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Old 05-06-2005, 11:42 PM   #1
XtianLA
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Default In a financing situation....need advice

So my stepdad helped me get my 03. I've been paying it for about 2 years now. It's pretty heavily modded. Now....I've known for a while that it was under lease, but the plan my stepdad had was to buy it out at the end of the lease. Well....I don't know if any of you have had ahole stepdads...but the situation had been escalating for a while....and I finally had to move out. I am no longer living at home, so I can barely barely afford to have my rex and survive on my own. The payoff left on my rex is 17.5k........

I'm left with either selling my Rex for at least this amount as is....and losing alllll the money invested on the aftermarket parts....or I was told that lease payouts can be negotiated? Is this true? How does it work? I'm sorry I sound like a total moron right now, I just really don't know much about auto financing....so I appreciate any help given to me.
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Old 05-07-2005, 12:09 AM   #2
nate.the.great
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ok...
1. how old are you?
2. do you have a job?
3. how much money do you make?
4. how much rent do you pay?
5. what were the terms of your lease?
6. when does your lease end?

all of these questions are very important if you want a good answer. you might be able to get a loan for your payoff, but i doubt it. i doubt it because you'll be upside down, and banks usually do not let you go upside down on a used car. anyways, answer the questions, and i'll do my best to give you a good answer.
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Old 05-07-2005, 12:09 AM   #3
Balr14
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"Lease payout" can mean a lot of things, depending on who the leaseholder is. Also, how much longer does the lease run?

What nate said. He beat me to it.

In any event, if you can't afford to keep it, you would be much better off returning it to stock condition than selling it as is.
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Old 05-07-2005, 12:46 AM   #4
XtianLA
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Quote:
Originally Posted by nate.the.great
ok...
1. how old are you?
2. do you have a job?
3. how much money do you make?
4. how much rent do you pay?
5. what were the terms of your lease?
6. when does your lease end?

all of these questions are very important if you want a good answer. you might be able to get a loan for your payoff, but i doubt it. i doubt it because you'll be upside down, and banks usually do not let you go upside down on a used car. anyways, answer the questions, and i'll do my best to give you a good answer.
19
work full time, but can barely afford the car
like 1k
no rent....but a lot of bills
i believe it's a 4 years...not sure....so it'd end in another 2 years...or another 1.5?
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Old 05-07-2005, 12:56 AM   #5
nate.the.great
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ok, let's be more specific
1. what is your gross monthly wage (before taxes)
2. which bills do you have? (this is important so i can know if it'll show up on your credit report)
3. how much a month do you pay for your lease?
4. how's your credit?
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Old 05-07-2005, 01:03 AM   #6
XtianLA
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Quote:
Originally Posted by nate.the.great
ok, let's be more specific
1. what is your gross monthly wage (before taxes)
2. which bills do you have? (this is important so i can know if it'll show up on your credit report)
3. how much a month do you pay for your lease?
4. how's your credit?
1200 gross i believe
2 credit cards (one basically maxed out, another almost maxed out)
$386
great credit from what i've been told for someone my age...i dont know my score though....
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Old 05-07-2005, 01:09 AM   #7
Seahag1978
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Quickly get the maxed out cards to 50% of their limit your score will rise.
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Old 05-07-2005, 01:26 AM   #8
nate.the.great
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Ok, let's get crackin'

1. Your first problem is your credit cards. Those will mess you up. You have to make sure you pay them EVERY month. The fact that you have them almost maxed out is a problem and will negatively affect your credit score.
2. I was trying to get your monthly bills so I could calculate how much car you can afford. However, that is not working because I don't know enough, but you can currently afford at least $386, so let's go with that.
3. A good refinance rate is 6% right now. It's hard to find one lower, but you can look around at your local credit unions. I just did mine and it is 5%. On to the numbers...

