I’m located in Pennsylvania and leasing a 2021 Honda CR-V EX-L with 31k miles and 2 months left on the lease. The buyout is $21,500. The KBB is around $23,700 (trade-in).
I’m comparing three options:
1) Buying out my lease. ($5k down, 60mo loan; $380/mo payment)
This seems to be the second best financial option and I would eventually own the car but I will have paid lease/finance payments for 8 years.
2) Leasing a new CR-V [or RAV4?] ($5k down and $1k of equity trade-in; $383/mo)
I’ve been told that putting money down on a lease is a terrible idea and risky. I didn’t know this until recently but my understanding is that if you total the car in an accident that you are out your downpayment which is the main problem?
The advantage is that I will have a new car and low payments but still be in the “lease-cycle” of cars.
3) Financing a new car. ($10k down; $477/mo)
This would probably be the best option if I had a little bit of extra money to put down. We are currently looking for a new house so even $10k down is stretching my budget.
I’m trying to get as low of a monthly payment (under $400) as possible which is difficult. A friend of mine said he got a 0% 60-month loan from Mazda back in December but I don’t know how common these offers are.
You only have 1k of Equity on a 2021 CRV? That’s doubtful as those cars hold it extremely well.
Who’s holding the note? If Honda you can only get another Honda (Or find a big dealer like Autonation), if not honda, you are possibly screwed for equity.
My current payoff is $21,500 (and two months left) and the KBB is $23,700 so that is $2200 of equity but multiple dealers are only giving around ~$1500 or so.
Unfortunately the lease is directly through Honda so I agree with not being able to trade it elsewhere. (Toyota confirmed this)
You can usually find that on the maufacturer’s website.
Mazda is offering 2.9% for 36 mos on a CX-5 (not sure what model you’d be looking at). I assume, given what’ve said in the rest of your post, that you would not be paying off a new car in 36 mos.
If you have kids, I don’t think a CX-5 is a great option. We have one (and it’s just me and my partner), and I can’t really imagine trying to squeeze a family into one on a regular basis.
Putting more money down will reduce the effective interest you pay on the lease, but the “low payment” is otherwise more of a psychological thing than an actual financial thing (unless it somehow makes a difference in terms of securing a mortgage). JMO.
If you go to a big dealer like Autonation, their Toyota arm can take a Honda as it looks like Autonation Honda bought it. Or you outright sell it to Honda, uber to Toyota and get your Rav4
You can research by Edmunds or go to manufacturer’s site. CX-50 is 2.9% for 60 months and 0% for 36 months. What’s the best rate on the lease buy-out, I am guessing it’s around 6%. You will have to run some numbers to see what’s best for you.
Anyone with a Honda or Acura dealer in their network can take your trade and give you equity. That includes the big conglomerates like Autonation, Lithia, Sonic, Penske, etc etc
Don’t forget to maximize your equity.
The 2023 Santa Fe is probably the best value right now in that segment for your next car. RAV4 is best for reliability rep and resale value. Or buy out your lease if that’s the best for your DTI and mortgage application. House is a much bigger priority than car IMO.
