I have a weird question. Has anyone leased through Ford credit before and at lease-end had Ford offer you a lower price than the residual? My lease is going to be up on my 2005 supercrew and when I got it, there was no employee pricing or huge rebates so the residual is much higher than what used f-150's are going for now. I would think that Ford would have to take a loss on my truck because the residual is only a couple of thousand dollars more than a brand new one with the same equipment. I thought about asking for a better price to buy it out but if not, they can have it back and take a huge loss. Now I know some of you might say that they will not take a loss even if they take my truck back, but no one is going to pay the residual for my truck when they can get a used truck with the same equipment $5000-$6000 less. Or buy a new one for $2000 more with 0 miles. Thanks in advance for any feedback.

 

did you get a 12 month lease or something?

 

I think they are going to go by contract rules and values at trade. I don't think a dealer EVER loses out.Even it it seems they will take a loss, they will find a market for the vehicle. Maybe someone with poor credit really needing the car badly would get the vehicle at what the dealer wants for it. Just a thought though.

 

True. Even if they did take a little bit of a loss on it they wouldn't care. They make so much money everywhere else they could give a couple of cars away every month and still turn a profit.

 

Was it a 12 month lease? If so were the terms favorable? I didn't know you could do a lease for that short of time. That sounds like what I need to do so I can get a new one every year. What were your monthly lease payments snd how much did you have to put down?

 

Keep in mind that on a lease you are limited to the number of miles you can put on the truck. So if you are over the milage they will charge you per mile over the limit. Also if there is any damage or worn tires, they will charge you for that also. They will usually find something wrong the vehicle that they can charge you on just so you will either keep it or trade it in.

 

The only time lease miles matter at the end of the lease is when you want to turn the truck in. If you buy it, they could care less if you have 500,000,000 miles on the truck. The thing is, the "Purchase Option Price" aka Residual Value is pre-set at lease inception and is based on MSRP. Residual Basis and MSRP are one and the same. So even if you got the truck for $100 over invoice, the lease residual would be the same as the guy who leased an identical truck and paid sticker.

Secondly, Ford does not offer 12 month leases. The ones they have are 24, 36, and 39 month, and in some rare cases 48 month. I am currently in month 8 of a 24 month lease, that I sold to myself as a sales manager at the local dealer.

Last thing, when you take the truck back, let's say your lease end purchase option price (aka Residual) is equal to $19,550.54. The dealer, upon termination of your lease sends a check to Ford Credit for that amount, and the dealer buys the truck. Then, they re-con it, send it for smog and safety check and slar a retail sticker on it of $25,995.00. Either way, the dealer makes money, and so does Ford Credit. To me, the only time a lease makes sense is if you know that you're going to be like the typical buyer (me) and try to get a new car every two to three years. When you lease, you can do that and not lose any money (unless you put a large chunk down, which is stupid).

By the way, I do Fleet sales and leasing too, in case you're wondering how I know all this stuff about leasing.

EDIT: Forgot to add, most dealers take a security deposit from the lessee, which is a percentage of MSRP, or they sell them something called "WearCare" in which damages and wear and tear are covered, to a maximum of $2,500.00. All Ford Credit RCL's (Red Carpet Leases) also come with GAP insurance. I think it's a smart way to get a new car every couple years if you don't mind always having a payment. I learned a lot in our RTCM class (retail trade cycle management).

 

Well, my lease is a 24 month lease and the purchase option is $23574.80 plus tax and fees. I made a one time payment for it when I got the truck as I was trading in another vehicle. I believe that it is a Red Carpet Lease. The residual seems very high to me. I am currently 5000 miles under the lease mileage. I do have the wear and care plan which was a "no cost" thing for my lease. I just can't see a dealership making money or even Ford Credit making more money than it already has made off of me for a residual that is over $23000. With employee pricing last summer and fall, trucks were being sold new in our area for $26000 for the same vehicle or better than mine. There is no way I am going to pay $23000 for my truck that will be two years old even with the low mileage when I can get a new one for a couple thousand more. I may even get a Lariat this time instead. Thanks again for all of the responses so far. They have been very insightful!

 

A high residual is a good thing. It lowers your payment during the lease. If you're concerned about buying it out, then you shouldn't be in a lease.

 

I am not really concerned about buying the truck out because I like to have a new vehicle every two or three years. I am way under my lease mileage and the truck is in excellent condition. I always seem to get the itch to buy a different car after a year. So, with a 24 month lease, I can get a new car every two years and be sort of satisfied. The reason why I have asked this question is that I just thought if the price was right, I might considering buying out my current truck instead of buying a different one.

 

It's never a wise idea to buy out a lease. Ever.

For the simple reason that you stated. Your lease-end purchase option price is set at lease inception. So what if by the time your lease is over, trucks have dropped in price to half of what they were when you got yours? Would you still buy it out? No!

That's the beauty of a lease. You pay for the portion of the vehicle that you use, and there's no depreciation, so long as you dont mind always having a payment.

 

Gotta disagree, 02Supercrew...at the end of the lease on my 1st M3, it was worth 10k more than the residual. The dealer was pleading with me to turn it back in.

 

OK, I meant leases on common cars like F150's and Foci, and Exploders. Not luxury cars. That's a whole different story.

 

Bingo...that is how you can lease a F-150 for so darn cheap right now. The later in the year it gets the more the residual will go down. Lease now it will save you a few bucks.

 

Thanks everyone for your insight. I will end up probably leasing another truck. The deals that are out are so good that it is hard to pass up. I wonder if Ford, GM, etc. will have employee pricing this summer and fall again? That was the time to get a new vehicle.