A $19,750 loan for 5 years at 6% has monthly payments of 381.82. This means you can afford this loan. So, now you know the maximum amount of loan you can afford. Whether or not a bank will actually give you a loan for $19.75K remains to be seen. The problem is that your car is not worth $19.75K, so I'm pretty sure a bank won't give you a loan for that amount. They will loan you less money than the vehicle is worth unless your credit is SUPER STELLAR. I doubt it is that good due to your maxed out credit cards.

Your plan of action:
1. Assuming you want to keep the car...
You need to contact your lease company ASAP and ask them how much to buy out your car NOW. That number may be slightly negotiable. The longer you wait, the more interest rates will rise. They just went up this week, so HURRY. You know that the max you can afford is $19.75K, so if the buyout is higher than that, this is not an option. If it is lower than that, it is time to go from bank to bank looking for a loan for the buyout amount. If you can find one, you'll own the car in five years, if you can't find one, on to option 2.
2. You want to keep your car, but can't afford to buy it out now. When your lease is up in 1.5 to 2 years, your car will not be worth $17.5K. It will be worth around $15K? if that. A bank will be willing to loan you around $10-$12K at that time for the car. So, you need around $5k saved up so you can cover the difference between the bank loan and the buyout price.
3. You can't afford to keep your car now or at the end of your lease. You should part everything out NOW. The longer you wait, the less your parts are worth. Drive a stock WRX until the end of your lease, trade it in, and try to lease a new car.

My suggestion:
You are 19 and don't make very much money. You either need to find a new job as some sort of skilled labor (plumber, electrician, etc...) or you need to go to school. Being some sort of skilled labor is an option, and you need see if you have any opportunities in that area. You can't go to school becaues that requires even more money. So, unless there is some sort of abuse in your household, I suggest you move back in. The fact is, you do not have the capability to support yourself and your car properly right now. I think that your relationship with your stepdad can be mended. Honestly, I am guessing a lot of the problem is your stepdad wants you to play by his rules and you don't want to. Well, as long as he pays the bills, he makes the rules, and you have to respect that.

My course of action:
Move home, and mend the relationship. Suck it up. Deal with and respect him for providing for you until you can properly get on your feet. While under his roof, explore career options and school. When you can comfortably support yourself, move out. This may take around 4 years, but you will have your car, and a comfortable life. Where will you be in 4 years if you continue where you are going now?
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Old 05-07-2005, 06:43 AM   #9
armand1
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^^^^^^^^^^^^ what he said, especially the part about moving home.
If you're dead set against that, there's no law that says you can't have *two* full-time jobs at the same time, or a couple of half-time jobs to go with your main job. That would double your income.

As for value, since new WRXs are so cheap now ($21.5k for base 5MT), the value of used ones is even lower. If you've got 30k miles on a base 5MT '03, its max value (unmodded) in a private-party sale is $15k to $15.5k. Modded, the value is lower, unless you can find that one-in-a-million person who wants exactly the mods you have.
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Old 05-07-2005, 09:43 AM   #10
Seahag1978
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Typically, lenders will only finance 90% of the book value of a used car and the term is for 4 years not 5, unless it's a current model year ('05). I just refinanced mine through a credit union at a rate of 4.25%.

The lender will probably want a hefty down payment... so you'll need to go in armed with cash. The second job may help raise the money. Moving back home would certainly help too.
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Old 05-07-2005, 10:23 AM   #11
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You need to find out what your "end of lease purchase price" would be. Chances are the 17.5k buyout right now is the end of lease price + all of the monthly payments you have left.
Say you have 12 payments left of $300 each. That 17.5k should drop by the $3600 in payments you make.
Be aware that most leases allow 12k miles a year, so if you're over 36k miles at the end of the 3 year lease (assuming 3 years) You'll have to pay probably between 10-15 cents per mile you're over.
Also, if your tires are below a certain tread depth, they'll charge you to replace them. (brake pads too).

