Get out of negative equity by rolling into lease?

smartin53 · 04-22-2008, 05:37 PM

OK so here's my situation. I'm trying to find the best way to eliminate my negative equity.

I currently have an 06 VW GTI and am about $7-8k upside down. While I was drooling over a 1 series car and musing to the sales guy about how I wish he could magically wish away negative equity he happened to float the idea of rolling the negative equity into a lease.

Now in my case I'm trying to stay in the $500 per month range payment wise, can't put any money down, have an excellent credit rating, and want to stick with a 36 month lease at 12k mikes a year.

The 128i I speced out is about $33k before taxes and fees.

I know that sometimes there are people knowledgeable in such things floating around the forums so I figured I'd ask and see if my idea has any merit or if I am just hopelessly wishing for something unrealistic.

The hope is I can get myself back to neutral ground within 3 years instead of 5 and then give myself better options on a new car with lower payments.

Glassjaw · 04-22-2008, 05:43 PM

I think you'll be fine, I got priced for a 128i in AW, with Steptronic, heated seats, premium package, and xenons for $516 a month and thats with taxes built into the payments....

Space gray · 04-22-2008, 08:48 PM

If you're 7k to 8k underwater, I don't think you'll be able to roll all of it into the lease. I think you can go something like 110% of MSRP, so assuming you get very little or no discount in the sales price, you'd be able to roll 3k to 4k into the lease.
IMO, the money factor in 1-series leases so far has not been stellar, so rolling negative equity into the lease does not make sense. To pay off 7k in 36 months takes ~$200/month, plus interest charge. So tack that on to the best deal you can make. Without a large cap cost reduction, there is no way you can get close to 500/month.

ulrichd · 04-22-2008, 09:32 PM

It'll be an endless cycle of being upside down on cars. You would have a $42K car that became a $30K car the moment you drove off the lot.

Dan203 · 04-23-2008, 03:54 AM

Buying a new car that is even more expensive then your old car and rolling over debit from the previous loan is absolutely NOT the way to go. That's a good way to end up in serious financial hardship.

Your best bet is to over pay your current loan by as much as possible every month. (i.e. if your car payment is $500, send them $600 or $700 if possible) That will get you to neutral faster and allow you to pay less interest in the long run. Once you're neutral then you can start looking at new cars.

Dan

smartin53 · 04-23-2008, 07:41 AM

Yea there were a few details I didn't catch on the lease deals BMW has that got my hopes up. Without putting at least $5k down on the car I'd end up with a payment way over what I want and thats not an option. I guess I'll look into a few other options to make up the gap. Besides its looking like it might take a while to get the car I want based on various BMW forums so I guess this a good sign to wait.

Nixon · 04-23-2008, 12:22 PM

Yep, waiting and increasing your current car payments while you wait is really your only chance of getting out from being upside down in your car.

But while you are waiting, it might be useful to figure out how the heck you got $7-8K upside down in the first place! And to do a gut check and decide if you really want to do something different than what you did last time, in order to avoid getting $12-14k upside down in a 128i. Because assuming you could afford the monthly payments, and assuming BMW would actually allow you to do it, that's exactly where you would be in a year or two. It is impossible to "eliminate" negative equity by just shifting the debt to a new car. You just get much further upside down the day you buy a new car, than you are already upside-down in your current car.

I'm going to guess you got into your current car by having a dealer sell you on a zero down deal where they took your upside-down trade-in (an older Honda?) and financed the balance into your VW. The dealer drove the negotiations based upon the cost of your monthly payments. And you ended up paying a price near MSRP (or more) once the true value of the trade-in is calculated in, along with lots of fees and add-ons (extended warranty? Lo-Jack? Paint or interior sealant/protector? Loan Insurance?).

All financed over 84 months.

NM27 · 04-23-2008, 01:10 PM

[quote=smartin53;118442]
Now in my case I'm trying to stay in the $500 per month range payment wise, can't put any money down, have an excellent credit rating, and want to stick with a 36 month lease at 12k mikes a year.quote]

So wait, im confused. you're talking about the 128i, or the 135i?

