…unless some all-knowing dopers can help me think this through. In my current riled up state, it seems that I am not thinking clearly.
The background:
I have a car that is coming off lease in May. The “remarketing” division of where I have been sending my $355 every month for the last 4 years sends me a packet with the new “numbers” with the payoff info if I want to keep the car. The fabulously generous folks at Car Company that Shall Remain Nameless offered me the following:
$330 a month for 48 months at 12.5% interest. :eek:
Apparently, they are claiming it is because my car is at equity and Iam WAY under the mileage they expected me to be.
Who in their right mind would throw another $15K into a car that is already 4 years old??? Mind you, the payoff amount is a little over $12K. This seems bizarre to me. Now what I need to do is get this car off my hands…I’m thinking of bringing it to a different dealer and seeing if they will take it off my hands, pay off the amount owed, and then I can start brandy new with a car that I will payoff and EVENTUALLY OWN.
No more leasing for me, man. :smack:
Anyone have any ideas? Or does Car Company That Shall Remain Nameless have me all tied up??
Hmmmm…when we leased our truck, our payoff amount was determined the day we leased it. We wanted to keep it at the end of our lease, so all we had to do was get another loan for the payoff amount. We could finance through whomever we wanted. The downside-our payments are $60 more per month. That interest you were quoted sounds high to me. We got ours at 5.25% I believe.
For us, leasing has turned into a pain, too. We won’t be doing it again, either.
I don’t know if I helped, but thought I’d relate our experience.
I thought one of the points of leasing is that you can walk away from the car at the end of the lease owing (and owning) nothing. Why would you need to find another dealer to “pay off the amount owed”? Shouldn’t there be $0 owed?
I won’t name my former leasing company either, but their initials are GMAC. I had 3 different leases through them, and each one ended up like that. Never took the car, and actually laughed at them the last time.
In a moment of sheer stupidity, I took a 0% car loan for my present set of wheels. Those are no picnic either, because they will get all over you like ugly on a gorilla if you’re 15 seconds late with a payment, and they won’t work things out if you get in a jam (unemployment was mine).
Next time, I’ll pay interest to a credit union and tell GMAC to pound sand.
Leases are a bad deal, m’kay. Walk away the wiser for it and never do it again. I’m told there are certain scenarios where leases make sense, but for average folks they’re just a waste of dough. Buy your next car, preferably with a bank or credit union loan. Best scenario, get the financing ahead of time, go to the dealer and get the best deal you can (lowest sticker price) and DON’T TALK FINANCING until you’re ready to close the deal, then spring your bank financing on them. You’ll get a better price if the salesman thinks he can get you to finance through the dealer, so don’t mention your (cheaper) outside financing till your butt is in the chair ready to buy.
That’s what I thought too. They are giving you the opportunity to buy the car, but you aren’t obligated to do so. When the lease is up you give back the car and the payments stop.
We always lease our cars and this has never been a problem. We bought our Explorer at the end of the lease and just paid the predetermined difference. Our BMW was the same way. My Honda was our most recent lease. At the end of the lease I could have paid $12000 and bought it or I could just walk away. Of course, I crashed it- so that’s not really an issue, now is it?
Chalk me up with the ‘screw it and walk away’ crowd. Why would you be so attached to this car that you had to have it? Walk away, owe nothing, go get a new one.
I think this may be the issue here…In my excitement 4 years back, I didn’t think to find out about that. :smack:
There is also a bit of body damage on the car (nothing MAJOR, but I can still see them overcharging me for the work that needs to be done). The main issue is is that I do not have that much expendable income, and I am afraid of what they will try to charge me for the body work–so it’s either pay THAT money which I dont have, pay $12,000 which I dont have, or make another $15,000 worth of payments on a 4 year old car. :dubious:
On the plus side, I have a family friend that may be able to get me a break…he knows most of the car dealers in my area…I’m hoping he can come up with something or someone that will be willing to help out.
Thanks to everyone, btw–I have definitely learned my lesson with the leasing. Boo! Hiss! Boo! :mad:
A balloon payment is not typically something you pay at the end of a lease. Balloon payments are a feature of retail contracts with residual value at the end of term.
These are popular in states where leasing is cost prohibitive or just illegal. For a balloon payment to work as a lease the contract ususally has an automatic purchase clause at the end.
If you do not have an automatic purchase clause you may be screwed. Find out what other lenders are willing to loan you so that you can cover the balloon. Usually the residual value is specified at contract sigining, so you may owe much more or much less than the car is worth. Asking other lenders to finance gives you a good idea of the residual value, because if they offer to cover the balloon amount you owe less, and if they don’t you are certainly screwed.
You do have a few options. Most banks would rather not loan you more than the value of the car, but many have no problem letting you roll the value of your new car + old car - trade into a new loan. But you are essentially paying interest on something you no longer own in that situation. Which blows.
Do not crash the car. Really. If you are upside down on the car you’ll just owe the money right away, because insurance will only cover the value of the car.
You may be able to sell the car via clasifieds or auto trader, which will get you a bit more than you might get in trade, and may get you enough that you can pay off almost all the car.
So:
Sell Car +you may actually make money - Lots of work. You may make no money.
Buy new car, use this as trade + You can definitely get the financing at a better rate - you may pay more interest on nothing.
Keep car + Might get a good rate through third party - three to five more years of paying for a car that will not be in the prime of its life.
If this is a business car there are some tricks you can do. But I will assume it is not.
I have to admit I don’t see the problem ? If this really is a LEASE, turn the car in at the end and forget about it. If you have any damage to the Car, and you are worried about it, get it fixed now by a reputable body shop. Buying your own car off lease especially recently is usually a bad idea because many car manufacturers increased the residual value to make the payments lower over the term of the lease. Basically, don’t purchase unless you couldn’t buy a similar car for the same amount or less money.