Lease problems! What should I do, over miles and looking at scenarios.?

Question

My mom has a lease on an 06 Ford Fusion. The car is currently at 35,900 of an allotted 36,000 miles. She got a new job and is putting and has been putting 1,000 a month on the car, more than when she began the lease. She will be about 4000 over in January when the lease is up. Right now they are quoting bad prices on new leases, as they are rolling her current overage after pro-rating plus the two payments they won't pay for. It appears it will be cheaper to ride it out as right now about 750 dollars will be rolled into her new lease, and if she waited it would be more like 600 in overage, and she's not paying for 2 months she won't be driving it. My question is, is it possible to finance the overage money if she leaves Ford? How can she leave Ford and go somewhere else if she owes 600 dollars and can't pay it all at once?

Answer 1

I would stay with Ford if she is happy with the car. If the difference between now and Jan is only $ 150, now  would be better. Consider what it would cost if she needed to get tires or brakes or other service for the current car.

Answer 2

Hi Clark. I got your email and re-read your posting. You are right. You did say your mom got a new job. Not a new paint job. So I owe you an apology. And your mom.

So that changes a lot. Your mom has taken very good care of the car. She's just over on miles. I've been leasing cars for a long time and I've never rolled un-made payments into a new lease. That's just is crazy. Why pay for a car that you no longer have?

Some salesmen are too pushy and want to make a deal NOW.  They'll tell you how easy they can get you out of your present car and into a new one. But they fail to tell you that not only will you be paying for a car you no longer have, but you'll also be paying for it over the course of the new lease as well!

Anytime you roll-over negative equity into a new loan, in your mom's case -- the last two payments, that adds to the balance owed on the new car. And you'll be paying interest on that for the entire term of the new loan, as well as interest on your new car. Even in a lease you pay interest. It's called a money factor.

So "rolling into" does not get you free and clear of your old car. It keeps it tagged onto your new car and you'll still be paying on it for the duration of the new lease.

Regarding the miles, your mom needs to call Ford Motor Credit. Ask them if she can make payments on the overage charge. If they say yes, she needs to have them fax or snail mail that to her so there won't be any problems after she turns the car in. If they won't do either one, she needs to write down the name of the person who said she could make payments, along with the time and the date of the phone call and keep that on record.

Once you mom does this, she is free to turn the car back to the Ford dealer once the lease is up. And she will be free to lease any make or model she desires. But she should hold onto it until she makes her final payment. That makes the most financial sence.

Regarding the leases right now, all the rates have gone up quite a lot because residuals have taken a beating. The manufacturers are losing their shirts when they sell the lease returned cars at auctions. Everyone, except Audi, has lowered the residuals on all their new cars and raised the money factor to make up for their huge losses. That means higher rates to everyone who leases. Unless you lease an Audi.

I don't sell Audis so I'm not pushing my brand. Just giving you some solid advice. Also, you mom's lease is up in October. She's be much better off turning it in then and leasing a 2009 car. Why? Because we're at the end of the model year on all 2008s. The residuals have already dropped even more on them since the 09's are on the way. And 09's will have a stronger residual than the 08's have right now since 08's are already a year old. The wait will be worth it for her.

Answer 3

The money can be rolled into another lease or purchase, and it doesn't have to be through Ford. If she is looking at leasing again, I wouldn't risk waiting until Jan. Leasing is going to be all but a thing of the past. She may want to consider checking what her buyout is, and if it makes sense, buying the car out and financing it