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Mazdax605
Mazdax605 UberDork
8/29/18 2:00 p.m.

Hey guys,

 

Last July(2017) my Suburban was giving me fits, and we needed a truck like vehicle to tow our camper. We looked at a bunch of used SUV's and trucks, but it was going to be a replacement for my wife's Sienna which she had been driving for 10 years. I figured she was due for a newer vehicle. Ultimately we decided a 4Runner would be a good vehicle. Used ones were crazy priced it seemed even with highish mileage.

 

In a moment of weakness we ended up leasing a brand new one at a local dealer that was recommended by my sister, and not the regular Toyota dealer we had bought a few cars from. Long story short we were taken advantage of, and lied to about a few things.

 

We love the 4Runner, and could probably afford to keep it through the lease(24 or so months left), but in my head it just isn't making a ton of sense. Biting the bullet on what we owe compared to the trade in value isn't great either, but might make the most sense in the long run.

 

Since we got the 4Runner we've only used it to tow the camper once, and our life has changed enough that I don't see us using the camper much more in the next couple of years(haven't used it once this year). I might even talk her into selling it as I don't like camping anymore anyway. I guess to me it doesn't seem to make sense to have a high lease payment on a truck that probably isn't needed, and is too much vehicle for her/our needs.  It is an awesome truck though!!

 

On paper there's a gap of around $3-4k between what we owe on the lease, and what it's worth on trade in. Significant money, but maybe something I'd entertain considering what it will cost to keep the lease for the remainder of the term. This is all on paper, and not in the real world dealing with a salesperson. Keeping the lease until the end will cost us around $13k with reg/taxes, excise, etc before fuel. We don't own it at the end either. Buying something will be more expensive total I suppose, but we can spread it out over a longer period, and we own it afterwards. I hate payments, but this lease while an affective way to get a car you normally couldn't afford is something I don't think was wise for us. I should have known better, but like I said it was a moment of weakness. We are well under the allowed mileage, so that helps us I suppose.

 

My thoughts are maybe eating the $3-4k, and buy a slightly used/new small SUV/CUV for around the $17-25k range and still be ahead of the game over the length of the financing. I say this as right now there are a few manufacturers offering 0%-0.9% on new cars. Also used with low miles means you can get a lightly used car with good features for less money. We could probably get more features in a new or used CUV. I say this because while our 4Runner is well equipped it lacks a few cool features that a lot of lower level cars have now, like heated seats, sunroof, etc. It does have some cool features that she/we will never use(TRD off road crawl control stuff). A small SUV/CUV will most definitely get better MPG's too. Also my short wife seems to struggle parking the 4Runner even a year plus later. She struggled with the 4wd shifter last winter as well. AWD might be the right ticket here.

 

I'm thinking about Mazda CX-5's, Toyota Rav-4's, Mitsubishi Outlander, Nissan Rogue, etc..

On paper I like the Outlander GT V6 best as you get a lot for your money with a regular automatic opposed to a CVT. Best warranty as well. You guys seem to E36 M3 on Mitsu, but critics like them it seems. I'm a Mazda and Toyota guy though so I think the CX-5 (also traditional auto)is probably the best bet. Any thoughts on these choices? Mazda, and Mitsubishi are offering low interest right now(0%), and I haven't checked on Toyota/Nissan yet. Might go check out a left over 17 CX-5 touring tonight. No Sirius/XM radio on the lower level Mazda's is a bit of a turn off though. Thoughts? Am I nuts?

 

Chris

Lof8
Lof8 GRM+ Memberand Dork
8/29/18 2:09 p.m.

I’m curious on the details of how you were taken advantage of and what you were lied to about. I’d like to avoid that in potential future dealer interactions. 

Mazdax605
Mazdax605 UberDork
8/29/18 2:16 p.m.
Lof8 said:

I’m curious on the details of how you were taken advantage of and what you were lied to about. I’d like to avoid that in potential future dealer interactions. 

We had a payment that I was happy with, and they sold us on a wear and tear/wheel protection package that added $40ish to the monthly payment. I asked about canceling it, and was told yes we could. I did cancel it about a month later as I thought it was a waste of money. They canceled the plan, but the payment didn't drop the $40ish a month. They said we'd get a prorated check back at the end of the lease in the amount of the package over the 36 months. It will be about equal to one months payment ultimately. Total rip off. Also they played games with the numbers once they ran our credit, and saw it so high, and changed the lease company from Toyota to a local bank which makes lease assumption(something I looked into) more difficult, and the residual value higher.

Mazdax605
Mazdax605 UberDork
8/29/18 2:20 p.m.

I will say that while they played games, and lied to us about a couple of things ultimately we could've still walked away, but I was weak, and we needed a car/truck. Stupid move, but I have to live with it. I'll be more responsible next time.

classicJackets
classicJackets HalfDork
8/29/18 2:22 p.m.

I'm curious to see the advice offered here. Best of luck with whatever turns out!

