Let's say it's time to turn in your leased car. Do you buy the car outright, since getting a new one right now is so difficult?
Many drivers want to buy that car they have been driving for three years, but are ending up with a battle on their hands this year, even if they have a contract to purchase it.
Tariah Wiley is among them. She loves the 2019 Honda Civic that she leased three years ago.
"I love it," she said. "I mean I wouldn't have kept it if I didn't like it."
So she decided to purchase it when the lease came up, especially since she was originally offered a great buy out of $15,567.
"It was stated in clear words, no way around it, that was clear," she said.
But it wasn't. When she sat down with the dealer, she learned it would now cost $19,834 to purchase her own car.
"That was about $4,300 more than what I should have paid," she said.
Wiley said the salesman's explanation made no sense.
"They said since you are financing it, we have to buy the car from Honda, so they are charging us a fee, so we have to charge you a fee."
3-year old cars are worth much more now than originally thought
This is happening more and more these days, according to Karl Brauer of the car buying websiteiSeeCars.com.
Given today's market conditions and sky-high used cars prices, he said dealers can get a lot more money reselling your lease to someone else, which means they don't really have an incentive for you to buy it at the price they agreed to long ago.
"The dealers know the value of these cars is far higher than it was three years ago when that residual value was written into the contract," Brauer said. "And it is probably painful for them to have an empty lot, and watch an existing customer come in and scoop up the car for a residual value from three years ago."
Brauer said while it's illegal to change a contract, watch out for:
- Reconditioning fees.
- Administrative fees
- Termination fees.
- A mandatory extended warranty.
Tariah Wiley decided to tell the dealer a contract was a contract.
"I know a lot of people are not going to advocate for themselves like I did," she said. "But they should."
She said the dealer finally agreed to sell the car for what she was originally promised. So, watch for hidden fees, so you don't waste your money.
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