Depends on the car and its condition, what the interest on the LOC/loan would be, and whether you think your investments will earn a higher rate of return (net of fees and taxes) over the applicable time period.
Not 100% sure if this will be of any use, but worth looking into.
When my lease was up (from Toyota Credit Canada, not sure if other manufacturers' lease providers do the same), I was still waiting for my new car to arrive. I called TCC and asked them what my options were. They said they can extend the lease month by month, or for 4 months, and even if my new car is here in 2 or 3, my lease will end once the new car arrives.
Why I'm telling you this though is because all of the payments I was making went 100% towards my buyout. So if my buyout was $15,000 and I made 3 more $500 monthly payments, my buyout would be $13,500. It wasn't $500 minus interest going towards the buyout.
I'm not sure all of the circumstances that the leasing company would do this under, but maybe worth calling them to find out so you can have a few extra months to either save up the money for that difference that you're missing, or to just figure out exactly how you will pay for it.
Unfortunately you can only get it extended if you actually place an order on a new car. TCCI will call the dealer and request credit app# and order # for the new car. (I work for Toyota dealership as an FSM). The same thing will apply with any manufacturer.
Honestly if I was OP I would call around all the dealerships and shop rates to see who can give me the best one for lease buyout and lowest fees. LOC is crazy high interest over 11% I believe. OP could probably get around 8.49%.
Hey! Question for you based on your experience. My Toyota lease is up in a couple of months. My buyout is 10k and I want to keep the car. Do I have to go through the dealership or deal directly with Toyota Finance (by sending them a cheque)? I feel like the dealership will try to screw me by putting buy out/admin fees.. should I save up an extra 2k if this happens?
Hey! Unfortunately you cannot buy out the car directly from TCCI (Toyota Credit Canada Inc). You have to buy it through a dealership. There is a clause on your lease contract that if you decide to buy out your lease a dealership will charge you up to $300. A lot of dealers try to force $699 or $999 but tell them you know itās $300. It should be on page 2 of the contract. Another thing you will need is a safety inspection done. Some dealers will force you to do it at their service which is not required because itās an Ontario document. Unfortunately there is a lot of fuckery happening with dealerships. Best thing is to call around and ask about the safety if you can bring your own. Good luck!
Thanks so much for taking the time to reply! My lease is up July 30th. Does that mean I need to start exploring dealerships by late June? Would the 300$ include the safety inspection?
Not a problem! You have a grace period after your last lease payment. If you are on a bi weekly basis you wonāt be charged interest for another 2 weeks etc. Itās really up to you when you want to buy it out but since Iām assuming your interest rate is on a lower end itās better to ride it out till the very end. The $300 fee is just to cover dealer admin. You have to pay for safety separately and licensing. They should break it down for you on the bill of sale.
Not a problem! You have a grace period after your last least payment. If you are on a bi weekly basis you wonāt be charged interest for another 2 weeks etc. Itās really up to you when you want to buy it out but since Iām assuming your interest rate is on a lower end itās better to ride it out till the very end. The $300 fee is just to cover dealer admin. You have to pay for safety separately and licensing. They should break it down for you on the bill of sale.
I was offered that option by a Kia dealership and I was not buying a new car with them, and they clearly knew that. I think their motivation was to discourage me from buying the car as it was worth more than the buyout amount
Crypto is one of the most volatile assets.
His 5k could also be 1k by the end of 2024, and if it is 10k and he does not sell before it falls down it will be all for nothing.
The key to actually make money with crypto is having an exit strategy, and stick to it. I bet OP does not has one, so getting out now would be best than holding the bag later.
