The world's worst lease deal

I have no idea how this happens, or if it's even possibly real, but this person is advertising a "take over my lease" type offer:

https://columbus.craigslist.org/pts/d/columbus-2013-dodge-durango/7492317256.html

$516/mo for a 10 year old Dodge at 69 months remaining, and $500/down?! That car also has 131k miles on it? That's a total of $36,104 in payments and down payment, and you don't even own the vehicle at the end. Is this some kind of weird joke or trolling?

Screenshot in case it disappears:

Without more info, I'm going to just assume it's another example of predatory auto loan/lease/etc. It's amazing what some dealers are able to get away with. 

I thought this was going to be about Chicago's lease/sale of their parking meters and the skyway...

Hmm ... almost sounds like a deal that Bobby Bonilla's agent would craft.

I'd rather light my balls on fire and smash the remains with a hammer than take on that loan. No. Berkin. Way.

"Hi.  I'm dumber than a box of rocks, and I signed a deal that my Grade 2 math eventually showed me was a super bad deal.  Seeking someone dumber than me, with worse math skills."

Wouldn't shock me if it was some sort of debt consolidation situation, and he's trying to get somebody else to eat it.

mtn said:

I thought this was going to be about Chicago's lease/sale of their parking meters and the skyway...

Can the private company set whatever parking and transit rates they want provided the services are still used at a certain low level? That's what our conservative government in Ontario let them get away with when they leased the 407 toll road for 99 years for a fraction of its value back in 1999.

A buddy of mine used to be a Ford salesman at a dealership on the edge of the rougher side of town in Milwaukee. He finally decided he wasn't cut out for it after going through a few buyers who were chomping at the bit to take used vehicles home with downright absurd 20%-ish APRs on 7-8 year notes.

Apparently he couldn't with good conscience try to close those kinds of sales and stressed how bad of a financial decision they were, but the buyers only cared about the monthly payment number and just went along with it.

I cringe a little when I think about how buy-here-pay-here places can be orders of magnitude worse than that. Almost surgically designed to take advantage of people with little to no financial literacy.

In reply to pointofdeparture :

Absolutely.  In my line of work, I see it all the time.  We'll get a totaled 2015 Nissan Altima.  The car is worth $10,000 (just picking a random number) and the owner tells us it's financed with Jimmy's Used Cars.  At that point, we brace for impact.  Invariably, they owe $19,000 on it, if they're lucky.  It's truly tragic.

I've known guys who ended up in similar deals in the past.  Sometimes what happens is the buyer is rolling negative equity of a trade-in into the lease deal for the "new" car.   I used to work with a guy who rolled something like 3 different vehicles he had bought within a few years into a lease deal on a new base model Hyundai Accent.  He was paying almost $600/mo for 5 years on a roughly $12K car (this was over 20 years ago) - because he kept rolling the loans from the previous car into the next one.  And then because he had a long commute, blew through the annual mileage limit within like 4 months. So he ended up having to park the car and bought a cheap used car to commute in while he paid off a car he couldn't drive.  

I think I've posted this story before, but years ago I stopped to check out a P71 at a buy here pay here lot. The owner was friendly and started chatting with me, and after making it clear I wasn't a mark and would be interested in a cash deal, he basically told me he'd just repossessed the car again, and was going to sell it a few more times to finance buyers before selling it for real.

The business model is basically designed around default and repossession, and when somebody does pay off their loan it means you have to find another crappy used car for your lot to sell. 

In reply to pointofdeparture :

Thats not even the end of the horribleness of these places.  Some of em don't report credit properly. 

Brother-in-law's brother got into one of those type of loans. Never missed a payment, he kept track of his monthly expenses well, just wasn't financially literate enough to go much beyond month-to-month.  About halfway through, with the help of my sister laying out the payments over time, he ended up realizing how bad it was and hustled to pay it off.  Knocked a couple years off of it.

A couple months after he got out from under it he had the idea to check his credit to see what kind of impact it had and couldn't find the loan in any recent history.  Eventually found it as a smaller loan paid off years before.

Tom Suddard said:

I think I've posted this story before, but years ago I stopped to check out a P71 at a buy here pay here lot. The owner was friendly and started chatting with me, and after making it clear I wasn't a mark and would be interested in a cash deal, he basically told me he'd just repossessed the car again, and was going to sell it a few more times to finance buyers before selling it for real.

The business model is basically designed around default and repossession, and when somebody does pay off their loan it means you have to find another crappy used car for your lot to sell. 

Had an almost identical discussion when I was looking at a Focus SVT about a decade ago. My memories fuzzy but I think the line was we make money off lawyers and tow trucks not cars.

One of my best friends is a finance manager at a high volume (250+ cars/mo) Mainline Dealer (Nissan and Ford).  They keep a 60 day rolling average of all financed vehicles that go through the department.  When we were looking to buy a hybrid in April, we reached out to him and he told me the AVAERAGE finance rate was 16.4%.  That includes all of the promotional 1.9%'s and low interest leases too.  He said in his 4 years managing the dept, the 60 day avg has never dropped below 13%.  

