Update on negotiations...

[don85259]

Let this be a warning to any of you high mileage drivers like me.

As some of you may recall, my five year lease ends on my 1998 Infiniti Q45 in two months. I have 95k miles on a 60k mile lease so just giving the car back to Bank One is not going to happen. They don't make a jar of vaseline big enough to handle the screwing I will get at their hands if I give it back. At fifteen cents per mile overage, this amounts to $6,000. Ouch!

The wholesale value of the car is around $13,000 and retail is around $15,000. The stated residual value in my lease is $18,000, and I have negotiated with the lender to reduce that by $2,000.

Note that I will likely be in law school next fall and can no longer afford to pay $660 a month for any car. I need to get the payment down into the 400s to survive the coming financial storm.

Options:

1. Buy the car at the end of the lease for $16,000. I can probably get a 3 year loan at $500 per month. Drawback is that it has high mileage and is out of warranty. Any big expensive repairs come up and I will be in a real bind. Second problem is I lose half of the tax write off driving the car on a lease represents to me. Last year this took 11k off of my taxable income. Going to a loan will reduce the writeoff to about half of that, as on a lease you can deduct the entire payment, on a loan you can only deduct the interest on your car payment.

2. Attempt to sell the car myself. It would appear that the most I can get for it myself is maybe $14,000 if I am lucky. This means I have to "come to closing" with 2k in my pocket to get the lien released. If I am not lucky, then this gets worse, not to mention any monies I spend readying the car for sale, advertising and showing it.

3. Attempt to trade the car on a new car deal. This has been unsuccessful because we have exceptionally greedy car dealers. I've had two of them (Pinnacle Infiniti and Airpark Chrysler) offer me 9k on trade. Obviously this is not conducive to doing a deal. I called the sales manager at Pinnacle to complain and they finally sweetened the deal to 12k trade (still leaving a 4k deficiency) and offering to sell me a G35 for 4k off of sticker (32k out the door). This is probably as good as it gets with the Infiniti dealer. Problem with this G35 deal is that it will result in payments in excess of $600 per month, still too much. I am going in on Saturday to discuss doing a deal on an I35, which will likely be 4k cheaper than a G35.

4. Buying a cheaper car entirely. My brother works for Ford and can get me an employee discount. This is below invoice price. For example, a Mustang GT convertible premium would probably cost me around $22,000 (sticker is nearly 30k) on the A plan through Ford.

Any thoughts? Comments? Suggestions? I hate to leave Infiniti but I must think of the long term considerations here. I can always come back after I am "lawyered up" and buy anything I want, so I look at it as temporary in nature.

Thanks.

--don

[AZhitman]

Don, your car payment was higher than my house payment.

I think the damage was done back in '98 - That was a bad deal all the way around. Leasing is and has always been one of the most fiscally irresponsible choices out there. (Sorry - I should be helping here....)

FYI - If you decide to keep the Q, by all means put an aftermarket warranty on it. Then you might be able to get your money's worth out of the car over a longer haul. I can get you some good info, e-me anytime...

[dougs98Q45]

Hey Don- Sorry to hear about your bind. Other that the tax-break (which is a biggie, I admit) I never liked leases. IMHO tho, you are under valuing our Q. Obviously the car's condition is foremost and location counts too but those #'s sound really low to me. I got mine a year ago (w/ 56K) and paid $24K. I know I overpaid for the model/milage but this one was cherry and that was worth a lot to me. There is one 98 w/ 77K in my area for sale at $20K. The only ones like mine I see for anywhere near $15K are on the infamous salvage-yard used lots. I know it's all talk until until you get someone to write the check but I suspect you can do better. Play around w/ autotrader.com (if you haven't already) and experiment w/ diff ZIPs (92121 out here) to see what's for sale. Go luck w/ your predicament!

[maxnix]

Don, I just hope you have saved the extra $2K the over contract milage is going to cost you.

Thank you for your literate explanation of why leasing and driving doesn't work, especially if one is returning to school.

[Q45Viper]

Leasing got you into this but it also might get you out. I note that you live in Scottsdale, which has arguably by reputation one of the best dealers around. The dealers in Baltimore/Washington have been running ads for either the G or I for $349 a month, walkaway, no other money required, no down, no secuity, no aquisition fee, no nothing. This has to be a national Infiniti subsidized lease, meaning if they can do it here they can do it there. Now if you're gonna be in school, you're certainly not going to be putting more that 10-12k a year on right? so maybe you trade it in on that deal and mention NICO loud and clear, maybe someone here can refer you to the general salesmgr there or a "good guy" salesperson. Bite the bullet on the overage and work the best deal you can. Here's one way they can do it, if you don't want to front the overage on the trade they can add it to the NEW car so you are paying it off over time. I also see deals for 0% financing on the I, so if what I suggested won't work on a lease, finance the I, have them add what you owe on the other car and you will be paying it off over time if cash is short . Starting with a 0% rate should help, what you don't pay on inerest you will be paying for as the old car, it might work out even. Always remember the sales guys are BEST at this sort of thing, they face it every day, the guy trading a car in always thinks it's worth more and that's why they pay you more for the used car, then add it to the new, you should be able to use this theory to cut a deal. I also have found that with Infiniti this is absolutely the month of the year to do it. May seems to be when they finally kick in the good finance and lease deals.Good luck! Good luck

[Jberger]

People see these lease stories and decide leasing is a terrible option. Try running the numbers on most new car purchases and they are just as ugly. . . and most of the time you pay more and are stuck upside down too!

