Wednesday, June 18, 2008

what to do with an SUV coming off lease?

Well, our SUV is coming off of lease.

We had thought to buy a less expensive hybrid with better gasoline mileage, however, my wife was unhappy with the vehicle performance and prefers the higher seating / positioning of an SUV - she can more easily see over traffic.

The fact that it's a luxury SUV means that it's much nicer and more comfortable on the insides, as well - though I think that was less important in her decision making - she likes the HP / engine performance.

All said, we need to decide what to do.

We're paying about $620 per month for a vehicle that's depreciated about $15,000. It's worth about $26,000. If I refinance it with a five year bank loan it will be cost $580 per month (via Chase). I'd really like to save more money than that.

Leases are usually cheaper as you pay for the depreciation plus and loan fee (interest) rather than paying for the entire vehicle.

My next bet is to find a less expensive way to refinance the vehicle. Used vehicle loans are often more expensive than new due to lower collateral value, so I find myself in a pickle.

At this point I'll need to research how to refinance affordably. Our credit rating is high so we should be able to obtain good rates.

I do wonder if it's possible to lease the car again. That would may be the least expensive option.

Two other alternatives would be to either:

a. pay in cash
b. user our HELOC

I'd rather not do either in order to maximize liquidity. In today's market I do not feel secure in my employment (though I have been reassured by corporate leadership), so it's best to maintain as much available cash as possible.

I am concerned that:

a. doing nothing - I will overpay because the original lease was calculated at a $40+k principal
b. spend too much time on this as the monthly savings may be very small

Any thoughts?

Regards, makingourway

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