Pay more on monthly lease or save for the down payment?

Pay more on lease or save for downpayment?


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Mojoe2211

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How's it going guys. I have a question, currently I am leasing a 2017 Hatchback Ex-t, I have 1 more year left on my lease and I do plan on purchasing it after the lease is up and I always had planned to. I was wondering if it is better for me to pay more on the monthly lease payments which are USD 361.93 a month so that the payoff amount gets lowered and I don't have to pay back as much when I get the car financed at my credit union. Or should I just keep saving up for a large downpayment?
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redstang

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How's it going guys. I have a question, currently I am leasing a 2017 Hatchback Ex-t, I have 1 more year left on my lease and I do plan on purchasing it after the lease is up and I always had planned to. I was wondering if it is better for me to pay more on the monthly lease payments which are USD 361.93 a month so that the payoff amount gets lowered and I don't have to pay back as much when I get the car financed at my credit union. Or should I just keep saving up for a large downpayment?

That's not really how leases work. The buyout amount at the end of the lease is fixed and isn't changed by paying more than your monthly payment. Right now your total buyout amount (if you wanted to do it right now), is the end of lease buyout amount on your paperwork plus the total of your remaining payments. So paying extra on your payments only gets you to the end of the term quicker, it does not save you money. Save that extra money so you don't have to finance as much at the end of the lease which will save you money in the long run.
 
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Mojoe2211

Mojoe2211

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That's not really how leases work. The buyout amount at the end of the lease is fixed and isn't changed by paying more than your monthly payment. Right now your total buyout amount (if you wanted to do it right now), is the end of lease buyout amount on your paperwork plus the total of your remaining payments. So paying extra on your payments only gets you to the end of the term quicker, it does not save you money. Save that extra money so you don't have to finance as much at the end of the lease which will save you money in the long run.
That's not really how leases work. The buyout amount at the end of the lease is fixed and isn't changed by paying more than your monthly payment. Right now your total buyout amount (if you wanted to do it right now), is the end of lease buyout amount on your paperwork plus the total of your remaining payments. So paying extra on your payments only gets you to the end of the term quicker, it does not save you money. Save that extra money so you don't have to finance as much at the end of the lease which will save you money in the long run.
That's not really how leases work. The buyout amount at the end of the lease is fixed and isn't changed by paying more than your monthly payment. Right now your total buyout amount (if you wanted to do it right now), is the end of lease buyout amount on your paperwork plus the total of your remaining payments. So paying extra on your payments only gets you to the end of the term quicker, it does not save you money. Save that extra money so you don't have to finance as much at the end of the lease which will save you money in the long run.

Oh ok, thank you for explaining that to me, I feel kind of dumb now. I'll take your advice thank you very much.
 

redstang

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Oh ok, thank you for explaining that to me, I feel kind of dumb now. I'll take your advice thank you very much.
No need to feel dumb. When I did my first lease I thought you were locked in until the end of the lease. It turns out that you can trade in a lease on another vehicle at anytime. It works the same as if you were purchasing the original vehicle. When we traded in that first lease a few months before the lease was up we actually had $1000 in equity that we used as a down payment toward the lease on the new vehicle.
 


disgraced.fk8

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So I just traded my leased 17 sport for a 19 sport touring. I was in a similar situation, and unsure of what to do. If you go to a dealership and tell them you want to trade the lease for a brand new car, it will be pretty easy to get the lease bought out by the dealership. And it's worth noting that when I first got the 17 sport, I wanted to buy it out. But when I started talking to the dealership, they were antsy to sell me a new car (of course) so I negotiated a good deal and got the upgrade.

Now, I had 70k miles in only 2 years (I know, I know, I should have never leased given the mileage I put on - but I could not get financing and needed a car at that point) and the payoff amount was 17k. The car was valued at 14k, so there was $3000 of negative equity. They rolled that -$3000 into my finance, and I got out of my lease which would charge me $0.50 per mile over (it was on track to be about $25k+) and got into a brand new car. Car dealerships make more money on used cars, so they are always trying to get more.

So my takeaway would be this: if you either want to buy out the car or trade it for a newer model and finance, make the minimum monthly payments for the lease. Take the extra cash and literally put it aside so that when it comes time, you have (ideally) a large chunk to put down. The dealership will be more willing to do any sort of transaction with a bigger down payment.

Hope this helps you decide!
 

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I never know you can trade in a leased car. Learned something new today.
 

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Actually if you drive a lot of miles and don't keep your car more than 2-3 yrs then leasing is the way to go. You pay for the miles up front. They don't usually advertise them but many brands have the rates for higher than 15k miles. Ford, dodge and a few others show it in their online payment calculators. Doing this means you are not at risk for any negative equity. Just turn it in at the end of your lease. Again this isn't for everyone.
 