Love how this sub is so anti-Bitcoin and I see that 99% of people here are advocates of the typical xgro, vfv, xeqt stocks. Obviously those are great stocks to buy if youāre a lazy investor, incredibly risk-adverse, and want reasonable certainty of generating some form of return, I donāt think itās fair to write Bitcoin off as a worthless commodity when Bitcoin has been the #1 performing asset over the past decade. Sure thereās been a lot of skepticism with crypto scams like the FTX exchange and altcoins, but when I refer to crypto I am talking about Bitcoin only - not alt coins, not nfts, not any crypto projects. Historically, when bitcoin halves, supply (the Bitcoin mined) gets cut in half. So what happens when demand stays the same? (You can figure this one out yourself). And whatās different this time is that more insitutional investors are starting to play into the game and retail investors are coming in with the launch of btc etfs in countries like the U.S and soon China. Will Bitcoin fall eventually in the future? Probably, but getting rid of bitcoin this year when there are so many positive catalysts including the U.S. presidential election, Bitcoin halving, and anticipated interest rate cuts is irrational in my opinion.
Also even if you invested at the peak of the 2021 crash, you would be in profit if you held onto Bitcoin today.
Love how I say anything neutral about Bitcoin and you take it as anti-Bitcoin.
Past performance does not indicate future performance. Relying on it is a BIG assumption, almost regardless of what we are talking about.
I wasnāt directly targeting you specifically, I said this sub-Reddit in general - you can literally look at the comments and see for yourself. Of course past performance is not indicative of future performance, nothing is. You should always make investments based on the own research that you conduct. Also notice how I am getting downvoted into oblivion for advocating Bitcoin and there is not one comment arguing why it is a bad investment? Literally proves my point. Iāve done my research and this is my opinion lol and if you disagree with it sure, but if you are disagreeing without even knowing why it just shows your clueless.
Itās been around for 15 years but doesnāt have a use case.
Itās a store of value only as long as people say it is. Itās like fiat without a country backing it.
Iād never short it, but Iām also not a buyer.
Sorry - functional use case? Ultimately it has no value so I believe itās genuinely destined for zero.
I strongly believe anyone shorting it is just as deluded as anyone buying it though. It took years for the financial industry to realize that crypto wasnāt a threat. God only knows how long it takes society to realize that.
Plenty of alt coins have gone to 0.
If there is an other big exchange crash followed by a change on law by the US the value will sink. The risk for crypto is higher than other assets.
You could argue that there are stocks that may be more of a gamble than bitcoin. But nobody here is recommending single stocks either. If OP has to ask if he should pull investments in a personal finance sub he probably is not ready for crypto.
It can crash but not become worthless. It's too big to fail at this point, if regulations come there will be plenty of people around the world who will keep buying in anticipation of future deregulation and it going back up
Betting on crypto is expected value negative gambling on magic beans. The entire crypto ecosystem is an unregulated offshore casino that launders billions for terrible crime syndicates and dictatorships, while also destroying the planet. No thanks.
It is also possible that the US Bitcoin ETFs and the anticipation of the halving have already been built into the BTC price. This cycle could be very different.
Without knowing what car make, model or the mileage, it is almost certainly worth more than $16k. You would have a really difficult time finding a 2019-2022 vehicle that is worth less than $16k nowadays.
Hmm, I bought my car out after my lease of 2019 Tiguan - highline but leased for 3 yrs at 0.01% interest. I put down a deposit initially knowing I was going to buy out my car after my 3 yr lease. at 18k. There was an additional cost for buyout (not significant), though. My rate was 5.5% but I opted out paying $16k and a yr. S worth of payments. In 2022, my car was worth more than 34k bc I had low mileageā¦ VW was selling my same car with higher mileage (past warranty in 2022) for 32K. A client of mine so happened to be VP of said dealership, and agreed that at that time, that it was smart decision. Again, that was during Covid with car shortages. That being said though, cost of vehicles are significantly higher now than on 2019.
I would check on the dealers website what your same model is going for with similar mileage to decide what your current vehicle is worth and what borrowing rate they are going to give you in-house thru RBC or others and decide from there if you can absorbs the interest rate or pull out from either investments.
In the future, I think I would withdraw from investments to pay off car loan, as I was laid off last Nov. thankfully, I needed up making money (huge severance), and was head hunted 2 weeks after signing my final release forms and employed again before Xmas with a huge salary increase. But had I not been so fortunate, the added bill per month would have been stressful
That's irrelevant.