Litflynt912 · 04-23-2008, 06:07 PM

dude,
I was in the same boat...
I have a 07 rabbit 2Dr and I was upside down on it..
I just got back from the dealership today and they were offerring $10K less than what I owed.
Naturally, I wanted the 1 series bad enough that I was determind.
My 128 was $30500 minus taxes and that would have brought me to $42888 out the door...
They could not find a bank to make that happen.
I decided to keep the rabbit and buy the 128i outright and finance the $33K (taxes) and continue paying my rabbit off.
I know not everyone is in the financial shape to do that and with three car liens it is going to be tough...
but who ever above mentioned about having a gut check and thinking about how you got so much negative equity to being with is right...

In my case, I am going to make three car payment, enjoy my 128 and pay them all off because at the end, it is the right thing to do..
Good luck to you

Dan203 · 04-23-2008, 06:32 PM

^^^ No, good luck to you! Having 3 car payments is insane! Especially when you're upside down on at least two of them. (you lost $3-$5K on the 128i as soon as you drove it off the lot, so you're now upside down that plus the taxes)

Dan

smartin53 · 04-24-2008, 01:09 AM

Oh I know exactly how I got upside down. I jumped from my other car loan too early. I knew what I was doing but wanted the GTI badly. It was just stupidity on my part.

I had thought I had found some golden ticket with the lease option till I unwrapped it and saw the reality. Ah well I'll just pay into the loan more and suck it up. Maybe by the time I get my loan to the same amount as its worth I'll wanna keep it. I have a bad habit of going OOOOOOO WANT before thinking (on car #7 now) but this was the first that bit me.

Litflynt912 · 04-24-2008, 03:26 PM

yes three car payments are not going to be fun...
Actually, I have positive equity in my wifes car so it is only the rabbit and now the 128 I guess...
but you have to look at it from a standpoint of need and want...
We need a family and work car and since I have both, they are justifiable and the amount paid for is one that would be resolved through use...
with the 128 that was a total want and since I got a good deal on it...I can't really complain...

now if I took out the loan and took a loss on the rabbit...
I would have been screwed for real!

jdesclafani · 04-24-2008, 03:28 PM

y not give the wife the rabbit and trade in the other car that has positive equity?

Brandon26pdx · 04-24-2008, 05:49 PM

Quote:

Originally Posted by smartin53

OK so here's my situation. I'm trying to find the best way to eliminate my negative equity.

I currently have an 06 VW GTI and am about $7-8k upside down. While I was drooling over a 1 series car and musing to the sales guy about how I wish he could magically wish away negative equity he happened to float the idea of rolling the negative equity into a lease.

Now in my case I'm trying to stay in the $500 per month range payment wise, can't put any money down, have an excellent credit rating, and want to stick with a 36 month lease at 12k mikes a year.

The 128i I speced out is about $33k before taxes and fees.

I know that sometimes there are people knowledgeable in such things floating around the forums so I figured I'd ask and see if my idea has any merit or if I am just hopelessly wishing for something unrealistic.

The hope is I can get myself back to neutral ground within 3 years instead of 5 and then give myself better options on a new car with lower payments.

You're just hoping for something unrealistic. The last thing you would want to do is trade your car in. Better clean than thing up and pay the loan down to where you can sell it privately for what you owe on it. Come back after a year of working your ass off to dig yourself out of this mess. There's just no way around the economics here.

How the hell did you get that far upside down in a car anyway?:iono:

WhiteOne · 04-24-2008, 05:52 PM

Buy now and pay later. We are a nation in debt! Worries me...

Litflynt912 · 04-24-2008, 07:26 PM

Quote:

Originally Posted by jdesclafani

y not give the wife the rabbit and trade in the other car that has positive equity?

that was the original plan but because the suv is our "family" car I couldn't up and leave her w/ a two door..

