How much should we intervene?

"Bryan doesn't drive a 1M" (bryantakespictures)
02/25/2015 at 11:34 • Filed to: Honda

One of my coworkers recently ended a lease on a Honda Crosstour 8 months early and bought a 2008 Accord with 80k miles listed at $10,000. The amount financed on the '08 Accord: $24,000! She feels like she got ripped off because they sold her a 2 year warranty for $2700, and there was a hefty lease-breakage fee, but I'm not sure where the rest of the $14,000 came from. She's not excited in the least about her "new" car purchase (yes, I know it's an Accord, and it's literally beige, or "gold"), and she said during the negotiations with the sales person he told her "not to overthink this."

I don't like giving people specific car recommendations because then you end up being blamed for anything that goes wrong, but she has made some shockingly bad financial decisions recently. The warranty seems like a waste of money on a Honda, but being that far underwater on the loan maybe it's not? This seems like a case where GAP insurance would make sense, and I'm not sure if she has that.

This all could have been prevented if I had convinced her to buy a Miata, or a used C63 AMG.

DISCUSSION (37)

SidewaysOnDirt still misses Bowie > Bryan doesn't drive a 1M
02/25/2015 at 11:39

I bought a brand new BRZ for about the same price. How does one spend that much on a 7 year old family car?

bob and john > Bryan doesn't drive a 1M
02/25/2015 at 11:40

*spit take* HOW MUCH!?!??!?!?!

mcseanerson > Bryan doesn't drive a 1M
02/25/2015 at 11:41

I'm convinced these people are who $10k cars at carmax with the everything's covered warranties are made for.

505Turbeaux > Bryan doesn't drive a 1M
02/25/2015 at 11:44

ridiculous. She could have been into so many brand new cars for less than that. Why in the hell would she have signed that? All water under the bridge now since it is signed, but god damn that is wayyyyyy too much

CalzoneGolem > Bryan doesn't drive a 1M
02/25/2015 at 11:45

You can't do anything. This person would not listen to you.

Bryan doesn't drive a 1M > mcseanerson
02/25/2015 at 11:46

No Carmax in Washington state, unfortunately. But I agree.

crowmolly > Bryan doesn't drive a 1M
02/25/2015 at 11:46

$24k for a 7 year old car? A basic Honda?

She didn't get ripped off. She got RIPPED THE FUCK OFF .

That's insane. Say the warranty and penalty are $4k, that means she paid twice the asking price?

And we wonder why there's so much personal debt and bankruptcy.

Bryan doesn't drive a 1M > SidewaysOnDirt still misses Bowie
02/25/2015 at 11:47

That's what I'm trying to find out, since the sticker was $10k. It sounds like they really beat her up in the financing department, but I don't even know what they could tack on that would cost that much.

extraspecialbitter > Bryan doesn't drive a 1M
02/25/2015 at 11:47

But this doesn't sound like a car recommendation. If she can't get her books in order, that's on her. Who in their right mind would agree to this deal?

wabbalosthiskey > Bryan doesn't drive a 1M
02/25/2015 at 11:49

I think when it's in the realm of one's own expertise or experience, and it's that obvious that something is wrong, you ought to at least offer a second opinion if they are open to it but you don't want to leave them insulted when you get turned down either. "That sounds like maybe something is wrong there based on my experience - if you want, I could take a look and see if anything stands out." I do it all the time with customers who spent a bunch of money on something that doesn't seem right. Sometimes it is, sometimes it's not.

People make poor or uneducated decisions all the time in places they aren't experienced in, and to some degree if they are happy then fine, leave it alone...But that seems pretty bad. And I bet they said "not to overthink this" ...

Biased Plies > Bryan doesn't drive a 1M
02/25/2015 at 11:49

She had 8 lease payments remaining. Let's assume a $400 - $500 to be generous on the value of a Crosstour. That's $3200 - $4ooo. The lease termination fee should be around $500-$1000, after a quick google search. At the termination of a lease, the lessee is also responsible for damage to the vehicle that isn't covered in the agreement as well as any miles over the agreed term. Mileage overage fees are typically $0.10/mile or so. If she's well over her allotted mileage, that could be hundreds or even thousands of dollars in fees. If the vehicle has any damage, that could easily be thousands as well.

Add the warranty ($2700), remaining payments (~$3600), termination fee ($750) and damage, mileage overage and taxes would have to make up the remaining $7K or so, which is possible.

All of this can add up to that amount but would have to be the product of a very bad series of financial choices.