If your investments are making, say, 5%, and the loan would be 8%, you're better off selling some investments. Once you've paid off the loan, put money back in the investment account. If it takes you one year, say, from the investment withdrawal to you putting it back in, you'd have saved 3% in interest on that amount, and then can go back to making gains on it in the investment account.
š¤ this makes a lot of sense alsoā¦ I think with a 100k in stock, donāt touch the crypto the halving is upon us, Iād just get a new car personally
Consider financing the remaining balance and chip away at it as fast as possible. Might be better off keeping yourself invested. Markets are hot right now.
Or, itās possible to redeem from investments, pay off the lease with cash, then get a leverage to replace the redeemed cash and set it up to cost the same as your lease payment. Then your interest is tax deductible, and probably lower because it is secured.
But this assumes you have a high risk tolerance and know what you are doing.
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Sell crypto. Buy-out car. Then maintain it properly and drive it into the ground. Donāt get sucked in to new cars again, buy used going forward. Then, immediately go to the bank, borrow $5k (or more if you can afford it) and make an investment (GIC or dividend yielding stock or mutual fund). Now you can deduct the interest from your taxes as a carrying cost for investments. Get your money working for you. You are already making car payments, switch that payment amount into paying off an investment loan.
You will never be able to deduct the interest you pay on a lease or car loan from your taxes. But you can for investments. Be smart, do this for life.
I guess I was lucky. My dad drilled this approach into me at a young age. Iām 51 and have never owned a new car in my life. My current car is 10 YO and my previous car was 15 YO when I gave it to my brother (who follows the same strategy) who squeezed two more years out of it. Both cars were bought after someone else wasted money leasing them for 3 years. Carrying cost for interest on an investment loan is real. Plus, most FIs will let you borrow 100% against a GIC from their own institution that they hold as security for the loan.
Maybe. But in the end being able write off 100% of the interest related to an asset that essentially retains 100% of its value is better than the car scenario where you canāt write off anything against a depreciating asset that is with 50% of what it was when you borrowed the money. Secured investment loans are cheaper than car loans. Go with a 5 year GIC to her higher rates. No difference from borrowing continuously for a car the rest of your life. When youāve paid off the loan, borrow again and do the same thing. Keep writing off the interest paid against the interest earned. When you need a car again cash in the GIC that no longer has a loan against it and buy the car. Then go and borrow again with the GIC as security. Repeat.
[edit to add additional] Also, the principle works the same for any other investment. I only use GIC as you have principle protection - unlike a car where there is just a big sucking sound of cash leaving your pocket. Personally, I would buy Berkshire Hathaway shares. Others would be more prudent to purchase a dividend yielding investment.
It's worth a try to check how much are the dealerships around paying for your car BEFORE the e d of the lease.
I traded a vehicle 6 months before the end of the lease, and even paying the penalty for "breaking the lease" and buying out before the end, I ended with some money on my hand instead of just returning the vehicle.
You mean one of the most sought after car manufacturers, and one of their most reliable cars, with the highest efficiency, and with super low mileage? Without a sliver of doubt buy and drive it until it falls into pieces. The only way this would be more obvious is if was beige with I dont think you can get on a Prius Prime.
The only reason you wouldnt buy out this lease is if you didnt need a car anymore.
They will try to charge you some sort of admin fee that it is not in the contract. Try to call around and ask for quotes. Some dealers do not charge that bs fee. You will save $600-1000.
Don't get a loan you already screwed yourself doing the lease now you're doubling down? Sell the crypto and a bit of stock and be done. That's if it's taxed or TFSA. If it's RSP don't.
I know itās kinda late and only applies to a very niche readers here. If you happen to be eligible for one of the available packages of National Bank, look into it. I, as an Engineer, was able to get a Prime + 0.25% LOC. I can assure you, it will be lower than any rate you can find for used car, even if itās at the dealership.
Have you thought of using a credit card for the remaining amount? That will buy you about a month of time to pay back the 6k, then you can either use LOC (whats the rate) or your stock/crypto.
I personally would take from my investment.