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Mojoe2211

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So I just traded my leased 17 sport for a 19 sport touring. I was in a similar situation, and unsure of what to do. If you go to a dealership and tell them you want to trade the lease for a brand new car, it will be pretty easy to get the lease bought out by the dealership. And it's worth noting that when I first got the 17 sport, I wanted to buy it out. But when I started talking to the dealership, they were antsy to sell me a new car (of course) so I negotiated a good deal and got the upgrade.

Now, I had 70k miles in only 2 years (I know, I know, I should have never leased given the mileage I put on - but I could not get financing and needed a car at that point) and the payoff amount was 17k. The car was valued at 14k, so there was $3000 of negative equity. They rolled that -$3000 into my finance, and I got out of my lease which would charge me $0.50 per mile over (it was on track to be about $25k+) and got into a brand new car. Car dealerships make more money on used cars, so they are always trying to get more.

So my takeaway would be this: if you either want to buy out the car or trade it for a newer model and finance, make the minimum monthly payments for the lease. Take the extra cash and literally put it aside so that when it comes time, you have (ideally) a large chunk to put down. The dealership will be more willing to do any sort of transaction with a bigger down payment.

Hope this helps you decide!

I'll look into that because as much as I love my car it's a CVT. I got the car because I needed one as I wanted to get rid of my old Integra GSR sedan for a new car (regret it now oh well) and I couldn't find a manual hatch near me and the sport would have killed me on insurance because at the time I was only 18. But I'll go to the dealer and see what they are willing to offer. Thanks for the advice.
 

jorus

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How's it going guys. I have a question, currently I am leasing a 2017 Hatchback Ex-t, I have 1 more year left on my lease and I do plan on purchasing it after the lease is up and I always had planned to. I was wondering if it is better for me to pay more on the monthly lease payments which are USD 361.93 a month so that the payoff amount gets lowered and I don't have to pay back as much when I get the car financed at my credit union. Or should I just keep saving up for a large downpayment?
It might be useful for you to play around with a loan calculator - I did a quick Google and found an example of two:

This one is for Google Docs: https://sites.google.com/site/sprea...ial-sheets/mortgage-amortization-with-paydown


And this one has a spreadsheet you can download: https://www.vertex42.com/ExcelTemplates/loan-amortization-schedule.html

(Please note that I just found these links, I didn't make them or have anything to do with them, I don't guarantee anything etc.)

You can also find your own if you want, try searching for something like "Loan Amortization Schedule with Extra Payments" or "Loan Calculator with Extra Payments".

What I like about these two calculators is that it shows you the lifetime of your loan, how much you'll pay in interest, and what the benefits are of making payments to the principal of the loan. It might surprise you how much money you can save by paying off a loan early. You can also play around with loan rates, and see just how big a deal getting a good rate is!
 


tuxmonkey

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Most leased vehicles have incentives to lease. Currently leasing my wife's Jeep GC because it had good incentives and I got a deal through work. My wife likes the car so when the lease is up we will probably buy it out. It's all very situational.
 

ulieq

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You gain very little by having a downpayment with a lease, just pay monthly. It's not the same as having a huge downpayment financing.
 

Rickmeister 48

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Little off topic,but I know a guy in a lease and they are gonna charge him 25 cents per for mile for anything over 10,000 miles a year, is that a normal thing with leases cause that sounds pretty bad, I mean isn't average miles a year at least 12,000?
 

Daniel644

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Little off topic,but I know a guy in a lease and they are gonna charge him 25 cents per for mile for anything over 10,000 miles a year, is that a normal thing with leases cause that sounds pretty bad, I mean isn't average miles a year at least 12,000?
10k miles a year allowance is in the range, there are different kinds of leases, you can get low mileage leases down to at least 9k miles a year if not 8k miles a year and higher mileage leases up to like 15k miles a year. Lower Mileage leases get lower monthly payment but get severe mileage penalties because the more you drive it the less it's worth when you trade it back in so they have to make up that value difference that they would normally be getting in the form of a higher monthly payment with the higher mileage lease.
 

disgraced.fk8

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Little off topic,but I know a guy in a lease and they are gonna charge him 25 cents per for mile for anything over 10,000 miles a year, is that a normal thing with leases cause that sounds pretty bad, I mean isn't average miles a year at least 12,000?
So I was given a rate of $0.50 per mile over... and had a limit of 36k miles for the 3 years , so 12k per. I was at 70k miles and "traded" it in - avoided about $17,000 in over mileage charge.

Edit: had 70k miles after two full years, would have been over 100k miles after 4 years soooooo easily $25k-$30k in overage charges
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