Bryan doesn't drive a 1M > crowmolly
02/25/2015 at 11:50

Exactly, and why would any bank finance that amount on a $10,000 car? Don't know what her credit rating is or loan rate, but that just doesn't make any sense.

E92M3 > Bryan doesn't drive a 1M
02/25/2015 at 11:51

This is the type of person every car salesman dreams will walk in the door everyday. I'd stay out of it. They clearly ripped her off, but she signed the paperwork (a legally binding contract). I don't think there's anyway out of it. If someone said "don't over think this", that would be a warning to analyze everything! I am curious how much roadside assistance they sold her, and the APR though.

Bryan doesn't drive a 1M > 505Turbeaux
02/25/2015 at 11:52

I think some of the add-ons can still be cancelled, like the warranty, but yeah, the paperwork has already been signed. At least an Accord is pretty likely to last until she pays off enough of that loan to get above water again, but ouch that money's going directly into the toilet.

Twingo Tamer - About to descend into project car hell. > Bryan doesn't drive a 1M
02/25/2015 at 11:55

Someone who makes that kind of decision is probably beyond help...

Biased Plies > Biased Plies
02/25/2015 at 11:55

Also, I don't know what the residual value of the Crosstour would have been but it might have been a better option to buy out that car at the end of the lease as she'd avoid the mileage, termination and damage fees.

It sounds to me she got scared of the potential costs and the end of her lease and was hustled into the Accord by a salesman convincing her this was the best option.

Bryan doesn't drive a 1M > CalzoneGolem
02/25/2015 at 11:57

She probably would have listened if we'd talked about it beforehand, but she has a history of being pretty bad with money. I think she just got steamrolled by the sales team and finance office.

Bryan doesn't drive a 1M > bob and john
02/25/2015 at 11:58

That was my reaction, which is why I failed to find out where the rest of the financed cost came from.

505Turbeaux > Bryan doesn't drive a 1M
02/25/2015 at 12:00

yeah I don't even know if you could get above water in that situation. I am pretty sure unless it ends up being a lemon not too much of that is going to be able to be knocked off once signed and funded by the bank. 2700 for the warranty is really not even an issue. She will likely need an EGR service soon enough and a few other things that can eat alot of that 2.7K, where did the rest go? The lease penalty for likely a few grand, maybe some damage on the lease vehicle. I just cant even see a bank taking a note for 24K on a 7 year old Accord!

Bryan doesn't drive a 1M > Biased Plies
02/25/2015 at 12:02

I think you nailed it!

She lives 20 miles south of work and has a boyfriend 20 miles south of her apartment, so I think she's way over the mileage limits, which was her main reason to cancel the lease. Still, it may have been better just to pay the fees or even just leave the leased car in the parking lot for the remaining 8 months and buy another car.

CalzoneGolem > Bryan doesn't drive a 1M
02/25/2015 at 12:04

I find that people usually listen to car advice and then go right out and ignore it.

Party-vi > Bryan doesn't drive a 1M
02/25/2015 at 12:08

From my understanding if you want out of a lease early you must pay the value of the car plus any remaining lease payments. So if the Crosstour cost $27,000 and it was leased for $2,700 down and $299 a month, that would give us a value of ((27000-2700)-(299*36)) = $13,536, when she gave it up to the dealer she still owed $2,400 in payments, so $13,536 + $2,400 = $15,936 she probably had to roll into the auto loan on the 2008 Accord. She should have kept the Crosstour it seems like.

Bryan doesn't drive a 1M > 505Turbeaux
02/25/2015 at 12:09

It's the bank's side of this that has me just as confused. I'll post an update if I find out more details, but since the paperwork has been signed I don't want to make her feel even shittier with no way to solve the problem.

NaturallyAspirated > Bryan doesn't drive a 1M
02/25/2015 at 12:11

I've learned the hard way that it's usually best to wait until asked before giving advice. I've had so many well meaning people try to give me "advice" about stuff that I've already done my research on, that I don't want to be "one of those people."

Sometimes I do hear about people making what I think are poor decisions, but a lot of the time, what I think is a good idea isn't always the best option for someone else.

My reputation as "the car guy" means I do get people asking me for second opinions on repair prices or used car purchases, but I try to make sure that people understand that my advice is worth exactly what they are paying for it.

The exception to all this is a very close personal friend or family member.

Bryan doesn't drive a 1M > wabbalosthiskey
02/25/2015 at 12:12

I would have been happy to help, but I think it's too late at this point.

505Turbeaux > Bryan doesn't drive a 1M
02/25/2015 at 12:12

If you get the details I would love to push this out to a professional group I am a member of to get some dealer feedback. I only work on the fringe of the industry (marketing) but am very curious as to their perspective. This is not a group that is going to revel in the fact she got her head taken off, but one that is active in maintaining good PR for the industry. All names will be protected regardless.

