| y2ks2k |
Has anyone traded their lease?
I’ve had my MDX almost 2 years of a 4 year lease. I pay $500 a month. Its a 2003 with 15K miles on it. Can we do this (Honda motor company). Do a lot of people do it?
I would think so, If I remember right, we paid $3K just to get in the lease. |
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| JeffK |
The answer is "YES" - if you are willing to pay.
Most leases are "upside down" - which means that the car is worth less than what you paid in lease payments.
Think of it this way: MSRP $36,000, you agreed to pay $34,000 and it is now 12 months into the lease. You have paid $500 a month for a total of $6,000. Most of this $6,000 has gone to pay interest, a portion to pay depreciation. (At the end of the lease the reverse is true - most of the payments are to pay depreciation less interest. This is the same as a mortgage)..
So of the $6,000 maybe $4,500 went to interest, $1,500 to depreciation.
So $34,000 less $1,500 = $32,500.
But the car is only worth perhaps $28,000 a difference of $4,500.
So to get out of the lease you will have to pay this difference.
BTW, if your car is stolen or destroyed, this difference is covered by gap insurance.
Before you scream "I will never lease again", remember if you had bought, your $34,000 is now worth $28,000 a difference of $6,000, plus taxes on the $34,000 plus use of money on the $34,000 for a year. Assuming 5% this is an additional $1,700 for a total loss of $7,700.
You can get out of your lease: see http://swapalease.com/ and http://www.leasetrader.com/.
But before you get excited, remember you can lease an '04 for under $500 and your car is an '03 worth perhaps $28,000. So to get I think you will have to give a cash incentive. Remember your car is used.
JeffK |
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| Lrpba300 |
..to add to JeffK's answer's, (I've done this like 15 times!)
You should ALWAYS call your financial place & get a PAYOFF BEFORE you speak to any dealer! (So you'll know what the numbers are!)
If you are "upside down" on the trade-in value to what you owe, it can be rolled into the new lease, as long as it doesn't exceed the loan value a lending institution will write paper on the new vehicle, (carry the loan).
There are other ways of buying the car (out of the lease) & then trade it in. This helps if your out of "wack" on the mileage, but we won't talk about that right now.
Usually, when your 1/2 way through your lease payments, you are at what they call the break even point. HOWEVER, there are a lot of variables that enter here. Condition of vehicle to trade-in, price the dealer will give you, size of the residual, etc.
Just talk the figures over with the dealer / salesperson / manager & what your needs are. YOU can decide if you can afford the new vehicle, monthly payment, etc. DON'T let them arm twist you into anything your not comfortable with! ( & Acura dealer's would NEVER do that! :15: ) Good luck |
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| JeffK |
Just a short follow up:
Excellent idea to see what the payoff is. The payoff is because you are upside down - the exception may be if you put down a lot of money at lease inception.
But the fact is 99 out of 100, at the end of the lease, the car is not worth the residual. That is why most people at the end of a lease return the car to the dealer.
Unrealistically high residuals are called "supported leases". They bring the monthly payment down which helps you out.
But because this lowers the monthly payment you are almost always upside down during the term of the lease.
JeffK |
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| Lrpba300 |
yep! He be right about that stuff! Boy, does that JeffK know his stuff about leasing!!!
(I guess I only know a little!) :4: |
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