Reply
New Member
goRH
Posts: 1
Registered: ‎03-11-2011
0

Urgent question regarding early lease termination options!

Hello everyone! I need your wise advise on an urgent decision that I have to make. I will try to make long story short.

 

I am trying to get out of lease early and purchase new car in about 5~10 months. My lease still has 20 months left. (by the way, this is a 2nd car)

 

Current Buyout: $44800

 

Price that I can sell the car for (quoted appraisal from dealer): $37000

 

Months left on the lease: 20 months left on a 36 month lease

 

Current Miles: 10000 miles used out of 30000 miles allowed   (36 months/ 10k miles per year)

 

At the end of lease, I have to pay about $1300 to fix the car and $2000 to change tires.

 

Insurance is $100 per month for this car.

 

 

I am trying to decide between two options listed below. I am aware that either option will give me financial damage.

 

1. Get out of the lease right now by selling the car. Wait 5~10 months and purchase the car I want.

 

2. Use the leased car for another 5~10 months and trade in the leased car to the new car that I want at that time.

 

Which one is a better choice financially?

 

Is it always better to sell the car as late as possible towards the end of lease? (if one is planning on getting out of lease soon or later?)

 

Thank you for your help!

 

 

 

 

 

 

Valued Contributor
Dustink
Posts: 3,097
Registered: ‎10-02-2012
0

Re: Urgent question regarding early lease termination options!

[ Edited ]

You have only had the car about a year. Why do you need another car so soon?

 

Can't you just stick it out the three years? Get the car fixed (cheaply) before you bring it back to the dealer. Slap on some used tires that are good enough to pass the dealers inspection.

 

If you are doing this because your payment is too high. Getting out of it will only cause greater problems.

Too many INQs & low AAoA so I'm off to tend the Garden.     Age:23    


     $17k       $8.5K          Closed          $19k      $6.5k        $24.2k        Closed         $5k       Closed     $8.5k        Closed      @2.49%
Epic Contributor
Creditaddict
Posts: 22,064
Registered: ‎10-23-2007
0

Re: Urgent question regarding early lease termination options!

What is the Car?

What is the payment?

What is wrong with it to be fixed?

 

Fico Scores: EQ- 626 Overstck., TU 696 Walmart, EX 695 Chase (11-05-14)
You will have to put up Electric Fence to keep me in the garden!
Highest Limit: Navy Federal Cash Sigi Visa $50k (AU)
Lowest Limit: Target $200
66 Cards and Counting :smileytongue:
Community Leader
Senior Contributor
StartingOver10
Posts: 4,529
Registered: ‎03-06-2010
0

Re: Urgent question regarding early lease termination options!

Help me out here....how can you sell a car you don't own?

 

A lease doesn't give you the right to sell your car, does it?

 

I agree with the others. Stick it out until you can turn in the vehicle per the lease. If you don't have the money now to make the payments, then go through your budget to find the extra funds monthly.

 

What happened to the car?

Epic Contributor
Creditaddict
Posts: 22,064
Registered: ‎10-23-2007
0

Re: Urgent question regarding early lease termination options!


StartingOver10 wrote:

Help me out here....how can you sell a car you don't own?

 

A lease doesn't give you the right to sell your car, does it?

 

I agree with the others. Stick it out until you can turn in the vehicle per the lease. If you don't have the money now to make the payments, then go through your budget to find the extra funds monthly.

 

What happened to the car?


This is why I don't understand why people are so terrible on leasing... I don't get the "you don't own it part, when you turn around and finance it... YOU STILL DONT OWN IT!"

A Lease is renting the car for the term of the lease based on what they predict the value to be at the end of the term of what you lease it for. so simple:

$30k car you want for 1 year

they say the car will be worth $20k in 1 year.

so you pay $10k over the term of that 1 year and then give it back to them or you may buy it (cash or trade or finanace) at that predetermined value they set at the start of your lease... in this case being $20k.

 

so in OP's case, He has to finish making all the payments for the lease term, then add in the (residual value) what they determined the car would be worth at the end of his lease and usually a small fee for closing out the lease and blah blah blah = a payoff... just like if you were financing the car you would have a payoff.

so similar to trying to sell or trade in a new car that you may have financed for 60 or 72 months and are only 1 year in, you have not really paid into it enough to catch up to the equity that was lost for driving a brand new car off the lot... a lease is similar, the longer you keep it into the lease the closer you have the chance of being at the payoff or actual value of it.

Fico Scores: EQ- 626 Overstck., TU 696 Walmart, EX 695 Chase (11-05-14)
You will have to put up Electric Fence to keep me in the garden!
Highest Limit: Navy Federal Cash Sigi Visa $50k (AU)
Lowest Limit: Target $200
66 Cards and Counting :smileytongue:
Community Leader
Senior Contributor
StartingOver10
Posts: 4,529
Registered: ‎03-06-2010
0

Re: Urgent question regarding early lease termination options!

[ Edited ]

My reference is:  difference between leasehold interest and equity interest.

 

If you have a lease on a vehicle you have a leasehold interest and in order to have an equity interest you have to pay the entire leasehold interest then excercise your right to purchase to have an equity interest.

 

 

The leasehold interest is only a payment stream with no corresponding equity interest. You have to do step two to get to equity interest.

 

With a financed vehicle you have an equity interest - even if it is negative equity you have a finate amount due at a given point in time. JMO.

 

Edit to finish the thought!: With a lease you have other contingent liabilities you are responsible for that you don't know the costs of until your lease terminates. For example, charges for milage over the alloted amount + charges for dings and dents and other condition items when you turn in the vehicle.

Epic Contributor
Creditaddict
Posts: 22,064
Registered: ‎10-23-2007
0

Re: Urgent question regarding early lease termination options!


StartingOver10 wrote:

My reference is:  difference between leasehold interest and equity interest.

 

If you have a lease on a vehicle you have a leasehold interest and in order to have an equity interest you have to pay the entire leasehold interest then excercise your right to purchase to have an equity interest.

 

 

The leasehold interest is only a payment stream with no corresponding equity interest. You have to do step two to get to equity interest.

 

With a financed vehicle you have an equity interest - even if it is negative equity you have a finate amount due at a given point in time. JMO.

 

Edit to finish the thought!: With a lease you have other contingent liabilities you are responsible for that you don't know the costs of until your lease terminates. For example, charges for milage over the alloted amount + charges for dings and dents and other condition items when you turn in the vehicle.


okay, makes sense :smileyhappy:

Fico Scores: EQ- 626 Overstck., TU 696 Walmart, EX 695 Chase (11-05-14)
You will have to put up Electric Fence to keep me in the garden!
Highest Limit: Navy Federal Cash Sigi Visa $50k (AU)
Lowest Limit: Target $200
66 Cards and Counting :smileytongue:

myFICO is the consumer division of FICO. Since its introduction 20 years ago, the FICO® Score has become a global standard for measuring credit risk in the banking, mortgage, credit card, auto and retail industries. 90 of the top 100 largest U.S. financial institutions use the FICO Score to make consumer credit decisions.

>> About myFICO
FICO Score - The Score that matters
Click to Verify - This site chose VeriSign SSL for secure e-commerce and confidential communications.
Fair Isaac Corporation is a BBB Accredited Financial Service in San Rafael, CA
FOLLOW US Social Media Facebook Twitter Pinterest Google+
}