BKosher84 > Twingo Tamer - About to descend into project car hell.
02/25/2015 at 12:14

Nobody is ever beyond help. I had 10k in credit card debt in college and got it all paid off in three years (two months before I got married) after I went to a Credit Counseling place.

BKosher84 > Bryan doesn't drive a 1M
02/25/2015 at 12:20

This woman is in need of MAJOR help in the financial department.. She sounds like she doesn't even understand basic finances at all. Her best bet would be to go to a Credit Counseling place (Not the ones on the radio/TV, but the ones that are not for profits.. They are out there.. One helped me at one point in my life) and get some help understanding finances.

Another good resource is something called Financial Peace University. It's an online/video series by a guy named Dave Ramsey. It's Christian faith based but MANY people I know that don't consider themselves Christians have learned a TON on how to handle/wrangle their finances better. This coupled with Credit Counseling will do wonders for her.

Vintage1982Benz > Party-vi
02/25/2015 at 12:23

That formula is roughly accurate to calculate a payoff quote, which results in the lessee having ownership of the vehicle.

Getting out of a lease and turning the vehicle back in generally results in the lessee paying the remaining monthly payments plus any mileage, damage, or other fees.

Bryan doesn't drive a 1M > Party-vi
02/25/2015 at 12:25

Hmm, I think you may be right here. She mentioned negative equity on the leased car and a $3,000 lease breakage fee, which I assumed were the same thing. Wow. Didn't matter what car she followed it up with, breaking the lease was a bad idea.

Vintage1982Benz > Bryan doesn't drive a 1M
02/25/2015 at 12:27

She should have ridden out the lease, turned the Crosstour back in, and gotten her shit together.

The math just doesn't add up whatsoever. I think there may be some key details she is not disclosing to you.

Worst case (adding the warranty and paying to get out of Crosstour lease) she should have a loan for somewhere around $15K max.

She also sounds like she should not be allowed to do any negotiating on future vehicles, ever.

Party-vi > Bryan doesn't drive a 1M
02/25/2015 at 12:28

Especially since it was only 8 months away. My (almost) brother in law is going through the same situation. He has a lease for two more years and another car he purchased last year, got screwed by his ex-fiancee and has two car notes. He's looking at a $34k loan on a $21k Honda Accord Sport. Yikes.

Twingo Tamer - About to descend into project car hell. > BKosher84
02/25/2015 at 12:57

It's not that they're beyond working out of the debt, it's that people often don't want to listen to advice.

Luc - The Acadian Oppo > Bryan doesn't drive a 1M
02/25/2015 at 13:00

Why didn't she just ride out the lease for the 8 remaining months and walk away scott free and start completely fresh? Then the 10K honda would of been $10K. Essentially she is paying $14K for 8 months worth of driving.

That's the part that makes completely no sense. Even if you could no longer afford the lease maybe cut back on other stuff and go on a strict ramen noodle diet for the next 8 months.

If she still had 2-3 years to go on the lease then I would understand but for 8 months that seems like a really (REALLY!) bad financial decision. Now she is going to be upside down for years until the car is fully paid off.

Bryan doesn't drive a 1M > Luc - The Acadian Oppo
02/25/2015 at 13:03

That's what I'm wondering. I think she was in danger of going way over the mileage limits, but even then there's no way it would have cost $14,000 in fees at the end of the lease.

Manwich - now Keto-Friendly > Bryan doesn't drive a 1M
02/25/2015 at 16:10

The time to help in this particular case has passed. The deal has already been done. Intervening now will, at best, achieve nothing, at worst, piss her off.

The homework needs to be done BEFORE the paperwork is signed.

In hindsight, "overthinking" it and discussing it with someone else is exactly what she should have done. She probably should have looked at the lease termination costs and compared it to just keeping the vehicle until the end. And then at the end, look at what the set purchase price is and compare it to the market value is. From there, it may have made more sense to just buy out and keep the vehicle she already had.

Also it could be that the other $14,000 came from a combination of penalties and from being underwater with the vehicle she had prior to getting the Crosstour.

In my opinion, the most you should say to her is the *next* time she wants to change vehicles, BEFORE she signs anything, you'd be happy to look at things and give your opinion.

Manwich - now Keto-Friendly > Bryan doesn't drive a 1M
02/25/2015 at 16:27

But going way over the mileage limit is no big deal she could just have bought it out at the end if the penalties would be too high.