What would ATOT Do - Car Debt Question

[dmw16]

So here's the situation...

Right now we have two car payments. One is a loan payment of $287/mon for my wife's car and the other is a lease payment of $389/mon for my car.

The balance on my wife's car is about $10,500. I would guess we have a few thousand in equity in her car.

The remaining payments on my car is $9725 (25 months @ $389/mon). I would guess that we are about $5000 upside down on my car. I am also within 5000 miles of being over my mileage at which point it's 20cent per mile. (Yes, the lease was a bad move)

I'd like to eliminate one debt and I am trying to decide which option is best.

Option 1 - Pay off wife's car by the end of June (we'll have the cash by then).

Option 2 - Give VW (the lease holder on my car) the $9725 and give me car back and walk away and buy a beater.

Option 3 - List my car for sale and when I find a buyer just pay the difference between what is owed and what I get for the car. (sub-option: sell my car to a dealer like CarMax and pay negative equity in cash)

Option 4 - Trade in my car for something cheap and pay negative equity in cash and take on small loan (w/ short term) to pay for new car.

Some comments on each option...

Option 1 - This would eliminate our smaller car payment which would be nice, but the $389 for my car clearly hurts us more each month.

Option 2 - This option kinda sucks and is probably the stupidest method to get rid of my car. Probably not even worth considering, but I'll throw out all the options.

Option 3 - Finding a private buyer can be a long process and can be made more difficult since I don't hold the title. Going to a CarMax and selling the car to them eliminates that challenge, but I won't get as much. If I go this way I'd be looking for a $3000-$5000 car to get around in as a replacement.

Option 4 - Similar to Option 3 I guess. This would be more expensive than Option 3, but less expensive than Option 2. If I go this way I'd probably have to spend at least $8k since finding a decent dealer that sells stuff much cheaper can be hard (maybe I'm wrong, not sure what cheaper cars Kia and the like sell these days).

EDIT: I should probably add that this isn't a move I need to make. We can continue making payments without problems. I'm just tired of paying for cars.

 

[OCGuy]

1. Drive to TJ
2. Leave car running in front of la pharmacia as you shop for err...."essentials"
3. ......
4. Catch a donkey show
5. ......
6. Profit

 

[nickbits]

How much would it cost you to keep your car and pay the mileage charge at the end?

 

[dmw16]

Originally posted by: nickbits
How much would it cost you to keep your car and pay the mileage charge at the end?

Keep the car for the rest of the lease and then trade in?

Hard to say, but figure I went 39k miles in about 20 months, so I am guessing I'll be AT LEAST 20k over when I'm done.

So on top of the remaining lease payments, trading in would cost $4000.

 

[spidey07]

You're going to have to buy out that lease otherwise you're screwed on mileage. Buy it out now, or later. Your choice. Or buy a beater and put no more miles on the lease.

Depending on the leased car it could be actually worth more than what you're paying to buy it out.

 

[dmw16]

I don't want the car at the end of the lease. One way or the other I want to unload it. I'm just trying to figure out the right way to do that.

Probably either private sale or dealer trade-in (or sell to a dealer).

 

[torpid]

How many miles per year does your wife drive? Can you just swap vehicles with her and drive her vehicle for the extra miles with her driving less on your leased vehicle?

 

[nickbits]

Originally posted by: dmw16

Originally posted by: nickbits
How much would it cost you to keep your car and pay the mileage charge at the end?

Keep the car for the rest of the lease and then trade in?

Hard to say, but figure I went 39k miles in about 20 months, so I am guessing I'll be AT LEAST 20k over when I'm done.

So on top of the remaining lease payments, trading in would cost $4000.

I'd drop option 2 and add the "do nothing" option.

What exactly are you trying to accomplish anyway? And what are the interest rates on the loan and lease? Depending on the rates your best option may be to put the money in savings.

 

[dmw16]

Do nothing seems the same as saying lose money in this case. I could sell/trade-in the car and lose less than $97XX. So at the very least shouldn't I trade it in?

Wife's commute isn't defined yet as we are moving.

My goal is to spend less money each month on car payments and save some money along the way.

 

[dullard]

Originally posted by: dmw16
Hard to say, but figure I went 39k miles in about 20 months, so I am guessing I'll be AT LEAST 20k over when I'm done.

So on top of the remaining lease payments, trading in would cost $4000.

Since you don't really want to buy the car, and since you'll have to pay $4000 to keep driving the car, I say you have one clear option with that leased car. (1) Stop driving the leased car once you approach the mileage limit. (2) For ~$2000 you can get a beater and drive that beater until your lease is up. (3) Unload the beater (for roughly your full $2000 back) and unload the leased car. (4) Get a car you can afford. You said you'd have cash by June, so this is certainly a good option. You'll save roughly $4000 minus whatever additional costs it is to license/insure that beater. Plus, you can probably lower your insurance premium on the leased car (high deductible) if you aren't driving it.

As for your wife's car, pay off as much as you can afford, assuming the interest rate is high. Once it is paid off fully, you can decide if it is worth trading down to a vehicle you can truely afford. But, you should just enjoy months/years with no car payment. It is a wonderous feeling.

