If you leased your Clarity in 3029, expecting to buy the car at the end of the lease in 2022....fergiddaboutit. Honda won't honor the deal.

4850 Views 36 Replies 11 Participants Last post by Baron G, Dec 9, 2021

NeedSomeClarity

Discussion Starter · Dec 1, 2021

We leased a 2018 Clarity Touring in January of 2019. The MSRP was 37, we let the dealer take the 7,500 tax credit, and signed a lease agreement stating that the residual value of the car at the end of the lease would be 15,000.

So off we go today, to spend hours at Honda where they presented us with a finance agreement through our credit union, with a total that was thousands more than the payoff value.

Their figure included the 15000 RV, plus the last two lease payments, plus taxes. So far, so good, right? That's all kosher.

Then there was what was explained as the "mandatory" $500 Honda charges for any and all lease buyouts, whether you do it before the lease ends or at the end to fhe lease, the $850 gap insurance, and the $2700 extended warranty.

We sent them back to take out the extraneous charges and give us the figures based on the RV alone. An hour later the finance manager comes back to tell us that ooopsie, so sorry, Honda isn't letting anyone buy out their lease.

So, though we would like to keep our car, it seems that we cannot. Has anyone else run into this problem?

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DucRider

· #2 · Dec 1, 2021

NeedSomeClarity said:
We leased a 2018 Clarity Touring in January of 2019. The MSRP was 37, we let the dealer take the 7,500 tax credit, and signed a lease agreement stating that the residual value of the car at the end of the lease would be 15,000.

So off we go today, to spend hours at Honda where they presented us with a finance agreement through our credit union, with a total that was thousands more than the payoff value.

Their figure included the 15000 RV, plus the last two lease payments, plus taxes. So far, so good, right? That's all kosher.

Then there was what was explained as the "mandatory" $500 Honda charges for any and all lease buyouts, whether you do it before the lease ends or at the end to fhe lease, the $850 gap insurance, and the $2700 extended warranty.

We sent them back to take out the extraneous charges and give us the figures based on the RV alone. An hour later the finance manager comes back to tell us that ooopsie, so sorry, Honda isn't letting anyone buy out their lease.

So, though we would like to keep our car, it seems that we cannot. Has anyone else run into this problem?

Why are you talking to the dealership at all?
Honda, along with many other manufacturers, are not allowing refinances thru 3rd parties, but if you can come up with a check, you can buy out the lease as stipulated in your contract.
Just get the payoff amount directly from Honda Financial and send them the check and they will send you the title. If you need to finance the payoff amount, it gets sticky. They can't prevent you from buying out the lease, but they can refuse to honor that price for a 3rd party (your CU). An agreement that transfers the title to anyone but you will be off the table. It is possible that you can get the title in your name with your CU as a lien holder, but Honda will resist this as much as they can.
They (Honda Financial) have to allow you to buy the car at the already negotiated price, but they don't have to do so for a 3rd party/lien holder.
There likely is a disposition fee (it will be spelled out in your original lease docs), but none of the other garbage they are trying to add.
What the dealer and Honda really want is for you to trade it in and buy a new Honda.

Honda, GM Say You Can't Sell Your Lease to Someone outside the Brand

The chip shortage and demand for used cars both mean car dealerships want to make sure they get their own cars back when the lease term is over.

www.caranddriver.com

At the end of the article, it points out that you have to buy the vehicle yourself, then sell it to a 3rd party

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tommyboy

· #3 · Dec 1, 2021

If a contract states a buyout amount without a clause giving Honda a right of refusal they have to let you purchase it subject to the stated conditions. They can't unilaterally change a contract.

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obermd

· #4 · Dec 1, 2021

Yet another reason to NEVER lease a car! Turn it in at the end of the lease and go get a Tesla or other full BEV. Tell your dealership they lost a used car sale with their shenanigans.

