I’ve been lurking and have some ideas but want to get thoughts and see if anyone has a better idea.
I bought a 2017 Honda Pilot Touring. Now have 5-6k negative equity. (some negative equity from my previous car went into this loan, No need to criticize).
Current payment is $658 until March 2024.
I drive 22-25k mi/yr so it will have about 175k miles when it’s paid off and be worth maybe 10k.
Here’s my idea:
If I find a great lease deal (Not making a big downgrade). ~$300-350/mo for 36/12k and purchase extra miles in advance (30000 extra at $0.15 =$125/mo). So $425-$475 a month lease. Then I roll in 5k negative equity =$150/mo.
That brings me to around $600-650mo after tax?
So in 36 months the negative equity would be paid off and I’m ending a lease with no negative equity. Then I could lease another car, prepaying mileage and my payment be <$500/mo and continue leasing cycle.
Assuming I’m going to continue driving high mileage, like newer cars, definitely don’t want to deal with repairs- is there a reason NOT to do this?
I don’t care about “owning” my car or driving until the wheels fall off. But if I saw numbers that would show saving thousands over the next 5-8 years, I’d be ok with sticking with what I have or trying a different idea.
And yes I know I can get a beater or drive a tiny car for cheaper. I’m not asking because I’m broke, I’m looking for ideas on getting out of the negative eq cycle and driving newer cars I like for the best price I can.
Thanks in advance for advice and ideas.
keep the Honda till it’s paid off, then sell, pocket the cash, and go get yourself a zero down lease.
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I think it is not that bad of an idea if the numbers work as you’ve stated. BUT, you won’t get a Pilot for $300-$350/mo, so you’ll have to accept the fact that you’d be paying $650 to lease a much lesser vehicle. But I like the idea far more than the fact you’d be paying over $600/mo when you are driving a Pilot with well over 100k miles. Not to mention a good deal of maintenance and repair costs you’d be saving by not keeping that going for 175k.
What car are you thinking of getting for 300 per month? Also need to make sure they offer pre-paid mileage.
Or just get your car appraised with vroom or caravana and pay the negative equity out of pocket and be done. Those two companies seem to by offering very competitive buyouts.
QX60 sounds like the way to go. Shop the trade on online vroom, carvana etc and carmax
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Keep the Pilot and get an extended warranty because the transmissions in the Touring and Touring Elite are notoriously awful. Sell it once the warranty expires so you don’t have to pay $4-5000 for a new transmission. They hold their value rather well so you hopefully won’t have too much negative equity.
Would my maintenance costs really be that much higher?
That’s definitely a concern. Driving a lease 65k over 3 years repeatedly- I’m goinf to have to replace tires too, correct?
Why is the qx60 so much less to lease? Nothing seems to compete… just curious on that.
I meant higher with the Pilot. I mean, with that many miles, things will HAVE to be done, such as plugs, possibly suspension, belts, etc, etc.
I believe on another similar thread here, my suggestion was for 24-mos when dealing with so many miles to avoid being out of warranty on a lease.
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6K negative equity on trade in, or private sell? You’ll get the most value out of your Pilot by selling it privately. Pay off the rest of the negative equity and wash your hands of the Pilot / negative equity cycle?
Good point on what I’d get for $300 a month. Not sure I’d love it.
I finally have cash built up for emergencies and really hate to put it all down on this…
I just confirmed I already have a 100k mile extended warranty on it… does that change your thoughts on things at all?
What I would do is find a car where you can get the best value for the monthly, some killer special or something and roll the negative equity into that. Make sure that the payment is still relatively attractive to a prospective transfer and put it up on swapalease and let someone else take over that headache for you, then come back and try to find a similar deal and do the mileage thing.
I’d recommend an ex-loaner BMW and I’d do it during the holiday sales event since that’s when their incentives are the best and dealers want to move inventory.
Ex-loaner BMW wouldn’t work for him since mileage is $.25 per mile, pushing his overage to almost $210 a month. I’m also assuming the original poster would want something larger since they went with the Pilot (seven seater?) so anything remotely close to that size (X5 with the optional 3rd row?) would be impossible to get at $300 a month even with minimal due at signing (first month + taxes + fees).
Unfortunately for this guy, he’s going to have to either give up something to hit the payments he wants. He’s gonna be scraping the bottom of the barrel in terms of options for anything with three rows, or he’ll have to give up the space/size to get a reasonably nice car.
To the OP, you’re in a pickle and unless you really hate the Pilot the most financially prudent move would to keep the vehicle until you’ve completely paid it off. It’s not the most glamorous or flashy, but it’s the best way to get from under the negative equity of your previous vehicle and the Pilot.
Well, since the Idea was to transfer it to someone else and let them pay off the negative equity, the excess mileage and vehicle size won’t really matter since it’ll be just temporary, right?
And for family haulers we all know the best deals will be on the QX60, but those don’t transfer well, so get a BMW to roll the negative equity on and a QX60 to drive around and transfer the BMW to someone else? idk just getting creative here, but i do agree that there will have to be a compromise.
sorry, i didn’t mean to respond to your post initially.
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Wouldn’t there be a point where I level out and am not at negative equity?
Probably around October 2022, you could trade it in when you owe what is worth
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Sure, you can make a graph based on the amortization curve vs. predicted resale value.
You drive 22-25k miles per year. There’s just no way to make leasing a semi-luxury vehicle work within your price parameters, unless you want to continuously roll successively higher debt into new leases until you can’t roll any more in. You would be paying far more to buy miles than what those miles actually cost. So my advice would be to stop the cycle, unless for some reason you absolutely need to drive a new $40k SUV.
The only way you’re going to “save thousands” is by buying a commuter car that is rock solid reliable and dirt cheap to repair/maintain for the bulk of your miles. You mention a “beater” and a “tiny car”. Is the absolutely minimum level of vehicle that you can accept a $40k Pilot?? Is there any reason that you can’t deal with a used Accord Touring or Camry XLE etc etc etc? Or even a used Pilot or RDX or RX etc etc etc. I’d recommend used sedan right now, since used SUV’s have really high values currently. If you get a good enough deal on a $15-20k car, it’s also entirely possible that you could roll the entire Pilot negative equity into it depending on your purchase price vs. bank valuation and still come out with a payment half of what you have now. Some dealer could be willing to play close to retail value on the Pilot as they are fast sellers to make a deal for a used car. Play the long game. Good news is, at least you’re not stuck with a $658/mo lease that you can’t get out of!
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I don’t “have” to have a 40k suv, but it’s what I want. (I’ve always had cars until this and have no desire to go back- drove one for 10yrs w no payments, when frugality was priority).
My situation isn’t that I “need” lower payments. I’m just looking to save as much as I can, while still having what I want.
If I had no neg equity to consider- prepurchasing mileage as mentioned above still seems like a good option to me - keeps me driving what I want - keeps me in a newer car under warranty. Unless I’m not seeing that the same
Well I want a Porsche, but if I got one I’d be posting about how broke I am on the internet…sorry man no offense but you are the only one who can resolve your situation to your satisfaction. I just don’t see a leasing scheme saving any money given how many miles you drive annually.
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