A number of years ago my wife’s Toyota Camry lease came to an end and the buyout price was substantially lower than its Blue Book value, making its purchase a no-brainer.
So she went back to the car dealership in New Jersey where she originally negotiated the lease and informed them that she wanted to buy the car.
When they rolled out the finance papers, she politely told them No, she wanted to pay cash – no financing.
She was then told that before she could buy the car outright, they would have to appraise it first. When she told the dealer that she wasn’t going to pay for any appraisal, they simply said, “No worry, there’s no charge.”
After waiting 25 minutes for this “appraisal” the financing document was finally brought out and the buyout price for cash looked like this:
Toyota Buyout: $10,815.54
Document Preparation: 195.00
Sales Tax: 770.74
Cash needed: $11,781.28
However, before my wife went to the dealership she came up with a different number $10,850.38 which, including the sales tax of $709.84, was $930.90 less than what the dealer wanted.
Looking at their finance sheet, she noticed that they had added $675.00 for an “Inventory Fee.” It became clear what the “appraisal” was all about. They wanted $675 for putting the car into inventory and then selling it back to my wife. Adding insult to injury they added $195.00 to prepare the document which I mentioned took less than half an hour. An observant person will notice that because of these dealer additions their sales tax was $61 higher.
So my wife left the dealership, called up Toyota, got a faxed buyout document, and sent a check for $10,850.38 – no document prep fee, no inventory fee, no extra taxes on the new bloated amount. Total time spent on the phone, filling out faxed documents, mailing out the check: 9 minutes. Savings: $930.90.
The casual reader may think to himself that this was just an isolated occurrence of a greedy car dealership, however since then I have been alerted to similar incidents.
In California, a telecom client of mine wanted to buy out his car from a lease and was told by the dealership that before he could buy the car they would have to examine the car in order to pass a Toyota Used Car Certification, at a cost of about $500.00. The truth is, if you are the original lessee, you do not need a Toyota Used Car Certification. What for? You know the condition of the car, what is the likelihood that you are trying to screw yourself?
Some dealers will tell you that you can’t buy out of a lease until it is certified for smog, for a small fee of a few hundred dollars, because in certain states the law requires such certification before a used car can be purchased.
Some dealers will insist that a safety inspection is required, again at a cost of a few hundred dollars.
However, what these dealers will fail to mention is that all state laws provide a specific exemption for smog or safety certification on transfer of ownership if the transfer “… is between the lessor and lessee of the motor vehicle, if there is no change in the lessee or operator of the vehicle.”
The simplest and least expensive way to buy your car out of a lease is to call the manufacturer, request a buyout document, and send a check. You don’t even have to leave the driveway.