# Is 3rd Party Lease Buyout Possible?



## bgasser (Dec 27, 2010)

A friend of mine is turning in her BMW 335i convertible at the end of its lease in July. The residual listed on the contract for the car is $31K and the car has low mileage. Will BMWFS allow me to payoff her lease at the end of the 36 months and take title (3rd party lease buyout)? 

I am trying to avoid having to pay sales tax twice on this transaction which would make it cost prohibitive. Both my friend and I live in NY. Any advice you can give would be appreciative. I am just trying to understand all my options at this point.


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## SARAFIL (Feb 19, 2003)

bgasser said:


> A friend of mine is turning in her BMW 335i convertible at the end of its lease in July. The residual listed on the contract for the car is $31K and the car has low mileage. Will BMWFS allow me to payoff her lease at the end of the 36 months and take title (3rd party lease buyout)?
> 
> I am trying to avoid having to pay sales tax twice on this transaction which would make it cost prohibitive. Both my friend and I live in NY. Any advice you can give would be appreciative. I am just trying to understand all my options at this point.


The only way to avoid double taxation is to buy it through a dealer. You could have your friend talk to his/her original dealer and they'd probably be willing to do the transaction for you as long as they can make some profit on the deal.


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## ard (Jul 1, 2009)

SARAFIL said:


> The only way to avoid double taxation is to buy it through a dealer. You could have your friend talk to his/her original dealer and they'd probably be willing to do the transaction for you as long as they can make some profit on the deal.


Are you giving categorical advice, or NY state specific advice?

Some states allow you to avoid "double taxation" if you buy the car and sell it within a short period of time- like a week or so.

This was done to allow owner to avoid getting screwed over by dealers needing to make "some profit" for dodging the sales tax. If the dealer can buy the car and flip it, the current lessee should be able to.... or that was the legislatures intent in those states.

OP:

If she buys it from BMW, but sells it to you before she registers the car, it might be use tax exempt. Call your local tax board or DMV- and not a car dealer.

HOWEVER, if you can get a BMW dealer to add a "CPO extended warranty" to the car as part of the transaction (might cost $2) it would be a very good thing to have....

A


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## bgasser (Dec 27, 2010)

Ard:

Thank you for the advice, I have heard CA offers a 10 day window to avoid the double taxation. I was hoping that someone had experience with NY State and this issue already. If BMWFS allows a lease-swap for $350, I was hoping for a fee they would also have a policy for 3rd party buyout.

I don't think the dealership route is practical. I can't see a Long Island dealer allowing this car to be sold anywhere near the $31K payoff that is listed on the lease contract.


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## ard (Jul 1, 2009)

bgasser said:


> Ard:
> 
> Thank you for the advice, I have heard CA offers a 10 day window to avoid the double taxation. I was hoping that someone had experience with NY State and this issue already. If BMWFS allows a lease-swap for $350, I was hoping for a fee they would also have a policy for 3rd party buyout.
> 
> I don't think the dealership route is practical. I can't see a Long Island dealer allowing this car to be sold anywhere near the $31K payoff that is listed on the lease contract.


Think about any dealer in the TriState area.... no need to stay local- heck, I am thinking you can do it outside of NewYork state.

The BMW CPO warranty is the same as their "Gold Extended Warranty" and is worth about $3k. I like extended warranties in general as I drive the crap out of cars, and can be pretty picky about faults so I typically get my moneys' worth.

If you'd buy the car for 31k then pay 3k for a warranty, you can probably get a dealer to flip it for 34k. (Assuming BMWFS will give it to them for 31k or less.)

Could you do a lease assumption from your friend? Just a transfer fee.... Then buy it? Do it at the end, or close to it?


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## SARAFIL (Feb 19, 2003)

ard said:


> Could you do a lease assumption from your friend? Just a transfer fee.... Then buy it? Do it at the end, or close to it?


