I haven't done it, but I've helped several of my customers do it. It works smoothly. It takes a few weeks for the paperwork to settle and make the buyout option work. if the dealer introduced you to the concept, if you wait at least 3 months payments then they don't get charged back the finance cash (that's what I ask of my customers). I haven't found a way to calculate the accurate buyout, but $5k-$6k better off than buying initially has been the case every time. Just takes a little extra leg work. It's not the full $7500 because there is a Volvo acquisition and buyout fee that can't be avoided, plus the few months of money factor. But Volvo has no problem folks doing it, it's not their money, it's the governments. I had one customer call VCFS to verify, and they weren't able to go over the numbers, but they acknowledged lots of folks are doing it no problem.

 

Thank you for the response. The dealership told me I can avoid paying taxes twice if come back to them at 4 months and have them do the inspection/registration/etc. Is this correct?

Also, I know Volvo won't sell to 3rd party. If I want to finance my buy out, how would that work? Would the bank send Volvo a check with my name listed as the buyer with a lien?

Would it make sense to put down a significant amount at the lease signing since we will be buying out the car 4 months later?

 

That is absolutely not always true. Depends on many different factors, including the money factor (interest rate), residual, and rebates. To make a blanket statement like that is misleading.

 

Well, there are some cases where some pretty clever financial gymnastics will yield a more favorable result for leasing but it is only in those cases where the payment is low because of a very high (artificial) residual value. I would love to see a situation where the finance rate for a purchase is higher than the effective interest rate for a lease. Again, leasing may have some conveniences like, for example, the lease might already include certain insurance coverage, which may save you some money. Looking at the case posted by the OP, the total number of payments will amount to about $47K over three years (assuming the payment includes tax) for a residual that is still close to $40K. The effective interest rate on the depreciation is huge (run the math). The bottom line is that there are some conveniences and you are indeed paying for them. If you lease a new car every three years, it is quite expensive. If you don't care about the cost and like the convenience, I can see why it is appealing to a lot of people.

 

I can report that I did the lease/immediate buyout (2 months was as quickly as I could do it with account numbers/etc.). While it was some pain of doing the transaction/paying taxes/re-registering the net gain was just over $6500 of the $7500 incentive even when factoring interest charges/VCFS fees/DMV fees. Taxes were due to the state for the purchase price (buyout price) at registration, but they were not previously paid so I didn't factor those.

 

Can someone check my math?

The dealership gave me an estimate for what the 4 month buyout price would look like. At $72,695 buyout price (taxes/fees/etc) I broke it down as follows:

MSRP	$70,271.00
4 x Month Depreciation ($860.24 X 4)	-$3,441.12
Processing Fee	$995.00
Sales Tax (Virginia)	$3,214.10
Reg/Title	$356.02
Lease End Fee	$1,300.00
Final Lease Payoff	$72,695.00

Dealer quote for lease below:

 

What state are you living? The residual should be 58% with 36months/12k. The MF is different by region but what you have is like 8.37% interest. Compared to a B6 which is 4.22%. I would check the numbers first. The hybrid MF is crazy high now but you get the incentive. My choice would be the lease to get all the discounts then going to your bank and get a check to pay it off. New vehicle loans are available around 5-6% so that’s already a big deal.
You don’t need the dealer to help you with the buyout. You call VFS and get the payoff amount then your bank will cut the check.

 

There is also zero benefit to the customer to not use the dealer to buy out. Suggesting they go through VCFS and not the dealer actually is a blessing to the dealer and puts the headache on the customer, so not very good advice. Per the contract, it would be a violation to have the dealer add any fees beyond state fees.

Also regarding the general fear/ignorance of leasing, this topic is not about riding the lease out to the end, it's about buying it out as soon as possible, so the money factor is a negligible issue. If an extra hour at the dealer isn't worth $5k-$6k then by all means, good for you. For most of us, that's time well spent.

 

It's a lot different up here. I normally agree that leasing is the most expensive way to buy a car UNLESS you are one that will naturally trade up that often. But if what I'm hearing is right, it may very well be better to lease it and buy out.

 

Down here in the states, Volvo PHEVs don't qualify for tax credit when you pay cash or finance it outright, but this rule doesn't apply to leasing companies, and many are passing this credit to the consumers, thus creating a loophole which you get $7500 off MSRP. A friend of mine recently went through this exact process on her new ioniq 5 purchase, after all said and done, she came out several grands ahead, so it's literally "free money" if you lease and buyout.

 

Why do you have 53% residual? That doesn’t make sense. Lease buyout fee is not $1300 but $350.
The 4 x $860 was $1306 in the original post. What changed? Did you ask about one pay lease if that changes the MF?

 

Lease buyout fee went up to $450 awhile ago. But I agree, it's not $1300... the fee is set by Volvo, not the dealer, and contractually, they can't add an extra fee. For example, dealers are not permitted to add a document fee to a lease buyout, which they are also showing there I believe as the $995, even though we have to incur the cost of handling the documents. But it's entirely possible they just are using a software calculator and it puts it in by default and they forgot to take it out. You should inquire.

