I made a stupid descision and now I can't take it back

[enharu]

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@maiden_girl wrote:

I purchased a 2015 Toyota Corolla LE Plus in a lease with option to buy after 36 months. The payments are $387 a month but I feel I paid too much for the vehicle and with a trade in, I don't think I got a fair price for my 2014 Kia Forte. Ive never traded a vehicle before so I didn't know what to expect. I knew I was upside down with the Forte when I traded it because I owed 14,500 and the car was only worth 11,000 in KBB. I feel like I will be upside down thousands if I try to end my lease agreement early with the Corolla or try to find someone to take over my lease agreement. I am willing to be without a car for a while. I admit that I made a really bad decision and should have kept the vehicle I traded in. I would like to correct the situation. However I am really unsure what to do at this point. I'm considering voluntarily vurrendering my vehicle--I'm unsure of the damage now but some insight will be helpful. I know there will be penalitites and my credit score will tank but I just can't stay in this bad car loan. In three years I will have paid 14k for this vehicle as a lease. I  just don't see this car as my forever car and I'm looking at all options to terminate this lease early without buying another car. PLEASE HELP!

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few things you can do.

1. bring your car to carmax or a used dealership and get it appraised. the amount you owe Toyota is the residual value + total amount of remaining payments. 

For instance you have 30 payments left and residual is 10k. you then owe toyota 21610 (387 x 30 + 10,000). If carmax is willing to buy your car for say 20k, then you need to come up with the remaining 1610 dollars.

Rarely, if you are lucky, the current appraised value may be even higher than, or same as what you owe. Which means you sell the car, Toyota gets paid in full, and you're done with not a single extra penny out of your pocket. You can also try selling the car via private party. Once you sell the car and pay Toyota in full, your lease obligations are done. There will not be anything negative on your CR. You just have a really new lease account that is recently opened and then closed and paid in full.

2. swap your lease. Check out swapalease, leasetrader, etc. 

if you negotiated a good rate, it is easier for others to take over your lease. But to be honest, 387 / month is going to be hard. People can get a BMW / Mercedes at that price per month for a lease. More than likely you will have to provide some sort of incentive (such as a few thousand "discount") for others to assume your lease. For instance, if most people are leasing a similar Corolla for 300 a month, then you may want to offer a 87 discount to them each month by paying for it yourself. You will need to write the full amount to them upfront.

Toyota will need to run their credit, and once they are approved, you guys will do the paperwork and have the car inspected. The person interested in taking over your lease has to pay around 400-600 dollars for processing fee, and I think they need a 679 credit score if you were approved for tier 1 rate. 

Once that is done, all your obligations with regards to this car is done. There will be nothing negative on your CR. Even if that person doesn't pay Toyota or destroys the vehicle later on, you are not responsible at all and it will not affect you.

3. Insurance claim if vehicle is totaled. No, I'm not telling you to intentionally crash the vehicle or drive it off a cliff. 

In most cases, the sweet spot to get out of a lease is after 2 years. That's when you lose the minimal amount of money when you decide to sell the vehicle or trade the lease away, though it depends on the vehicle's residual value and your payment amount. if you bought the vehicle at MSRP and didn't really negotiate on the price, then chances are you are going to get shafted regardless of what you do.

[coterotie]

Your buyer's agreement will show you how much they gave you for the KIA on trade.  So look there to see what kind of "deal" you got.  Then take information about the car you purchased to KBB.com plug the numbers and see what the dealer cost was on the vehicle you acquired.  This will give you the actual deal numbers.  Finally look at the residual value number, which is your cost to buy the car at lease end (if you want)

The negative equity is something you have/had to deal with.  You chose to deal with it monthly via this lease.  If the scores in your signature are correct, you likely got a pretty good interest rate to allow you to deal with this.  So of your $387/month, about $120 of it is dealing with your negative equity. So the car is costing about $260 a month.  Your MSRP was probably around 19K.    If you decide to try and get out of the deal it will likely cost you around 7,000 to 8,000 if you can sell the car outright.  If you allow it to get reposessed add another 2K.  Then you will be sued for the balance and a judgement obtained so add another 2K for that, plus the interest rate will be at least 12% on the judgement which will hound you for up to 20 years.  They can garnish your wages by taking 25% right off the top, before you ever see a dime.  Those nice credit scores will be gone and likely some of the credit card companies will cancel your cards.