BoxheadTim
BoxheadTim GRM+ Memberand MegaDork
8/29/18 2:29 p.m.

Check if your leasing contract requires you to still pay the remainder of the lease in full when you return the lease early. Quite a few will. If that's the case then I'd just sit it out as you'll be out the money anyway.

Leases tend to be harder to get out of than a purchase with a loan, so I'd start with your lease paperwork. That's the actual paperwork, not what some underpaid call center drone is telling you on the phone.

nderwater
nderwater UltimaDork
8/29/18 2:32 p.m.

Quitting a lease on an SUV to buy a new CUV seems a weird decision, not even considering the fact that you're more than 1/3 through the lease term and that doing so will cost real money and hurt your credit.

Mazdax605
Mazdax605 UberDork
8/29/18 2:34 p.m.
BoxheadTim said:

Check if your leasing contract requires you to still pay the remainder of the lease in full when you return the lease early. Quite a few will. If that's the case then I'd just sit it out as you'll be out the money anyway.

Leases tend to be harder to get out of than a purchase with a loan, so I'd start with your lease paperwork. That's the actual paperwork, not what some underpaid call center drone is telling you on the phone.

I'm thinking we'd have to cover the difference in the money owed if ending lease early. Therefore the $3-4k bullet we'd have to bite. Not great, but it beats the amount we'll pay if followed through to the end of the term on a car that really doesn't suit our life at this time. I'll have to check though.

BoxheadTim
BoxheadTim GRM+ Memberand MegaDork
8/29/18 2:35 p.m.

In reply to nderwater :

Shouldn't hurt his credit if he pays his way out according to his lease contract, but I agree it will hurt his wallet quite noticeably.

Mazdax605
Mazdax605 UberDork
8/29/18 2:36 p.m.
nderwater said:

Quitting a lease on an SUV to buy a new CUV seems a weird decision, not even considering the fact that you're more than 1/3 through the lease term and that doing so will cost real money and hurt your credit.

Would trading in a car hurt our credit? If so I don't want to do that. I know we traded in the leased Subaru we had years ago, and it wasn't any problem.

Mazdax605
Mazdax605 UberDork
8/29/18 2:38 p.m.
BoxheadTim said:

In reply to nderwater :

Shouldn't hurt his credit if he pays his way out according to his lease contract, but I agree it _will_ hurt his wallet quite noticeably.

Agreed, that's why I'm asking if this is a dumb idea. The wallet gets hurt regardless if I bite the bullet and trade now, or follow through the end of the lease on a car that is too much car for us/her. Also we won't own it once the term is up.

BoxheadTim
BoxheadTim GRM+ Memberand MegaDork
8/29/18 2:38 p.m.
Mazdax605 said:
nderwater said:

Quitting a lease on an SUV to buy a new CUV seems a weird decision, not even considering the fact that you're more than 1/3 through the lease term and that doing so will cost real money and hurt your credit.

Would trading in a car hurt our credit? If so I don't want to do that. I know we traded in the leased Subaru we had years ago, and it wasn't any problem.

I don't think it would unless you returned it in such a way that it would be classified as a voluntary repo. That'll hurt your credit badly.

Also, I'd have a look at the various lease trading sites, that might actually be an easier way to get out if you can find someone to take over the lease.

nderwater
nderwater UltimaDork
8/29/18 2:38 p.m.

Got it, on first read I thought you were thinking of abandoning the lease.  Would NOT recommend that.

BoxheadTim
BoxheadTim GRM+ Memberand MegaDork
8/29/18 2:43 p.m.
Mazdax605 said:
BoxheadTim said:

In reply to nderwater :

Shouldn't hurt his credit if he pays his way out according to his lease contract, but I agree it _will_ hurt his wallet quite noticeably.

Agreed, that's why I'm asking if this is a dumb idea. The wallet gets hurt regardless if I bite the bullet and trade now, or follow through the end of the lease on a car that is too much car for us/her. Also we won't own it once the term is up.

Just a couple of additional thoughts - those hold their value pretty well in general, right? Any chance that you might actually be in the money if you bought the truck at the end of the lease and then flipped it?

Also, another thought - the 4Runner doesn't fit your requirements right now, but what are the chances that this will change over time again? Obviously you did have a need for a truck like this a year ago.

z31maniac
z31maniac MegaDork
8/29/18 2:51 p.m.
nderwater said:

Quitting a lease on an SUV to buy a new CUV seems a weird decision, not even considering the fact that you're more than 1/3 through the lease term and doing so will cost real money and hurt your credit.

How would turning in a lease and buying something hurt his credit rating? EDIT: This was addressed while I walked away and came back to type a reply.

OP keep in mind there will also be the sales taxes, again, on whatever you decide to buy. I'd review the lease paperwork and what the ACTUAL cost savings are between the two options. 

 

If I was a betting man, I'd bet you'd be better off keeping it. However, I also understand the psychological part of "Damn, seeing this truck everyday reminds me of my bad decision."

Brokeback (Matt)
Brokeback (Matt) Reader
8/29/18 3:14 p.m.

