I’m new to the leasing world. We have always bought cars and traded them after a few years. Terrible I know. Negative equity all over the place.
I have a 2016 Ford Fusion. We owe 17k on it still and trade in at 2 dealers has been 10k. So I will need to carry over 7k. We are looking at leasing my vehicle because I don’t drive as much as my wife…I do about 10-12k and she does about 20k+.
I really like the 2018 Honda Civic sport hatchbacks. Aggressive, and the 1.5t is pretty good on gas.
I went to check a lease in San Antonio and was quoted with 0 down at $575 a month. That seems like a lot to me. I wasn’t able to get all the details but this is what I have.
22600 price
17K owed on trade
10k trade in
54% residual
Gave me the 575.
I was quoted a 36/12. I know the 7k negative is about 200 a month by itself. I was hoping for great rate at 450-475ish range. I was surprised but the $575.
Is the negative equity hurting it that much?
I know there is a lot missing…I read up on cars…didn’t know there was so much on leasing.
Any help or thoughts would be great. (Just signed up at edmunds also)
From what you wrote there is nothing wrong with your Ford Fusion? If there is nothing wrong then rolling in $7k of negative equity is crazy unless you’re a millionaire who really likes Honda Civics. I would run down the Fusion for a couple more years and then get rid of it when you can break even.
The combo of $7k negative equity, Honda leasing, and Texas will always be horrific.
To answer your question, yes, the $7K negative is hurting your deal very much. Simple math says that it is hurting your deal by ~$195 per month ($7,000/36), however, in your case, the fact that you are only leasing a $22K car is making the difference even higher In order to bury your negative equity the dealer need to find a place to “make $7K profit on the deal” (in easiest terms - in reality they are finding where to bury all that money). The bank will likely only let you borrow 110% of the MSRP (in most cases), so, including the profit in the window price they have buried approximately $3K. Hence, they have to mark up the money factor to the max but the dealer doesn’t get dollar for dollar on the mark-up, so if the mark-up equals $2000 additional profit the dealer only gets $1500 but the effect on your payment is based on the $2K. so now they’ve buried $4.5K. Now they can sell you a warranty for $2K but it costs say $500, and so on and so on. So net effect on your payment is way more than the $195 simple math number.
In any case, its a bad deal all around. I am surprised they even said they could do it (that they found enough places to bury all that money).
I would do like others have said and get a second opinion on the value of your trade (Carvan or vroom). Then go back and renegotiate. Your car is probably worth more than $10K, which is why they could even entertain burying $7K. Or as others have said, don’t do it. Drive the crap out of the fusion. You are literally throwing your money away…
What is the monthly payment on the Fusion currently? A Civic should lease for $175-$225 depending on trim. Is your Fusion payment plus and anticipated Civic payment less than the civic lease you were quoted? If it’s less maybe just rent it out on Turo and hold on to it but still get the Civic? I’ve seen a pay per mile insurance company mentioned on here that you could use to cut insurance cost down.
Civic leases suck. Even a stripped Civic can be $250+.
OP - not only is rolling in so much equity pretty bad, but because you literally chose one of the absolute worse leasing cars on the market, it’s even worse a lease.
OP, there is nothing wrong with buying, but you bought a vehicle with terrible residual value. That type of vehicle would be much better to lease. And with the Civic, there’s really no benefit to leasing it vs buying since it has great residual value and no lease incentives.
Personally I’d wait to switch until the Fusion is closer to even equity. The grave has already been dug unfortunately. That’s a ton of negative to finance in a new car payment, and it would be difficult to even get that approved by a bank.