Just trying to understand all the numbers. The typical lease deduction (due to the lease inclusion rate) is the same as depreciating an auto purchase $3060/yr. So I'm not sure how you wrote off the entire lease price ($7920) yr. Is the rest gas, oil, maint, etc? If you go back and look at what you saved in taxes, your probably MUCH better off, even with the extra miles.

Your 35K over your lease allowance, so @ .15 /mi that should be 5250, is the $6000 including wear and tear?

Any disposition fee to contend with?

There's no way I'd buy the car unless they were willing to seriously negotiate the value, they do not want this car back. They will be lucky to wholesale it out and net 9K after they refurbish and pay the dealer. If you buy it, then you need to buy an aftermarket extended warranty to keep you covered from major repairs til you are out of school.

If you can't come up the 6K out of pocket, then you'll need to trade it.

Acura has a great lease on the TL, $329/mo or $369 loaded with NAVI. Use that lease to negotiate with your dealer on a G35 and you might come out okay.

Leasing is a good option, if you take the time to consider all the numbers and you can accurately state your expected milage. I'd bet if you run all the numbers, you're still better off, even if you pay $6000 in miles, to lease rather than purchase. Especially after the tax advantages.

[Jeff Williams]

Find some car dealer that is advertising, "We'll pay off your old car, no matter what you owe'"

I bought my car, a month before the lease ran out, and got my Credit Union to go 4 years on the note. It was a Maxima, with 69,000 miles on a 45,000 mile lease. I was able to keep the car another 2 years, and get my money out, at that time.

Keep trying the finance deal.

I hope you took advantage of the lease, on your taxes. That IS the only good reason to lease, IMO.

[AZhitman]

Find some car dealer that is advertising, "We'll pay off your old car, no matter what you owe'

Jeff, any dealer will do that - But negative equity will be tacked on to the new car cost.

Don, I can hook you up with someone to take care of you at Scottsdale - They love me there, and they love NICO. E-me and I'll be glad to grease the skids.

A G35 with a few miles on it (demo) would be a smarter move, and selling your car on the open market would be wiser - And this time, buy the damn thing outright!

[don85259]

Check your messages, AZhitman.

Actually, if I could find a dealer offering one of those "Book your own car" events, I might be better off that way.

I'll be 40k over by the end of the lease in July, most likely. There is a $250 or $350 lease end disposition fee, plus any wear and tear items they attempt to ding me for (no pun intended). That's why I figure 6k out the door. Mega jar of vaseline.

Buying most any car outright isn't going to happen. Even at zero percent financing, $32,000 for new G35 x 60 month loan = $533 per month plus tax license and doc fee. Sales tax is 7.7% so that alone brings me to $574 per month. Figure $600 after all shots are fired. I want something like $200 less. Arrggghhh!

--don

[dougs98Q45]

Jberger is exactly right. They don't want that car back. If you like it and no other options appeal to you, the make them a way-low offer and buy it outright. Pre-approval on a loan at your bank/CU would give you a 'max amt.' when negotiating and you would know ahead of time exactly what your payments would be... Sounds like you take good care of her so it wouldn't be the worst thing in the world- driving that sweet set of wheels for another 100K mi... I do admit to being a little biased tho...

[nuQ]

hey hitman,,,,if you don't mind, could you explain exactly why leases are fiscally irresponsible. i know for a fact how a dealership can really make out with an un-educated buyer who gets into a lease, but would love to know the "nuts and bolts" of the negatives. IMO it is always cheaper to buy used, even in the long run. just have to be smart about it. a book called "the millionare next door", which is about how many of this country's wealthy(not the donald trumps, business owners who are technically worth over a million) almost always buy used cars since a new car is such a bad investment, too much depreciation lost initially. thanks, jeff

[AZhitman]

Leasing a car is like renting a house - You never recoup the full amount you drop into it. Tally up the first 5 years of registration (when they're the most expensive), the amount due at signing, the payments (admittedly a tad lower than if purchased), and consider that in those 5 years you MUST maintain as the factory recommends through the expensive dealer (in many cases) - no DIY. You may not exceed the arbitrary mileage limitation, and God forbid you get a scratch, a door ding or a tear in the upholstery. You'll put a new set of tires on it (that you may or may not get the full use out of). Then , after all that time, you turn it in and what do you have to show for it? NOTHING. Of course, buying new IMO is almost as unwise.

Your scenario about buying used is right on. Let someone else eat the depreciation, then buy an aftermarket warranty and enjoy ther best years of that car's life.

Others will disagree - But that's why there are options.