 

[chorb]

Originally posted by: OCguy
1. Drive to TJ
2. Leave car running in front of la pharmacia as you shop for err...."essentials"
3. ......
4. Catch a donkey show
5. ......
6. Profit

You are already profiting mentally from seeing a donkey show, no need to put "profit" twice.

 

[nickbits]

Originally posted by: dmw16
Do nothing seems the same as saying lose money in this case. I could sell/trade-in the car and lose less than $97XX. So at the very least shouldn't I trade it in?

Wife's commute isn't defined yet as we are moving.

My goal is to spend less money each month on car payments and save some money along the way.

Option 1-Makes sense if Wife's instrest rate is high
Option 2-Doesn't make any sense IMHO, even if beater cost <4K you have a beater for 2 years+
Option 3-You'd have to buy out the car first. You're not going to be able to sell a leased car.
Option 4-You can't trade in a lease. You can either purchase it for amount owing on the car (not the remaining lease payments) or pay off the lease and end up with nothing. Sometimes a dealer will pay off your lease for you but I highly doubt you'd get that worked out in this case.

 

[dmw16]

Originally posted by: nickbits

Originally posted by: dmw16
Do nothing seems the same as saying lose money in this case. I could sell/trade-in the car and lose less than $97XX. So at the very least shouldn't I trade it in?

Wife's commute isn't defined yet as we are moving.

My goal is to spend less money each month on car payments and save some money along the way.

Option 1-Makes sense if Wife's instrest rate is high
Option 2-Doesn't make any sense IMHO, even if beater cost <4K you have a beater for 2 years+
Option 3-You'd have to buy out the car first. You're not going to be able to sell a leased car.
Option 4-You can't trade in a lease. You can either purchase it for amount owing on the car (not the remaining lease payments) or pay off the lease and end up with nothing. Sometimes a dealer will pay off your lease for you but I highly doubt you'd get that worked out in this case.

Interesting. So I can't get a dealer to take a leased car in trade and pay off the lease (same as if you were trading in a car you owed money on)?

Option 1 looks better and better...

 

[amdhunter]

Option 5: Leave 1 car window down in a bad neighborhood - remove the battery. Remove plates and leave car there for 2 days. Come back and car should be pretty empty. Break one of the remaining closed windows with a bat and call insurance for vandalism.

Easy option out and you don't risk the chance of exploding yourself in a fire.

 

[amdhunter]

Also, I tried to get out of a lease early to buy another car...but returning the car early, EVEN if you pay the entire amount you owe, can ruin your credit + allows the dealership to tack on huge fees.

My dreams of an S5 or a fully loaded 135 are a year away for me.

EDIT: If you are willing to give VW back the car anyway, why not pay off the lease agreement and hold the car until its time to return? You'd have one less bill to worry about.

 

[OCGuy]

Originally posted by: amdhunter
Option 5: Leave 1 car window down in a bad neighborhood - remove the battery. Remove plates and leave car there for 2 days. Come back and car should be pretty empty. Break one of the remaining closed windows with a bat and call insurance for vandalism.

Easy option out and you don't risk the chance of exploding yourself in a fire.

:roll:

At least my suggestion included drug smuggling and beastiality.

 

[dmw16]

Originally posted by: amdhunter
Also, I tried to get out of a lease early to buy another car...but returning the car early, EVEN if you pay the entire amount you owe, can ruin your credit + allows the dealership to tack on huge fees.

My dreams of an S5 or a fully loaded 135 are a year away for me.

EDIT: If you are willing to give VW back the car anyway, why not pay off the lease agreement and hold the car until its time to return? You'd have one less bill to worry about.

Yeah, I don't get why they care if I pay them now (and give car back) or later, but who knows...

I think I'll probably just pay off my wife's car. She's a teacher, so at the very least we can swap cars in the summer to avoid tons of miles.

 

[nickbits]

Originally posted by: dmw16

Originally posted by: nickbits

Originally posted by: dmw16
Do nothing seems the same as saying lose money in this case. I could sell/trade-in the car and lose less than $97XX. So at the very least shouldn't I trade it in?

Wife's commute isn't defined yet as we are moving.

My goal is to spend less money each month on car payments and save some money along the way.

Option 1-Makes sense if Wife's instrest rate is high
Option 2-Doesn't make any sense IMHO, even if beater cost <4K you have a beater for 2 years+
Option 3-You'd have to buy out the car first. You're not going to be able to sell a leased car.
Option 4-You can't trade in a lease. You can either purchase it for amount owing on the car (not the remaining lease payments) or pay off the lease and end up with nothing. Sometimes a dealer will pay off your lease for you but I highly doubt you'd get that worked out in this case.

Interesting. So I can't get a dealer to take a leased car in trade and pay off the lease (same as if you were trading in a car you owed money on)?

Option 1 looks better and better...

Q. The dealer said he would allow me to trade in my current car, regardless of what I still owed on my loan or lease, and give me a great deal on a new car. Anything wrong with this?

