Quick question - I leased a 2023 Hyundai Tucson N-Line AWD (approx 36k with $500 off msrp) and may trade for a new different vehicle early. I actually put $5k as a down payment at the time, although I didn’t really need to. If I trade leases early for a different vehicle through the same dealer, would any of my down payment carry over to the new lease? Edit - nevermind, that’s part of the total amount paid already
I would only consider trading if the price of the new vehicle is decent, hoping for a deal. My logic is, I owe around $8.3k over the next 18 months at $447/month, however less than $4k between market value and buyout price as of right now. So I would spend more if I were to keep it through the remainder of the lease. It will continue to depreciate the longer I keep it.
Also - I intend to purchase the other car at some point anyway (2025 Kia K5) so waiting another year won’t really make a huge difference on the price of the new car. Kia K5 I would trade for is right around 30k msrp. Assuming my dealer works with me and no mark ups etc, below msrp even better. Lease payment would drop to around 400/month not including negative equity rollover or down payment etc. I know I would have to pay that off at least.
I am exactly halfway through the lease at 18 months, 15k miles, $22899 residual, $30700 buyout, approx. $27000 market.
I added to my post - I still intend to purchase the new car at the end of the lease for a 2025 Kia K5. MSRP around 30k. I doubt I’d get any significant savings in the next year unless there happens to be a CPO one at the exact time the lease ends, plus the car will continue to depreciate the longer I keep it. So might as well trade now right? To me, it makes more sense to pay down 3700 + 30k now vs 8300 + say 28k 18 months from now, is that the right logic?
First, the logic is not correct.
But even if it was, per your calculations, the difference between these two scenarios is $2600. So you get to drive a car for 18 months on effective $2600? That is just $145 per month. The second scenario wins.
Even though you ignore so many factors like, 1) You will get a lot of depreciation on your new car in the next 18 months. 2) The car you want to buy in 18 months might not be $28k but more due to inflation. 3) Opportunity cost of snagging a deal by being patient and waiting. It is really difficult to predict what would happen 18 months from now.
You are almost at $600/month right now for a Tucson. You could effectively be driving two Ioniq 5’s for this monthly. Have you done your research on which cars are good for leasing and which are a good candidate for purchase, and which cars fits your needs and requirements?
Your only fiscal option is to complete the lease and spend the time in Wiki learning lease negotiables and how a lease payment/DAS actually comes together using the LH calc.
Ionic 5’s were not 300/month in December 2022. Don’t want electric anyway.
I originally intended to purchase the Tucson at the end of the lease but I’ve never been fully content with the car. Doesn’t really fit my use case since I wont have kids for a while either. I intend to purchase the Kia at the end of the lease as well.
The way I justified the purchase at the time was that long story short, I owned a 21 K5 for 2 years prior paying 411/month with 2.9% interest (around 32k otd) but got into an accident (not my fault) and totaled it. Insurance paid me nearly 10k for it. I was convinced by family to go with an SUV so I did - in hindsight, it was not the best decision as I definitely could have went with something cheaper. But taking half of my payout and only adding $30/month to my previous payment didn’t seem terrible for a car that was 4k more expensive (36k for the Tucson N-Line AWD).
The problem was at the time (December 2022) interest rates were super high and most cars both used and new were marked up. I just so happened to find a dealer that gave me $500 off msrp on the Tucson plus transferred it from another state all right before the end of the month at no cost. I could have went with a cheaper car yes, but not much else made sense to me in the moment. That was kind of the point of leasing, seeing as there was a lot of market uncertainty at the time.
I loved the Kia, it was nearly perfect but I had a couple of minor qualms namely the infotainment system and terrible sound system. The 2025 model has fixed all those things - I have already confirmed. Couple other small benefits compared to my Tucson - my insurance goes down a bit ~$10/month, lighter on gas around 20% more efficient plus bigger gas tank somehow, better safety features, more features in general. Won’t save a significant amount on insurance and gas but would be more convenient to refuel less often. Edit - OBVIOUSLY the small savings wont offset the negative equity, just worth noting.
So I know I can just get a cheaper vehicle at this point, but it’s more about getting that one specifically. But I am not in a rush either. I realize there are many other factors, such as interest rates, inflation, bad money factor etc.
Buying out/purchasing a lease at any time only makes sense if the market value of the vehicle at that time is much greater than your buyout including sales tax…plus in this case you put 5K down and are still underwater almost 4K. Ugh!
Well yes, I had no idea what the value would be in 3 years which is why I leased expecting the value to be decent. I figured if I loved the car anyways I would have leaned towards purchasing it regardless. The down payment should have never happened but unfortunately wasn’t better informed at the time. Wasn’t considering base models then either which would have obviously saved me money.
Depends on the money factor on the new lease I suppose. I haven’t gotten an actual quote on either yet, so it depends on what they offer once the car arrives at the dealership. 4.99% on 72 months or 4.49% on 60 months is what I would be looking at for finance. If the money factor on the lease is less than the effective interest then it might be better, but I’ll find out.
Obviously, never said it did. As I said to someone else, I haven’t gotten actual quotes yet so if for some reason they give me a crazy market value at the dealership say 29k, then I will lose quite a bit.
Your last statement tells me you have no idea how to negotiate a good deal on a new car. There is no Kia going for MSRP now.
It seems you have already decided you are going to do this despite everyone telling you it is not a wise financial move.I am not sure if Kia allows third party buyouts, but you should see who will give you the most for the Tucson. The dealer is going to low-ball you on the lease buyout which is going to cost you thousands more than you think. He will try to hide it by giving you less of a discount off the new car making you think you are getting a good deal. You should be prepared to pay the full remaining value on the lease for the benefit of getting into the new car you want. You will be the proud owner of the most expensive Kia K5 on the planet.