Can not do a lease transfer in the last 6 months of the lease



bgasser said:


> If BMWFS allows a lease-swap for $350, I was hoping for a fee they would also have a policy for 3rd party buyout.


BMWNA is a manufacturer, and BMWFS is a bank-- neither one of these divisions is licensed to sell cars to the public, so they can only transfer ownership of cars to licensed dealers or to the leasee of one of their leased vehicles.


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## ard (Jul 1, 2009)

SARAFIL said:


> Can not do a lease transfer in the last 6 months of the lease


I kinda thought that....



SARAFIL said:


> BMWNA is a manufacturer, and BMWFS is a bank-- neither one of these divisions is licensed to sell cars to the public, so they can only transfer ownership of cars to licensed dealers or to the leasee of one of their leased vehicles.


So that's the reason??? It's a matter of paperwork and licenses?

They could surely allow the leasee to name a third party on a lease agreement, but it isn't in their best business interest to do so- hence unless forced by the state law, they will not do it.

Oh, wouldn't the term 'transfer ownership' following "payment of money' actually be SELLING the car? To either the leasee or the dealer in your explanation.

I agree with your conclusion- that it can't be done...it's just that the reasons are not as technical as you portray- just that it doesn't make good business sense for the dealers hence they pressure BMW not to do it.


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## SARAFIL (Feb 19, 2003)

It is actually just as I mentioned. It's not exclusive to BMW. Franchise laws make it very hard (impossible) for manufacturers to sell direct to the public in almost every state. 

You CAN argue that this is the result of years of successful lobbying by car dealers, but it is not about BMW dealers pressuring BMW that they want to make more money on off-lease sales. This is not a problem that is unique to BMW. 

Manufacturers can not sell cars to individual buyers, only dealers or fleet/commercial accounts. I don't know the legalities behind it, but there are reasons that they can sell you your own car off-lease. However, they can not transfer ownership (sell) to anyone not named on the lease since they are restricted by not being licensed car dealers-- and they can not get a license because most states prohibit manufacturers from selling cars.


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## ard (Jul 1, 2009)

SARAFIL said:


> It is actually just as I mentioned. It's not exclusive to BMW. Franchise laws make it very hard (impossible) for manufacturers to sell direct to the public in almost every state.
> 
> You CAN argue that this is the result of years of successful lobbying by car dealers, but it is not about BMW dealers pressuring BMW that they want to make more money on off-lease sales. This is not a problem that is unique to BMW.
> 
> Manufacturers can not sell cars to individual buyers, only dealers or fleet/commercial accounts. I don't know the legalities behind it, but there are reasons that they can sell you your own car off-lease. However, they can not transfer ownership (sell) to anyone not named on the lease since they are restricted by not being licensed car dealers-- and they can not get a license because most states prohibit manufacturers from selling cars.


Again, I agree with the end result. But BMWFS is not a manufacturer, and they could allow an assignment of lease rights to a third party immediately prior to lease end. As you pointed out they actually BLOCKED this by prohibiting a lease transfer within 6 months!

BMW does not want this to be done, it is not in their business interest. It really is as simple as that, nothing to do with licenses 'preventing them'.

3rd party sales competes with BMW dealers and competes with BMWFS.


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## SARAFIL (Feb 19, 2003)

ard said:


> 3rd party sales competes with BMW dealers and competes with BMWFS.


We're arguing about technicalities at this point. BMWFS is a captive finance company that is wholly-owned by an auto manufacturer... Call them what you want. 

I guarantee you that it wouldn't take long for the lawsuits to start if BMWFS started selling cars. I don't know if BMWFS wants to be in the business of selling cars to 3rd parties or not, but I can assure you that the reason that they don't do it has to do with legal pressure from dealers and state governments that have laws protecting dealers. With the exception of the Obama administration's support for GM and Chrysler dealer terminations in 2009, government overwhelmingly supports the rights of franchised dealers and puts up a lot of roadblocks to the automakers getting involved in selling cars directly to consumers.


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