What's the best way out of a lease?

[DarkSunrise]

Originally Posted by ashtray

When I was 20 my parents gave me some money to buy a used car. I bought a low mileage Buick. Sedan. Not even a performance trim. *facepalm* Sometimes being responsible is very over rated! (Now that I'm a parent, I'm buying cars like the Miata and BRZ - go figure!)

Hah I know what that's like. In my 20's, I tried to be practical and drove around an economical RSX for 8 years. Then was like, what the heck am I doing? Life's too short!

Since then I've owned an STI hatch, GTI, FR-S, 350z, and Boxster S, although half of those are gone now. It's been fun.

[acg2010]

What happened to the TDI that was in your build thread? Seems to me if you really want to cut down on a car payment, go back to your other car and lose the second car.

[BlueDubbinTDI]

Originally Posted by acg2010

What happened to the TDI that was in your build thread? Seems to me if you really want to cut down on a car payment, go back to your other car and lose the second car.

Its my fiancés but I mod and drive both. The payments are only 181/mo with $80/mo insurance on the TDI. We're keeping it forever.

[acg2010]

Originally Posted by BlueDubbinTDI

Its my fiancés but I mod and drive both. The payments are only 181/mo with $80/mo insurance on the TDI. We're keeping it forever.

I figured it might be her car, but if they were both yours, I was gonna say - wheres the conundrum turn in the BRZ and keep the TDI. But, since you have his and hers, that makes sense.

[suaveflooder]

Originally Posted by F4ith

Same mentality but we're not necessarily paying the same, and defintely no where near less, as financing.

My lease paperwork shows that if I decide to buy out afterwards, I'd pay roughly $33k total BEFORE interest on the 18k residual, or I can just pay it all up front at lease end. If I were to finance right now, I'd pay $30K otd BEFORE interest. That's a $3k difference.

But I don't think of it like that. I think our generation tends to favor those with cash in hand. I still leased dispite of that bc:

1) smaller monthly payments
2) a limiter to control myself on modding the car too heavily (otherwise I'd have rocket bunnyed her so fast)
3) warranty
4) I know for a fact my car will be worth more than Toyota's "estimated" residual of $18k when I'm done bc I barely drive her with a 10 mile round trip daily commute + I have a bike. Theoretically the profit I make should break me even
4a) if the value of the car still drops significantly, I can return the car and still lose less than those who financed
5) if they turbo her, I can swap easily

The more I read, the happier I am with my lease. Gives me so much freedom and peace of mind for a small price in my opinion. I try to minimize stress so I do place a $$$ value on things that stress me out. I see so many people worry about "what if a turbo comes out" or "the value is dropping" and I'm so glad I don't have to worry about that.

You seem like you've really thought this through. Unfortunatly, I doubt that the car will be worth 18k, and you just lost out on $3k if you do decide to buy (which alone is probably close to double the interest you would loose in a 7 year loan with a decent interest rate…. ). Leasing is such a horrible financial decision 95% of the time (the only time that it MIGHT be a good decision would be if you own a business and can write it off). If you can't afford the payment to buy it, put a down a nice size downpayment (you should do this anyway). If you still can't afford the payment, don't buy the car. You can't afford it. It's not a forever thing and it doesn't mean that you don't "deserve it" but making good financial decisions while you are young will save you a TON of headaches in the end.

If I had a dollar for every older person that came to me and said, "if only" regarding multiple bad financial decisions, I wouldn't have to advise them anymore.

[LXXXV1]

Originally Posted by suaveflooder

You seem like you've really thought this through. Unfortunatly, I doubt that the car will be worth 18k, and you just lost out on $3k if you do decide to buy (which alone is probably close to double the interest you would loose in a 7 year loan with a decent interest rate…. ). Leasing is such a horrible financial decision 95% of the time (the only time that it MIGHT be a good decision would be if you own a business and can write it off). If you can't afford the payment to buy it, put a down a nice size downpayment (you should do this anyway). If you still can't afford the payment, don't buy the car. You can't afford it. It's not a forever thing and it doesn't mean that you don't "deserve it" but making good financial decisions while you are young will save you a TON of headaches in the end.

If I had a dollar for every older person that came to me and said, "if only" regarding multiple bad financial decisions, I wouldn't have to advise them anymore.

I accepted the fact that I'd pay more if I leased to buy, but I saw the extra $3000 as small price to pay for reasons for 1-5 + the following:

I graduated 2 years ago so I'm still trying to save money for that engagement ring/wedding/house down payment that's looming within the next 5 years for me(lol at any idea of the bride's family paying for it). Assuming the recommended 20% down $6K @ $400/60 (30k) months vs a $3k down @ $350/36 (15.6K) months comes out to a $14.4K difference...why not "save" that money instead and invest it or just pay most of it off immediately after? Finance means an extra $3k gone that I can be saving/investing from day 1. As a recent grad, I'd like to think a bigger rainy day fund is more important than $3k sprinkled into 3 years. This is what I mean by my generation favors those with cash in hand, seeing that a family man should have had more time to create a bigger safety cushion. Also, I was well above Toyota's tier 1 credit score if that helps with interest calcs.

Toyota put the residual at $18K and their resale value seems to be pretty consistent, at least for their other models. No one can really say how much the FR-S will be worth in 3 years because it's still so young and anything can happen(turbo or FT-1). I can't even KBB a 2012 FR-S to test it. But running quick numbers on a 10 series at 50K miles (I used 50 to make up for the 2 years in age)in excellent condition from private party still puts it at $21K. 2013 base at 50K drops it to $18K. $3k is the difference I paid for my Monogram vs a base so that makes sense. My car will be 3 years old with around 24K by the time I'm done. I drove 6k miles in 1.5 years on my old car, estimating 24K is already highballing it for me. Based off of what I know now and my habits...pretty confident my car will be worth more than $18k at the end of my lease especially with how I take care of her.

