auto

Rolling over lease usually a bad move

Terry JacksonDear Terry,
I have a four-year lease that ends in March 2009. I have recently racked up the miles. I am not over my limit, but will be if I go to the end.

I want and need a larger vehicle, but can't get a new vehicle because of credit issues. I want to turn in my lease early and roll over the rest to a used truck or SUV.

I know rolling over is never good, but mileage fees could be higher than the negative equity. The negative equity will be about $2,700.

I also want to keep the same payment or get it a little lower. I am looking at spending about $6,000 to $7,000 before negative equity, plus tax, title, fees and negative equity. I'm curious about your opinion.
-- John

a_v2.gifDear John,
You're right when you say I'm not a fan of negative equity deals. They simply put a buyer deeper in debt and greatly extend the time when the new vehicle will be worth more than what is owed.

The negative equity number you mention would equal a mileage penalty of 10,800 miles, assuming the lease penalty is 25 cents a mile. That's a lot of miles, especially since you say you're under the mileage cap now. So, I would think hard about whether there's any benefit to taking the negative equity hit now or keeping the car until the lease runs out.

If you have a car question, email it to us at Driving for Dollars. Save money on your car -- sign up for Bankrate's new weekend Car & Money newsletter.

advertisement

Show Bankrate's community sharing policy
          Connect with us
advertisement
 

A little research could save you BIG on interest.

Don't have time? Our rate-tracker tool saves you time and money. Delivered Thursdays.
 
advertisement
Partner Center
advertisement

Blog

Tara Baukus Mello

2 years free charging from Nissan

Nissan is hoping to spur more sales of electric cars with an incentive that offers new buyers two years of free public charging.  ... Read more


Connect with us