That is just flat out INSANE to me... I cannot comprehend it, literally.  Maybe that's why I drive 20 year old crapboxes, but I could never, in good conscience, be willing to pay Teens interest rates for 84 months for an appliance like a Rogue or freaking Juke... but here people are, doing it.  At a reputable BIG dealer, no less.   I can't even imagine the stuff going on at the shady 'we finance everyone' lots, but nothing would surprise me. 

adam525i said:

mtn said:

I thought this was going to be about Chicago's lease/sale of their parking meters and the skyway...

Can the private company set whatever parking and transit rates they want provided the services are still used at a certain low level? That's what our conservative government in Ontario let them get away with when they leased the 407 toll road for 99 years for a fraction of its value back in 1999.

Basically. There are obviously some restrictions on the price hikes, but the long and short of it is that, 14-20 years later, the companies have made about $500M after breaking even. 

In reply to Tom Suddard :

Honestly my Dad and I looked into starting a BHPH lot decades ago once we figured out the business model. It was all built on selling one car multiple times. The only hitch back then was finding the car to repo it. Now you just use a GPS tracker and pick it up. Quick refresh and back on the lot it goes.

Tom Suddard said:

I think I've posted this story before, but years ago I stopped to check out a P71 at a buy here pay here lot. The owner was friendly and started chatting with me, and after making it clear I wasn't a mark and would be interested in a cash deal, he basically told me he'd just repossessed the car again, and was going to sell it a few more times to finance buyers before selling it for real.

The business model is basically designed around default and repossession, and when somebody does pay off their loan it means you have to find another crappy used car for your lot to sell. 

There is a local guy that does the same thing. Basically, the down payment pays him for the car. The monthly payments are pure profit. Even if the car disappears, he's not out any money.

Wandered onto a car lot one day and was told they would not sell me a car for cash. Payments only. Period. I laughed and left.

Gearheadotaku (Forum Supporter) said:

Wandered onto a car lot one day and was told they would not sell me a car for cash. Payments only. Period. I laughed and left.

I've had that experience too.

Every lease is a bad deal (business use excepted)

Pay a bunch of money, dealer gets to keep the car. Whoever came up with that scheme is a genius.

Lets not forget the added charges for damages, mileage, maintenance and, best of all, the crippling "balloon payment" at the end.

First time I tried to lease a car at 19 years old, I sat down and the salesman laid out the terms for me. All I could manage to say was "you guys are f-ing nuts". and left.

I know it works for some people but I can't figure out how.

In reply to ShawnG :

From time to time I've seen crazy "lease hacker" deals making the rounds where you can get a new Corolla for something crazy like $149 a month with 10k miles a year allowed. Obviously not what we're talking about in this thread but there are definitely lease deals out there that make sense for a certain kind of driver. (By and large personal leases are indeed a losing proposition though.)

golfduke said:

One of my best friends is a finance manager at a high volume (250+ cars/mo) Mainline Dealer (Nissan and Ford).  They keep a 60 day rolling average of all financed vehicles that go through the department.  When we were looking to buy a hybrid in April, we reached out to him and he told me the AVAERAGE finance rate was 16.4%.  That includes all of the promotional 1.9%'s and low interest leases too.  He said in his 4 years managing the dept, the 60 day avg has never dropped below 13%.  

 

That is just flat out INSANE to me... I cannot comprehend it, literally.  Maybe that's why I drive 20 year old crapboxes, but I could never, in good conscience, be willing to pay Teens interest rates for 84 months for an appliance like a Rogue or freaking Juke... but here people are, doing it.  At a reputable BIG dealer, no less.   I can't even imagine the stuff going on at the shady 'we finance everyone' lots, but nothing would surprise me. 

Yes, but I feel like that's pretty common with Nissan.  They're the company you turn to if you want a new car and Mitsubishi turned you down for a loan.

In reply to ShawnG :

If you're the kind of person who absolutely positively has to have a brand new car every 2-3 years, then leasing makes sense.  Or, at least more sense than buying.

Whether that is a smart way to be or not is an entirely separate issue.

I once advised PW that, if something were to happen to me, find the best $149/mo lease you can find and do that every 3-4 years. That way you'll always be in a newer car under warranty and not have to worry about breakdowns and getting ripped off.  Cars are so much better today I no longer think it's a great idea

Duke said:

In reply to ShawnG :

If you're the kind of person who absolutely positively has to have a brand new car every 2-3 years, then leasing makes sense.  Or, at least more sense than buying.

Wheether that is a smart way to be or not is an entirely separate issue.

 

If you have good credit, the difference is a lot longer than 3 years.  Factor in long term maintenance and actual mileage, leasing *can* be a good deal. 
But the math has to be done.