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NeedSomeClarity

Discussion Starter · #5 · Dec 1, 2021

Thank you. I have concluded that once we rejected the thousands of dollars in additional costs, the sale was not worth it to the sales manager and that is why he came at us with the bs about Honda not allowing buyouts.

As of this morning, we have spoken with both Honda Financial and our credit union, and the it appears that the whole transaction is going to go through smooth like buttah.

I have left a message for the sales manager to that effect. I think he's hiding out from me today, because he knows he tried to pull a fast one and got caught.

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NeedSomeClarity

Discussion Starter · #6 · Dec 1, 2021

tommyboy said:
If a contract states a buyout amount without a clause giving Honda a right of refusal they have to let you purchase it subject to the stated conditions. They can't unilaterally change a contract.

That's what we told the folks at the dealers' yesterday. Anyway, after speaking directly with Honda Financial today, it seems that the story of Honda not allowing Clarity lease buyouts was a complete fabrication.

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NeedSomeClarity

Discussion Starter · #7 · Dec 1, 2021

DucRider said:
Honda, GM Say You Can't Sell Your Lease to Someone outside the Brand

The chip shortage and demand for used cars both mean car dealerships want to make sure they get their own cars back when the lease term is over.

www.caranddriver.com

At the end of the article, it points out that you have to buy the vehicle yourself, then sell it to a 3rd party

Thank you. As of this AM, it seems that there will be no problem buying out the lease with a CU check , but if there is, we have to buy it outright, with no middle man, we will probably go ahead and do it that way.

What peeved me off the most was when the jr. sales associate said "no one wants a Clarity." With gas at 5 bucks a gallon, that is really hard to believe. After looking at every other PHEV on the market right now, the Clarity is still at the top of the list as far as their all electric mileage range goes.

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4sallypat

· #8 · Dec 2, 2021

NO NO NO!

Never ever let a dealer let you buy out your lease!

I had the same experience at my selling dealer a few months ago - they really wanted to buy it out and get me into a 2021 model.

When I said I wanted to buy it out, they quoted a ridiculous 7.6% interest rate plus $2500 of extended warranty.

I politely said "no thanks" and went to my CU.

My CU will finance the car at 1.49% (used car rate) and buy it out from the dealer at the RV (not a penny more).

My lease buyout is happening the same time as yours - end of December...

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jay4321

· #9 · Dec 2, 2021

In fairness, the salesperson wasn't far off in one respect. No one really wanted a Clarity, and few people know they exist. If you've seen the historical monthly US sales figures for it not much question. Today it's a different story with the shortage and anything that runs is in demand. But six months ago, the dealer I bought from had 4 on the lot 45 days or longer and finally caved in. Even then it was partially because my wife was shopping Hondas also and she did wind up buying an outgoing-gen Civic from them at an ok-but-not-great price. But by that point I was tracking VINs for every new Clarity for sale anywhere near me. They moved very slow, and I had to wait a long time to finally convince a dealer to let one go at the price I wanted.

Right now that car is probably worth a good bit to someone, obscure model or not. Carvana had no problems giving me almost 12k for a 2013 Sonata with less than 52k miles, which sums up the market situation pretty well. I don't know anything about the "normal" used market for the Clarity but I could see some people being concerned about buying a used car that runs off a battery, on a model recently discontinued, not knowing anything about what maintenance and parts replacement might cost. And without a tax credit.

I could be projecting badly here but I'd expect that most Clarity owners are folks like me in that they spent a ton of time and over-researched tons of cars, and at some point stumbled on the Clarity as sort of a hidden gem. Any goofball can watch a TV ad or maybe spend 20 minutes looking at Edmonds ratings for the top selling models, or "get sold" something at the dealership, or maybe word of mouth from someone they know about their shiny new car. None of those cases are all that likely to lead a person to a Clarity.

So even if the salesperson is correct I don't know it's a bad thing, really. There may be relatively few people specifically market for the Clarity, but lots of people want good cars that are highly efficient. Good on you for finding your way to one of them, let whoever "nobody" is carry on with whatever they wound up buying. You didn't mention mileage or the condition of your car, but you're almost certainly in position to take ownership of the car at what has become a good value relative to the market.

