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juz · 12-07-2006, 10:46 PM

Traditional leases are few and far between now a days. Financing companies have learned that balloon based or residual based financing is better for all parties involved.

In a traditional lease you are basically renting a car for 1/2/3 years, after your term expires you return to the dealership and give the car back. That is when the dealership will go check you mileage and wear and tear to make sure its with in what is stipulated in your contract.

The newer residual flex buys work a little different,
first off the buy price is negotiable, once price and term is settled upon a set formula is used to determine the "end lease" value of the car, the number turns into your balloon payment.
Now fastforward 2-3 years when the lease is about to expire, unlike a traditional lease where you have to turn the car now you have options

1. You can turn the car into the dealer, he will then go out inspect the car and probably try and charge you extra for mileage. Walk away and youre done

2. You can straight up purchase the car because you fell inlove with it, either stroke a check or finance it through a lender of your choice

3. Use it as a trade in on another make/model, this is the big one here. an example would be your lease expires this January and while you really liked your BMW, the porn gods have smiled upon you this year and fattened your bank account by a large margin so you want a (Porsche/Ferrari/Lambo).
You would take your BMW to which ever new dealership you are purchusing your car from and tell them you have a trade in, they will ask if there is a balance owed and you will let them know yes, give them the figure and its like any other trade in / purchase deal.

I spent close 8 years in the Auto sales/finance business working for Volvo to Lexus and BMW and from i have seen this type of purchse is great for peple who dont drive their cars into the ground. Some people buy a car pay it off and never want a another car payment, those people shouldnt do this. But if you like to get a new car every few years this what you need to do, the way the financing is setup I never saw anyone get upside on this type of purchase. Never buy more miles, 9 times out of 10 you will trading the car in and you wont get any sort of mileage hit if you went over your alloted 10k a year.

I hope this helps

12-07-2006, 10:46 PM
juz Confirmed User Join Date: May 2006 Location: Van down by the river Posts: 307	Traditional leases are few and far between now a days. Financing companies have learned that balloon based or residual based financing is better for all parties involved. In a traditional lease you are basically renting a car for 1/2/3 years, after your term expires you return to the dealership and give the car back. That is when the dealership will go check you mileage and wear and tear to make sure its with in what is stipulated in your contract. The newer residual flex buys work a little different, first off the buy price is negotiable, once price and term is settled upon a set formula is used to determine the "end lease" value of the car, the number turns into your balloon payment. Now fastforward 2-3 years when the lease is about to expire, unlike a traditional lease where you have to turn the car now you have options 1. You can turn the car into the dealer, he will then go out inspect the car and probably try and charge you extra for mileage. Walk away and youre done 2. You can straight up purchase the car because you fell inlove with it, either stroke a check or finance it through a lender of your choice 3. Use it as a trade in on another make/model, this is the big one here. an example would be your lease expires this January and while you really liked your BMW, the porn gods have smiled upon you this year and fattened your bank account by a large margin so you want a (Porsche/Ferrari/Lambo). You would take your BMW to which ever new dealership you are purchusing your car from and tell them you have a trade in, they will ask if there is a balance owed and you will let them know yes, give them the figure and its like any other trade in / purchase deal. I spent close 8 years in the Auto sales/finance business working for Volvo to Lexus and BMW and from i have seen this type of purchse is great for peple who dont drive their cars into the ground. Some people buy a car pay it off and never want a another car payment, those people shouldnt do this. But if you like to get a new car every few years this what you need to do, the way the financing is setup I never saw anyone get upside on this type of purchase. Never buy more miles, 9 times out of 10 you will trading the car in and you wont get any sort of mileage hit if you went over your alloted 10k a year. I hope this helps Last edited by juz; 12-07-2006 at 10:48 PM..