So bottom line you need to suck it up for a couple of years, enjoy the car, take care of it and be better prepared the next time you decide to buy a car.  If you will suck it up this time, you can get your next car without having to deal with the negative equity.  This will give you a much wider range of options.  Also, trading a car after a year or two is about the worst thing you can do.  If you just have to have a new car every few years, then a lease is the only way to go.  Or buying 7 year old used cars that retain their value.

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@maiden_girl wrote:

I purchased a 2015 Toyota Corolla LE Plus in a lease with option to buy after 36 months. The payments are $387 a month but I feel I paid too much for the vehicle and with a trade in, I don't think I got a fair price for my 2014 Kia Forte. Ive never traded a vehicle before so I didn't know what to expect. I knew I was upside down with the Forte when I traded it because I owed 14,500 and the car was only worth 11,000 in KBB. I feel like I will be upside down thousands if I try to end my lease agreement early with the Corolla or try to find someone to take over my lease agreement. I am willing to be without a car for a while. I admit that I made a really bad decision and should have kept the vehicle I traded in. I would like to correct the situation. However I am really unsure what to do at this point. I'm considering voluntarily vurrendering my vehicle--I'm unsure of the damage now but some insight will be helpful. I know there will be penalitites and my credit score will tank but I just can't stay in this bad car loan. In three years I will have paid 14k for this vehicle as a lease. I  just don't see this car as my forever car and I'm looking at all options to terminate this lease early without buying another car. PLEASE HELP!

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[maiden_girl]

UPDATE 12/8/14

Hello all,

Thank you for the advice. Some of it was useful in determining what would be the next step for me. I ended up selling the Toyota lease back to Toyota but it cost me 8k out of pocket to actually do this. I went to several different dealerships and most of them only were offering 12-13k for the car. It was a brand new 2015 Toyota and I was asked to come up with an obscene amount of money from a few places--including Carmax who only offered 14,000 for the vehicle. I ended up selling it to a Toyota dealership for 16k and my loan was for 24k--why so high? 4k of the loan was a roll over from my trade-in. I only received about 10k for that vehicle on top of buying the Toyota at full price. I was out of pocket 8k but that was fine with me, just as long as I got out of that car loan.

I did attempt to do a lease swap but Toyota was being difficult with that. They told me I had to make 6 months worth of payments before I could do that--I even said I would make 6 months worth of payments in a lump sum to do a lease swap...they said no...6 calender months. I was also told I couldn't sell the vehicle because it was leased and that I had to do a lease buy-out before I could sell it... making the payments go from still manageable 388 to almost 500 dollars. I was actually advised not once but TWICE by Toyota Financial to let the car voluntarily surrender or "risk" REPO. I was even faced with rude agents that said, "Oh well thats too bad. You should've thought about that before you signed the contract." True in a sense but man do you have to be that rude about it? In the lease agreement, it didn't include an APR or anything so no idea what that was or if it was even included in my contract. I was told it was .05% because I was paying principal only but who knows. I only made a single month payment on it and vowed not to make another. The vehicle was sold prior to my second month payment coming up. I purchased the car during a bad time in my life and wasn't thinking about the consequences of my actions. Did I make a mistake? You bet. Will I repeat this mistake? Hell no.

[Creditaddict]

Well I will refer to a Suze Orman saying on this one "If it makes you feel more powerful, that you will be more powerful" and while financial speaking this whole thing may not seem like a great end result to me it clearly has lifted a huge weight from you and that's what matters... You can go on to get a different car in a way that makes you feel empowered to do so and will be better off in the end.

Glad you got it sorted out

[maiden_girl]

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@Creditaddict wrote:

Well I will refer to a Suze Orman saying on this one "If it makes you feel more powerful, that you will be more powerful" and while financial speaking this whole thing may not seem like a great end result to me it clearly has lifted a huge weight from you and that's what matters... You can go on to get a different car in a way that makes you feel empowered to do so and will be better off in the end.

Glad you got it sorted out

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Thanks creditaddict. Financially speaking, my thing was to either walk away out 8k up front now or keep it and be out 14k long term on the lease knowing I wasn't going to keep the car. Either way, I was going to be out something rather it be sooner or later.