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4sallypat

· #10 · Dec 2, 2021

Yes, the Clarity was a hidden model that most people didn't know about as it was not heavily marketed by Honda.
It is definitely a gem because of how reliable and awesome the EV range has been.
For one to sell a used Clarity since no more new models are available, they are worth gold and the dealers know it.
My base Clarity is worth $5,000 more than RV!

My dealer was trying so hard to get me to turn in my lease and even dangling lots of cash in front of me to get into a different Honda - never have seen this type of behavior.
BTW a brand new 2021 Clarity PHEV lease offered to me was TWICE what I am paying now - if I had to get new, I would finance it instead.

I can't wait to buy out my lease and know that Honda's certainly do keep their value.

And truly an unusual time in our lives when used cars are worth more than new cars!

obermd

· #11 · Dec 2, 2021

jay4321 said:
In fairness, the salesperson wasn't far off in one respect. No one really wanted a Clarity, and few people know they exist.

Honda didn't want to sell the Clarity in the US. Honda has historically used the Clarity nameplate for vehicles they wanted to use to test new drivetrains on. Thus the three variants of the current Clarity (PHEV, FCEV, and BEV). Thus, they did minimal advertising at launch and then did nothing to make it widely available. I don't think it's a case of no one wanted a Clarity; it's a case that no one even knew it existed.

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jay4321

· #12 · Dec 2, 2021

obermd said:
Honda didn't want to sell the Clarity in the US. Honda has historically used the Clarity nameplate for vehicles they wanted to use to test new drivetrains on. Thus the three variants of the current Clarity (PHEV, FCEV, and BEV). Thus, they did minimal advertising at launch and then did nothing to make it widely available. I don't think it's a case of no one wanted a Clarity; it's a case that no one even knew it existed.

I think we're saying about the same thing. I could have probably replaced "and" with a semi-colon for clarity--lol, clarity--in the bolded part but I don't do semi-colons before at least my 2nd cup of coffee. No one wanted because they didn't know about it, I have zero doubt it would have done better with any real awareness. But even now, I drop by the DMV for papers on my last car and two cops out front had never seen one. And those guys in part make a living reporting car models by sight.

tommyboy

· #13 · Dec 2, 2021

My local dealer said they never had one. The sales guy had never heard of it (but their service manager knew what it was, and came out to look it over). Other than mine, I have only seen 2 others in the whole of So. Utah. I bought mine because I wanted something different than a Prius (had 3 previously) and a little more room and more luxury.

jay4321

· #14 · Dec 2, 2021

Most I ever saw at once was 4, and that's when I was able to finally get one. Even then it was when the newest of the 4 hit 6 weeks on the lot. Guess they were waiting for a really environmentally conscious gang to buy all four or something

2002

· #15 · Dec 2, 2021

obermd said:
Yet another reason to NEVER lease a car! Turn it in at the end of the lease and go get a Tesla or other full BEV. Tell your dealership they lost a used car sale with their shenanigans.

Some people were not able to utilize all of the $7,500 federal credit, but they were able to find a dealer who was willing to include the credit in the lease price. In those situations leasing could be a better deal than financing.

obermd said:
Honda has historically used the Clarity nameplate for vehicles they wanted to use to test new drivetrains on. Thus the three variants of the current Clarity (PHEV, FCEV, and BEV). Thus, they did minimal advertising at launch and then did nothing to make it widely available.

I think that's about right. Honda put the Clarity nameplate on the three technologies that at the time were total non-sellers (now only two of them are). The hydrogen powered FCV Clarity debuted in 2008. The remodeled FCV Clarity debuted in 2017 and the next year they rolled out the BEV and PHEV versions. These cars were built primarily for three reasons - CARB credits (in California especially), preparation for eventual electrification, and to be able to claim "greenness" as they can at least say they are developing the technology, because doing nothing looks really bad, but even just selling tiny numbers of green cars makes them look like heroes who are trying to save the planet. At least they can advertise their company to appear that way.

