Hello! My wife and I have not made good lease decisions in the past and are trying to start with more advice and wisdom this time around.
We are currently in a 2016 Honda Civic with payment of $296/month. We have eight more payments left on the lease.
We recently went in to three Honda dealerships and one Subaru dealership looking to get out of the lease and into a new one (preferably a compact or subcompact suv). All of the dealerships (as well as Carmax) valued our vehicle at $12K-$12.5K. The Vroom website was an outlier at $13.5K.
However, our payout is 14.8K because, of course, it’s including remaining payments ($296x8=$2368) into the payout.
Another important factor: we are at 36.5K in mileage.
We will undoubtedly be getting into a lease next, so “turning it back in” at whatever point is not an option.
Our question: are we better off racking up mileage and waiting a few months or even to the end of the lease and then using the Civic’s equity (if it has any) toward a new lease – in hopes that the negative hit in value from six to eight months of mileage would be better than the $2400 we have to pay now from the remaining payments? Or would it be wiser to rid ourselves of it now and roll the eight months of payments into a new 36 month lease? Is there a sweet spot between waiting until the end of the lease and using it as a trade in now?
I hope this makes sense. Thanks in advance for advice towards making a wiser decision.
Great questions. You have a 12,000 mile/year lease, I assume?
Looks like you racked up 36,500 miles in 28 months, so 1,300 miles per month. By the end of your lease, you’ll be at roughly 47,000 miles, so $1,650 in mileage overage at 15 cents per mile. Plus $350 disposition fee, so $1,950 in total.
Or you could pay $1,300 if Vroom buys your car right now.
Or, as you said, you could hope for equity at the end of the lease. Looks like your residual is roughly $12,432. Have you checked Vroom to see how much your car would be worth with 47,000 miles instead?
Also, if you like the Civic, have you considered buying the car? I hear they can last forever.
My wife doesn’t want to keep the Civic and she’s the boss. Haha!
We won’t be returning the lease so we would be trading it in at some point between now and the end of the lease.
So I guess we’re trying to figure out the point at which the mileage devaluation of the car will match the amount we are having to pay for two cars by getting into another lease before our 36 months were up.
There is no way to predict what the car will be worth as each month goes by. My take: if the wife wants out and it will only cost $1300 now, then just cut bait and be done with it. I mean, really, how much can you save at this point and at what cost to your wife?
Obviously, make sure you get a 15k/yr lease next time.
@KD6-3.7 thank you. residual is $12773. Purchase option fee is, I believe, around $300-$400.
I don’t believe that I’ll break even at the end of the lease. We are just trying to figure out how to minimize the loss. Right now, depending on who’s giving us the quote, we are $2300-$1300 away from the amount that would get ourselves out of the lease. Is there a point during the next eight months when it would be wiser to attempt a trade-in, when a dealer would be more likely to pay my remaining payments to get me in a new lease? Or is that something that dealers never do?
Thank you @Qbrozen Is there ever a point in the life of a lease when a dealer might take your car as a trade in at below what you owe and then cut you a check for the remaining payments in order to get me into a new lease? Perhaps as I move closer to the end of the lease? We are just very hesitant to roll $1300-$2300 (depending on whose appraisal we’ve received) into our new lease. It seems to put us back into a bad lease which we are now trying to get rid of.
Hi. We are in similar situation. Tried back in July and again last month. Currently 6 mos left on 2016 lease. Will be above mileage. We are going to do a lease pull ahead when we are ready with GM as there is a pull ahead program that was just sent to us yesterday. But it covers 4 months or $2500. So we hope to hold off til end of the year with 4 payments left which will put us at $300 over the $2500 max. That’s out sweet spot .
We have a GMC Yukon XL. Hoping to get a Chevy truck ideally. But if gmc can do better we will go back to gmc.
Whatever you do don’t roll those payments in. I get it that the wait is long but trying to hold out for a pull ahead program for your brand is a better financial decision imo.
Or use it as a trade with a month or 2 left. I’m guessing the price may be closer to your payoff then. Our problem is we need tires and I don’t want to throw 800-1k into tires that will be absorbed by the XS wear coverage I purchased, but only good to use at trade in, not now to cover tires. We can’t make it thru winter on 2/32 tires.
If your payoff is $14,800 (which does sound free of tax) and you’re being offered $12,500-13,500, I’d just take the $13,500 and chip in the $1,300 yourself to get out. How soon will you need to buy tires or brakes? How much does the 40K service cost? Using those values, you could probably sell the Civic yourself and cover the payoff. I don’t picture the value/payoff difference moving your way since the payoff is based on 36,000 miles and you’re heading for 47,000. Don’t feel bad about being $1,300 under water- you’ve driven the car 8,500 miles more than you should have already. If you had a 15,000 mile lease instead of a 12,000 mile lease, your payments would have been $20-25/mo higher and you could have gone to the lease end being maybe just 2,000 miles over the limit. Some manufacturers have rebates for coming out of a competitors lease- just find the SUV you want that has the deal you want.
Unless you want to sell the Civic yourself, I’d jump on the Vroom bid of $13,500 and see what Carvana offers. They may not continue to pay too much for cars for very long. Your wife (the boss) wants out- get out. I don’t picture your equity situation getting any better.
What kind of SUV do you want to get to replace the Civic?
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