Hey there! I’ve been lurking on this sub for a while but haven’t really read information on how to deal with negative equity. Currently I have a lease through Nissan that I’d like to trade in but it’s 5500 underwater, I’ve contacted many dealers with 3k down and no one comes close to the numbers I want which is 400 a month. They all stand at about 490+ a month. Am I just being unrealistic in hoping to reach that payment with any car? I’ve inquired to a couple different dealers about 4 cars that interest me. A Wrangler Unlimited Sport, Ram Crew Cab 1500, Toyota Tacoma Crew Cab, or a Jaguar 20D Premium. Am I doing something wrong or is it just not possible to find a lease under 400 on these? Do you know of any similar cars/trucks where I can achieve this? I’m in So-Cal if that helps and credit is 723. Thanks!
Your options for dealing with negative equity are:
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Sell the car private party or to a dealer like carmax, and pay NMAC the difference between what you sell it for and what your contract says you owe them.
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Lease a new Nissan and roll the remaining lease payments into the new car.
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Have the dealer of the new model you are considering purchasing cut you a check for the remaining lease payments on your Nissan, return the Nissan to a dealer, and pay a termination fee/damages (if any) when Nissan recovers your vehicle. The new dealer will roll the money from the check they cut you into the new lease.
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Continue making payments on your current vehicle until you have equity, or the term ends, whichever comes first.
There’s no magic pill to wipe out negative equity, unfortunately. What you owe is what you owe.
The general rule of thumb on negative equity is add $30 to the new payment for every $1000 in negative on 36 month leases. In your case that would add $150’ish to your new lease payments.
How much longer do you have on the Nissan lease?
Either sub lease the car or wait it out. Based on your listed choices its obvious that you dont NEEd a new car you just want one. Just wait it out. I am guessing you are in this car for less than 18 months?
Next time get a 24 month lease.
I’m excatly 18 months into the lease, wouldn’t the 3k down help cover about half of the negative equity cost?
Do you really hate the car so much that you would pay $5500 + an additional car payment not to drive it for the next 18 months? 18 months is not a long time, if you wait you can get a much nicer car next time on your budget (not having negative equity rolled in).
My wife and I were 20 months into a 36 month lease on her Rogue SL Prem. and we were at 32k out of 36kmiles. We traded it and were only 2k flipped which honestly wasn’t bad at all as I was expecting to pay over that in overage miles if we came to full term.
As for you, You can use that 3k to send to NMAC so that you’d only be 2,500 flipped and try to get into a sign and drive or use it as a down payment it makes no difference.
The issue is that vehicles that you’re looking at don’t lease for $250/mo (400-150)… You need to look for a vehicle that would lease for $250/mo to get to $400 payment.
I think you’re confused about what the $3k downpayment is vs your negative equity.
You have to understand that negative equity doesn’t disappear, someone has to pay for it.
When we’re talking about rolling the $5500 into a new lease, that means that you’re paying for $5500 broken into monthly payments ON TOP of your new payment, it’s just worked into the price.
So for arguments sake, $5500/36 mo (most common length of a new lease) is about $150 as @osxaj already stated.
So any new lease will be the new payment + approx $150 per month.
So if you wanted to be at a $400 payment, you would need to find a car that leases for about $250/mo as @mberbic also pointed out then you put the $150 on top and you arrive at $400.
As for downpayment, the dealer will apply it towards the new lease to lower the payment on the new lease, still leaving you with an extra $150 to deal with. You could apply it towards the negative equity, which would leave you with about an extra $70 in negative equity to deal with so in that case you would need to find a car with zero out of pocket because you used up the cash to buy down your negative equity.
Most of the cars on your list are not in the $250 range so your price point at $400 is unrealistic except for maybe a wrangler. Someone recently posted a wrangler deal on here, i don’t remember the particulars maybe you can search for it.
Hope this breaks it down for you a little better so it’s easier to digest.
Thanks for all the replies! After reading and going through everything I ended up finding someone who wanted to buyout my lease as I was offering a 2k cash rebate. So the person just signed all the paperwork and bought the car for right an private party value. Now time to search and take my time on finding the right vehicle. Thanks!