FCV and BEV were lease only, and it is widely believed that Honda took quite a loss on those leases. But it was worth it to them for the above listed reasons. My guess is that the PHEV was closer to breakeven as long they didn't provide factory incentives, but even then it was probably not exactly a money maker.

Since then only BEV's have garnered public interest, and of course that is primarily Tesla, but even including Tesla the percentage of EV's sold is still very small. And with a range of less than 100 miles Clarity Electric was clearly designed for a niche market, who presumably used it as a second car for around town driving, and who appreciated having an EV that was much more comfortable than say a Leaf, but way cheaper to lease than a Tesla.

I still maintain that PHEV's and regular hybrids are going to become mandatory within a few years for any cars that are not EV. Currently there is resistance to that idea from both the EV community in the U.S. (my perception) and European regulators, both of whom see hybrids of any type including PHEV's as an impediment to full electrification. In Europe they have started killing off PHEV's by removing whatever incentives existed. Personally I am hoping that in the U.S. there will be a realization that PHEV's in particular have an amazing potential to reduce gasoline usage in the U.S. during the transition to eventual full EV

In the past governments have forced pollution equipment for example onto car manufactures, which added cost. Neither manufacturers or most of the public wanted it. But in the end the cars could still be driven the same as before. But forcing everyone to buy a car that has to be plugged in is going to have strong resistance until the charging structure is built out (including apartments) and super fast charging is available everywhere and in all vehicles. Until then PHEV's in particular will be very important to fill the gap. My opinion, I realize it is not widely shared. Although the crazy markups that Toyota is currently getting on the Rav4 Prime is encouraging in that sense (although of course discouraging to those who want to buy one)

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jay4321

· #16 · Dec 2, 2021

My super-casual .02 is that demand for EVs will follow battery charge-up time. To a point I think most folks could sacrifice a little on capacity to avoid gas prices, or some performance, but people are busy and used to filling their gas tanks in 5 minutes and getting back on the road. 20 minutes charging and up is too long, most especially for the wide segment of folks who aren't able to charge from their garage or driveway. Some working Joe with on street parking or a walkup apartment, they're just not going to sit at a charging station for 90 minutes as part of their routine. No doubt we'll get there.

As to regular hybrids, I think we're getting really close to the point where they overtake gas only for standard commuter cars. The prices have come down so much, gas is going up, and it makes less and less sense every year. Even the Elantra and some other entry-level new cars comes in a hybrid now. Even the holdouts like my wife are likely to switch over probably next purchase.

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2002

· #17 · Dec 3, 2021

jay4321 said:
My super-casual .02 is that demand for EVs will follow battery charge-up time. To a point I think most folks could sacrifice a little on capacity to avoid gas prices, or some performance, but people are busy and used to filling their gas tanks in 5 minutes and getting back on the road. 20 minutes charging and up is too long, most especially for the wide segment of folks who aren't able to charge from their garage or driveway. Some working Joe with on street parking or a walkup apartment, they're just not going to sit at a charging station for 90 minutes as part of their routine. No doubt we'll get there.

As to regular hybrids, I think we're getting really close to the point where they overtake gas only for standard commuter cars. The prices have come down so much, gas is going up, and it makes less and less sense every year. Even the Elantra and some other entry-level new cars comes in a hybrid now. Even the holdouts like my wife are likely to switch over probably next purchase.

Of course we are trying to predict what the general public will want and/or put up with, but I think I agree that longer range will probably not be as important as quick charging time. The technology exists already for charging about as fast as pumping gas, but it's a question of how many years before gas pumps will start to be replaced with that type of charger, as well as all EV's being so equipped. When it does happen that will also solve the problem for apartment dwellers who don't have a way to charge, eliminating what would otherwise be a huge capital investment converting existing parking garages so that most parking spots include a charging station. Instead it would be business as usual for apartment dwellers and others who can still just zip into their local convenience market for a quick fill up on electricity, snacks, and lottery tickets!

