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New Contributor
b1gr3dmachin3
Posts: 184
Registered: ‎07-08-2013

Paying off lease faster?

I currently have 2 leased cars at 311/month and 428/month. Would there be any advantage for me if I paidd more each month to pay them off faster? Would I pay less interest? I'm not really that knowledgable about car loans (these are my wife and I's first cars!). Next time I will probably purchase our cars since I've heard that is better. Thanks for any advice, really appreciate it!

BoA 123 $2.5k (11/12) // Discover It $2.5k (7/13) // Citi Forward Student $2.5k (7/13) // Chase Freedom 2.5k (12/13) // Amex PRG NPSL (12/13)

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pizzadude
Posts: 8,123
Registered: ‎01-28-2010

Re: Paying off lease faster?


b1gr3dmachin3 wrote:

I currently have 2 leased cars at 311/month and 428/month. Would there be any advantage for me if I paidd more each month to pay them off faster? Would I pay less interest? I'm not really that knowledgable about car loans (these are my wife and I's first cars!). Next time I will probably purchase our cars since I've heard that is better. Thanks for any advice, really appreciate it!


I don't think you'll save any interest by paying your lease early, but you'll need to check the lease agreement to know how they'll apply extra payments....

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
New Contributor
b1gr3dmachin3
Posts: 184
Registered: ‎07-08-2013

Re: Paying off lease faster?


pizzadude wrote:

b1gr3dmachin3 wrote:

I currently have 2 leased cars at 311/month and 428/month. Would there be any advantage for me if I paidd more each month to pay them off faster? Would I pay less interest? I'm not really that knowledgable about car loans (these are my wife and I's first cars!). Next time I will probably purchase our cars since I've heard that is better. Thanks for any advice, really appreciate it!


I don't think you'll save any interest by paying your lease early, but you'll need to check the lease agreement to know how they'll apply extra payments....


Okay thanks...I'll review it and see what it says. I just wanted to see if I had any options to save money!

BoA 123 $2.5k (11/12) // Discover It $2.5k (7/13) // Citi Forward Student $2.5k (7/13) // Chase Freedom 2.5k (12/13) // Amex PRG NPSL (12/13)

Starting Score: No Credit History (11/12)
Current Score: Discover Fico 768 (7/13) Discover Fico 701(11/13) Chase Fico 737 (12/13)
Goal Score: 750+


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Established Contributor
Luscher
Posts: 681
Registered: ‎03-24-2013

Re: Paying off lease faster?

I have a lease through TFS. In june i paid my lease all the way up until january. so my next payment isn't until next month and i hunt paid since june.
Moderator
pizzadude
Posts: 8,123
Registered: ‎01-28-2010

Re: Paying off lease faster?


Luscher wrote:
I have a lease through TFS. In june i paid my lease all the way up until january. so my next payment isn't until next month and i hunt paid since june.

Yep, I think that is how most leases work; extra payments just push out your due date on your next scheduled payment....

March2010 FICO® ~ 695 TU, 653 EQ, 697 EX
Mega Contributor
Creditaddict
Posts: 16,868
Registered: ‎10-23-2007

Re: Paying off lease faster?

Do you want to keep the car after the lease?

Fico Scores: EQ 620, TU 675 & EX 703 (4-1-14)
Joint Cards: Navy NavCheck $15000, Discover iT $9000, Macy Amex $4000, Macy Store $3000, Macy Furniture $5800
AU: Virgin America $8500, CSP $27,000, Fidelity Amex $25,000, AA Biz $25,000, Barclay USAir Biz $6640
Mine: Navy NavCheck $3000, Kay Jewelry $2700, Pottery Barn $2800, FleetCard MC Biz $1800, HSN $1500, Vitacost MC $1500, Navy Cash $1500 and nRewards $1500, Bill Me Later $772, Cap1 Sony $750, Cap1 Spark $750, Best Buy MC $750, GE 76 Gas $650, Von Maur $600, Cap1 QuickSilver $500, Burbank CU $500, Kohls $300, Target1 $300, Target2 $300, Buckle $250, Express $250, Target3 $200
Frequent Contributor
coterotie
Posts: 375
Registered: ‎11-30-2012

Re: Paying off lease faster?

