Topic: Leasing Companies taking big hits?

[sailor723]

I wonder how bad the losses have been for Canadian leasing companies since the dollar's big rally and the flood of US imports? Right now I can buy an 05 Maxima in Maine for less than the buyout will be for my wife's leased 05 in Sept 09!....17 months from now! I'm guessing that by the time Sept 09 rolls around Nissan Finance is going to be upside down at least 5 or 6K. Assuming the dollar stays anywhere close to par I know we'll be saying "Thanks alot!....here's your keys back"

[99 Silver]

I hear you.

My 05 G35x came up on it's lease in January, and I thought the buyout was too high ($24,000 +/-) considering the market (and where it was heading).  I didn't want to buy that type of car at the current prices because I thought I would get wacked with a lot of depreciation when it was time to sell in three years. The best route was to lease again to leave them the risk on the residual value, but the interest rates on the leases were higher than purchase financing.

I decided to buy a one year old Infiniti M35 in the US for $31,500 compared to 43-44K in Canada and pay cash.  I only take the lease or financing deals if they don't discount the car by the present value of the discounted finance terms.

I'm sure the leasing companies and used car lots with lots of inventory are feeling the pain of the new reduced prices.  Good for us and bad for them!

[JSCC]

And how about those customers with open ended leases with NO guaranteed buybacks.

[sailor723]

And how about those customers with open ended leases with NO guaranteed buybacks.

I don't think there have been a lot of open ended leases written in recent years but you are right.....anyone who has one coming up is screwed.

[dorin]

What's an open-ended lease?

[sailor723]

What's an open-ended lease?

If the car is worth less then the residual value at the end of the lease you are responsible for the loss.

[99 Silver]

What's an open-ended lease?

If the car is worth less then the residual value at the end of the lease you are responsible for the loss.

Or if the car is worth more at the end, you get a check.  I did that on an Acura TL I leased - $1,840 windfall!

[sailor723]

Found an article dated April 30 on the CBC site that talked about something like 550,000 lease returns in Canada this year (10% higher than 06). They quoted a Scotiabank report that said the used market had suffered an 11% decline in pricing this year and that US imports had been more than 64,000 in the first Quarter alone. The general thrust seemed to be that leasing cos. were going to take it on the chin this year. Probably a good year to be in the market for a late model used vehicle.

Edit
 
 Sorry, I reread the article and the Scotiabank study was quoted as saying that  used vehicles values had declined 7% on average not 11%....The 11% decline was in one year old used vehicles. The causes for the declines were given as 1) Lower pricing in Canada for new vehicles and 2) Continuing increases in the number of late model US imports