All this is based off of private party sale and with the understanding that KBB is probably slightly off.

Also, if the car does drop lower than the 18k residual, I'd be a fool to keep her. I'm better off returning it to the dealer and buying her back.

[BlueDubbinTDI]

Well I went and talked to the dealer yesterday. He said since it's still only got 10k miles on the clock he doesn't even need to drive it to offer me 19k trade. He said my payoff is 22500. So before any negotiation takes place I'm in the hole 3500 but he did say they work with people in this situation all the time it's far from being unheard of. He did say it would be impossible (he said this numerous times) to drop my payment more than just about $60 to get much of anything worthwhile they had on the lot. He, his manager, and my fiance all highly recommend keeping it 1 more year and then negotiations will be much much easier on everyone once the depreciation slows down. I completely agree.

[BlueDubbinTDI]

Originally Posted by F4ith

I accepted the fact that I'd pay more if I leased to buy, but I saw the extra $3000 as small price to pay for reasons for 1-5 + the following:

I graduated 2 years ago so I'm still trying to save money for that engagement ring/wedding/house down payment that's looming within the next 5 years for me(lol at any idea of the bride's family paying for it). Assuming the recommended 20% down $6K @ $400/60 (30k) months vs a $3k down @ $350/36 (15.6K) months comes out to a $14.4K difference...why not "save" that money instead and invest it or just pay most of it off immediately after? Finance means an extra $3k gone that I can be saving/investing from day 1. As a recent grad, I'd like to think a bigger rainy day fund is more important than $3k sprinkled into 3 years. This is what I mean by my generation favors those with cash in hand, seeing that a family man should have had more time to create a bigger safety cushion. Also, I was well above Toyota's tier 1 credit score if that helps with interest calcs.

Toyota put the residual at $18K and their resale value seems to be pretty consistent, at least for their other models. No one can really say how much the FR-S will be worth in 3 years because it's still so young and anything can happen(turbo or FT-1). I can't even KBB a 2012 FR-S to test it. But running quick numbers on a 10 series at 50K miles (I used 50 to make up for the 2 years in age)in excellent condition from private party still puts it at $21K. 2013 base at 50K drops it to $18K. $3k is the difference I paid for my Monogram vs a base so that makes sense. My car will be 3 years old with around 24K by the time I'm done. I drove 6k miles in 1.5 years on my old car, estimating 24K is already highballing it for me. Based off of what I know now and my habits...pretty confident my car will be worth more than $18k at the end of my lease especially with how I take care of her.

All this is based off of private party sale and with the understanding that KBB is probably slightly off.

Also, if the car does drop lower than the 18k residual, I'd be a fool to keep her. I'm better off returning it to the dealer and buying her back.

My residual is like 16800. I can't decide if that will be accurate or not yet. Not that it matters, I won't be keeping this car at the end if I make it through. Not that it's a bad car at all! It's just not practical enough. A lease was still a good option for me I think

[Shawnofthedead]

Tell them you'd like to buy the car? Go to a bank they'll buy out the car loan.

[ashtray]

So, you "owe" $22,500 on it at the moment? If you went to a bank and got a 5 year loan on the car now, at say 3.9% (it's a used car, bank rates will vary) - so that's roughly $400/mo in payments.

The problem with replacing it with another car is the $3,500 in negative equity you'd have to roll in to the new lease - plus depending on your state, sales tax on the new car. If you take a cheaper car and add $4k on to the price, you're getting back up closer to the price of the FRS. You're just throwing away money to save a few bucks per month and end up driving something you don't even like.

Just ride it out - see what the situation is at the end of your lease. Note that at lease end the dealer might ding you for cost of new tires, brakes, dings and scratches, etc.

[AVodka14]

I hear ya in terms of your situation. I had a nice little 05 tC that was a fast street sleeper. Still comfy to drive. Paid for and all. The FRS was an impulse getting purchase out of grad school. I had a supersport bike, tC, and FRS all at one time. Sold the bike and then the tC. Should have never bought the FRS and kept the bike and tC. Hindsight is always 20/20. No car payments would be nice right now to take those payments and add it to my student loan payments. The FRS is perfect for me right now. I am engaged without kids. It's only me in the car usually and occasionally the fiancee. Just do what you can to make the car solely yours and keep it for another 5 years or so. I always try to keep a car for about 9-10 years as I did my tC. Life is always going to be full of regrets. Just make decisions and move on. That's how entrepreneurs become entrepreneurs. Making gut decisions and leaving the past in the past. Mistakes will be made. Just don't make them twice. Enjoy the ride. You're young. Won't be able to get in and out of this kind of car in your 70s.

[BlueDubbinTDI]

Originally Posted by ashtray

So, you "owe" $22,500 on it at the moment? If you went to a bank and got a 5 year loan on the car now, at say 3.9% (it's a used car, bank rates will vary) - so that's roughly $400/mo in payments.

The problem with replacing it with another car is the $3,500 in negative equity you'd have to roll in to the new lease - plus depending on your state, sales tax on the new car. If you take a cheaper car and add $4k on to the price, you're getting back up closer to the price of the FRS. You're just throwing away money to save a few bucks per month and end up driving something you don't even like.

Just ride it out - see what the situation is at the end of your lease. Note that at lease end the dealer might ding you for cost of new tires, brakes, dings and scratches, etc.

Yep that's why all roads lead to minimum 1 more year of leasing, which will bring the money owed closer to the value of the car. Which I saw coming, I just didn't know what sort of tactics they'd pull. And actually they were a real good couple of dudes to work with. I know I can get out early just as if I were trading it in as if I owned it. It seems to be really that simple.