A. Maybe. If you are "upside down" (you still owe more than your car is worth), the dealer will simply add the difference to the cost of your new car, which can dramatically increase your payments. So, the only time that this tactic makes sense is if you have some trade-in value ("equity") built up in your old car, over and above what you owe, that can be used to reduce your new payments. Take great caution with dealer salespeople's advice. If your trade-in vehicle is leased, you must be especially careful because by trading, the lease company considers this an "early termination." Don't make the mistake of thinking that the dealer is somehow taking the lease completely off your hands.

---
So you'd need to figure out what the car is worth and what the buy out value is (not remaining lease payments) so see if you have any equity.

 

[dmw16]

Originally posted by: nickbits

Originally posted by: dmw16

Originally posted by: nickbits

Originally posted by: dmw16
Do nothing seems the same as saying lose money in this case. I could sell/trade-in the car and lose less than $97XX. So at the very least shouldn't I trade it in?

Wife's commute isn't defined yet as we are moving.

My goal is to spend less money each month on car payments and save some money along the way.

Option 1-Makes sense if Wife's instrest rate is high
Option 2-Doesn't make any sense IMHO, even if beater cost <4K you have a beater for 2 years+
Option 3-You'd have to buy out the car first. You're not going to be able to sell a leased car.
Option 4-You can't trade in a lease. You can either purchase it for amount owing on the car (not the remaining lease payments) or pay off the lease and end up with nothing. Sometimes a dealer will pay off your lease for you but I highly doubt you'd get that worked out in this case.

Interesting. So I can't get a dealer to take a leased car in trade and pay off the lease (same as if you were trading in a car you owed money on)?

Option 1 looks better and better...

Q. The dealer said he would allow me to trade in my current car, regardless of what I still owed on my loan or lease, and give me a great deal on a new car. Anything wrong with this?

A. Maybe. If you are "upside down" (you still owe more than your car is worth), the dealer will simply add the difference to the cost of your new car, which can dramatically increase your payments. So, the only time that this tactic makes sense is if you have some trade-in value ("equity") built up in your old car, over and above what you owe, that can be used to reduce your new payments. Take great caution with dealer salespeople's advice. If your trade-in vehicle is leased, you must be especially careful because by trading, the lease company considers this an "early termination." Don't make the mistake of thinking that the dealer is somehow taking the lease completely off your hands.

Thank you.

What I was thinking was paying enough down payment to cover the "negative equity" in the lease. But I didn't realize this would show as early termination. I figured it would show up as just buying out the lease (which is allowed as far as I know).

 

[spacejamz]

Originally posted by: amdhunter
Also, I tried to get out of a lease early to buy another car...but returning the car early, EVEN if you pay the entire amount you owe, can ruin your credit + allows the dealership to tack on huge fees.

My dreams of an S5 or a fully loaded 135 are a year away for me.

EDIT: If you are willing to give VW back the car anyway, why not pay off the lease agreement and hold the car until its time to return? You'd have one less bill to worry about.

calling SHENS on that...how can your credit get ruined if you pay back everything you owe??? that doesn't make sense...

what kinda of car were trying to turn back in? I had no problems turning in my 05 Acura TL lease 10 months early for 08 Accord Coupe last year...my credit did not get ruined and they did not tack on huge fees...

 

[JulesMaximus]

Originally posted by: OCguy
1. Drive to TJ
2. Leave car running in front of la pharmacia as you shop for err...."essentials"
3. ......
4. Catch a donkey show
5. ......
6. Profit

I'm kind of curious what this is but I probably don't want to know...

 

[summit]

a lease just means u are fucked. best option to cut all your loss would be to pay as much as you can to your wife's car. after you move, if she has a shorter commute, switch cars.

 

[dmw16]

Originally posted by: JulesMaximus

Originally posted by: OCguy
1. Drive to TJ
2. Leave car running in front of la pharmacia as you shop for err...."essentials"
3. ......
4. Catch a donkey show
5. ......
6. Profit

I'm kind of curious what this is but I probably don't want to know...

I would imagine you are right

 

[spacejamz]

Originally posted by: JulesMaximus

Originally posted by: OCguy
1. Drive to TJ
2. Leave car running in front of la pharmacia as you shop for err...."essentials"
3. ......
4. Catch a donkey show
5. ......
6. Profit

I'm kind of curious what this is but I probably don't want to know...

1. Rent/watch Heart Break Kid with Ben Stiller
2. wait for the 'traditional dance' scene
3. ...
4. profit!

 

[spacejamz]

Originally posted by: Summit
a lease just means u are fucked. best option to cut all your loss would be to pay as much as you can to your wife's car. after you move, if she has a shorter commute, switch cars.

A lease does not mean you are fvkced...Leases are not for everyone...but infallibly, people are attracted to the low monthly payments without understanding the fine print or responsiblity that goes along with it...

I personally enjoy getting a new car every three or four years. I don't a problem with the mileage limit and I take car of my vehicles so they are in great condition at the end of the elase...It is great knowing that I won't great lowballed by the dealer when I turn my car in..
.

Funny how we have all of these rich folks here with supermodel girlfriends, but yet they drive their cars for 10 or so years to save money because financing a car is just throwing money down the drain...