I love my car, but I truly am completely upside-down in my loan. Not only is my loan more than the value of the car, but I'm paying off my previous car in the same loan. I've been told that I have two options - tough it out and pay off the damn car, or lease a new car.

Obviously the 1st option is the most reliable and sensible way out, but I was curious as to what the rest of you thought of the leasing idea...

 

Perhaps I'm missing something, but how does leasing a car help you out? Aren't you still going to be liable for any shortfall/deficiency on the loan after you sell off your current car?

Is it a situation where you trade in your car for a leased vehicle, and they pay off the loan? Even if that's the case, they're just going to roll that amount over into your new lease payments I would think, in which case you'd be right back in the same position basically.

 

no no no do not lease. Why make payments that get you nowhere? either tough it out or sell the car for something more affordable. Although I would hate to see the only B.A. i35 in Georgia disappear

 

Fellow Georgian and "I" owner here. I also happen to be the only finance guy who reccomends that you should not finance anything (besides your home.... I'm a mortgage consultant).

If you lease a new car they will simply roll your negative equity into the cost of the new lease and you simply stretch your negative equity over the course of 2 - 3 years. Not only that, but the dealer will hammer you on the value of your car, so your negative equity will be exascerbated by doing the trade in.

In my line of work I see so many people that ruin their financial lives through car payments. My advice to you, work some extra hours....deliver some pizzas, work some odd jobs, and pay down your car loan as fast as possible. I don't know how much you owe, but I bet you could have your car paid for in one year if you really focused on it.

Let's say this all comes true and a year from now you have no car loan. And I will guess the value of your car is 8 grand. Well, say you save $450 per month over the course of the following year (which would be comparable to the lease payment on a new car). That would equate to $5,400 you have saved over that year. Take your $8,000 car and $5,400 that you saved and you now can go out and buy a $13,000 car that's paid for and no monthly payments.

There will be people that will argue and say "don't put your money into a depreciating asset" (i.e, don't pay cash for cars). But let me ask you.... why would you then pay interest on something that is going down in value? You're still taking a loss on the investment because it's going down in value....so why, then, would you pay interest on top of that?? I have over-simplified the math here in order to not bore you to tears, but if you want detailed info let me know and I'd be glad to share.

Good luck. Let us know what you decide.

 

I would tough it out, unless of coure you do not like your car anymore and want bigger and better.

 

Absolutely correct. If you can pay cash for the car, you'll have a lot more bargaining leverage as well during the negotiation. Hold what you got and pay off your car. Leasing it would be a mistake especially if you don't have a business that allows you to take the deduction on your lease payments.

 

You've just answered your own question. Please don't over think the ovious

 

I have no idea how you planned to get out of your situation by digging yourself a deeper hole and diving it in head first. As been said, buckle down & payoff your loan.

 

This is a far too common problem. People are buying cars with zero or very little money down and spreading the loan out to 5 or 6 and sometimes 7 years. Cars just don't hold their value anymore. Things that can help to alleviate that is, buy a car a few years old, put 10 to 20% cash down and finance the car for 2-3 years if you can't pay cash for the entire car.

I don't buy new cars anymore. I bought my 97 Maxima brand new and paid cash for it and I still drive it daily. Cheap transportation if you ask me. My other car in on a 3 year lease. GM is going to lose their butts on that one too. It's worth far less than the residual.