What to do With Car when Lease Ends - Help!

[Anonymous]

Hi there and thanks in advance for any help you can provide.

So I have a decision to make on what to do with my 2013 Mazda3 Hatchback that will be coming off of a 4-year lease in August. Unfortunately, I had lost my job last year and had to take up driving for Rideshare to pay the bills. Of course this was never the plan but that's life.

Currently the car has about 64,000 miles on it with some significant wear and tear. I like the car but seem to be paralyzed on what to do with it. My choices are to either buy out the car at around $11,000 or trade it it on something else. Perhaps something more Rideshare friendly like a hybrid. I keep going back and fourth on what to as I can argue it both ways.

I currently pay about $250 a month on the lease which is do-able. It was a low-mileage lease (10k a year) as at the time I leased the car I was not driving much. I have a 700 Credit Karma score which I'm not sure tells me anything. I am guessing my Auto FICO is higher as I have leased numerous cars in my lifetime with no late or missed payments. I know roughly if I buy out the car for another 3 years, my monthly payment will be in the low to mid $300 range.

Mazda Finance is emailing and mailingme constantly saying "do something, do something" LOL

My initial thought is to buy it out and just drive this baby into the ground and deal with a new car once I get settled in a new job. That way, I can save on starting over again with depreciation and excessive mileage. I can't afford to buy it out on a shorter term and am concerned that once more miles rack up on the car, there will be a lot more upkeep expenses. It seems to be a reliable car and a lot of people say that 64,000 miles is nothing on newer model cars.

On the other hand, trading it in on a new car with a new warranty is appealing as I can start over with no miles and a warranty and perhaps a car that gets better gas mileage.

It's a real challenge for me as a need a low monthly payment which is usually found with leasing but leasing is not suited for what I am using the car for (rideshare).

I know what the dealer wants; low ball me on my trade-in and sell or lease me a new car. But I also know that car sales are on the soft side and some are willing to make deals right now.

What to do?

[pipeguy]

Keep in mind that you will have to pay mileage overage on the 24,000 miles over the lease allowance if you turn it in, even at .15 cents a mile thats $3600 that you'll pay. Given the buy out price is $11,000 that means you are actually paying $7400 for the current car since you'll owe the $3600 anyway. You should check your lease papers and see what overage miles actually cost (if its 20 cents a mile you'll pay $4800 to turn it in). The actual buy price after the lease ends should also be listed in the lease agreement. 

Edit/Add: Looking at the Mazda site on a 2017 Mazda 3, 4 door, 3 year lease: 

1. MSRP $18,895 plus $875 destination charge. Payment based on capitalized cost of $17,465. Total payments of $7,167. Dealer participation required. Not all lessees will qualify for lowest payment through participating lender. Some payments higher, some lower based on residency and other factors. Lessee responsible for excess wear and mileage over 36,000 at $0.15/mile. Purchase option at lease end for $10,478 plus tax or price negotiated at signing. Take new retail delivery from dealer stock by 7/5/2017. See participating dealer for qualifications.

https://www.mazdausa.com/shopping-tools/special-offers-and-incentives

[Anonymous]

Well, I don't have thousands to pay the dealer so regardless of what the car is valued, unless a dealer is willing to take the hit, I have no choice to just negotiate the best buy price on this car as possible and just move on.

[StartingOver10]

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@Anonymous wrote:

Well, I don't have thousands to pay the dealer so regardless of what the car is valued, unless a dealer is willing to take the hit, I have no choice to just negotiate the best buy price on this car as possible and just move on.

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Yes, that's the downside of leasing.  It is one of those pay me now or pay me later conundrums. I agree with your conclusion - its better to do the buy out than to move the negative equity over to a new vehicle in my opinion. If you do decide to trade, this is where they will hit you hard on condition and milage. The dealer never takes the hit - they pass it on to you in the form of a higher price or higher interest rate or both, whatever they can get away with at the time of the trade. 

[Anonymous]

Agreed. My only thought was that many brands are soft on sales right now which may work to my advantage but probably not enough. Thanks again.

[StartingOver10]

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@Anonymous wrote:

Agreed. My only thought was that many brands are soft on sales right now which may work to my advantage but probably not enough. Thanks again.

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Some of the others on here are not as anti-leasing as I am so wait for them to respond. I put lots of miles on my vehicles so I would never consider a lease under any circumstances, but everyone is different and a few people have been successful in trading out to a better vehicle payment with a low even when they are upside down. Naturally, you would want to finance your next purchase so you don't have the milage restriction again. 

Hopefully some of the posters with successful trades will pop in and tell you what they were able to do in similar circumstances. 

[Anonymous]

Your so far over the mileage you really have already locked into buying this car, otherwise you will pay them a small fortune to take the car and have nothing to show for it.  I am sure you can finance that 11k with a credit union, take good care of it and it will go 200k so I would buy it and drive it till it won't drive anymore. Let us know what you decide to do and how it works out.