The rabbit is my work car, the suv our family car and the 128i MY CAR!!!! : )

04-22-2008, 05:37 PM	#1
smartin53 New Member 3 Rep 6 Posts Drives: 2013 X1 xDrive 28i Join Date: Apr 2008 Location: Alexandria, VA iTrader: (0)	Get out of negative equity by rolling into lease? OK so here's my situation. I'm trying to find the best way to eliminate my negative equity. I currently have an 06 VW GTI and am about $7-8k upside down. While I was drooling over a 1 series car and musing to the sales guy about how I wish he could magically wish away negative equity he happened to float the idea of rolling the negative equity into a lease. Now in my case I'm trying to stay in the $500 per month range payment wise, can't put any money down, have an excellent credit rating, and want to stick with a 36 month lease at 12k mikes a year. The 128i I speced out is about $33k before taxes and fees. I know that sometimes there are people knowledgeable in such things floating around the forums so I figured I'd ask and see if my idea has any merit or if I am just hopelessly wishing for something unrealistic. The hope is I can get myself back to neutral ground within 3 years instead of 5 and then give myself better options on a new car with lower payments.
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04-22-2008, 05:43 PM	#2
Glassjaw 135i addict 1 Rep 49 Posts Drives: Join Date: Dec 2007 iTrader: (0)	I think you'll be fine, I got priced for a 128i in AW, with Steptronic, heated seats, premium package, and xenons for $516 a month and thats with taxes built into the payments.... __________________
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04-22-2008, 08:48 PM	#3
Space gray First Lieutenant 247 Rep 337 Posts Drives: 2022 iX 50 Join Date: Nov 2007 Location: San Francisco, CA iTrader: (1) Garage List 2022 BMW iX50 [0.00] 2017 BMW M3 [0.00]	If you're 7k to 8k underwater, I don't think you'll be able to roll all of it into the lease. I think you can go something like 110% of MSRP, so assuming you get very little or no discount in the sales price, you'd be able to roll 3k to 4k into the lease. IMO, the money factor in 1-series leases so far has not been stellar, so rolling negative equity into the lease does not make sense. To pay off 7k in 36 months takes ~$200/month, plus interest charge. So tack that on to the best deal you can make. Without a large cap cost reduction, there is no way you can get close to 500/month.
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04-22-2008, 09:32 PM	#4
ulrichd Colonel 210 Rep 2,233 Posts Drives: 128i M-Sport Join Date: Jun 2007 Location: Houston, TX iTrader: (6)	It'll be an endless cycle of being upside down on cars. You would have a $42K car that became a $30K car the moment you drove off the lot.
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04-23-2008, 03:54 AM	#5
Dan203 Lieutenant Colonel 136 Rep 1,592 Posts Drives: 2016 340i xDrive Join Date: Jul 2008 Location: Carson City, NV iTrader: (1)	Buying a new car that is even more expensive then your old car and rolling over debit from the previous loan is absolutely NOT the way to go. That's a good way to end up in serious financial hardship. Your best bet is to over pay your current loan by as much as possible every month. (i.e. if your car payment is $500, send them $600 or $700 if possible) That will get you to neutral faster and allow you to pay less interest in the long run. Once you're neutral then you can start looking at new cars. Dan
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04-23-2008, 07:41 AM	#6
smartin53 New Member 3 Rep 6 Posts Drives: 2013 X1 xDrive 28i Join Date: Apr 2008 Location: Alexandria, VA iTrader: (0)	Yea there were a few details I didn't catch on the lease deals BMW has that got my hopes up. Without putting at least $5k down on the car I'd end up with a payment way over what I want and thats not an option. I guess I'll look into a few other options to make up the gap. Besides its looking like it might take a while to get the car I want based on various BMW forums so I guess this a good sign to wait.
	Appreciate 0 Quote

