end very smoothly, usually with no penalty for mileage charges, etc. It also allows you to "sell" the car and not be responsible for the remaining lease payments. If the lease was structured correctly, you should owe about "book value" at any given point in the open ended lease. Open end leases have an amoritization schedule that mirrors that of a purchase. Additionally, open ended leases will typically go out to 60 months, which would lower your payment wherein a closed end typically goes to 36 and sometimes 48 months. (I say typically, not always.)

 

I've had many, many clients sell their cars under leases and actually make a little money as their payoff was reflective of a purchase and sale agreement rather than based on a flat agreed upon lease payment.

 

tax credits are another thing, because not all states give tax credits, not all states collect tax in the monthly payment, and many states, like texas, are what they call a tax up front state, where you pay 100% of the tax at time of purchase/lease and the credit amount is dictated by the county the car is registered in...it's kind of complicated in some states. Other states make it easy.

 

So the long answer is, it depends where you live on what is beneficial to you. If you think you are going to trade out of the car in 2 years then an open end lease is the way to go. If you don't mind being stuck to the car for the full lease term, then closed might work for you. Personally, I would NEVER do a closed end lease...too many variables to worry about in a market that is unpredictable.

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ok, here's the rough scenario:

 

- got an approval from PUTNAM for open-ended lease 60 months for a 2015 huracan.

 

- about $3300 a month.

 

- about $9500 (first and last month payment, and fees)

 

- $110,000 balloon at end

 

 

but here's the parts i'm trying to understand:

 

a) if i wanted to get out of this car in about 1.5-2 years, what would that cost me to do it? not looking for a number, but basically an idea. i know with finance it's pretty much (Payoff - Trade In or Market Value = What i OWE or make) and i know that with such short term ownerships, i'll be in a negative scenario more times than not. but does this change with the above lease?

 

B) what would i have to pay for or look at when getting out of this car in about 1.5-2 years?

With these lease companies if you sell the car before lease is up you automatically forfeit at least one months payment, possibly two months as kind of an early termination fee. But then you can sell it or pay it off however you please. Rates won't be as good through a lease company though. Only way it really makes good sense is if you can write the lease off. Otherwise traditional financing typically will be cheaper financing...

 

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ok, here's the rough scenario:

 

- got an approval from PUTNAM for open-ended lease 60 months for a 2015 huracan.

 

- about $3300 a month.

 

- about $9500 (first and last month payment, and fees)

 

- $110,000 balloon at end

 

Time out !!

 

3300 X 60 is 198000

 

Plus owing 110,000

 

308k ??

 

Say the car is 245 and you pay 7% tax.

 

Put the same 10k down.

 

Finance 252k for 72 months at ...? 3.5% ??

 

You're 3850 ....

 

If you can do 3300. I assume you can do 3800...

 

And you will be much more ahead I feel, in two years if you dump it off.

 

The only advantage I know of that type of lease is a) it will not show on your credit. And B) it is a write off for business in some cases.

 

Mike

 

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True unless you buy it out at the end. Also in Pa you pay 9% on a lease and 6% on a purchase.

Also in pa you get the sales tax benefit rolled into the next purchase, with a lease you loose all of the sales tax credit. Did it once and will never do it again. Look at woodside credit for long term financing as an option.

 

:iamwithstupid:

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You have to have the payoff amount, on a open end lease, clarified at the signing of the lease. Depending on which company, or who writes the product for you, will determine what that payoff is. As of the end of May, the leasing game changed a little bit. There needs to be some cavaet emptor applied when doing this, and whom you do it with.

 

You are in California, so you have a more legitimate reason to lease, as you do not have a sales tax credit applied when you trade. You burn those taxes every single time you buy. With a lease you will only pay on the monthly payment.

 

If you are still in Cali, and you need a referral for the best in the business, PM me and I will point you in the right direction. Good luck with your purchase.

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You have to have the payoff amount, on a open end lease, clarified at the signing of the lease. Depending on which company, or who writes the product for you, will determine what that payoff is. As of the end of May, the leasing game changed a little bit. There needs to be some cavaet emptor applied when doing this, and whom you do it with.

 

You are in California, so you have a more legitimate reason to lease, as you do not have a sales tax credit applied when you trade. You burn those taxes every single time you buy. With a lease you will only pay on the monthly payment.

 

If you are still in Cali, and you need a referral for the best in the business, PM me and I will point you in the right direction. Good luck with your purchase.

 

Curious who your contact referral is?

Feel free to PM me, thanks

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