andrewmp6

Yeah im just trying to figure out whats gonna be the cheapest option for him.

Basslicks

Probably the best thing to do at this point would be secure a private loan to cover the difference between the value of the car and the balance of the lease PLUS the payoff, sell the car to a private party at PP value, then buying a car with CASH for 4 or 5 thousand dollars.

That's what I would do... and it's what I lot of financial gurus will tell you as well.

aroundincircles

without knowing specific numbers, That's hard to say, but buying a reliably beater for cheap (I recently bought a 2003 olds alero v6, working a/c and only 100k miles on it for $2000 so it can be done) and finding a buyer for his vehicle is probably the best option. but that is a difficult thing to do. when my brother did that, it took months and a few different buyers to get it right.

The other option of taking out a loan to buy it out vs buying a used car and just waiting out the term, no longer driving the car except the occasional weekend, we would have to know how much he's paying, how much the car is worth, and if he can even get a loan for that amount of money. (which is something I doubt) or get the cash together to cover the difference between what he can get a loan for and the price of the buyout.

BruceB

Leasing a vehicle is just a different way of financing it. You the customer negotiate the price (capitalized cost) trade in allowance and cash down. You the customer also agree on how many months and what your expected mileage will be. The termination date of the lease and the anticipated mileage create the "residual value" or what the vehicle is expected to be worth at the end of the lease, this is also your fixed purchase option if you decide to purchase it at the end of the lease. The payments are based upon an average monthly depreciation (cap cost - residual value / by the term)=AMD plus a monthly finance charge, which usually commensurate with A tier interest rates. Now if you exceed the mileage agreed upon, the penalty per mile is to adjust the residual value because the vehicle has devaluated more than anticipated. This factor, along with excessive wear and tear, mismatched or bald tires, damage, neglect and other factors that would make you not to want to buy the car are factors that also affect the end of term value and are the responsibility of the customer. The dealer makes their income at the initial point of sale based on the cap cost or selling price to the lease company. The manufacturer has already made their money when they sold the car to the dealer for inventory. Most leasing is done by the manufacturers captive finance arm. Their mission is not necessarily to make profit, but to capture customers who would not normally be able, or willing to pay the payments on a regular finance contract, thereby selling another automobile from the dealers inventory and then for them to replace it. Equity? never, the lease is paying down based on an average monthly depreciation whereas any new vehicle will depreciate 15% to 20% once you drive it over the curb, regardless how you pay for it. Some where around 80% to 85% through the term the actual cash value of the vehicle and the lease balance comes close, and if all goes as designed, the vehicle will be worth the end of term value at the end of the contract. Leases can be written for up to 20000 miles per year, but that also affects the residual value by lowering it, which increases the monthly depreciation, which means higher payments, therefore removing the advantage of leasing a vehicle for a lower payment and less down payment as compared to normal financing. Leasing is not for everyone, but does have great benefits for those who are normal mileage drivers and want a new car every 36 months without having to worry about trade in values or negative equity. This is just an FYI for those who are interested. If you found it helpful, good.

aroundincircles

That being said, Leasing is THE MOST EXPENSIVE way to buy a car. Period. Its a way to keep somebody stuck in payments for the rest of their lives. which is as close to slavery as somebody can put them selves into without actually being in slavery.

BlueRidgeMark

Sorry to hear you made such a terrible financial mistake.

What made you ignore the advice of every competent financial advisor out there and think you know better?

Oh, right. You wanted the nice shiny new car and you believed the salesman. Got it. Salesmen are always such good sources of unbiased financial advice, that of course you just took his word for it. Got it.


# 2? Forgive the excess? That is not going to happen. They LOVE guys like you. They live for guys like you. They make lots and lots of money on guys like you doing exactly what you are doing. They HOPE you go over. They are waiting for it, loving it. Yes, they might roll it over into the new lease. Then you will be in even deeper. Where did you get the crazy idea that leasing is a good thing?

#3? Heh. They know about that too. They've been doing this a looong time, and you will not beat them at their game.

#1 is a reasonable way out.

You are about to pay what some people call, a "stupid tax". You did a really stupid thing (leasing a car) and now you are going to pay. The only question is, how bad will it hurt.

Jeepin'_Aint_EZ

This is great. No sugar coating.

Willys55

screwed

BruceB

Did you miss this part---"Leasing is not for everyone, but does have great benefits for those who are normal mileage drivers and want a new car every 36 months without having to worry about trade in values or negative equity."

It was at the end of the paragraph..

aroundincircles

leasing is not for anybody, ever. its a terrible financial decision for anybody and everybody. I don't think I'm alone in this thread in that opinion.

BlueRidgeMark

I didn't miss that part. It embodies stupid.

Rogue4x4

Closing this thread.