[lessthanjakejohn]

You make aftermarket warranties sound like...well yo know

you wonde if they would actually make any money off of them

[Rex]

IMHO, The problem with leasing is that dealers convince people they can have more car for less money. Okay, the problem really starts with dealers not talking price, but monthly payment.

Back to leasing...

Leasing works for mileage frugal people that budget a set amount for a car payment that isn't at the upper end of their "transportation budget". The best concept for a leasee is to pay X hundred dollars a month, and just rotate to the next lease vehicle at the end of the lease (24 to 36 month) maybe bumping up the payment up $10 to $20. Unfortunately, most sales people don't "deal" leases that way. It's actually a way for some people to stay in a nice/decent, under warrantee car their entire life.

Please keep in mind, this is a statement about leases/leasing not your situation.

[Q451990]

a book called "the millionare next door", which is about how many of this country's wealthy(not the donald trumps, business owners who are technically worth over a million) almost always buy used cars since a new car is such a bad investment, too much depreciation lost initially.

That's a great book! I especially liked the part about how these people tend to buy cars by weight! I went out and checked the curb weight rating - maybe there's hope for me yet!

Heath

[Jberger]

You can't really compare leasing a car to renting a house. Houses typically APPRECIATE, while virtually all cars depreciate rapidly (80% of purchase price over 5 years). Plus the real driving force for most home purchases is tax related. Without mortgage intrest deductions, home ownership would be much less appealing for most low-middle income buyers.

There are no new car purchases which are "good deals" and used cars are almost always the best way to go, financially.

But leasing does make financial sense in some cases, almost all of which relate to business/tax use. I've always purchased my cars outright, but I've never bought a new car. Just could not make it financially appealing.

My Q is now over 200K and while I could keep spending 3000 a year to keep it on the road with the occasional 2-3K extra repair tab, it's just not worth the time and effort to make it go another 100K. The car still looks wonderful, and drives very well, but in all honesty, I just don't want to deal with the nagging problems I know it will have.

So it's time to buy something else. This time it will most likely be an SUV since I'm really tired of putting up with limited trunk space when heading to the lake, beach, BBQ, etc. Plus I need to tow and there's just no real good sedan option for towing.

So I've been running the numbers. The new FX is out of the running, although I do like the vehicle. After comparing financials on a tax adjusted basis, I'll probably lease.

Why?I can write off more than 80% of the entire expense to business in place of the standard $3060/yr on a purchase. And by using the Section 179 accellerated deprecation schedules coupled with the lease, there's no need for a large capital outlay in year 1 or high payments over the next 5 years. Even with the zero intrest promotions available, the lease is still cheaper and the car stays under warranty and most routine maintance is included.

Sure, some people get suckered into leases because they want things they really can't afford. But there is a much larger pool of business buyers who lease becuase it makes tremendous financial sense.

Leasing is not for everyone, but you really need to run the numbers and have them professionally reviewed before your next purchase.

[Jeff Williams]

I agree with Jberger,

Quote »My Q is now over 200K and while I could keep spending 3000 a year to keep it on the road with the occasional 2-3K extra repair tab[/quote]

Factor those costs ($250 to $400 per month, in servcie) in the cost of a new lease, and your new M45 starts to look even better. Don't forget, you will get better gas mileage, and no lost-time for unscheduled servcie (Hopefully!)

Quote »and the car stays under warranty and most routine maintance is included[/quote]

Quote »Leasing is a good option, if you take the time to consider all the numbers and you can accurately state your expected milage[/quote]

THAT is the key!

I, on the other hand, tend to do most of the maintenance for my own Q, reducing my annual servcie costs to about $2000.00 annually, or $160.00 per month, and I drive so many miles, a year, that leasing is not an option. (Try pricing a 3 year lease with 150,000 miles).

I am limited to 4 to 8 year old Q's with under 100,000 miles, that I can drive for 2 years, and stay away from the expensive service.I still end up paying $4,000 to $5,000 per year for the purchase price of a car, plus an additional $6,000 per year for gas, tires, oil, and maintenance.

I do get about $3,500 in tax savings, for the mileage (Which just pays for the gas).

Here is my annual car budget for 2003/2004:

$ 5,000.00 price of car (based on a 24 month lifespan)$ 500.00 tires$ 250.00 oil & filters$ 3,500.00 gas$ 2,000.00 emergency servcie / insurance deductibles$ 1,500.00 auto insurance premiums$12,740.00 per year.$ 3,500.00 tax savings$ 9,250.00 cost or $770.00 per month

I have rounded that up to $1,000.00 per month.

I have been lucky in the past, with finding a car for about half that cost, but I usually spend the rest in mods, or enhancements. I am now looking at struts and brakes at 160,000 miles, a transmission service, and a timing chain change at 200,000 miles, and driving the car, until September 2005, where I will upgrade to a 2003 M45.

[maxnix]

Having driven two Suburbans in the eighties, I realized in a different environment I didn't need to have the space to haul the kitchen sink (or the whole kitchen) with me every where I went. Now I just rent a pick-up when I need one.

Even then, the Q is definitely overkill for most urban driving. Espceially with freeways that work like parking lots.__________________Brian1995 Q45 & Q45t