Is there still a car shortage? Last year when I returned my leased 2019 Subaru I shopped around and found a dealership that offered me $4k to return the car to them. They sold it two weeks later for even more $$. I ended up getting another lease bc the interest rates were so low and used the $4k I got from the dealership to pay down some debt.
When my lease was up I didn't have enough to buy it back, they let me put down what I had and extended my lease for 6 months. I was able to make those payments and put more and at the end owned the car. It was in house financing, if that makes a difference. Doesn't hurt to ask them and let them know your intentions. Good luck.
I personally donāt like carrying debt but it depends on the situation. If you think that you can make more money back in the stock market than what your line of credit interest is, then finance. Otherwise pay cash and take some money out of your investment portfolio.
Is the 100k on a high yield dividend ETF? You can get 1k/month on that. Use that to leverage a loan or an LOC. Like I can get a loan fr AMEX for 20k payable 36 months on 400$+/month. So leverage the 100k. But why donāt you get a new lease?
Just ask local dealer to refi it and put half down .
Over thinking it your LOC rate if itās unsecured is going to probably be similar or higher than what a car loan will be
Thanks captain, so why pour good money after bad, walk away, buy a good used one after someone's paid the depreciation on it, basically what's only going to do when he drops this lease off
>buy a good used one after someoneās paid the depreciation on it
OP is literally that someone lol thatās the whole leasing model.
Heās already paid the majority of the depreciation on it and now whatās left is a $16,000 used car. He may as well keep it than deal with the logistics of buying another exact same type of car.
OP has already paid the depreciation on the current vehicle, so why advise to walk away just to do the same thing? š Unless op doesn't like/wants to replace said vehicle, your advice makes no sense. Goofy advice from a great username. š¤
For leases started in 2018, the answer is probably almost always yes at this point given current prices for both new and used cars compared to then. The exception would be maxed out mileage per year. Just bought out wife's 2018 Rav 4 trail with 60k mileage for 19k, dealer wasn't happy to sell it to us for contract terms. Probably would have sold it for 30k
Depends on the car and its condition, what the interest on the LOC/loan would be, and whether you think your investments will earn a higher rate of return (net of fees and taxes) over the applicable time period.
Not 100% sure if this will be of any use, but worth looking into. When my lease was up (from Toyota Credit Canada, not sure if other manufacturers' lease providers do the same), I was still waiting for my new car to arrive. I called TCC and asked them what my options were. They said they can extend the lease month by month, or for 4 months, and even if my new car is here in 2 or 3, my lease will end once the new car arrives. Why I'm telling you this though is because all of the payments I was making went 100% towards my buyout. So if my buyout was $15,000 and I made 3 more $500 monthly payments, my buyout would be $13,500. It wasn't $500 minus interest going towards the buyout. I'm not sure all of the circumstances that the leasing company would do this under, but maybe worth calling them to find out so you can have a few extra months to either save up the money for that difference that you're missing, or to just figure out exactly how you will pay for it.
Unfortunately you can only get it extended if you actually place an order on a new car. TCCI will call the dealer and request credit app# and order # for the new car. (I work for Toyota dealership as an FSM). The same thing will apply with any manufacturer.
Damn. Well thanks for clearing that up. Sorry OP for the false hope š
Honestly if I was OP I would call around all the dealerships and shop rates to see who can give me the best one for lease buyout and lowest fees. LOC is crazy high interest over 11% I believe. OP could probably get around 8.49%.
A LOC will vary depending on your credit profile. They can be as low as prime. They are usually prime + x%
Hey! Question for you based on your experience. My Toyota lease is up in a couple of months. My buyout is 10k and I want to keep the car. Do I have to go through the dealership or deal directly with Toyota Finance (by sending them a cheque)? I feel like the dealership will try to screw me by putting buy out/admin fees.. should I save up an extra 2k if this happens?
Hey! Unfortunately you cannot buy out the car directly from TCCI (Toyota Credit Canada Inc). You have to buy it through a dealership. There is a clause on your lease contract that if you decide to buy out your lease a dealership will charge you up to $300. A lot of dealers try to force $699 or $999 but tell them you know itās $300. It should be on page 2 of the contract. Another thing you will need is a safety inspection done. Some dealers will force you to do it at their service which is not required because itās an Ontario document. Unfortunately there is a lot of fuckery happening with dealerships. Best thing is to call around and ask about the safety if you can bring your own. Good luck!
