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First time leasing a car

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kkuron
New Visitor

First time leasing a car

I have been researching but still a lot of unanswered questions. 

Here a little backround. 

I bought a new car in 2011. First time car buyer - I was stupid, gullable, naive and had no idea what I was doing. I was just super exited to have a new car. 

I still hve about 16000 left on a 25000 loan. Now I need a bigger car. We have a baby which needs a car seat, stroller and we have a dog. When we want to go on a trip, we have to take two cars. I cant really afford to trade my car in and end up being upside down. Also my monthly payment is $400..

Now I am looking in leasing a car. I wrote a few question down that I will be asking at the dealer ship before signing anything. I hope these a good uestions to ask:

-Down payment needed

- gap insurence offered

- millage per year

- What happens when there is damage to the car at the end of the lease

- what is considered normal wear and tear

- what happens if I have an accident (besides insurance payment + gap insurance) will I have to pay anything

- if car is totaled will I get a new car

- When does term exactly expire

- Lease end value

- What happens if the car is less worth when I give it back

 

My actual questions. And I hope somebody can help me before Igo to the dealer. 

Can I trade in/ selll my old car? Will it affect the lease deal? Its a 2012 ford focus SE. I love it but I its just too small for us.

Are there any other questions I should ask? Anything else I need to pay attention too?

Also, more importantly, after a few hardships last year my credit score isnt the best right now. Somewhat over 600 I believe. But I have never missed a car payment  or was late on a payment. Will that effect the deal?

 

I hope somebody can give me answers to all my questions. I dont want to walk into the dealer and give the impresion I dont know what I am doing.  

 

Message 1 of 6
5 REPLIES 5
Remember0
Valued Contributor

Re: First time leasing a car

Since you seem to be new to the game, let me suggest my thread on financing and leasing. It's a bit long, but I think you'd be well served by reading it...

 

http://ficoforums.myfico.com/t5/Auto-Loans/The-Definitive-Guide-to-Financing-or-Leasing-a-Car/td-p/2...

 

As far as your questions, I've numbered them in the order they were asked. I recommend you read the link above for better context:

 

1) I recommend putting no more than 1 month + fees down on a lease. To lower MF, try getting them to accept a security deposit. We can't tell if you'll be forced to put down a bigger payment without more info. Look at this thread ( http://ficoforums.myfico.com/t5/Auto-Loans/Do-I-qualify-for-an-auto-loan-Info-that-is-needed/td-p/22... ) and post that info here for more guidance.

 

2) GAP is included with most leases. Otherwise, dealership GAP is a ripoff usually. Be sure to quote with your auto insr co.

 

3) Not sure what you mean by mileage per year? If you exceed, you'll have to pay at the end some pre-agreed fee per mile.

 

4) They assess it, value the damage, and you're liable for it.

 

5) Can't expand too much on it...seems self-explanatory?

 

6) No, but you can lose your down payment if the car is totaled.

 

7) No, you get nothing. The insr + gap pay off the lease and call it a day. You get a rental for a couple days if you have that coverage.

 

8) Depends on the term you sign for?

 

9) Called residual, you need to ask/compare this upfront.

 

10) Nothing. You owe nothing extra. Rarely happens, but the finance company has to swallow the loss in value. Unless the value loss is due to damages, that you'll pay for.

 

11) Yes, you can sell/trade-in. If done at the same dealer as purchase, it counts as a down payment on the lease if you owe less than what they give you. If you owe more, up to a certain amount it can be rolled into the lease. I'd go ask Carmax how much they'd give you for it today before going to the dealer. A dealer once lowballed me 20%. If you want to know if it can be reasonably rolled in, tell us how much you owe as of today and all of KBB's Trade in values (fair, good, and very good). Even better, tell us what you owe and Carmax's offer. You have no obligation to sell to carmax, you can just go and ask for an offer. However, I do NOT recommend going to Carmax unless you will DEFINITELY be buying a new car within 6 days.

 

12) Read my thread for how to negotiate a lease/purchase and not get fleeced. The longer you are willing to drive for your car, the cheaper it generally will be.

 

13) Your lower credit score will definitely affect the deal. It'd help to have a exact number (600 and 670 will yield FAR different APRs)...but if it's low 600s, expect not-so-favorable terms. Not missing a car payment though means your Auto enhanced fico (what the dealer uses) will most likely be higher than your regular fico. That'll help you a bit depending on what exactly your auto enhanced is (only the dealer can find out).

 

My questions for you: What car(s) are you looking at specifically? And new or used?

