Topic: lease takeover fees

[Giant Dwarf]

As has been illustrated by a few posts here, I'm not convinced that the deal being offered to you is the best one out there.  As a quick reference, here are a few in your area that seem to be comparable values, and won't have you shelling out for transfer fees...

http://www.leasebusters.com/$295/details.asp?ID=15442

http://www.leasebusters.com/$295/details.asp?ID=15761

or even similar models from other makers:

http://www.leasebusters.com/$295/details.asp?ID=13493

[Giant Dwarf]

If you are truly taking over an existing lease then the terms of the original lease will not change. The payment, the mileage limit, security deposit, and the buyout amount are all spelled out on the lease contract and will not change with a transfer of name on the lease. Any fees required to do the transaction are separate - Honda will charge a fee and since there is nothing in it for the dealer, they will probably charge something as well.

This is not always entirely true.  When I transferred the lease of my Audi to another party, the montly pmt actually did change.  As it turned out, VW Credit has implemented some asinine new policy wherein the tax savings resultant of the trade-in I had could not be applied to a new party taking over the lease.  It became a very convoluted and highly irritating ordeal for both me, my very gracious salesperson (stuck in the middle) and the poor individual taking over my lease.  In the end, I agreed to suck up the $500 lease transfer fee (which I wasn't originally going to do since all parties agreed that the lease deal they were taking over was good enough that they didn't mind paying it), and they accepted the car at the slightly higher monthly payment.  Uggh... what a nightmare -- and certainly cause for me to want to avoid EVER using VW Credit again.

[Cord]

Being a tax issue, that sounds like a government probelem rather than strictly a bank issue. But yes, there are rare exceptions. For example, if the lease is being transferred to someone in a different province, the payment will change because because of changes in provincial taxes. Again, that's a government issue.

[Giant Dwarf]

Being a tax issue, that sounds like a government probelem rather than strictly a bank issue. But yes, there are rare exceptions. For example, if the lease is being transferred to someone in a different province, the payment will change because because of changes in provincial taxes. Again, that's a government issue.

ahhh... but that wasn't the case.  As you stated originally (and I fully agreed with... which made swallowing the situation so difficult) -- the deal should have still stayed.  It's not like I took the car back that I traded... so the dealership still got the same value out of it and it should have affected the lease the same throughout its entirety.  The woman who took the lease over was also and Ontario resident, so that wouldn't affect it either.  Nope, I was told it was simply a VW Credit new policy and that they had received a few nasty calls and letters about it.  No kidding!

The point is, you need to check with the dealership or credit service to get the specific details for the situation you're considering.

[Cord]

It's not like I took the car back that I traded... so the dealership still got the same value out of it and it should have affected the lease the same throughout its entirety.

It sounds to me like somebody at VW Credit is scared of the taxman. The dealership getting the trade has nothing to do with the situation. The issue is strictly the tax credit, not the value of the trade. It sounds like VW Credit adjusted the lease as if the value of your trade was cash down instead of a trade. The tax credit is based on the principle that since a consumer has paid tax once on their car they should get some credit for the car's value to reduce their tax when they trade it on a new car. I suspect that in your case, the taxman told VW Credit that since the lady taking over your lease had never traded a car she had paid tax on, that she wasn't eligible for the tax credit from your trade-in.

Definitely a PITA, but that's what taxes are.

[Giant Dwarf]

It's not like I took the car back that I traded... so the dealership still got the same value out of it and it should have affected the lease the same throughout its entirety.

It sounds to me like somebody at VW Credit is scared of the taxman. The dealership getting the trade has nothing to do with the situation. The issue is strictly the tax credit, not the value of the trade. It sounds like VW Credit adjusted the lease as if the value of your trade was cash down instead of a trade. The tax credit is based on the principle that since a consumer has paid tax once on their car they should get some credit for the car's value to reduce their tax when they trade it on a new car. I suspect that in your case, the taxman told VW Credit that since the lady taking over your lease had never traded a car she had paid tax on, that she wasn't eligible for the tax credit from your trade-in.

Definitely a PITA, but that's what taxes are.

Amen to that!  You make a good point... probably right about that.

[fitz318is]

Here are the facts about what happens.
A lease, just like a loan is only a balance owing.  Balence owing being residual buyout + (remaining monthly payments - lease charge) + tax.
Honda Canada finance will only discharge a lease to the original leasee or a honda dealer.
The dealer buys the car from HCF for your balance owing and sells or re-leases to the next party.
What they charge for this service (15 minutes of paperwork) is up to them.  HCF charges nothing.

400-600 lease transfer fee is crazy.  The buyer of my honda paid 175 for this service at Kitchener Honda.  Talk to Carl there.

[Cord]

That does not describe a lease transfer as we've been discussing. You're just describing a standard lease buy out. If a dealer buys a car from HCF then that lease is over. If they then lease the car to someone else they are starting a new, used car lease with different terms - different buyout, different interest rate, etc.

A lease tranfer is where only the name on the contract changes and the same lease continues.