Negitive Equity on a Lease

[Anonymous]

I am currently 1 year intoa 5 year lease and the pay off on the car is 15k more than what the car is worth. Like a damn fool when i leased the car, i turned in a car that had negitive equity and rolled into the car im in now causeing me to be roughly 13-15k in negitive equity. My lease payments are as much as a mortgage at 895 a month. So heres the breakdown...

2013 Lexus GS350

Pay Off is 55,000

Blackbook on the Car is 40,000 

diffrence of 15,000

Would it be a smart decision to lease a new car but a much cheaper car say like a honda accord or a civic to just roll the negitive equity into it and just do a 2 or 3 year lease ? Would my payments be cheaper than what im paying now at 895.00 ?

[webhopper]

Hi and welcome to the MyFico forums!

Sorry to say but you likely won't be able to roll that much negative equity into a Honda accord.   Usually anything above 120% of NADA is not allowed.

My suggestion is to start throwing major money at this thing to get back into the positive equity catagory. When you have negative equity, the worst thing you could possibly do is roll it into something, especially a car which is expensive in its own right. You are essentially paying for both the new car and the old car at the same time.

I don't recommend doing anything different except for you to focus on paying this thing down as much as possible.

[Anonymous]

Your lease is way too long. I am in a 3 yr lease and the nice thing is, once I finish the lease, my negative equity is taken care of. I owed about $4900 on the car. The car was a trade in and wasn't even included in the lease payment from what I saw as they checked the box saying I had no trade in when I did in fact trade in a vehicle. I'm not sure why they did that. . But there was a small amount of negative equity. Did you have more than $4,000 in negative equity. My lease payment is $536 per month which included a maintenance protection plan and some upgrades. MSRP was $37K and I leased about half that amount. It was through Acura Financial. Part of the reason your payment is so high is the purchase price of $55K. Did you roll $15K of negative equity into that? I couldn't afford that high of a car payment. You're very blessed to have such a nice car!

[Anonymous]

Thanks for the welcome i wished i woulda known about this site before I got in crazy debt

Would i be able to pay more than monthly payment on the lease ? I didnt think that was possible,

[Anonymous]

Yeah i was a fool for a doing a 5 year lease the car is a great car and i can afford it, I just cant justify the 895 payments anymore. I figured if I got like a 20k car and were to roll my 15k into it i would be looking at 35k payoff vs me at 55k. Yeah my car isnt as nice as the GS but I would also assume my monthly payments would drop and I would do either a 3 year lease or 4..... 

[Dustink]

Yes, you can ay extra.

No, you cannot roll $15k in negative equity into another car. The reality is, you bought a depreciating asset with negative equity at the start. Just pay it off and don't make the same mistake next time.

[Anonymous]

Maybe I'll do that then i didnt think you can pay more than the monthly payment on a lease....

[Dustink]

Well then, instead of paying ahead on the lease. Which is pretty pointless since the costs have already been established and you would not be saving any money. Set money asside. Use the money you have set asside for the next car. Or, to buy this car at lease end if you so choose.

[Anonymous]

You can also save up the extra money until the balance drops on the lease equal to your savings and then pay it off. I'm pretty sure you can pay it off in full but no early partial payments.

Don't beat yourself up over this. I've done something very similar and have been in your shoes. I know it is not fun but it is a great learning experience and you will get a great deal on your next car.