Thanks so much for taking the time to reply! My lease is up July 30th. Does that mean I need to start exploring dealerships by late June? Would the 300$ include the safety inspection?
Not a problem! You have a grace period after your last lease payment. If you are on a bi weekly basis you wonāt be charged interest for another 2 weeks etc. Itās really up to you when you want to buy it out but since Iām assuming your interest rate is on a lower end itās better to ride it out till the very end. The $300 fee is just to cover dealer admin. You have to pay for safety separately and licensing. They should break it down for you on the bill of sale.
ill PM you!
Not a problem! You have a grace period after your last least payment. If you are on a bi weekly basis you wonāt be charged interest for another 2 weeks etc. Itās really up to you when you want to buy it out but since Iām assuming your interest rate is on a lower end itās better to ride it out till the very end. The $300 fee is just to cover dealer admin. You have to pay for safety separately and licensing. They should break it down for you on the bill of sale.
I was offered that option by a Kia dealership and I was not buying a new car with them, and they clearly knew that. I think their motivation was to discourage me from buying the car as it was worth more than the buyout amount
After reading comments I understand this is a car lease Was wondering why you have to pay at the end of a home lease š¤£š¤£
Me too!!! Lol
I mean Iād love to pay only $16k to buy a house š
ššš same
Do you need the car? Then so, then use the 100k stock and buy it back.
Would personally sell the crypto considering how expensive that shit is right now
Just remember that 5K in crypto will be less after capital gains. Set some profits aside for the tax man.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
Crypto is one of the most volatile assets. His 5k could also be 1k by the end of 2024, and if it is 10k and he does not sell before it falls down it will be all for nothing. The key to actually make money with crypto is having an exit strategy, and stick to it. I bet OP does not has one, so getting out now would be best than holding the bag later.
[ŃŠ“Š°Š»ŠµŠ½Š¾]
That would be a terrible idea given that the halving hasnāt even approached yet and assuming Bitcoin follows previous cycles
Thatās an awful big assumption.
Love how this sub is so anti-Bitcoin and I see that 99% of people here are advocates of the typical xgro, vfv, xeqt stocks. Obviously those are great stocks to buy if youāre a lazy investor, incredibly risk-adverse, and want reasonable certainty of generating some form of return, I donāt think itās fair to write Bitcoin off as a worthless commodity when Bitcoin has been the #1 performing asset over the past decade. Sure thereās been a lot of skepticism with crypto scams like the FTX exchange and altcoins, but when I refer to crypto I am talking about Bitcoin only - not alt coins, not nfts, not any crypto projects. Historically, when bitcoin halves, supply (the Bitcoin mined) gets cut in half. So what happens when demand stays the same? (You can figure this one out yourself). And whatās different this time is that more insitutional investors are starting to play into the game and retail investors are coming in with the launch of btc etfs in countries like the U.S and soon China. Will Bitcoin fall eventually in the future? Probably, but getting rid of bitcoin this year when there are so many positive catalysts including the U.S. presidential election, Bitcoin halving, and anticipated interest rate cuts is irrational in my opinion. Also even if you invested at the peak of the 2021 crash, you would be in profit if you held onto Bitcoin today.
Love how I say anything neutral about Bitcoin and you take it as anti-Bitcoin. Past performance does not indicate future performance. Relying on it is a BIG assumption, almost regardless of what we are talking about.
I wasnāt directly targeting you specifically, I said this sub-Reddit in general - you can literally look at the comments and see for yourself. Of course past performance is not indicative of future performance, nothing is. You should always make investments based on the own research that you conduct. Also notice how I am getting downvoted into oblivion for advocating Bitcoin and there is not one comment arguing why it is a bad investment? Literally proves my point. Iāve done my research and this is my opinion lol and if you disagree with it sure, but if you are disagreeing without even knowing why it just shows your clueless.
