Alright, so I’ve never leased a vehicle. All my life I’ve been told it’s basically setting your money on fire but I’m a changed man. A friend & other financially intelligent people informed me that a lease might be my best option for removing a large amount of negative equity.
I’ve done so much research my brain hurts but I can’t find an answer for this.
Here’s my big question, I have negative equity on a trade-in. Is it possible to use a broker and obtain a lease from out of state(I’m in TX) while also trading said vehicle in? I am upside down about $10-11k and will have $7k available at signing to offset the amount. Looking to be around $600/month for an SUV lease.
TX is not lease friendly and the upfront TOTAL tax costs are eating up my cash down making leasing for under $600 impossible. Are there any Brokers who do work in TX despite its unfriendliness that could make this possible? Or is out of state my best option?
Some extra information, my partner will be the one leasing the vehicle since my credit is poor which is also why I’m so upside down, 18% interest :’( She has a 720-740 credit score depending on which credit is checked. Once again, $7k cash available at sign. $100k/year income which includes rental income, aka my VA disability.
We want to avoid financing since we don’t plan to have this vehicle for very long and we will most likely be in this never ending cycle of negative equity if we do finance.
Lots of context but very few details. If you are just looking for a broker please post in the Wanted Thread.
If you want help with the numbers, telling us you want to find a mass grave big enough to bury 10-11k in negative doesn’t give anyone much to go-on — what’s the mystery car? What’s the payoff? Details about the loan besides interest rate? What is ACV (what are buyers willing to pay, not KBB).
There have been a half dozen similar posts in the past 90 days (1-2 about Texas in the past month), search and read through those to see if it either answers any questions it generates more specific ones.
Ahh my bad. I guess that information is definitely important.
2016 Ford Focus ST3, 84k miles. Pay off $19144. CARMAX offer was $10500, offer from local dealer was $8750. Leaves me about $10k-11k in the hole.
I could put the $7k straight into the loan but I wouldn’t be able to pay for any of the DAS costs. Unfortunately, I need a larger vehicle sooner rather than later. Initially, we planned to wait until January/February to comfortably pay the difference and have enough for a down payment but we are unable to wait that long unfortunately.
Most of the information I’ve found so far is that it’s recommended to lease outside TX to avoid the upfront tax and to get better discounts off MSRP before any incentives. I found minimal info regarding trading in a large amount of negative equity and almost none for any experiences in the state of TX. I’ll keep searching but was just hoping someone could chime in with some clarity or similar anecdotal experience and was successful in rolling the equity over.
Taxes are based on where you register the vehicle, not where you buy it. You’ll be paying TX taxes even if you buy out-of-state.
TX taxes the sales price, unlike many other states which tax the monthly payment. The tax does not have to be paid upfront as you can roll it into the monthly payment, but then you’ll be paying interest on it.
I am going to assume an EV is not what you are looking for, but that is the best way to bury some of your negative equity due to the rebates. Have you looked at the hybrid Jeep Grand Cherokee 4xe? These are not leasing well right now, but that could change at any moment. The Money factor is high, but still less than the 18% you are paying on your current vehicle.
Those people were incorrect or probably just regurgitated some incorrect information off the internet.
Any new car, loan or lease, is just another form of re-borrowing the money. None of the negative gets wiped or erased or removed or buried or any of the incorrect terminology used to commonly describe NE, even on this forum.
So, within your budget, what car has the lowest APR on a loan or lowest MF on a lease?
With your credit, going further into debt (which is what a lease is) probably isn’t a great plan. What do you need a larger vehicle for? Can it be your partner’s vehicle?
You will have no good options while you it finances are so messed up.
I haven’t put in the effort for it just yet, but I will here soon. I’m a little discouraged to due to the minimal demand an almost 10 year old Focus ST has these days. Carvana offered $11400, so if I can get $13k privately, it’s still a win but I feel my expectations are too high.
What I’ve been told is that a lease is a good way to break the cycle and to “get rid” of the NE. 18% is atrocious and trading it with the NE will only keep me upside down. So my understanding is a lease within my budget would be best because after 3 years, I can start from scratch.
My partner is the one that is going to be on the lease while I stay off and continue to rebuild my credit. She has a 720 so I’m lowballing and expecting Tier 2 rates. The only low MF lease deals I’ve encountered so far that could definitely work are the Tucson and Sportage. On the smaller end of what we need but beggars can’t be choosers.
So we have 3 total vehicles. My partner has an Elantra, my Focus ST, and an old F150 I bought cash.
I don’t plan to be on the lease or loan. While I do make the majority of the income, it would greatly offset her good credit.
We need a larger vehicle because I can’t physically drive the Focus. I have a bad lower back injury and I simply can no longer drive it for longer than 8 minutes without squirming and swearing about the pain. I’m just burning $500 into a car that has been sitting for almost a year and due to the high interest rate, I’m not even chipping away at the principal. The truck I currently drive was temporary and sufficient for the time being, but it’s an extended cab and we need the space to be able to travel with our dogs, baby and baby stuff.
An SUV would make all of this significantly easier not only for convenience but my back as well. The Elantra is starting to cause me issues with getting in and out of it.
Yes, but that could change quickly as new 4xes pile up on dealer lots. There are virtually no programs on the JGC 4xe right now that I can find. Let’s see where the leas rates head after the coming interest rate cut in September. I think October might be a good time to lease a JGC 4xe if the incentives return along with lower rates.
Fuck me that’s a crazy good deal. I’ll look into them and see if an EV would be possible for us. We have solar, so we may need a few more panels for the additional Electricity consumption but other than that, I don’t see any foreseeable issues with an EV. Maybe long distance traveling could be a headache but I’ll see if it’s justifiable. Thanks!
Again, you are not getting rid of anything, in quotes or otherwise. Whoever told you that was wrong.
You are re-borrowing it and paying it off. If you can lower your net spend that way, it may make sense.
Question is, what is the lower net spend of the two over the next 5-6 years?
Finance something like a Mazda CX50 at 0% APR 36m or 0.9% 60m, pay it off, own the equity and trade it in for sales tax reduction on your next car. Repeat that over 5yr cycles.
Lease something (I’m not even sure what lease would fulfill your financial constraints). But even hypothetically speaking pay it off 36m. Then start over again with no equity and no tax breaks. Pay full tax on the next lease. And again start over with no equity and no tax breaks. Rinse and repeat.
What mechanical condition is the F150 in? Sell the Focus to Carmax, use the 7k cash you have plus a 3k personal loan to pay off the vehicle and dump it.
Ride the F150 for as long as it takes you to pay the personal loan back and then consider finding a lease deal that’s strong with no negative equity to roll in.
There’s no way to get rid of negative equity aside from paying it off. Even if you roll it into a lease with high credits and incentives… you’re still paying the negative equity one way or the other. It’s just a hard pill to swallow.
Sell the Focus ST and ride it out for 6 months in the F150 while you make payments on the personal loan.
The solution to your financial constraints is simple, based on what you’ve stated.
6 months of pain for a ton of financial freedom in the near future. Seems like a no brainer.