I'm home today, so I don't have a Volvo contract in front of me, I'll check tomorrow. I want to say it's around para 40 or so.. I've commented on it elsewhere, though searching my comments can be a bit daunting.....

Per the Volvo lease contract, the buyout is not based on deprecation directly. It's the residual value + all remaining payments minus unused money factor (which is calculated by an actuarial method.. or some non-specific language like that).

As for residual value, you should opt for the lowest mile possible (aka 7500) even if you drive more than that... because it will incur the lowest rent charge, though give the highest residual value. But since MF is higher than interest right now, no reason to pay more than needed. Likewise, you could do 24 months if it suited you, payment will move upwards. Though that might just be pinching pennies at that point, but worth looking at if you want.

One pay lease adjusts money factor, but not much, and not applicable for someone wanting to buy it out in a few months... you'd lose a bunch of money. For Volvos, a one pay lease is generally only valuable if someone has no US credit (aka student abroad studying here, or work visa) or has bad US credit but a large amount of money sitting around and wants a new car (likely a poor financial choice in this case). MSDs could save a little, but IMO, not worth the hassle since you're only paying the money factor a few months.

You should be able to ask for a copy of the contract to review ahead of time. I never mind making those for a customer.

 

Per the Volvo lease contract, the buyout is not based on deprecation directly. It's the residual value + all remaining payments minus unused money factor (which is calculated by an actuarial method.. or some non-specific language like that).

For a 4 month buyout based on what you said this is what I come up with:

Residual Value: $70271 *.53 = $37243
Monthly Payment: $1306
4 Months x $1306 = $5224
32 Month Balance = $41792
Total: $37243 + $41792 = $79035 <-- ???

The total is almost off by $6340 quoted by the dealership ($72695). Now the $1306 does include rent charge. So I'm assuming I would have to breakdown how the $1306 is calculated and subtract the rent charge for 32 months.

Monthly Depreciation: $884
Monthly Interest: $370
Monthly Tax: $52
Money Factor APR: 8.38%
Total: $1308

So, inclusive of 32 remaining payments (depreciation + taxes) I would have the following

$37243 + (32 * (884+52)) = $67195.

With the calculation above I'm coming in $5500 below what the dealership quoted me as a 4 month payoff ($72695).

I'm definitely off somewhere!!

As for residual value, you should opt for the lowest mile possible (aka 7500) even if you drive more than that... because it will incur the lowest rent charge, though give the highest residual value. But since MF is higher than interest right now, no reason to pay more than needed. Likewise, you could do 24 months if it suited you, payment will move upwards. Though that might just be pinching pennies at that point, but worth looking at if you want.

So should I request a 7,500 mile quote vs the 10,000 mile? I highly doubt we will hit 7500 before we buyout the lease.

You should be able to ask for a copy of the contract to review ahead of time. I never mind making those for a customer.

I have requested a draft contract from our sales advisor. I want to see all the itemized numbers and be able to read through the contract.

Thanks!!!

 

Did you already purchase this? This is a horrible deal. Autocompanion (autocompanion.com) is offering 8% off before incentives. Their dealerships are in Maryland, so you also save $300 vs. the Virginia doc fee.

 

So we bought out the lease November 24th. Signed all the paperwork with the dealership and they cashed the check on Nov 29th. I logged into my VFCS account and shows the lease is still active. I contacted the dealership and they said the vin was shown as "sold" in their system. I contacted VFSC and they said they had not received payment from the dealership. Anyways contacted VFSC and they have opened a case and will be reaching out to the dealership to find out what is going.

Anyone else had something similar happen? Can it take weeks to for the dealership to payoff the lease?

 

Payoffs are normally handled pretty quick. The dealer should have grounded the car as well, you could ask them if they did that. So I'd guess there is an error on one side or the other, but with the information given, I couldn't guess which side made the mistake.

 

They did check the car back in and put it through inspection/emissions and sell it back to us as a "used" car. I assume this would be "grounded"?

 

Trade-ins are much more seamless in Ontario so you wouldn't wait to be funded unless it was a 'cash-back' trade in, and that would take maybe 2-3 days.

We would actually ground immediately but acknowledge that the bank who is the actual lender may take its sweet time from clearing it from the customer's credit report. We don't know why that is, we only know that it is.

 

That's a really odd situation. I'd get in touch w someone at the dealer higher up and ask them to go to bat. VCFS won't give the dealer any info about an account generally, but they should have some contacts they can work w to look into it w. Errors can happen, it's hard to know where they did sometimes. I'm more willing to bet VCFS screwed something up at this point if the dealer is insisting everything was done. But surprised they aren't already trying to sort it out.

 

So the dealerships CFO is now involved in trying to track the money. I also opened a case with VFCS.