Message 2 of 6
kkuron
New Visitor

Re: First time leasing a car

thank you so much for your help!

 

I will be answer your question from bottom to top.

 

Thank you for your answer. First I was looking in buying a used car. But I dont think you can lease a used car right? I was looking for a mid size SUV or maybe a bigger Crossover. 

 

My credit score is actually exaclty 670 as of now. 

!

I owe 16423 on the car.KBB value for

fair:9,562

good: 10,937

very good: 11,480

I only copie the lowest value. I bellieve my car is somwhere between good and very good.

 

I will have to go to carmax tomorrow. But i will go there tomorrow mornng and to the dealer right after.

" I do NOT recommend going to Carmax unless you will DEFINITELY be buying a new car within 6 days."

why do you not recommend this?

 

I am still reading your thread.

 

Message 3 of 6
Remember0
Valued Contributor

Re: First time leasing a car

Where'd the 670 come from? This site or another one? Also what bureau? If you have a 670 FICO, I think you can work a good deal...esp since it doesn't include the good auto loan history.

 

You TECHNICALLY can lease a used car, but that's a terrible, no scratch that, atrocious, idea in most cases. Why do you want to lease in the first place? Not planning on keeping the car you buy?

 

Carmax's offer is valid for 7 days. After 7 days you can always have your car re evaluated. But I'm a little paranoid that they'd bring down the second valuation with a BS reason (more mileage than before).

 

Regarding your current car, ouch! I'm sorry to say but you overpaid too much...please negotiate better this time on the price (do NOT negotiate on payments, I'm guessing that's what you did last time). Feel free to ask here if you have a good deal and ask the dealer for time before signing. Also do your negotiating online.

 

More importantly, I think you'd get around 10.5k or 11.0k for your car at a place like Carmax (and if you get the carmax offer, dealer will match). That leaves you with 6k negative equity. This depends on the exact car you buy and how well you negotiate, but it'll probably be impossible to roll all of that into a new lease/purchase. Maybe they can roll 3k at most (unless the new car has a lot of manufacturer incentives). I think you're going to have to put down like 3k if you want to get rid of your 2012 Focus and its payments...maybe a dealer can work magic, but I doubt 6k is possible to be honest.

Message 4 of 6
StartingOver10
Moderator Emerita

Re: First time leasing a car

Remember0 has some excellent information for you in his threads that he provided and in his answers to you.

 

Leasing is not something I would recommend except in very rare circumstances. There are no benefits to you other than a slighly lower payment, but the restrictions to get to that payment are extremely difficult to meet.  Also the lower payment is generally outweighed when you turn the vehicle in at the end of your lease and get hit with a bunch of fees.

 

Others will jump in here and extol the virtures of a lease. Review the information and weigh it against your specific situation.

 

A red flag that I saw in your post was the fact that you want a bigger car to vacation in since your family has grown. You can accomplish the same thing by renting a vehicle to drive to your destination during your vacation. Simple as that.

 

Right now you are upside down and if you trade into another vehicle - that negative equity doesn't just go away, it is transferred to the new vehicle. You would be lucky to have only $3k transfer over (in real dollars). Especially with a lease.

 

This is the time to be extremely careful. You have a new baby. They are expensive Smiley Happy Before you throw away $6k on negative equity swap around... pick up Dave Ramsey's book "Total Money Makeover" and read it before you make any decision on purchasing a new vehicle. http://www.daveramsey.com/home/   JMHO.

 

Consider taking the money you have and putting it against the current vehicle and then refinacing it with DCU. Smaller payments will make you smile while you get your finances in order.

Message 5 of 6
nycsimone
Regular Contributor

Re: First time leasing a car

Can you trade in your car? Yes.

 

Here's the problem. The trade-in value for your car (assuming 40,000 miles) is around $8,500-$9,000. If you owe $16,000 on it, that means you're going to be in the hole about $7,000.

 

So now the big question. Do you have $7,000 to make up the difference? If no, then that's ok. However, you're going to have to find a car to lease that is able to absord most of that $7,000...and the problem is that there's not that many around.

 

You're going to have to find a car that has at least $3,000 in incentives right off the bat. Then, you're going to have to negotiate and get down to invoice price on the car. That right there should get you to $5,000+. Hopefully you can put down at least $2,000 for the rest.

 

You should look into something like a Nissan Murano or similar. Go to Truecar.com and see how much off you can get in your area. In my area it looks like about $6,300 off MSRP. That's the kind of deal you need.

Message 6 of 6
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