I know i know.
Just hear me out.
So in Oct of 2014 my spouse and I purchased a 2015 vw golf (non diesel, though we will get to that in a minute.) We initally planned to do the loan in my name, but my credit, (still recovering from a shortsale on my old home) was in the high 500 range. We put it in her name only, and because we had negative equity in our previous trade, we ended up financing in solely her name.
Her credit scores from all 3 are in the 720-735 range. We got a so so rate (5.05%) mostly on account of the sheer amount that we financed and the term (over 72 months).
To make a long story short, the value of the car has simply not held up, given vw's emissions scandal. I'm starting to worry about the long term costs of vw ownership, which I know are on the average, higher than japanese or domestic makes. However, what nada says my car is worth (14800, she is in tip top shape, 29k on the odo) is far below my outstanding balance, (which sits at right around 23k.).
After doing the math, it seems like I'll never actually come out ahead as far as equity is concerned....basically, not until the car is paid off.
I've had some people suggest leasing as a way to get rid of the negative equity...in simple terms, if could get a car on lease that is on manfrs' special, i could probably end up with roughly the same payment, but on a newer car that wont have any miles and will hold hits value better. (to mileage: i drive less now then i did most of the first year we've had the golf, so i wont have the same mileage a year from now on a newer car. to the value: we plan on getting something like a subaru or honda).
Granted, the only way this would 'work' is if the dealer let us walk away from the lease after 3 years. In 3 years, we'd be roughly in the same place as the golf: still too much negative equity and trading out would still drag some of that amount with us. Or, in 3 years, we could walk away from a vehicle that, yes, probably would still be too much to finance and keep...but as long as i was within my lease terms....thats it for the negative equity right?
My credit score has improved (630 range) and hers is still great (same as above).
Does this sound like a reasonable scenario?
Would purchasing a car that has lots of incentives on it be a better alternative? (certain hondas and toyotas have 4-5k off sticker currently....i figured that would help take the sting off of some of the negative if the lease doesn't sound feesible)
all thoughts are welcome.