BTW- who's name is the lease under? If it's stepdads, or if he co-signed for you, it's in his best interest to make sure it stays out of default.
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Old 05-07-2005, 02:05 PM   #12
XtianLA
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It was an abusive situation, and I am not going back. One more question though....although this sounds absurd because I know it's very expensive, but SAY I was to sell my car for $18k and someone bought it....couldn't that work too? Because it's more than the current payoff? As much as I love my Rex I don't think I can afford to keep it, unless I get a raise. I'll probably end up getting a cheap beater until I can afford coming back to the Suby family.

Oh, and my credit cards do get paid every month, I pay more than the minimum amount every statement. I'm trying to pay them all off as soon as possible. I've actually thought about getting a part time, but I would rather stay here full time and go to school at night. I think I'd be better off just letting my rex go until I can afford it and getting myself back in school. Besides...SOA isn't going anywhere, unlike Mitsu, lol.

Thanks a lot for your help guys.
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Old 05-07-2005, 04:27 PM   #13
teh sash
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wow great info...
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Old 05-07-2005, 04:45 PM   #14
Balr14
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US Bank and some of the other biggies have an incentive plan that lets you buy the car 6 - 8 months before the end of the lease, at the predetermined buyout price. Saves a fair amount on lease payments. You can always turn around and resell it. But please, return it to stock condition first; it will be much easier to sell. Sell your mod parts here or on e-bay.
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Old 05-07-2005, 06:51 PM   #15
armand1
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Quote:
Originally Posted by XtianLA
...SAY I was to sell my car for $18k and someone bought it....couldn't that work too? Because it's more than the current payoff?...
Yes, but *first* you would have to buy it from Subaru, since they actually own it; only then would you technically be able to sell it. It could probably be done, but could get very complicated. The bigger problem is that someone would have to be smoking crack to pay $18k for the car, and if so would probably have a hard time coming up with the money.
If you can restore the car to bone stock condition, and there are no dings, dents, paint problems, you'll be lucky to get $15k for it. If you can sell the mods separately for $3k or more, you might come out OK. Take a look at the private party for sale forum here to get an idea of what various used parts are going for.
Quote:
I'll probably end up getting a cheap beater until I can afford coming back to the Suby family.

Oh, and my credit cards do get paid every month, I pay more than the minimum amount every statement. I'm trying to pay them all off as soon as possible. I've actually thought about getting a part time, but I would rather stay here full time and go to school at night. I think I'd be better off just letting my rex go until I can afford it and getting myself back in school...
All good decisions, IMHO.

One thing that would help both you and us is to dig out a copy of the lease paperwork to get the actual number of months left, how many miles are allowed, buyout price, etc. Also, what shape is the car in now (what mods, mileage, general condition)?
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Old 05-07-2005, 09:59 PM   #16
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If you did find someone to buy it right now for 17.5k, (say a dealer, although it's not likely) They would call up the finance company, find out what the buyoff is, and send them a check directly. The finance company, in turn, would send them the title to the car. You don't actually have to buy it from the finance co and then turn around and sell it.
Although if it is in your stepdads name, you're pretty much making the payments on HIS car that he can turn around and take from you whenever he wants. If it's in your name, but he is a guarantor, it's still your car. he's just responsible if you default.
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Old 05-07-2005, 10:20 PM   #17
XtianLA
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zavigm: can only a dealer send the finance co a check....or could the private party do this as well? I might actually have a buyer! I hope it's serious though.
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Old 05-07-2005, 10:52 PM   #18
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Sounds like he was a nice enough guy to help you get the car in the first place. Why badmouth him now?
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Old 05-08-2005, 12:04 AM   #19
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He said he was abusive. What more does he need to say.

I would think that if you call the finance co and let them know that a 3rd party is going to purchase the car, you can arrange to have the title signed over to your buyer once he sends them a check. The finance co will let you know all of the logistics of that transaction. That's great if you can get out from under the car at this point. Good Luck!
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Old 05-08-2005, 12:36 AM   #20
XtianLA
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Yeah, hopefully. Thanks for the help guys, it's much appreciated.
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