[ Edited ]

Leases aren't loans.  They are rental agreements.  So there is nothing to "save."  The only savings could be tax savings by pulling payments into a different tax year for business expense tax deductions.  A viable strategy if you have some large bonsuses that will be paid prior to eoy.

 

In fact if interest rates were higher, a better strategy would be to pay them "late" up to the penalty date and earn interest on the payment amount since the payment is not affected by timing or principal balances.

 

 

New Contributor
b1gr3dmachin3
Posts: 184
Registered: ‎07-08-2013

Re: Paying off lease faster?


Creditaddict wrote:

Do you want to keep the car after the lease?


Yes, I would like to keep one of the cars after the lease is up. The other one I'm not sure about yet. Why do you ask?

BoA 123 $2.5k (11/12) // Discover It $2.5k (7/13) // Citi Forward Student $2.5k (7/13) // Chase Freedom 2.5k (12/13) // Amex PRG NPSL (12/13)

Starting Score: No Credit History (11/12)
Current Score: Discover Fico 768 (7/13) Discover Fico 701(11/13) Chase Fico 737 (12/13)
Goal Score: 750+


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Mega Contributor
Creditaddict
Posts: 16,868
Registered: ‎10-23-2007

Re: Paying off lease faster?


b1gr3dmachin3 wrote:

Creditaddict wrote:

Do you want to keep the car after the lease?


Yes, I would like to keep one of the cars after the lease is up. The other one I'm not sure about yet. Why do you ask?


The newer the car the lower the interest rate you could get to buy it... might be worth to do the numbers if you bought it out now vs. wait until the end of the lease.

I recently looked at this on our Kia.

Fico Scores: EQ 620, TU 675 & EX 703 (4-1-14)
Joint Cards: Navy NavCheck $15000, Discover iT $9000, Macy Amex $4000, Macy Store $3000, Macy Furniture $5800
AU: Virgin America $8500, CSP $27,000, Fidelity Amex $25,000, AA Biz $25,000, Barclay USAir Biz $6640
Mine: Navy NavCheck $3000, Kay Jewelry $2700, Pottery Barn $2800, FleetCard MC Biz $1800, HSN $1500, Vitacost MC $1500, Navy Cash $1500 and nRewards $1500, Bill Me Later $772, Cap1 Sony $750, Cap1 Spark $750, Best Buy MC $750, GE 76 Gas $650, Von Maur $600, Cap1 QuickSilver $500, Burbank CU $500, Kohls $300, Target1 $300, Target2 $300, Buckle $250, Express $250, Target3 $200
New Contributor
b1gr3dmachin3
Posts: 184
Registered: ‎07-08-2013

Re: Paying off lease faster?



Creditaddict wrote:

b1gr3dmachin3 wrote:

Creditaddict wrote:

Do you want to keep the car after the lease?


Yes, I would like to keep one of the cars after the lease is up. The other one I'm not sure about yet. Why do you ask?


The newer the car the lower the interest rate you could get to buy it... might be worth to do the numbers if you bought it out now vs. wait until the end of the lease.

I recently looked at this on our Kia.



Good point, I was thinking of buying it early too, however I thought you weren't able to buy early from a lease unless you pay large fees?

BoA 123 $2.5k (11/12) // Discover It $2.5k (7/13) // Citi Forward Student $2.5k (7/13) // Chase Freedom 2.5k (12/13) // Amex PRG NPSL (12/13)

Starting Score: No Credit History (11/12)
Current Score: Discover Fico 768 (7/13) Discover Fico 701(11/13) Chase Fico 737 (12/13)
Goal Score: 750+


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