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Turning in a lease early to save on insurance costs

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I leased a vehicle back in November of 2014 for 39 months. GM Financial is the finance company. Payment is $662 per month. The vehicle is not worth the buyout price so selling it isn't worthwhile. I do not use the vehicle, as I took a job about a year ago working from home. We have two vehicles and plan to keep the other one, and turn the leased car in at the end of the term (or so I thought).

  • Approximate insurance savings over the next six months (until lease term is up): $1200
  • Refund of state registration fees is one year, since it recently renewed and I stuck the sticker to the windshield (otherwise, if the sticker was unstuck, I'd get a full refund): 50% ($100~) - this is a wash because whether I turn the car in now or in February, I'll get the same refund
  • Fuel savings over the next six months: maybe $200 since I fill the car up every couple of months, and use it for around town stuff
  • Miles on the vehicle: 20,000
  • The reason the miles matter: tires, brakes, etc are all good right now and I will not have to replace any at lease turn in; it's arguable that I won't have to replace these in February either since I probably won't put more than 1000 miles on the car between now and then (I put 2400 miles on it in all of 2016 and that's with almost half a year of commuting 65 miles one way)
  • I MAY get a prorated refund of a tire and wheel warranty that I bought when I leased the car. A lot of people knock this but I've had three tires replaced (run flats, nearly $400/tire) and one wheel replaced ("$1000"). However, since this was built into the lease contract (financed), I am not sure if I'll get the refund of if GMF will. So this would just be icing on the cake.


So I pay out $4000 now to save $1200 in insurance costs. Granted, my other vehicle's policy price will probably go up so it's not quite $1200. However, even if I save $1000, that's a 25% return on my $4k investment that would otherwise be spent for a car to sit in the driveway. Thoughts? Am I missing anything? I do not believe there is an early turn in fee. I guess this is similar to people asking if they should put more money toward their mortgage. If their money can earn more than their mortgage rate elsewhere, invest it elsewhere. However, I'd be hard pressed to beat 25% in the market or otherwise.

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maybe try to get the insurance cost down by saying that it is not driven.

RidicuRuss (Aug. 03, 2017 @ 1:48p) |

Not exactly! For people that truly consider an automobile for transportation from point A to point B (meaning to say fol... (more)

dealgain (Aug. 03, 2017 @ 10:12p) |

I am surprised that the car has depreciated that much even with only $20k miles on it. I would strongly suggest taking t... (more)

MADDOG2020 (Aug. 04, 2017 @ 3:05p) |

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Since you used the Tire warranty you won't get a refund.

Why not stick it on swapalease?

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Actually, I've had three of these T&W warranties before and you can always get a prorated refund, no matter the use. That "if you've used it" clause is for the initial 30, 60, 90 day 100% refund. If you use the warranty within the first XX days, you won't get a 100% refund but otherwise you would. I have cancelled two of the three previous warranties (after using them) and always gotten a refund. Also, in the contract, it states that I'll get a refund (but I'm not sure if that'd be me or GMF, since usually the refunds go to the finance companies first if there is financial company info listed on the contract).

Also, GMF doesn't allow lease transfers within the first six months, nor the last 12 months of a lease contract. I tried and I had one guy asking me to get him to $299/month, which didn't make sense at the time (with over $6k of payments remaining) and another guy who failed a credit check. By the time the second guy failed the credit check, I was within the 12 month window.

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the refund goes toward payments on the car.
Oh I forgot about the 12 month rule for Ally. And yes people in SWL will try to lowball you just like on CL or eBay.
Then returning the car early is probably your only choice and save a couple of $.

If you can't use the car or know someone that you wish to bequeath the car to, then yes, a return early is what you should do.

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The refunds I've gotten have gone to the finance company and they send me a refund check later on. Would it work the same way with a lease?

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No, it goes toward paying down the car then you get to argue with Ally how to get it back after you paid the 'full lease amount'.

For example, you cancel an extended warranty. That doesn't change your payments, it just ends those payments earlier.

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By the time I get a refund, the contractual payment obligation will be far behind me and the car out of my possession.

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jaytrader said:   So I pay out $4000 now to save $1200 in insurance costs. Granted, my other vehicle's policy price will probably go up so it's not quite $1200. However, even if I save $1000, that's a 25% return on my $4k investment that would otherwise be spent for a car to sit in the driveway. Thoughts? Am I missing anything? I do not believe there is an early turn in fee. I guess this is similar to people asking if they should put more money toward their mortgage. If their money can earn more than their mortgage rate elsewhere, invest it elsewhere. However, I'd be hard pressed to beat 25% in the market or otherwise.