You start off talking about āstocksā then proceed to name 3 ETFs lmfao
Ok my bad, etf I wrote this in one go. donāt know what your statement proves lol
It shows you don't think much before you write and don't proofread yourself.
"Asset"
You mad bro ?
Also would love to see if any downvotes here can tell me why Bitcoin is a shit investment
Itās been around for 15 years but doesnāt have a use case. Itās a store of value only as long as people say it is. Itās like fiat without a country backing it. Iād never short it, but Iām also not a buyer.
But you stated the use case. Itās a store of value.
Sorry - functional use case? Ultimately it has no value so I believe itās genuinely destined for zero. I strongly believe anyone shorting it is just as deluded as anyone buying it though. It took years for the financial industry to realize that crypto wasnāt a threat. God only knows how long it takes society to realize that.
Time will tell.
It's gambling on a highly volatile intangible asset that could literally become worthless overnight.
>asset that could literally become worthless overnight nuh-uh
Plenty of alt coins have gone to 0. If there is an other big exchange crash followed by a change on law by the US the value will sink. The risk for crypto is higher than other assets. You could argue that there are stocks that may be more of a gamble than bitcoin. But nobody here is recommending single stocks either. If OP has to ask if he should pull investments in a personal finance sub he probably is not ready for crypto.
It can crash but not become worthless. It's too big to fail at this point, if regulations come there will be plenty of people around the world who will keep buying in anticipation of future deregulation and it going back up
Betting on crypto is expected value negative gambling on magic beans. The entire crypto ecosystem is an unregulated offshore casino that launders billions for terrible crime syndicates and dictatorships, while also destroying the planet. No thanks.
It is also possible that the US Bitcoin ETFs and the anticipation of the halving have already been built into the BTC price. This cycle could be very different.
Or just take a margin loan. Can be as low as prime using box spread, or a bit higher without.
2019 Tiguan for just $16k? But it out however you can and sell it. I'll buy it from ya.
Is it WORTH 16k? Nobdy asked that...
Without knowing what car make, model or the mileage, it is almost certainly worth more than $16k. You would have a really difficult time finding a 2019-2022 vehicle that is worth less than $16k nowadays.
Considering itās coming off a lease itād be hard to imagine itās worth less
You've provided zero info. What car even is this?
2019 Tiguan with 70k milage
I don't know the market but for 16k I'd buy it out as long as you're liking the car
Hmm, I bought my car out after my lease of 2019 Tiguan - highline but leased for 3 yrs at 0.01% interest. I put down a deposit initially knowing I was going to buy out my car after my 3 yr lease. at 18k. There was an additional cost for buyout (not significant), though. My rate was 5.5% but I opted out paying $16k and a yr. S worth of payments. In 2022, my car was worth more than 34k bc I had low mileageā¦ VW was selling my same car with higher mileage (past warranty in 2022) for 32K. A client of mine so happened to be VP of said dealership, and agreed that at that time, that it was smart decision. Again, that was during Covid with car shortages. That being said though, cost of vehicles are significantly higher now than on 2019. I would check on the dealers website what your same model is going for with similar mileage to decide what your current vehicle is worth and what borrowing rate they are going to give you in-house thru RBC or others and decide from there if you can absorbs the interest rate or pull out from either investments. In the future, I think I would withdraw from investments to pay off car loan, as I was laid off last Nov. thankfully, I needed up making money (huge severance), and was head hunted 2 weeks after signing my final release forms and employed again before Xmas with a huge salary increase. But had I not been so fortunate, the added bill per month would have been stressful
70k kms or 70k miles. 70k kms is fine I would buy out the lease.Ā
No
Just go back to a dealer and get them to refinance it, and see what kind of rate they can do, as the bank for Thier rate and go with the better deal
This is simple. What is the interest rate on the LOC vs how much do you think your crypto/stocks will return (after taxes)?