04-23-2008, 12:22 PM	#7
Nixon Banned 57 Rep 1,396 Posts Drives: : Join Date: Jul 2007 Location: : iTrader: (0)	Yep, waiting and increasing your current car payments while you wait is really your only chance of getting out from being upside down in your car. But while you are waiting, it might be useful to figure out how the heck you got $7-8K upside down in the first place! And to do a gut check and decide if you really want to do something different than what you did last time, in order to avoid getting $12-14k upside down in a 128i. Because assuming you could afford the monthly payments, and assuming BMW would actually allow you to do it, that's exactly where you would be in a year or two. It is impossible to "eliminate" negative equity by just shifting the debt to a new car. You just get much further upside down the day you buy a new car, than you are already upside-down in your current car. I'm going to guess you got into your current car by having a dealer sell you on a zero down deal where they took your upside-down trade-in (an older Honda?) and financed the balance into your VW. The dealer drove the negotiations based upon the cost of your monthly payments. And you ended up paying a price near MSRP (or more) once the true value of the trade-in is calculated in, along with lots of fees and add-ons (extended warranty? Lo-Jack? Paint or interior sealant/protector? Loan Insurance?). All financed over 84 months.
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04-23-2008, 01:10 PM	#8
NM27 slow in, fast out 4 Rep 56 Posts Drives: 09 335i Join Date: Feb 2008 Location: Miami, FL iTrader: (0)	[quote=smartin53;118442] Now in my case I'm trying to stay in the $500 per month range payment wise, can't put any money down, have an excellent credit rating, and want to stick with a 36 month lease at 12k mikes a year.quote] So wait, im confused. you're talking about the 128i, or the 135i? __________________
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04-23-2008, 06:07 PM	#9
Litflynt912 Private First Class 4 Rep 114 Posts Drives: 2022 228i GC Alpine Join Date: Apr 2008 Location: AZ iTrader: (0)	dude, I was in the same boat... I have a 07 rabbit 2Dr and I was upside down on it.. I just got back from the dealership today and they were offerring $10K less than what I owed. Naturally, I wanted the 1 series bad enough that I was determind. My 128 was $30500 minus taxes and that would have brought me to $42888 out the door... They could not find a bank to make that happen. I decided to keep the rabbit and buy the 128i outright and finance the $33K (taxes) and continue paying my rabbit off. I know not everyone is in the financial shape to do that and with three car liens it is going to be tough... but who ever above mentioned about having a gut check and thinking about how you got so much negative equity to being with is right... In my case, I am going to make three car payment, enjoy my 128 and pay them all off because at the end, it is the right thing to do.. Good luck to you
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04-23-2008, 06:32 PM	#10
Dan203 Lieutenant Colonel 136 Rep 1,592 Posts Drives: 2016 340i xDrive Join Date: Jul 2008 Location: Carson City, NV iTrader: (1)	^^^ No, good luck to you! Having 3 car payments is insane! Especially when you're upside down on at least two of them. (you lost $3-$5K on the 128i as soon as you drove it off the lot, so you're now upside down that plus the taxes) Dan
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04-24-2008, 01:09 AM	#11
smartin53 New Member 3 Rep 6 Posts Drives: 2013 X1 xDrive 28i Join Date: Apr 2008 Location: Alexandria, VA iTrader: (0)	Oh I know exactly how I got upside down. I jumped from my other car loan too early. I knew what I was doing but wanted the GTI badly. It was just stupidity on my part. I had thought I had found some golden ticket with the lease option till I unwrapped it and saw the reality. Ah well I'll just pay into the loan more and suck it up. Maybe by the time I get my loan to the same amount as its worth I'll wanna keep it. I have a bad habit of going OOOOOOO WANT before thinking (on car #7 now) but this was the first that bit me.
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04-24-2008, 03:26 PM	#12
Litflynt912 Private First Class 4 Rep 114 Posts Drives: 2022 228i GC Alpine Join Date: Apr 2008 Location: AZ iTrader: (0)	yes three car payments are not going to be fun... Actually, I have positive equity in my wifes car so it is only the rabbit and now the 128 I guess... but you have to look at it from a standpoint of need and want... We need a family and work car and since I have both, they are justifiable and the amount paid for is one that would be resolved through use... with the 128 that was a total want and since I got a good deal on it...I can't really complain... now if I took out the loan and took a loss on the rabbit... I would have been screwed for real!
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04-24-2008, 03:28 PM	#13
jdesclafani Private First Class 3 Rep 135 Posts Drives: Join Date: Mar 2008 iTrader: (0)	y not give the wife the rabbit and trade in the other car that has positive equity?
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04-24-2008, 05:52 PM	#15
WhiteOne Major 28 Rep 1,000 Posts Drives: 2008 AW 135i Join Date: Dec 2007 Location: Alabama iTrader: (0)	Buy now and pay later. We are a nation in debt! Worries me...
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