topic Re: Questions on a Lease in Auto Loans

Questions on a Lease

Anonymous — Mon, 25 Nov 2013 15:19:37 GMT

Hello Everyone,

I am looking for some advice from someone in the know on my current situation and whether or not this will work. My wife and I are looking to trade in our cars for new vehicles. We would like to both lease new vehicles since we are in a better credit situation and also no longer commute the long distance we used to when we lived in our old house. The question stems from the amount of negative equity that we have and how much we have to put down.

We have $4500 in negative equity to recover from which stems from our bad credit past. One vehicle is even on LTV and the other is $4500 negative. To off set this we have about $3000 to put towards the negative equity but since it is from one vehicle I am not sure if we can split it between the two leases. Basically I want to put $2000 towards the negative and carry the difference of $1250 on each lease putting $500 towards the first months payment on each lease. In addition Toyota is offering $750 cash towards the lease of both vehicles.

The vehicles in question are a Toyota Camry valued at 28K and a Toyota Tacoma valued at 32K. Please tell me if I am looking at something unrealistic with the LTV and carrying negative equity on the leases. My goal is to get rid of both cars that are in need of maintenance and drive new cars for three years with little to no maintenance. Once the leases are up we would buy a cheap car at a good rate and lease another new car.

Our scores are ~ low 700's since we just closed on our house and we are in Texas if that matters at all. Thanks to everyone of this great community for all of your advice and wealth of financial resources.

Jimmy

Re: Questions on a Lease

Revelate — Tue, 26 Nov 2013 23:52:37 GMT

'Honestly not sure; that all depends on your income and your DTI calculations as to whether you can pull it off.

It strikes me as stretching; while the market is hot and some job sectors are booming, it may behoove you to hold off for a while especially as new homeownership can bring unexpected expenses.

I'm not an expert financial planner, but I think this isn't a highly defensible financial position you're advocating unless the cars are simply falling apart and not maintainable for any reasonable cost, leaving you with pretty much no choice.

Re: Questions on a Lease

Anonymous — Tue, 26 Nov 2013 12:51:49 GMT

Thank you Revelate,

I appreciate your opinion and I do think that it is probably not the best idea. We do have the income to support the new loans but as you said it just doesn't seem like the best idea. Sometimes it just helps to hear someone else say what you already know. Thank you for that!

Jimmy

Re: Questions on a Lease

Creditaddict — Wed, 27 Nov 2013 16:32:31 GMT

What are your current loan balances and monthly payments?
I don't know about dividing negative equity or why you would need to do it... Whichever lease has $1k negative will have just about $15ish+ dollar a month higher payments.