[blackshark]

I finace a 02 ml320 and owe about $27.ooo more. w
70,ooo miles. should i trade in for a newer ml or should go for a lease on a new onefor? if i leased i would opt for the 15,000 mile limit.

thanks for the input

 

[sthu]

I lost your question(s).

Are you saying you current car has 70K miles and still owe 27K to bank/institution?

You are thinking of trading in the current to buy a new ML? At least you will get a hit on mileage plus all new model coming out is not going to help.

If you drive high milage, lease is not a good option.

 

[sosh]

In my estimation the ONLY reason to lease is for business/tax purposes. With 70000 miles on your current vehicle it is considered a "high" mileage vehicle and you will not get anywhere near what a lower mileage ML will bring. In fact, its got almost twice what the industry considers average miles. I would be sitting down when they tell you what they will allow, most likely no where near your payoff. Then again its only money.

 

[sthu]

But then again, some people put negative equity in the new car. You end up oweing more than what the car is worth.

There are alot of people in that situation where they don't have enough equity and keep on buying new car every two years. Not that I'm saying "author" is such a person, I'm sure he is fine upstanding citizen.

Stop the bleeding........keep what you have.

 

[rudeney]

First of all, I am fairly certain that you are “upside-down� on your current vehicle, which means that you owe more than what it is worth. I would suggest you go to the Kelley Blue Book site ( k b b . c o m ) and enter your vehicle’s particulars just see what you might get as a trade-in value. Keep in mind that no matter how nice you think it is, your truck is most likely not in “excellent� condition according to the true definition. My guess is it will be worth around $17K, which means a dealer would likely offer you $1K - $1.5K less than that. You are probably dealing with at least $10K of “negative equity� to overcome.

As long as you are (a) willing to put down some cash to overcome this, or (b) have excellent credit and are willing to lease or finance a new vehicle for more than it is worth, then this is not a problem. Most finance companies will lease a vehicle for 125% of MSRP. If you truly are $10K negative, and want to roll this into a new vehicle lease, then you’d need to look at spending at least $40K on another vehicle. Some lenders will finance more than MSRP, but it’s usually much less than 125% and is generally not recommended because of future value and insurance issues.

My advice is that unless you just want to “lose� at least $10K in the deal, then hang onto your current ML and keep paying down the loan. If possible, pay more than the “minimum� monthly payment to bring the payoff down more quickly. If you do feel that you must trade, then I suggest a lease. Just know that if you do that, you will be pretty much “stuck� with the new vehicle for the term of that lease if you roll all that negative equity into it.

- RODNEY

 

[rudeney]

In my estimation the ONLY reason to lease is for business/tax purposes.

That’s not true. If you want to drive a new car every three or four years but don’t want (or can’t afford) to pay cash each time, then a lease has the advantage. It allows you to have a lower monthly payment, and as long as you stay within mileage allowances and keep it in good condition, there will be no issues with its value at the end of the term. If you want to buy a car with no cash or trade as a down payment, or you have negative equity in your trade, then a lease is definitely the way to go. Of course if you intend to keep your vehicle for more than four years, if you are into modifying it, you drive more than 18K per year, or you just plain don’t take care of it, then financing is probably a better option.

- RODNEY

 

[blackshark]

thanks guys i will hold on to it another year or so and get more equity in it.

 

[drmc_coy]

old school: what does it cost - what do i have

new school: what does it cost per month - what do i make per month

i prefer old school

 

[timf]

off-topic, drmc_coy - I'm with you, old school...

For the past 20 years, never bought anything I couldn't purchase outright for cash - including my house !

End result ? - see my signature, but interestingly I have a poor credit rating because I've never taken on debt. Ironic ??

 

[LOCHS 2]

RE: off-topic, drmc_coy - I'm with you, old school...

timf - 3/3/2005 2:24 PM

For the past 20 years, never bought anything I couldn't purchase outright for cash - including my house !

End result ? - see my signature, but interestingly I have a poor credit rating because I've never taken on debt. Ironic ??

If you get credit and start borrowing money but paying it off on time your credit rating will improve dramatically. Like you said you have no credit history so you SHOULD have a poor cedit rating. If you start to buy on credit that is a negative signal to the marketplace and they would be wary to give you a low interest rate at first. They would ask why is this guy needing to borrow all of a sudden when he never has before? Financial troubles? It's a bigger risk to loan money to a first timer--just look at what new borrowers in the corporate market pay--then to someone who has proven they can pay. Banks competing for your business will have to lower their rate in the future to entice you to use them. Right now they can justify higher rates until you "prove" yourself.

The old school way is how I was raised but the new school of leveraging yourself gets you nicer things--but can put you in the poor house or perhaps chapter 7 bankruptcy.

Living within your means is always the smarter move for wealth management unless you can invest your borrowings and earn a higher return. The first rule of finance is "always use other peoples money".

 

[blackshark]

whoa whoa where did all that come from?
im not paying $50,000 out right for a car! i'll finace or lease that thank you very much...

why would you waste a lump sum like that?

i was just getting icthy for a newer truck but drive a lot of miles, if i could'nt afford it i would be drive a kia truck now...

easy

 

[Benza]

RE: off-topic, drmc_coy - I'm with you, old school...

timf - 3/3/2005 3:24 PM
For the past 20 years, never bought anything I couldn't purchase outright for cash - including my house !

I think Bill Gates and Donald Trump would take issue with your statement. The smart money will mortgage their property to the hilt making them liquid in order to have that money make money, not to mention creating a substantial tax write-off.