I owe 29k on my 22 TM3 (52k).
carvana values at 20k
payment is 760 a month for the next 32 months.
How do I get out of this outside of declaring bankruptcy. I would prefer to go back to a gas vehicle and lower my payment. I saw some rolling it into a lease, but the difference is quite significant.
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With the $9-11K in negative equity, your best bet is to try and identify a vehicle that can absorb that much negative equity with a lot of rebates, dealer discounts, incentives as well as a vehicle that has a low MSRP. Both of those things combined can help get you out of this and into another lease that after that lease, you’ll be right again. Look at vehicles like the Dodge Hornet, Mazda CX-30, Volkswagon Taos, etc…
The other option is to get a loan through like Lightstream for $9K, and then sell it to Carvana. Depending on what your interest rate/money factor is currently on the lease that may or may not be a good idea. Just depends on how badly you want out of this vehicle and into another vehicle with a lower payment.
I have looked into several vehicles. Mazda cx5, honda civic, toyota camry, honda accord as vehicles but cars with huge incentives have realistically only been a jeep wrangler.
I apologize for the 32 month portion. its actually 38 months due to the half year.
Another option is pick-up a manageable part-time job somewhere and dedicate all income from that part-time job to paying off your negative equity (you might be surprised how quickly you’re able to do that) and then get something you really want instead of settling just to get out of an EV/upside down vehicle. That will require a little more time and discipline, but in my opinion, is more rewarding and will prevent you from repeating this situation again in the future.
Gas cars are mostly terrible leases these days even without any negative equity.
And all that NE rolled into a 36m term is going to make your payment jump. And it’s just a bad decision to pay finance charge and tax on NE when you don’t have to.
Your best bet might be a 0% APR financing deal for 60 months such as Tiguan or Rogue. No tax and no interest on all that NE.
These vehicles are not good lease candidates, since Honda and Toyota do not need to incentivize these vehicles. You are better off financing one of these (given their high resale value), although in your case it won’t be of any help in “burying” the negative equity
I could pay it off, but was really against keeping the Tesla and Elons price cuts and what not really bring the cars value down. thank you for the advice
looking into a dodge hornet may be the best option to absorb the negative equity.
I leased an rt+ last week and was able to get $6k off msrp and $10k in incentives
The incentives were $6500 in stellantis ev credit, $1000 through an email offer directly from dodge site, and another 2500 were some sort of bonus lease cash
your payment would probably be 600+ a month, but you’d be wiped clean in 24 months
I actually looked into that after this post, but my issue really stems from reliability for this car.
Edit: I see you are doing a lease. I was thinking purchasing cause I see some r/ts for 26k.
don’t purchase a hornet. only look at the lease option. you’d get the same discount + credits. and if anything goes wrong, you’re under the warranty
You’ll want to make sure you’re taking advantage of GAP insurance if you go the purchase route to protect you should you be in a total loss accident. Some leases automatically include GAP, so you’ll want to ask that question if you end up leasing something vs purchasing it. GAP is super important if you’re transferring a lot of negative equity into a new deal.
If you can pay off the negative equity, then your best bet is probably to sell private party and to do it really soon before public sentiment against Tesla turns due to Mr. Musk himself.
I sold a Tesla last year and easily beat Carvana’s offer by 15+ percent.
PS: don’t touch something as bottom of the barrel in terms of quality as Dodge or any Stellantis brand. There’s a good reason they are “cheap” but only superficially. Between the continuous depreciation and maintenance/repairs your TCO (total cost of ownership) will likely be higher than if you spent the same money on a brand new Toyota, Honda, Mazda, H/K or Subaru.
building off this: incentives aren’t put on cars that people want. accordingly, if people didn’t want it in the first place, the depreciation will be higher, and you’ll be back at square one with an underwater car that nobody wants to buy from you.
Perhaps I’m overlooking something. I don’t quite understand or maybe you are wrong here.
A car with a higher MSRP will be able to absorb more negative equity not the one with lower MSRP.
What does rebates/dealer discount/incentives have to do with being able to absorb negative equity? Let’s compare two cars:
(a) One car has a $300 monthly payment with $0 discount, 0 MF.
(b) The other car has a $300 monthly payment with $15k in discounts, 0.003 MF.
Which car do you think would absorb the negative equity better? I would assume it would be the one with lower MF which is option (a).
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When considering a lease to effectively handle (refinance) negative equity, you should look for:
A lease with low monthly payments when compared to similar vehicles (indicating the lease is actually hackable).
A zero or low Money Factor (MF) program to minimize finance charges.
A lease that’s hackable over a longer term to spread out payments. 36 months or higher preferable.
A captive auto finance company that permits rolling all of the negative equity into the lease. Many lenders will have a maximum LTV ratio they’re willing to go beyond, often around 125%. However, this can vary.
I would also suggest doing some research and take a look at the Signed Deals & Tips section of this forum. Feel free to check out some of the recent deals on high and low MSRP cars.
A higher dealer discount equates to a lower taxed sales price. Rebates are taxed in California, btw. You are forgetting how the Money Factor (MF) plays a role in all of this. There are several variables when calculating a lease payment.
In an ideal situation, you want a car/manufacturer advertising lots of rebates + low MF. You also want a dealer to play ball and offer a substantial discount off MSRP.
Negative equity questions have been answered multiple times on this forum. I am not trying to reinvent the wheel.
OP needs to figure out the best financial move for them.
I would actually love to find out where I am wrong.
Thanks!!
and so? Eventually if two leases have the same monthly payment, the lease with the lower MF would be better candidate for refinancing the negative equity.
MF decides the actual interest on the refinanced negative equity. That is the most important variable here.
In the example provided below, Option (a) would be the better choice. Rebates have minimal effect on refinancing negative equity.
You never mentioned MF before (nobody did in this thread). MF is the most important variable when refinancing negative equity. Low payment + Low MF is what one should be looking for to find a good lease candidate to refinance negative equity. How one gets to a low payment: high RV, dealer discount, rebates, incentives, tax credits, low document fee, acquisition fee waiver, etc., does not matter as long as the lease is hackable. As explained earlier:
Should I put “have high rebates” in the list above? I don’t think so because that doesn’t matter to refinancing negative equity.
And yet we have people suggesting “look for a vehicle with high rebates/incentives/dealer discount and low MSRP so it can absorb negative equity better”, when the correct answer should be “look for a lease with low monthly payment, low MF, and longer lease duration.”
Everyone really needs to stop using words like absorb when it comes to negative equity.
Every OP needs to understand that it doesn’t get absorbed or buried or washed. It just gets re-borrowed and paid back with interest
Rebates aren’t there to help with NE. They only inadvertently help borrowers borrow more by creating more space under the LTV cap. I’m surprised more captives haven’t caught on to a big hole in their credit risk algorithm.