I would probably sell the trailer and save the cash from that, and then keep the lease for the next 2 years and keep trying to save more $$ towards the replacement and/or buying out the 4runner at the end of the lease.  Use the 4runner to the max # of miles allowed by the lease between now and then. 

 

Aspen
Aspen Reader
8/29/18 3:18 p.m.

Normally this would be bad financially, but in this situation you may be better off:

1) the 4runner has very high resale value, so you may be able to swing a deal especially if you find a private buyer

2) a lesser small CUV like the CX5 would save much $$ in gas, maybe $1000 over 2 years depending on how much driving you do.

 

However, walking into a dealer and doing a trade will likely hurt the wallet.  I would just keep it and be more analytical about my next purchase.  Sell the camper if it won't be used, it won't do anything but depreciate and take up space.

 

parker
parker Reader
8/29/18 3:24 p.m.

Good luck.  Even the idea of leasing hurts my brain.  Making car payments, possibly being penalized if you drive said vehicle too much, at the  end you own nothing.  Does not compute.

 

rdcyclist
rdcyclist New Reader
8/29/18 5:21 p.m.

I had a similar situation in 2003. The wife's car threw a timing belt (another long story) and she wanted a new car. Somehow, in my own moment of weakness, we ended up with an Audi A4 Quattro. Great car but not for 320 bucks/month in 2003 dollars. The lease was through Audi but there was a significant penalty for exiting before the end of lease. Not only that, she ended up driving it way more than expected taking care of her sainted mother (sarcasm mine) so we were going over the annual mileage by about 3k/year. Nearing the end of the lease I was trying figure out how were going to pay what looked like a coupla grand of mileage penalty, when in a rare flash of brilliance, I advertised the car on Craigs and sold it in a private party sale for 2k more than the residual!

So you may want to look into selling it privately. The other thing you might be able to do is turn the lease over into a newer car that you really want. Just make sure it's not in a moment of weakness 'cuz we know what happens then...

Mazdax605
Mazdax605 UberDork
8/29/18 5:27 p.m.

Local Mazda dealer has a left over 17 CX-5 that they'll sell for $26.6. Offered us $33k for the 4Runner. Just left there gonna think about it over night. Gave payments based on us putting $3k down to cover the $2600 negative equity and tax title, tags etc. Based interest rate on middle of the road rates. I can get 2.24 % from my credit union. 

BoxheadTim
BoxheadTim GRM+ Memberand MegaDork
8/29/18 5:49 p.m.

From my understanding of car leases, there really isn't a concept of "negative equity" like there is with a car loan, at least unless you have the option to purchase the vehicle for a given price at any point in time during the lease. The ones I looked at in the past are generally written up such that you can only purchase the vehicle at the end of the lease, at least without additional negotiations with the leasing company or paying all the outstanding lease payments plus the price for the purchase option.

That's (again) why it's important to check the lease paperwork. In order to be able to sell it to the Mazda dealer, you would have to own the 4Runner first, but right now you're renting it long term.

TGMF
TGMF Reader
8/29/18 6:00 p.m.

You could try to buy out the lease now, and sell it yourself. As you mentioned resale is absurd on these so its likely you should be able to break even or  come out ahead. 

I'd just keep it.  Buy it at the end of the end of the lease and sell it then. In that scenario, you will come out thousands ahead. 

APEowner
APEowner GRM+ Memberand Dork
8/29/18 6:10 p.m.
Mazdax605 said:

Local Mazda dealer has a left over 17 CX-5 that they'll sell for $26.6. Offered us $33k for the 4Runner. Just left there gonna think about it over night. Gave payments based on us putting $3k down to cover the $2600 negative equity and tax title, tags etc. Based interest rate on middle of the road rates. I can get 2.24 % from my credit union. 

The first thing you need to do is read your lease contract and see exactly what the early termination is going to cost you and, if you can in fact trade in the 4Runner.  It's not technically yours.  If you can't understand it (and you may not, it's written in lawyer gobbledygook) you could call the lease holder and ask them.

Dave M
Dave M New Reader
8/29/18 8:06 p.m.

The "negative equity" is probably inclusive of capitalized interest pulled forward when you terminate. It's not a good move to pay that interest now if you can avoid it, so just keep the car.

Mazdax605
Mazdax605 UberDork
8/29/18 11:12 p.m.
Dave M said:

The "negative equity" is probably inclusive of capitalized interest pulled forward when you terminate. It's not a good move to pay that interest now if you can avoid it, so just keep the car.

I'll have to look into it deeper. The dealer we traded our leased Subaru into years ago didn't seem to care about the fact that it was a lease. We only had about 9 months left on that one if I remember correctly though. The local Mazda dealer we just spoke with offered up $33k on the 4Runner. Like I said we can keep it, and we do love the car, it just is a lot more than we need, and it isn't going to be ours at the end, and likely we won't want to finance the residual amount when the lease is over. It's also pretty miserable on fuel.

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