Widespread availability of quick charging stations (i.e. similar to the availability of current gas stations) also allows making EV's with lighter and smaller (and thus cheaper) batteries without making longer trips inconvenient. Of course we also expect battery costs to come down, as well as density, but maybe not enough in the near future to make long range EV's affordable for everyone. Although super fast charging may not be the best thing to use every day for battery health compared to using it on the occasional out of town trip, but I think they are making progress on that also.

Either way I think there is too much unpredictability both with the technology, and public acceptance to predict when full EV will be possible. Thus transition cars are needed as a supplement. As for regular hybrids, I agree that will probably be the minimum at some point in the not so distant future. On an individual basis the lowered fuel cost may not always offset the higher cost of the drivetrain that much, but the nationwide gas savings will be substantial.

But I think PHEV's are still underestimated by most people (except of course current PHEV owners). But even Clarity owners sometimes tend to poo-poo PHEV's that only have 25 mile EV range. But there are a lot of people who rarely drive that much most days, but still want the flexibility for longer trips. And all things being equal a 25 mile range compared to 50 miles frees up some cabin space and cargo space, not to mention keeping the vehicle cost down. And even if someone has say a 50 mile roundtrip commute five days a week, if they can charge at work then they will still be pretty much gas free. And even if they can't charge at work, what would have been 250 miles of gasoline usage Mon-Fri will only be half of that, with at least 125 miles each week driven all electric. Widespread adoption of PHEV's with 25 to 50 miles EV range would likely result in a huge reduction in nationwide gasoline usage.

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4sallypat

· #18 · Dec 3, 2021

2002 said:
Some people were not able to utilize all of the $7,500 federal credit, but they were able to find a dealer who was willing to include the credit in the lease price. In those situations leasing could be a better deal than financing.

I think that's about right. Honda put the Clarity nameplate on the three technologies that at the time were total non-sellers (now only two of them are). The hydrogen powered FCV Clarity debuted in 2008. The remodeled FCV Clarity debuted in 2017 and the next year they rolled out the BEV and PHEV versions. These cars were built primarily for three reasons - CARB credits (in California especially), preparation for eventual electrification, and to be able to claim "greenness" as they can at least say they are developing the technology, because doing nothing looks really bad, but even just selling tiny numbers of green cars makes them look like heroes who are trying to save the planet. At least they can advertise their company to appear that way.

FCV and BEV were lease only, and it is widely believed that Honda took quite a loss on those leases. But it was worth it to them for the above listed reasons. My guess is that the PHEV was closer to breakeven as long they didn't provide factory incentives, but even then it was probably not exactly a money maker.

Since then only BEV's have garnered public interest, and of course that is primarily Tesla, but even including Tesla the percentage of EV's sold is still very small. And with a range of less than 100 miles Clarity Electric was clearly designed for a niche market, who presumably used it as a second car for around town driving, and who appreciated having an EV that was much more comfortable than say a Leaf, but way cheaper to lease than a Tesla.

I still maintain that PHEV's and regular hybrids are going to become mandatory within a few years for any cars that are not EV. Currently there is resistance to that idea from both the EV community in the U.S. (my perception) and European regulators, both of whom see hybrids of any type including PHEV's as an impediment to full electrification. In Europe they have started killing off PHEV's by removing whatever incentives existed. Personally I am hoping that in the U.S. there will be a realization that PHEV's in particular have an amazing potential to reduce gasoline usage in the U.S. during the transition to eventual full EV

In the past governments have forced pollution equipment for example onto car manufactures, which added cost. Neither manufacturers or most of the public wanted it. But in the end the cars could still be driven the same as before. But forcing everyone to buy a car that has to be plugged in is going to have strong resistance until the charging structure is built out (including apartments) and super fast charging is available everywhere and in all vehicles. Until then PHEV's in particular will be very important to fill the gap. My opinion, I realize it is not widely shared. Although the crazy markups that Toyota is currently getting on the Rav4 Prime is encouraging in that sense (although of course discouraging to those who want to buy one)

Correct, some dealers who are ethical will pass along the $7500 tax credit to the leasee (customer).