 

May sound like a stupid question but did the dealer mail a physical check rather than ach/wire to VCFS?

 

Dealer paid via 360 portal and sent me the Bill of Sale showing the transaction. Dealership said they don't mail checks and VFCS said they wouldn't accept checks from 3rd party (Dealership).

 

It won't surprise me at all if VCFS is at fault here. They do several things in confusing and less than black and white ways. I've not heard a situation like this, but it seems quite believable to me.

 

I'm sure it is VCFS. When we are doing transactions on vehicles, everything is auto-debit, and auto-credit when claiming back incentives. No paper.

 

Update: SO VFCS is now confirming they DID receive the payoff from the Volvo dealership on Dec 8th (dealership sent the payment on Dec 6th). For the last week or so they denied any payment from the dealership and magically today they say "oh we received it on Dec 8th."

They are now telling me that I owe property tax on the vehicle before they can close the account out. They are quoting me $2100 for 1 month lease in property tax owed. I have lived in my county for 45 years. The county always charges a pro-rated tax which I expected to be about $200 - $300 max. NOT $2100!!!

VFCS is trying to get a property tax waived so the county can bill me directly and they can close out the lease.

The games continue with VFCS!

 

Update 2: So I called the county tax department and spoke to them in regards to the property tax owed. They quoted me $470 for two months. I sent that amount plus the county contact information to VFCS. A few hours later VFCS called me and told me they are waiving the property tax bill and will close the lease out. Checked this morning and appears the lease has closed.

I asked VFCS about the title. The said they would send it to the dealership via 3rd party processor. They said they can't send it to me as the deal was done through the dealership. Can anyone confirm if this is true??

 

Aren’t majority of deals done via dealers??

 

Final Update: DMV finally registered the car in my name and the title came into today. This has been quite the adventure. Not sure if I will ever lease with Volvo again. We did save $5200 by taking the lease to buy route.

 

So, I’ve been trying to set up a lease on a V60 PE with a dealership in Nashville, TN—that has utterly and completely ghosted me when they found out my intention was to buy out the lease within a few months. Never got to price or terms, just a complete 180 from eagerly awaiting my visit to no answer at all.

@DFrantz : do you have any insight as to why this dealer lost interest in me as a customer? They have two V60’s to sell so I don’t think it’s a lack of inventory. Is it because they have a profit interest in the $7500 for themselves? Second question: should I initiate contact with another dealer near me (in NC) and just not say “I plan to buy out the lease”?

I am very confused by this turn of events. Was ready to move forward quickly on the vehicle I wanted and not accustomed to having a car salesman ghost me.

 

We dont make anything from the $7500, its just a rebate like any other. If a customer doesnt make enough lease payments (3 i believe) we get charged back a finance profit though so they might be assuming theyll make more selling to someone else.

I tell my customers about it... but its admittedly more work. Im sure ive lost a few sales because its confusing. Ive also got a few sales because im the one that introduced folks to it and they appreciate that. I dont get paid as much because of the finance chargeback, but id rather a sale than nothing.

What do you mean by ghosted? Are they not responding to your outreach or just not being proactive? I rarely follow up with people unless they contact me about a question. I hate being bothered by salesfolks just asking if im ready to buy and assume my customers are the same. I know some folks like getting lots of calls... oh well, id rather spend my time on swedespeed.

 

We were transparent with our dealership about buying out the lease. They told us to wait 3 months for all the paperwork to sort out. However, according to VFCS you can buy out the lease as soon as they have an account number for you.

I'm assuming anything less than 3 months hits the dealership on profit.

 

I told them I was thinking 5 months to buyout. Like I said, they haven't replied for 48 hours. Completely unexpected and Volvo may be losing a customer. Confused.

 

While i break the rules and use my personal cell phone, the proper thing is to use the texting through the crm.... it tracks everything for notes and captures permission to text etc. And yeah there is an app you can download too.... but not everyone is equal w technology. So it might be sitting on a computer rather than in their pocket.

 

Just so everybody knows how this story ended. The sales rep (who was in fact sales manager) never replied further. I wasn’t going to drive almost 3 hours from my city to Nashville without any hope of being welcomed. Volvo lost a customer. The next nearest V60 PE was in Charlotte but while I was mulling whether to make the effort a lightly used vehicle of another car brand fell into my lap here. Why the reception went from warm to cold based on my stated goal to lease and pay off quickly is a matter other potential customers can think on.

Both of their V60 PE’s are still sitting on the lot. They just started advertising a $1000 discount.

Thanks I learned quite a bit in my brief time here.

 

We considered the same but the unlike a 3 year lease where you know what you pay for the car they do not give you the price you will pay in several months. That is the big unknown. We ended up negotiating for around $71000 for a car that was $84,000.

 

There isn't a good way I know of to give an exact price. The contract makes it a bit grey, but it does work. You can figure out the approximate, but at the end, it's you can save thousands or you can get a firm deal.