When it comes to deciding whether to buy out your lease or sell it to CarMax for a $7,000 “profit,” several factors need consideration. Both options have their pros and cons, and understanding these will help you make an informed decision that suits your specific circumstances. In this comprehensive guide, we will explore the intricacies of lease buyouts and selling to CarMax, providing you with all the necessary information to decide wisely.
Firstly, let’s delve into the concept of a lease buyout. A lease buyout refers to the process of purchasing your leased vehicle from the leasing company before the lease term expires. This option allows you to retain ownership of the car and gives you the freedom to continue driving it without any further lease obligations. There are two types of lease buyouts: the purchase-option buyout and the finance buyout.
The purchase-option buyout is the most common one and is typically determined at the time of lease signing. It stipulates a predetermined amount that can be paid to the leasing company to acquire the vehicle at the end of the lease term. This option is often utilized by individuals who wish to keep their leased car due to its favorable maintenance history, low mileage, or personal attachment.
On the other hand, the finance buyout involves securing external financing to buy out the lease. This option can be beneficial if you find better interest rates or if the vehicle’s market value exceeds the residual value stated in the lease agreement. However, additional considerations such as creditworthiness, loan terms, and interest rates play a significant role in the financial viability of this option.
Now that we have a better understanding of lease buyouts, let’s shift our focus to selling the vehicle to CarMax. CarMax is widely recognized as a reputable used car retailer, offering competitive prices and hassle-free transactions. Selling your car to CarMax can provide a sense of convenience as they handle paperwork, arrange payments, and ensure a smooth process. However, it’s important to note that the “profit” mentioned in your question refers to the amount you receive above the lease buyout cost, not the actual profit gained from the transaction.
If CarMax is offering you a $7,000 “profit” for your leased vehicle, it might seem like an enticing deal at first sight. However, it is crucial to dig deeper into the numbers and evaluate the overall financial implications. To assess the profitability of selling to CarMax, you must consider several factors.
Firstly, compare the CarMax offer to your lease buyout cost. If the offer exceeds the buyout amount, it’s crucial to ascertain whether you have any vested interest in the vehicle, such as an emotional attachment or the need for a reliable mode of transportation. Additionally, evaluate the vehicle’s current condition, mileage, and its market value compared to other comparable used cars.
Furthermore, consider the alternative options available if you decide to sell to CarMax. Researching similar used car dealerships, private sales, and online platforms can help you obtain a holistic understanding of the market value for your vehicle. Sometimes, a different buyer might be willing to offer a higher price, leading to a more favorable financial outcome.
Before proceeding with any decision, it’s beneficial to consult the terms and conditions of your lease agreement. The leasing company might impose fees, restrictions, or penalties for early buyouts or lease transfers. It’s crucial to have a clear understanding of these obligations to avoid any unforeseen financial burdens.
Additionally, take into account the tax implications of each option. Buying out the lease might incur taxes, while selling to CarMax under certain circumstances may result in a lower tax liability. Consulting with a tax professional is essential to analyze the potential tax consequences and determine the most financially advantageous choice.
Consider your future plans and requirements when making a decision. If you currently have a reliable vehicle that meets your needs, buying out the lease and keeping the car might be a more sensible option. However, if you anticipate different transportation needs or plan to upgrade to a newer model, selling to CarMax could provide the flexibility required to pursue those changes.
It is worth mentioning that the financial aspect should not be the only consideration. Each option has non-monetary factors that contribute to the decision-making process. These factors may include your personal preference for car ownership, the car’s sentimental value or emotional attachment, or the convenience and reliability of the vehicle.
Lastly, conducting thorough research and seeking advice from experts in the automotive industry can provide valuable insights and support during this decision-making process. Weighing the pros and cons, evaluating financial implications, and incorporating your personal circumstances will enable you to make an informed choice that aligns with your needs, preferences, and future aspirations.
In conclusion, deciding whether to buy out your lease or sell it to CarMax requires careful consideration of various factors. Understanding the different types of lease buyouts, assessing the profitability of selling to CarMax, evaluating alternative options, analyzing tax implications, considering your personal preferences, and seeking expert advice are all crucial steps in making an informed decision. By taking these factors into account, you can determine whether retaining ownership of your leased vehicle or selling it to CarMax for a perceived profit better suits your unique situation.
If you make $55k/year, a $32k truck is too much.
How about buying a $7k car, and putting $500/month in savings? Is your plan to have monthly car payments forever?
I think you need a different perspective. You have a car that means your needs but you want to sell it and go further into debt for something else.
Also no vehicle is immune breakdowns and you don’t have to have a $32k vehicle to have something reliable.
If you choose to buy a new vehicle at least admit to yourself that it’s because you want it.
32k car on 55k a year? That’s over half your income yo. I make 135k and just bought a 28k car, and even that felt expensive.