Mine was very transparent and the Clarity lease came out to be a bargain ($7500 tax + $3000 Honda incentive + $2500 dealer discount + $3500 state post rebate + $500 AHM state employee discount)

Now it's been 3 years and love the car so much that I am buying her out from Honda Finance.

Now looking for another PHEV since my reserved F150L EV truck won't be ready in time...

ClarityDave

· #19 · Dec 4, 2021

2002 said:
But forcing everyone to buy a car that has to be plugged in is going to have strong resistance until the charging structure is built out (including apartments) and super fast charging is available everywhere and in all vehicles. Until then PHEV's in particular will be very important to fill the gap. My opinion, I realize it is not widely shared.

I agree completely. Even with the PHEV I would not own it if I didn’t have a way to charge it quickly at home. This instantly shuts down the market for a large number of people who dwell in apartments. And at this point I still would only buy a BEV for local use as I don’t want to have to plan a trip around where I can find charging stations. As it is, I primarily use the Clarity for local in-town stuff just because I prefer to drive as few miles as possible in HV mode.

2002

· #20 · Dec 4, 2021

ClarityDave said:
I agree completely. Even with the PHEV I would not own it if I didn’t have a way to charge it quickly at home. This instantly shuts down the market for a large number of people who dwell in apartments. And at this point I still would only buy a BEV for local use as I don’t want to have to plan a trip around where I can find charging stations. As it is, I primarily use the Clarity for local in-town stuff just because I prefer to drive as few miles as possible in HV mode.

Yes I would expect that apartment dwellers with no place to charge would drive regular hybrids not PHEV's.

Another great thing about PHEV's that I didn't mention is that they can be plugged in pretty much anywhere that there is an electrical outlet. Another resistance to EV's for many people I think will be the requirement for 240 volt charging. The trend already in some areas is to start requiring 240 V car charging outlets in new home construction, but that is far from widespread right now. And it also doesn't deal with the millions of existing homes that do not have 240 V available where the car is parked. For an EV enthusiast, having a 240 V outlet installed in their garage or carport is nothing, it's a minor one time cost, and once taken care of it allows them to live in perpetual EV bliss. But for someone who it wasn't their idea to buy an EV but is being forced to by the government, the fact that they have to get an electrician out and spend potentially hundreds of dollars to run 240 V out to their garage or carport, I expect that will be a major complaint. I suppose there would be government subsidies for low income, etc. but that all gets complicated and expensive. Again with a PHEV they can just plug into a standard outlet if one is available, and for a large percentage of the population level 1 charging will allow them to do most of their driving in EV.

Eventually as quick charging stations become more common, even most BEV owners can probably get along okay with level 1 charging at home since that will cover most of their daily driving, and when they do need to go a bit further, or get a little behind, they can just pull into a fueling station for a quick fill up. Of course many BEV owners will go ahead and install level 2 just for the convenience, but it would be an option, not a requirement, and that makes a big difference when it comes to public acceptance.

I use the term fueling station because I think another requirement for widespread public acceptance will be that charging must be available at existing gas stations. Currently most chargers are hidden in the weeds and require an app with GPS to find them. For EV enthusiasts that's part of the fun, it's sort of a high tech version of playing Pokemon Go. Or a high stakes game if you are running low on charge, which to some is sort of an adrenaline rush. But it's far from fun for someone is who just trying to get from point A to point B with as little hassle as possible.

Actually fueling station is probably not a good name because electricity is not fuel. Maybe we can go back to calling them "filling stations". That's what they were called when I was growing up.

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