Hummer H3 finance/lease question

[rondocap]

Hi, I have a 2006 Hummer H3 that the lease ends in October of 2009. Does anyone know if I can change it to finance, and how much more that will probably cost me? I think that is a better idea, or else at the end of the lease I don''t keep the car - Finance may be better now that H3 prices are lower due to gas - maybe it will be a bit easier.

[rck0025]

Originally Posted by rondocap

Hi, I have a 2006 Hummer H3 that the lease ends in October of 2009. Does anyone know if I can change it to finance, and how much more that will probably cost me? I think that is a better idea, or else at the end of the lease I don''t keep the car - Finance may be better now that H3 prices are lower due to gas - maybe it will be a bit easier.

Normally, you have the option to buy the vehicle for the residual value that was determined at the time you leased. If you did a smart buy, there is no doubt you have the option to finance the truck (actually, with a smart buy you have financed the car - but GMAC has agreed to buy back the car for the residual value assuming that you have stayed within your miles and there is no excess wear and tear).

However, depending on who you leased the truck from, your residual value may be much higher than market value. GMAC inflates the residual value of their automobiles to keep the monthly payment as low as possible. Also, as far as I know, the residual cannot be renegotiated after your lease has expired - so your probably better off just buying a similar H3 on the used market and taking advantage of low interest rates and people running away from vehicles with relatively poor gas/milage (or just buy a new one - 0% financing for 5 years!). Financing the one you currently drive is likely the most expensive route to take. I would read my contract to be sure though.

Hope this helps!

[Crash ?]

With GMAC lease stuff, they'll start calling and bugging you about 3 months from the end and trying to get you to buy it..

To start with they are going to try and do a deal that goes by the elase specs.. If yours is anything like mine the residual they put in the lease contract is way over the actual value right now.. I think residual on mine after 3 years was expected to be about $22,000.. That's way over what the actual value is going to be.. Needless to say, don't go with the first thing the offer you..

They are going to keep on bugging you for the next 3 months.. Keep telling them you're not sure if you want to keep it and NEVER ADMIT TO ANYTHING OVER THE LEASE MILEAGES..

By the last month of the lease they'll listen and let you make offers.. If you make a decent offer, they'll jump on it.. They won't have the expense of reprepping, cleaning, advertising and storage..

I'll have been paying $350 per month on the lease for 3 years when things are due. I think offering to pay $350 a month for 4 more years on purchase is a very fair deal.. Will also try to get them to toss in extending the warranty out to 100K miles since they came out with that one month after I got the truck..

Of course it's always up to each to figure out what they feel is a fair deal..

[Crash ?]

Originally Posted by rck0025

Also, as far as I know, the residual cannot be renegotiated after your lease has expired

You can.. My last truck was a Isuzu Rodeo.. Did a 5 year lease and bought it behind that.. They told me that the residual was $xx,xxx. I told them what the blue book on it was and I was able to buy it for about $6000 less than what the residual was in the elase contract.

The truck listed for $28,900 new.. After paying for it for 10 years I only paid something like $26,500 including all the finance charges..

[rck0025]

Originally Posted by Crash ?

You can.. My last truck was a Isuzu Rodeo.. Did a 5 year lease and bought it behind that.. They told me that the residual was $xx,xxx. I told them what the blue book on it was and I was able to buy it for about $6000 less than what the residual was in the elase contract.

The truck listed for $28,900 new.. After paying for it for 10 years I only paid something like $26,500 including all the finance charges..

That's awesome. I'll remember that when the lease is up on my alpha in two years! Who says buying is cheaper than leasing?!!!! (so long gas isn't 20.00 a gallon, and we aren't speaking chinese)

[Agriv8r]

everyone who takes advantage of 0%....

[rck0025]

Originally Posted by Agriv8r

everyone who takes advantage of 0%....

......So long as they negotiated well below MSRP..........

[Big Dad]

Originally Posted by Agriv8r

everyone who takes advantage of 0%....

...and, most importantly, keeps the vehicle for the life of the loan. People that trade their 0% finance vehicle in -- in the middle of their loan -- would be better off taking a different deal i.e. $7000 rebate.

My 2 pesos!

[rck0025]

Originally Posted by Big Dad

...and, most importantly, keeps the vehicle for the life of the loan. People that trade their 0% finance vehicle in -- in the middle of their loan -- would be better off taking a different deal i.e. $7000 rebate.

My 2 pesos!

[Agriv8r]

Originally Posted by rck0025

......So long as they negotiated well below MSRP..........

sorry to disagree, but under MSRP, over MSRP, 0% beats the lease....30k truck, 2899 due at lease signing, tax/title/process fees also due (approx 1800), 39 months @ 299....the only real way to get out of this is to finish the lease....30k truck, 2899 down, ttl down, 359 72 months...every payment towards principal, no buy out mileage limitation....work it out....

[rck0025]

Originally Posted by Agriv8r

sorry to disagree, but under MSRP, over MSRP, 0% beats the lease....30k truck, 2899 due at lease signing, tax/title/process fees also due (approx 1800), 39 months @ 299....the only real way to get out of this is to finish the lease....30k truck, 2899 down, ttl down, 359 72 months...every payment towards principal, no buy out mileage limitation....work it out....

Not to be a pain, but I should have said that leasing is cheaper with several reservations - such as miles, vehicle preferences, opportunity cost of holding more cash, etc, etc. I guess the point is that leasing can be great for some, but bad for others. Same logic with traditional finance. I like to drive a new car every couple of years (although I may keep the alpha as a weekend vehicle in two years depending on the financing), and I live, work and go to school in the city - i dont get anywhere near the milage limitations (15k per year), therefore leasing works well for me. I always drive a new car, my monthy payment is well below 400 per month and I don't worry about things like.. "is this car is still suitable for me in two years" as I have the option to give it back at the end of the lease.

With financing you have to assume the risk of that vehicle not meeting your preferences for however long you took the loan or you have to sell it outright or take an automatic loss and trade the dealer for a new one or keep the vehicle until the wheels fall off. I don't want the hassle of assuming those risks, which are in fact costs (they just dont get quantified as neatly or as a clean and simple monthly payment). As young aspiring economist, I see that assuming people's preferences don't change over a 6 year period (especially, in view of volatile oil markets, newer and better technology, etc), and not including the risks associated with traditional finance into one's TOTAL COSTS (not just your monthly payment, but also what is forgone by making the decision to lease or buy) as suffering from bad logic.

However, if you want to drive an H3 for 6 or seven years despite innovations in technology (say a biofuel powered, 300 hp, 40 mpg Hummer type vehicle) and don't care about resell-ability down the road and truly consume the vehicle - then yes, 0 percent financing is probably cheaper.