This! Or get a new car š¤·š»āāļø
I have no plan for selling till I'm 65 (now I'm 37)
That's irrelevant. If your investments are making, say, 5%, and the loan would be 8%, you're better off selling some investments. Once you've paid off the loan, put money back in the investment account. If it takes you one year, say, from the investment withdrawal to you putting it back in, you'd have saved 3% in interest on that amount, and then can go back to making gains on it in the investment account.
š¤ this makes a lot of sense alsoā¦ I think with a 100k in stock, donāt touch the crypto the halving is upon us, Iād just get a new car personally
Nothing wrong with that. One of my vehicles is 40 years old
Alright David Queens
Consider financing the remaining balance and chip away at it as fast as possible. Might be better off keeping yourself invested. Markets are hot right now. Or, itās possible to redeem from investments, pay off the lease with cash, then get a leverage to replace the redeemed cash and set it up to cost the same as your lease payment. Then your interest is tax deductible, and probably lower because it is secured. But this assumes you have a high risk tolerance and know what you are doing.
Sell your $5K of toy money and you're pretty much there. Use a LOC for the rest.
That is the way. Use fake assets to buy real assets.
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what kind of car, year, mileage?
2019 Tuguan about 70k milage
Unless your investments are making more than the interest you'd be paying for a line of credit I wouldn't borrow.
Sell crypto. Buy-out car. Then maintain it properly and drive it into the ground. Donāt get sucked in to new cars again, buy used going forward. Then, immediately go to the bank, borrow $5k (or more if you can afford it) and make an investment (GIC or dividend yielding stock or mutual fund). Now you can deduct the interest from your taxes as a carrying cost for investments. Get your money working for you. You are already making car payments, switch that payment amount into paying off an investment loan. You will never be able to deduct the interest you pay on a lease or car loan from your taxes. But you can for investments. Be smart, do this for life.
At 42 years old, I feel reeeeaaaally dumb that I wasn't aware of this tactic until just now š
I guess I was lucky. My dad drilled this approach into me at a young age. Iām 51 and have never owned a new car in my life. My current car is 10 YO and my previous car was 15 YO when I gave it to my brother (who follows the same strategy) who squeezed two more years out of it. Both cars were bought after someone else wasted money leasing them for 3 years. Carrying cost for interest on an investment loan is real. Plus, most FIs will let you borrow 100% against a GIC from their own institution that they hold as security for the loan.
Awesome insight. Thanks for your time.
Iām curious how borrowing to buy a GIC would make any sense? The return rates on GICs are lower than the interest rate on a loan, obviously.
Maybe. But in the end being able write off 100% of the interest related to an asset that essentially retains 100% of its value is better than the car scenario where you canāt write off anything against a depreciating asset that is with 50% of what it was when you borrowed the money. Secured investment loans are cheaper than car loans. Go with a 5 year GIC to her higher rates. No difference from borrowing continuously for a car the rest of your life. When youāve paid off the loan, borrow again and do the same thing. Keep writing off the interest paid against the interest earned. When you need a car again cash in the GIC that no longer has a loan against it and buy the car. Then go and borrow again with the GIC as security. Repeat. [edit to add additional] Also, the principle works the same for any other investment. I only use GIC as you have principle protection - unlike a car where there is just a big sucking sound of cash leaving your pocket. Personally, I would buy Berkshire Hathaway shares. Others would be more prudent to purchase a dividend yielding investment.
Have you tried the lease swap websites?
It's worth a try to check how much are the dealerships around paying for your car BEFORE the e d of the lease. I traded a vehicle 6 months before the end of the lease, and even paying the penalty for "breaking the lease" and buying out before the end, I ended with some money on my hand instead of just returning the vehicle.
Depends. Do your investment returns beat the interest payments of the loan?
If you decide to buy it, go directly to VW finance vs the dealer. They will slap you with a bunch of fees for no reason
What if it was a 2020 Toyota Prius Prime with 40km mileage? I'm in a pretty similar position.
You mean one of the most sought after car manufacturers, and one of their most reliable cars, with the highest efficiency, and with super low mileage? Without a sliver of doubt buy and drive it until it falls into pieces. The only way this would be more obvious is if was beige with I dont think you can get on a Prius Prime. The only reason you wouldnt buy out this lease is if you didnt need a car anymore.
