Just looking for advice and knowledge in this area.
I have about 13-16k negative equity in a vehicle. Yes, I know it’s a bad situation and my series of mistakes. I do love the vehicle nothing wrong with it but I often think of the end amount I would be paying interest wise and its a lot. My interest rate is not terrible but the loan is 84 months (70 left).
I heard about leasing could possibly be a good way to eat negative equity and that starting fresh is an option at the end. Which does seem ideal, I started young getting cars and rolled over negative equity a couple times so fresh sounds great now that I am a bit older.
I am aware the neg eq is high so it’s best to find vehicles that could eat that a bit with rebates etc. I tried polestar (10k rebate) and their results still ended up about 200-300 more than I am paying currently for a 27 month lease. But I was thinking if I decide to get a loan to pay off the 16k and sell the vehicle the payment for that loan would be much higher than 200-300 for 27 months. Am I missing something here or is a higher payment lease still ideal?
I thought okay maybe a cheaper vehicle would be better so the payment would be lower or the same as I am paying now if not a little bit higher. I found a much cheaper 30k vehicle (mustang) that I would be happy with but I have not got lease numbers on yet - and wondered if they would even work with me with the LTV being high and no rebates such as polestar was offering. I do not mind paying what I am paying now for a cheaper vehicle, because to me starting fresh is the end goal.
To me a short lease in order to start fresh seems smart - but that’s why I am here, correct me if I am wrong lol.
So, what’s the best route? Continue paying my vehicle and put extra towards the principle and hope I can catch up to the depreciation rate and trade in with no negative equity? Get a lease that ends up being higher, but lower than getting a loan to erase the negative? Get a lease on a much cheaper car with no incentives that ends up being close to what I am paying?
Unless you buy a car that does not depreciate fast, you’re better off holding onto what you have for as long as possible. Your used car value takes a nose dive especially in the first 12-24 months which explains your high negative equity. As time goes on, it should/could very well be much more manageable.
Youre talking about $5-600/mo in just negative equity if you roll this into a 36 month lease, so take whatever pricing yoi have seen and slap that on top.
Think of it this way, either way you’re paying down that negative equity, whether it’s on your current car or rolled over to some lease. At least any further depreciation is unlikely to be more that what you’ll pay in leasing payments, tax, reg etc.
Ford historically leases HORRIBLY. Ford is probably not an option here to try to get rid of the negative equity in 3 years. You’re only play here is probably an EV that has tremendous incentives, low money factor, as well as lender sales tax credits. But as someone else has said add at least $500/month to any payment you see advertised here to account for your negative equity.
Not quite. You will still be paying interest on the negative equity.
This might sound mean, but I am just going to be blunt here - You are here on this site inquiring about rolling up to $16k in negative equity. I get it that life happens and sometimes folks make mistakes, but it sounds like you are stuck in the “negative equity” cycle.
Are you leasing another car or did you get a quote on the Polestar for a 27 month lease? Care to clarify?
Before getting another car and hoping to “bury” a lot of negative equity, you need to figure out your finances. Sorry for being blunt again.
Since you tagged Texas, I hope you are aware that your state taxes on the full selling price of a leased vehicle. So leasing is going to be pricey (before any negative equity).
Why would you get into a car without any incentives? Most of us lease to take advantage of incentives.
TL; DR - Do not expect to be able to bury up to $16k of negative equity into a new lease in Texas.
It doesn’t seem you understand my post. I am not trying to “bury” equity. I am not trying find a car with no incentives, I spoke about a car(mustang) that was cheaper than an incencitived car (polestar). Not sure about “pulling up to this site” is about but I’m here to try to get out of negative equity cycle not continue it. And since I heard about leasing I came to this site to gain some knowledge and advice from experienced leasers.
I was not aware about the Texas tax on leases, thank you for that.
Post your numbers for both the mustang and Polestar, then.
I posed a bunch of questions. Waiting for you to address them.
There is a ton of knowledge that has already been shared with you. I think you are missing the point here. There is no magic wand that will help you bury negative equity.
This situation is a car dealer’s wet dream.
OP stop digging. Don’t get into even more debt by leasing using negative equity. You’ll never break the cycle and 20 years from now you’ll still be upside down in something.
Do you own a home? If so take out some equity and pay off the car. The interest rate will be 7-8% which is better than your horrible car note. Then pay that off as quickly as you can. And then buy. 5 year old Camry.
I would not recommend OP do that, if they owned a home. Mortgage rates are still high and OP would just be shifting the $16k debt into a second mortgage.
They should keep paying down their existing loan. OP has not yet shared what the rate of their existing loan is. If it is more than 10%, then they could look into refinancing it a lower rate and shorter term.
A heloc right now is 7-8%. It’s not a second mortgage it’s a line of credit. And Helocs are cots free to take out, inlike mortgages. My guess is the the note on the car is well into double digits. There’s no downside.
If OP had an extra $600 a month I doubt this would be an issue to begin with. OP is looking to do the typical thing people do. Take a bad situation and make it worse by continually rolling over negative equity in cars.
As I said it’s a dealer’s wet dream. OP will end up with a 48 month lease paying $1200 a month for a $38k msrp vehicle.
