Question: Can you give me some advice on how to get out of my current car lease, and get another car with a lower payment?

November 25, 2005

Hello Tony

I really like your site. I need help in my quest for "a better deal."

I would like to end up with a smaller car with less monthly payments. Presently I lease a 2004 Cadillac Seville on a GMAC lease. I have leased cars from the same dealer for a number of years.

I have about one year to go on my three-year no-money-down lease. I have driven the car only ten thousand miles in two years, so the price-per-mile is high. The car is in excellent shape. But since I'm now 75 years old, my next car may well be my last one. I am paying $589.91 on this no-money-down GM lease "deal!" I need to considerably reduce this monthly payment now!

I would very much appreciate your help in planning a strategy to reach my goals.

Under the circumstances:

• How do I approach the car dealer with my objective in mind?

• Do I contact the salesman who I made my present deal with, or do I approach another salesman or contact another dealer?

• Would I be better off to buy or lease?

• Should I arrange my financing before hand with my bank?

Considering the above, what do you think my chances are of reaching my goal of a smaller, newer car with less monthly payments?

Sincerely,

Bob B.

Answer:

Hi Bob,

Your big problem is getting out from under your present lease. Without that hanging over your head you could buy or lease a less expensive car and have a lower payment. With approximately $7,000 left on your lease payments you won't be able to trade the car back in without taking a major beating.

You could contact GMAC and ask for the total buy-out of the lease, and then try to sell the car privately for that amount. If you find a buyer you can then arrange with GMAC for that person to pay them direct. That would get you out from under the thing so you can start fresh. The fact that the car has such low mileage is a real selling point. The only thing is, you will probably find the buy-out to be quite high. Still . . . it's an idea!

Another thing you might be able to do is to find someone in your family or someone you know to take over the lease payments. The car would still be leased to you, but if you add this person on your insurance it might work. It would have to be someone you can depend on to make the payments and whom you can trust.

If you trust the car dealer you leased from you can go back there and ask them if they can come up with some idea to help you. They would have to take the car in trade and pay off the buy-out. Chances are, there is no way they can give you enough to cover the amount owed. This means that whatever negative equity there is it would have to be added to your new loan or lease. So there goes your low payment.

You may also want to take a look at SwapaLease.com. They might be able to help you.

You may have to bite the bullet and keep the Caddy until the lease is up. It may be too cost prohibitive to get out of the lease at this time.

In the future I would suggest you buy instead of lease, because it is much easier to trade a car that is financed as opposed to one that is leased. Plus the fact that you own it after it is paid for. And yes, you should arrange your own financing before making a deal.

RoadLoans is great at this. They will send you a RoadLoansCheck to go shopping with, and their rates are very reasonable. My daughter just bought a car using them and they were great to deal with.

Again Bob, your main problem is the lease. Once you lease a car you are pretty much locked in until the lease is up. I hope the ideas I mentioned above help you.

Good luck . . .

All my very best...

Tony Iorio