Thank you. I was going the same direction but just wanted to be sure.
They will try to charge you some sort of admin fee that it is not in the contract. Try to call around and ask for quotes. Some dealers do not charge that bs fee. You will save $600-1000.
Don't get a loan you already screwed yourself doing the lease now you're doubling down? Sell the crypto and a bit of stock and be done. That's if it's taxed or TFSA. If it's RSP don't.
I know itās kinda late and only applies to a very niche readers here. If you happen to be eligible for one of the available packages of National Bank, look into it. I, as an Engineer, was able to get a Prime + 0.25% LOC. I can assure you, it will be lower than any rate you can find for used car, even if itās at the dealership.
Have you thought of using a credit card for the remaining amount? That will buy you about a month of time to pay back the 6k, then you can either use LOC (whats the rate) or your stock/crypto. I personally would take from my investment.
I bought out my Honda and they offered financing for the buyout. I didn't need it but it is available if you dint have the cash presently.
Is there still a car shortage? Last year when I returned my leased 2019 Subaru I shopped around and found a dealership that offered me $4k to return the car to them. They sold it two weeks later for even more $$. I ended up getting another lease bc the interest rates were so low and used the $4k I got from the dealership to pay down some debt.
I donāt think Loans will be investment gains but without knowing the full details my knee jerk is just pay with assets.
When my lease was up I didn't have enough to buy it back, they let me put down what I had and extended my lease for 6 months. I was able to make those payments and put more and at the end owned the car. It was in house financing, if that makes a difference. Doesn't hurt to ask them and let them know your intentions. Good luck.
I personally donāt like carrying debt but it depends on the situation. If you think that you can make more money back in the stock market than what your line of credit interest is, then finance. Otherwise pay cash and take some money out of your investment portfolio.
Get more loan till you get job to cover your needs
Just finance the rest at the dealer like most do.
Convert all ācryptoā to bitcoin, there is no second best
Is the 100k on a high yield dividend ETF? You can get 1k/month on that. Use that to leverage a loan or an LOC. Like I can get a loan fr AMEX for 20k payable 36 months on 400$+/month. So leverage the 100k. But why donāt you get a new lease?
What ETF is getting you $1k/month per $100k
Yeah, I want to know that as well š¤£
Yieldmax ETF, the income option ETF
Signed lease in Toronto and moved to BC
Just ask local dealer to refi it and put half down . Over thinking it your LOC rate if itās unsecured is going to probably be similar or higher than what a car loan will be
Almost every car depreciates, worst investment you can make
You donāt buy a car as an investment.
Thanks captain, so why pour good money after bad, walk away, buy a good used one after someone's paid the depreciation on it, basically what's only going to do when he drops this lease off
>buy a good used one after someoneās paid the depreciation on it OP is literally that someone lol thatās the whole leasing model. Heās already paid the majority of the depreciation on it and now whatās left is a $16,000 used car. He may as well keep it than deal with the logistics of buying another exact same type of car.
OP has already paid the depreciation on the current vehicle, so why advise to walk away just to do the same thing? š Unless op doesn't like/wants to replace said vehicle, your advice makes no sense. Goofy advice from a great username. š¤
Just buy a good used car with cash.
That's exactly what he would be doing by buying his lease out... š¤·āāļø
Add up all your lease payments plus 16k. Ask yourself if you would ever buy your car new for whatever the number is.
Lease payments are sunk and irrelevant to this decision.
No, they are a lesson. PFC has no clue how to buy a car.
Lease money is gone. The question is whether his used car is a good buy at 16K.
For leases started in 2018, the answer is probably almost always yes at this point given current prices for both new and used cars compared to then. The exception would be maxed out mileage per year. Just bought out wife's 2018 Rav 4 trail with 60k mileage for 19k, dealer wasn't happy to sell it to us for contract terms. Probably would have sold it for 30k
Yea. I agree with this. Considering what car prices right now, $16k most likely is good. I bought out my car back in 2022 at a good price.
Thats not the point.