End of Lease and option to buy price inflated due to market conditions

segovia

I have a BMW X3 on a business lease which was originally for 3 years, I extended it to 4 last year and I have an option to extend it to 5 years. Its low mileage 18K and I always had it on plan to buy it at the end of the lease. I just insured it and my insurer values the car at 25K which is what I was expecting to pay to buy it. However, my lease company gets the second hand value from BCA and they have valued it at 34K.  When I entered into the lease I assume the leas company takes into consideration two factors when calculating the monthly payment. One, the cost of the car and two, the expected trade value at the end of the lease. In 2018 the expected trade value would have been circa the insured value of 25K. It seems the lease company wants their cake and eat it. I have already paid monthly contributions based on per-pandemic price increases. Anyone else going through a similar experience ?

iwb100

You leased it. The lease company has no obligation to sell it to you. They can ask for any price they want. There is no reason for them to sell for under its current market value since you entered into a lease arrangement.

Some leases won’t even entertain selling to you at the end. 

What you needed to be on if you wanted to have a guaranteed buy option at the end for a fixed price is PCP. In your case the lease company will seemingly sell but only if they achieve full market value. So I’d simply be looking for another lease if I were you. 

Grumpy_chap

On a lease, unlike PCP, there is no guarantee the lease company will be willing to sell to you and no rules set about what price they can ask for the vehicle if they do agree to sell.  If you think it is worth £25k and they think it is worth £34k, that is likely a larger gap than will ever close sufficiently.  Maybe you just need to buy another car, or lease another car.

With a lease, you are simply paying a monthly fee to have the use of the vehicle and it is never anticipated that you become the owner.  The lease company take all the risk - would you be equally concerned if the value now was £16k instead of £25k expected?

motorguy

As per the above, its a lease, so a rental.

The lease company is under no obligation to sell the car to you at all, let alone at the price you "think" they should.

Flight3287462

Every time you extend the lease that will be a new contract, which the lease company will be loving as I assume the payments haven't reduced whilst the residual will in effect be increasing.

MX5huggy

If the bottom had fallen out of the used car market and it was only worth £10k would be offering to buy it for £25k? 

iwb100

Flight3287462 said:

Every time you extend the lease that will be a new contract, which the lease company will be loving as I assume the payments haven't reduced whilst the residual will in effect be increasing.

There is no residual in a lease. The lease company can decide what to do at the end. And they may have extended it but at some point no doubt want to sell for market value. The OPs issue is market value is high right now. But to avoid that he should have done a PCP deal rather than a lease as leasing is for people who never ever ever want the option to buy. Leasing and then buying the car can happen but it’s rare and as we see here often sub optimal. 

diystarter7

OP, the value is not "inflated" but supply and demand needs.
See what the market is offering with one owner, same spec as yours and if it is 25k, go for that in place of the 34k.

Flight3287462

iwb100 said:

Flight3287462 said:

Every time you extend the lease that will be a new contract, which the lease company will be loving as I assume the payments haven't reduced whilst the residual will in effect be increasing.

There is no residual in a lease. The lease company can decide what to do at the end. And they may have extended it but at some point no doubt want to sell for market value. The OPs issue is market value is high right now. But to avoid that he should have done a PCP deal rather than a lease as leasing is for people who never ever ever want the option to buy. Leasing and then buying the car can happen but it’s rare and as we see here often sub optimal. 

Yes terminology was wrong I meant the current market price.