Can't decide on the best course of action for my situation

big_blue360

Hello All,

I find myself in a bit of an interesting situation and was looking for some advice. Recently, I financed a car I had been leasing for the last 3 years, a 2014 Toyota Corolla. Since I was doing a lease to own transaction I thought the deal would be fairly straightforward, but looking back on it i'm sure I made a hasty decision and screwed myself over.

First off, they charged me about 14,000 for the car which, thanks to Kelly Bluebook, I now know is only worth 11,000 at most. Then they stuck me with all kinds of extended warrants and extra charges so, at the end of the day, everything came out to about 20,000!!!. I'm now essentially paying double of the cars worth now. Admittedly, I understand it's my fault for not doing more research but I just didnt expect to get taken for such a ride especially when I was already leasing the car.

My question is.. what should i do now? Keep the car and pay more than 10k total over what its actually work or take the negative Auto equity hit and trade it in. Essentially, have the 4k rollover to whatever I decide to get next.

PF_Flyer

I'll go back to my ONE CAR value for my vehicles. That doesn't depreciate. It still gets me where I want to go, I enjoy driving it. Doesn't really matter that the dollar value of the car decreases over time. That's comes with owning the car. Doesn't matter what car it is, or how much you paid for it, The "market value" of it decreases over time and miles.

I get that, in hindsight,you feel you overpaid for a car you liked and wanted. However, digging a deeper hole on the next car wouldn't do much to fix that.

kyfdx

Those are sunk costs. The car is the car. If you like it, keep driving it. The negative equity situation will eventually take care of itself.

PF_Flyer

One thing's for sure. A car is NOT an investment. And since you liked the car enough to buy it, and you bought the extended warranty, seems like you really planned on keeping it. As kyfdx said, the negative equity situation will take care of itself. Heck, when I buy a new car, we generally finance about 90% of the cost which means we're in a "negative equity" situation right away since the instant the car leaves the showroom it's "used". But for me, a car is worth ONE CAR from the moment I drive it away until I part ways with it. I could drive myself crazy if I looked at any other way,

big_blue360

Appreciate the reply from you both but i'm still dont understand how this would be better considering the car will continue to depreciate in value. I suppose once its all payed for I wont be negative but, from the way I see it, im negative now... Or am i just thinking about this the wrong way.

Michaell

big_blue360 said:

Appreciate the reply from you both but i'm still dont understand how this would be better considering the car will continue to depreciate in value. I suppose once its all payed for I wont be negative but, from the way I see it, im negative now... Or am i just thinking about this the wrong way.

Anybody who finances a car is negative the moment they drive off the lot. It's just a matter of how negative, and for how long. The only exception is if you put lots of money down.

If you like the Corolla, keep it for a good long time. It's under warranty, it's reliable and it does hold it's value better than a lot of the competition.

big_blue360

While i do like the car I ultimately hate what I'm paying for it more, especially when I know I can do better. But for my situation I think I am better off with it.

kyfdx

big_blue360 said:

While i do like the car I ultimately hate what I'm paying for it more, especially when I know I can do better. But for my situation I think I am better off with it.

Anything you replace it with will also depreciate in value, so that's sort of a red herring.

You can't spend your way out of a mistake. That is in the past. The Corolla is a great car. Nothing that happened will change that.

Also, if your $20K includes the finance charges, that's not really part of the cost of the vehicle.

Mr_Shiftright

I think you have to view any car, and especially a reliable one like a Corolla, not for what it IS, but for what it DOES. Your car does the same basic thing as one costing 3X the price, and will continue to do so throughout its lifetime of use. If it was a BAD car then I'd be more concerned but obviously it isn't.

I am curious though. Since you bought out the lease, wasn't there a residual price stated in the lease (the pay-off)---was that the $14K?

texases

What, exactly, types of extras (warranties, etc.) did you get. Are they backed in writing by Toyota? You have one of the most reliable cars on the road, I would read each warranty to see if you can get a refund. Many allow for that.

ken117

If the extras you purchased are soft products, not installed on the vehicle, such as an extended service contract, GAP, etc., you should be able to get a refund. Go back to the dealer and request. If they will not act, contract the provider directly.

If the cost of those soft products were included in an auto loan, you will not receive a refund. Rather, the refunded amounts will be applied to the loan principle. This will reduce the amount you will have to repay. The monthly payment will remain the same.

If the products were hard products, such as paint protection, you will likely not get a refund. You can ask.

isellhondas

It sounds like back in 2014, Toyota needed to dump a bunch of excess Corollas they were sitting on so they did a giveaway lease. They make the lease payments so attractive that people gobble the cars up! In order to do this, they inflate the residuals to an unrealistic level. I guess they figure they will worry about that at lease end or they are hoping the lessor buys the car. In this regard, leases can be great values.

Be happy it's a Corolla! It's a great car that should give you very little problems for 200,000 miles or so!