But it's not a 25% profit. The insurance cost is part of the opportunity cost to keep your car.
  

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Right but it's the same thing as paying a mortgage early. By paying $4k and turning the car in now, I save $1200 gross. If I don't, I pay the $4k plus $1200 insurance. It's 25%ish saved.

I either pay $5200 for about another 1000-2000 miles of use or I pay $4000 and get rid of the liability of possibly having to replace tires and brakes, as well as save $1200.

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Put the car on Turo and rent it out. Just put a cap on the miles.

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henry33 said:   Put the car on Turo and rent it out. Just put a cap on the miles.
  Absolutely not a risk I want to take. 

ETA: and is technically a violation of my lease agreement. How would they find out, I have no idea, but still worth pointing out.

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op, based on your description in your op, you don't really need this car. Just return it and you can save yourself some opportunity cost in the form of hidden advantages like you will no longer be it's watchman (or caretaker or safekeeper) while it's sitting parked wherever, till the lease turn-in date.

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Given the insurance price, coupled with runflats....Corvette?

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Did you take it Carmax to get an actual offer for it? You never know.

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Logan71 said:   Given the insurance price, coupled with runflats....Corvette?
  Not sure why it matters, but no. 

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dealgain said:   op, based on your description in your op, you don't really need this car. Just return it and you can save yourself some opportunity cost in the form of hidden advantages like you will no longer be it's watchman (or caretaker or safekeeper) while it's sitting parked wherever, till the lease turn-in date.
  While saving myself $1200 in the process. Exactly my thoughts. Just unsure if the $4000 upfront makes sense. Realistically, $4000 even at 10% (20% annualized), over 6 months is only $400 if I were to somehow manage a crazy return on the money like that. Still only a third of the gross insurance savings. But I agree, it's also one less liability in my life. Won't have to buy tires or brakes, won't have to insure it, won't have to worry about it being vandalized or in an accident. I see no downside if I'm not using the car and putting 1000-2000 miles on the other vehicle instead of this one is probably immaterial long term. 

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realjones said:   Did you take it Carmax to get an actual offer for it? You never know.
  No, but the closest one is 90 minutes away and they are selling the same car, same year, with similar miles for about my buyout price. I can't imagine spending the three plus hours round-trip would be worthwhile. 

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Why don't you "park" the other vehicle and drive the lease vehicle?

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NoMoneyInMyWallet said:   Why don't you "park" the other vehicle and drive the lease vehicle?
  You did read that OP works at home now right?

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jaytrader said:   Right but it's the same thing as paying a mortgage early. By paying $4k and turning the car in now, I save $1200 gross. If I don't, I pay the $4k plus $1200 insurance. It's 25%ish saved.

I either pay $5200 for about another 1000-2000 miles of use or I pay $4000 and get rid of the liability of possibly having to replace tires and brakes, as well as save $1200.

But if you pay off a mortgage early, then you own the house.  If you pay off a car lease early, then the bank still owns the car unless you want to buy it.

Did you ask your wife?  What did she say?

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jaytrader said:   ...However, even if I save $1000, that's a 25% return on my $4k investment
jaytrader said:   Right but it's the same thing as paying a mortgage early.
Haha. It's not an investment, there's no return on it, and it's not the same thing as paying a mortgage early. I think the word you're looking for is plain old "saving."

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scripta said:   
jaytrader said:   ...However, even if I save $1000, that's a 25% return on my $4k investment
jaytrader said:   Right but it's the same thing as paying a mortgage early.
Haha. It's not an investment, there's no return on it, and it's not the same thing as paying a mortgage early. I think the word you're looking for is plain old "saving."

  I suppose I should have put quotes around the "that's a 25% return on my $4k investment" part. Yes, I understand it's not an investment. Along the general line of, a penny saved is a penny earned, in this case a penny saved is a penny not spent.

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forbin4040 said:   
NoMoneyInMyWallet said:   Why don't you "park" the other vehicle and drive the lease vehicle?
  You did read that OP works at home now right?

It also say "We have two vehicles".  That assumes that someone is driving the other vehicle instead of the leased vehicle.  

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qcumber98 said:   
jaytrader said:   Right but it's the same thing as paying a mortgage early. By paying $4k and turning the car in now, I save $1200 gross. If I don't, I pay the $4k plus $1200 insurance. It's 25%ish saved.