I made $150k last year and also bought a car as a splurge item, a $20k Subaru Outback with pretty low miles and a salvage title. I had saved up and bought it in cash, but still feel like it was way more than I needed.
The thought of buying a $32k truck or even a $26k car with only $55k income sounds crazy to me. When I was making that much, I was riding my bike full time because I couldnt afford any car.
Speak to a mortgage loan officer regarding how an active car loan will affect your mortgage buying power. In your position I would take the $7k and some of your savings and buy a reliable used car, avoiding having an active loan, and focus on the home loan rather than crippling your debt to income ratio and spending $32k (plus ~10k interest) on a depreciating asset, but everyone’s priorities are different.
Why not just keep the Subaru and buy out the lease yourself?
Doesn’t matter what you end up doing but $500 a month car payment at your salary is too much
Carmax can offer you $7K more because car prices have gone up so much during the time since you signed your lease. If you buy another new or late model used car with that $7K, you’re likely buying it at close to that same $7K more than it would have been just a couple of years ago. That’s actually what would be “leaving it on the table.”
It’s much like the situation many homeowners find themselves in today, where their own home has appreciated dramatically in the past couple of years, but they feel like they can’t capture it because the house they’d buy would also be much more expensive. Of course, the obvious solution there is to “sell high,” (rent for a while), and buy low (later when the market has cooled). Similarly, you capture the profit only if you *don’t* put it right back into a new vehicle. What you’re proposing is more of a sell high, buy high move.
At 55k you can’t afford a 32k Tacoma. Sell out the lease and put the 7k towards a reliable 20k car and call it a day
Wait, is Carmax offering to buy it as a straight purchase from you, or are they giving you “trade-in” value, in other words, store credit?
Buy the car and drive it to oblivion. You are on the right side of a car and need to take advantage of that
I thought CarMax couldn’t buy a lease? What car do you own? Tacomas are reliable (own one) doesn’t mean it can’t breakdown and at 32k price you’re looking at more miles than most cars or older? Unless your market is amazing?
At the end of the lease you need to do one of two things:
1. Return the car and get nothing in return.
2. Buy out the remaining value.
Whether you sell it to CarMax or not is a separate question.
In this market I would buy out the remaining value, there is no cheap replacement because as you know from your quote from CarMax the value of cars, new and used, has gone up significantly.
Buy out the lease, get a loan from your bank not the leasing company. The leasing company has horrible interest rates.
Genuine question OP: why do you want a pickup truck? I’m not so car stingy as the people in this post saying you should spend $20 on a 1994 Corolla, but even if you get a new-ish car, you say you want to drive around older relatives, reliably get from point a to point b, etc. A Tacoma has 5 feet of truck bed that is not contributing to that at all, as well as more than 2 tons of curb weight leading to terrible gas mileage you’re going to be paying for on top of that car loan. What is the actual appeal of a pickup truck for you other than the fact that other people like driving them?
Wait you want to sell your car for a $7k “profit” but then you’ll have new car payments…?
Your math isn’t mathing
Others have already said most of this, so I’m just repeating it in different ways:
1) that 7k is a discount you are getting on your current car. Not money left behind
2) 32k car on a 55k salary is a terrible idea. Regardless of your other details, this by itself is an awful idea. You absolutely cannot afford it.
Unless you have some significant money you haven’t shared with us here (like a large inheritance or wealthy family backing), you absolutely should keep the current vehicle till you make way more money
How does the added fuel and insurance cost factor?
Do you need a truck and will it’s added utility justify the expense?
Now is not the time to take out loans. Had this same position last year and we bought out the leased car which was a cash outlay. But not having the car payment is great and will be able to sell it at some point for cash.
Yes get rid of the car in the most profitable way possible for you. 7k is a lot.
On 55k income I personally wouldn’t want to spend 30k on a car. My income is similar to yours and my car was 13k. It’s nice af, reliable, and fuel efficient. Lots of great cars out there for 10-15k.
Beware if the lease is not already bought out, meaning the finance company still has the title, then carmax will give you less money. The number they quoted you is if you own the title outright. They don’t tell you that until you’re too far along to back out. I’ve sold a car to them while the financing company still held title. They gave me money but took about $1500 off their offer because of this.
To maximize your money from carmax you should buy out your lease and get the title in hand. Once that’s done sell your car to them, take the $7k and put it towards a $25k car.
You shouldn’t get the truck because you can’t afford it on your salary.
If Carmax is giving you that number – you’d prob get more from a dealer. Just by walking in with the carmax quote.
Sell the lease pocket the money and buy car you can afford I was in your same predicament I sold my lease and was in a better position financially
Keep the current car. The “correct” play that people are recommending is sell it and use the equity for a cheaper car. But you already know the history of this car and there’s quite a bit of value in knowing the car is good. Much better than buying a used car with unknown history and potentially ending up with some big bill because you didn’t screen the car well