I have a situation and I need some advice. I own a 2010 Toyota Corolla S with 47,000 miles. It needs a new front and rear bumper and two tires. Mechanically it’s just fine but it looks like crap on the outside. I owe $10,300 on the car, which is more than it’s worth so I’m upside down. It’ll take me 4 more years to pay the rest of it off and the car no longer has any warranty coverage whatsoever.
I work in car sales and my dealership is offering me an attractive deal on a 2014 Mitsubishi Lancer SE. They’re willing to pay $8000 for the Corolla and work the negative equity into the car deal. I’m thinking about a 3 year lease (12,000 miles/yr) at the SAME monthly payment as I have now and full warranty coverage. If I “sell” this car to myself, I’ll get $300 commission kickback and I’ll also get any money the store makes on the Toyota beyond the cost of the needed service.
If I decide to keep my Corolla, I’ll pay it off in 4 years and it’ll have probably over 100,000 miles by then and be worth far less than $8000. From this point forward, any necessary repairs will be coming out of my pocket. Also the Lancer gets better gas mileage than the Corolla, it’ll be brand new and covered by full warranty, it’ll be AWD instead of FWD (important in Minnesota), and I’ll get free gap insurance and free navigation installed, all for the same monthly financial commitment.
The only problem is that I’ll be pretty limited regarding the amount of miles I can drive, I won’t end up with anything to really show for it when the lease is up, I may have to deal with wear and tear fees, I may have to pay $0.15 per mile on any miles over and above the 12,000 mile limit, and I’ll just have to either lease another car or buy the Lancer and incur another several years of car payments.
I’m stuck and I don’t know if I should keep driving my Corolla and pay it off or try out a lease for the same monthly price. Any help from you guys and gals would be much much MUCH appreciated!!
You asked for opinions so here’s mine. I think it’s a mistake jumping into a lease, rolling the negative equity over into a new loan just adds interest on top of the neg. equity, and while I hate to be too critical on the make I’m not a fan of late model Mitsubishis and the Lancer.
A few years back my daughter was thinking about a new Lancer and wanted an opinion from a test drive. The car came across to me as being very tinny and plasticky. Not impressed at all.
There’s also Mitsubishi’s current situation of diminished sales and market share and that affects the future of the car as to values, parts and service situations, etc, etc.
The Corolla only has 47k miles and what I would do is round up a couple of tires and do some digging on eBay or Craigslist for some color matched used bumpers. It’s tough to be upside down on a car but trading and rolling over negative equity is not the answer; at least to me.
My daughter has owned a 91 Eclipse. (great car)
A 2002 Eclipse. (POS)
A 1995 Galant. (POS X 2)
I wholeheartedly agree that a lease is a big mistake. You’ll be making a car payment every month while gathering NO equity. At the leases end they’ll take you car and give you NOTHING, ZERO, ZIP, ZILCH. And you know those bumpers? You’ll HAVE to have them repaired by a shop, no matter the cost, or pay dearly at the end of the lease. Add to that the mileage limitations and you lose… big time.
Right now you have a car that runs great on which you can choose to live with the bumper skins looking like crap, have them replaced, or replace them yourself pretty affordably. You won’t have those options with a lease.
And you can take a 1,000 mile trip if you choose to. That’ll cost you big time with a lease.
You can customize, modify, or do whatever you want with your car if you tire of it as-is. You can’t do that with a lease.
And it’ll be yours in four short years. A lease will never be yours.
I’ve been ruminating all night on the idea and I think I’m gonna keep the Corolla, because I think I’ll want to take a long road trip and I looked up pricing on the parts I’d need and it’s not really too much at all. Thanks again for the opinions, I’ll be keeping my car.
also, the fact that your current ride is a bit beat up leads me to believe that the same would happen to the leased car, costing you fees. as long as the damage is cosmetic, keep the toyota
When a bank owns your car, they DEMAND full-coverage insurance…Perhaps there is a high deductible or other backstage issues keeping the OP from filing a claim…
If the OP works at a dealership, he should be able to have his Corolla fixed up in the dealerships shop at wholesale cost…
I’m with the crowd. You’re in no position to be looking at something newer, especially a leased car. Drive your current car (which luckily has many good years left) into the ground and put away as much money as possible for your next car so that you don’t end up in a hole next time.
The only thought I can add is to look around for a credit union near you, and find out what they can do for you to refinance the loan you have. You might get a better rate and a better deal all around.
The only thought I can add is to look around for a credit union near you, and find out what they can do for you to refinance the loan you have. You might get a better rate and a better deal all around.
That’s a good point. I belong to a credit union and they do refinance car loans. And their rates are very good too.
Trading a car loan for lease is like just digging a deeper hole. If you still owe 10K, you are clearly not making high enough payments. Boost the payments by $100 or $200 a month, spend $200 to have the bumpers repainted, and be happy. Doubling your payments will make a big big difference in the equation.
Again thank you all for your feedback. This all solidifies my decision to stick with the Corolla, for many of the reasons everyone has listed.
To clear up the collision insurance/screwed up bumper thing… I DO have full coverage, but at the time my bumpers were screwed, I wasn’t working at the dealership yet and I was, frankly, living paycheck to paycheck. I didn’t want to pay the deductible to replace my bumpers because at the time I didn’t care enough to spend whatever the deductible was. Can’t remember the amount.
I am thinking about the credit union/re-finance thing. I’ll be checking with my credit union soon and figuring out if it’s a good idea.
Has anyone else used a CU to refi a car loan? Is that a good idea generally or does it depend on situation? I’ll be running my own numbers once I talk to my CU and see what’s up, but I’m wondering what experiences people may have had with this.