I either pay $5200 for about another 1000-2000 miles of use or I pay $4000 and get rid of the liability of possibly having to replace tires and brakes, as well as save $1200.

But if you pay off a mortgage early, then you own the house.  If you pay off a car lease early, then the bank still owns the car unless you want to buy it.

Did you ask your wife?  What did she say?

  Right, but in the mortgage situation you save on interest. If I pay the lease early, I save on the insurance cost. I can save about 23% (the insurance $1200) if I turn the lease in early. Also, I mitigate any possibility of having to buy new tires or brakes--which is not a strong possibility if I were to keep the care to the end of the term, but I KNOW those items are "good" now. If I am going to buy tires or brakes for any vehicle, I'd rather it be for the vehicle we're going to keep.

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NoMoneyInMyWallet said:   
forbin4040 said:   
NoMoneyInMyWallet said:   Why don't you "park" the other vehicle and drive the lease vehicle?
  You did read that OP works at home now right?

It also say "We have two vehicles".  That assumes that someone is driving the other vehicle instead of the leased vehicle.  

  She is a stay at home mom, I work from home. Having one vehicle is enough.

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I feel like there has to be a better solution for a car you're not using than just turning it in early. Alas, since it's a lease, it looks like there isn't.

Let this be a lesson to everyone on FWF: Leasing a car is a bad idea, mkay

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meade18 said:   
Let this be a lesson to everyone on FWF: Leasing a car is a bad idea, mkay

  
Not necessarily, but this is one of the drawbacks.

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RBirns said:   
meade18 said:   
Let this be a lesson to everyone on FWF: Leasing a car is a bad idea, mkay

  
Not necessarily, but this is one of the drawbacks.

  
Generally speaking, it's a bad idea. I don't know why jaytrader did it in the first place. But even if it was a good idea at the time, look how easily things changed and it became a bad idea.

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Maybe sell the other car? Use this car for another 6 months and get another car once the lease is over. Unless the second car is a beater with liability, the $200 a month will be less than depreciation and insurance on the car. keep in mind, you might have to pay taxes again when you get a new car.

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DesiVibe said:   Maybe sell the other car? Use this car for another 6 months and get another car once the lease is over. Unless the second car is a beater with liability, the $200 a month will be less than depreciation and insurance on the car. keep in mind, you might have to pay taxes again when you get a new car.
  
Similar option: If the vehicle you plan on keeping is paid off, and the state you live in allows you to remove insurance if you are not driving it, you might consider parking the other car for 6 months, dropping insurance, and putting the wear and tear on the lease vehicle.  This might minimize the expense of wear and tear on the vehicle that becomes your daily driver after you turn in the lease.  Also, even if you still owe on the vehicle you keep, if the amount you owe is around $4,000, I would use the $4,000 to pay it off, that would also save a minimial amount of interest.

You could also save money by getting a low-mileage discount from your insurance carrier, if you don't already have one.  And, you could shop your insurance.  You might be surprised the rates other companies will give you just to get your business.

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maybe try to get the insurance cost down by saying that it is not driven.

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meade18 said:   I feel like there has to be a better solution for a car you're not using than just turning it in early. Alas, since it's a lease, it looks like there isn't.

Let this be a lesson to everyone on FWF: Leasing a car is a bad idea, mkay

  Not exactly! For people that truly consider an automobile for transportation from point A to point B (meaning to say folks that do not go for aspirational luxury cars), choosing a low payment car like a Jetta or a Hyundai or whatever that gets you everything counted for under $150-to-$175 a month (count everything tax, tag, license, registration,down payment,bank fee, dealer fee, )...leasing such a car for 36 month term is actually a nice deal. (Assuming your needs are within the allowed miles per year).
You don't pay for tires. and you dont pay for any repairs...most dealers give you free oil change coupon booklet for the entire lease duration for such small sedans.....you get yourselves a brand new car every 36 months (again keep to the $150-to-$175 a month cars).
At this price point, you are actually going to be break_even when compared to the costs of owning a similar sedan category (like a Civic, Corolla etc).
For such a lease, Approx $2000 per year is what you pay for everything. And more or less it's about the same depreciation for owning similar cars like Corolla

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I am surprised that the car has depreciated that much even with only $20k miles on it. I would strongly suggest taking the car to Carmax or a another dealership for appraisal. Your breakeven point is residual value + 4k. Any appraisal over your residual value will be additional savings compared to your current option. Have you tried listing the car as a private sale? That could be another option. 
 

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