12-20-2023, 03:00 AM | #1 |
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EXTRA Payments on Lease
Hey Everyone,
Does anyone know if I can make EXTRA principal payments on my M3 lease? Just made my first payment yesterday, and I was wondering if I could say, perhaps pay another $2,000 extra next week to slightly lower my payments going forward. My goal with this would be to reduce the overall interest I will end up paying over the 36 months of my lease. Thanks and let me know if anyone had done this before. |
12-20-2023, 08:14 AM | #3 | |
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Not even putting a down payment at the beginning helps with this. That's why the recommendation is not to put any money down on a lease. |
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12-20-2023, 03:30 PM | #4 | |
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12-20-2023, 04:09 PM | #5 |
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Buyout price doesn’t change. You’re better off putting that money down as MSDs to reduce your Money Factor.
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12-20-2023, 04:41 PM | #6 | |
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You are thinking of ur lease payment as loan with interest but it doesn’t work the same way in terms of interest. U interest doesn’t go down as u make more payments. |
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12-20-2023, 07:53 PM | #7 |
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No, money down only reduces the cap cost, and only lowers the monthly payment. And, as others said, there is no benefit to making extra payments or paying over the monthly payment. It’s not generally wise to put down a large down payment.
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12-20-2023, 07:55 PM | #8 | |
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12-20-2023, 07:56 PM | #9 |
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12-20-2023, 08:49 PM | #10 |
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Multiple Security Deposits. Allowed up to 7 deposits (each deposit is equal to your monthly payment) whereas each deposit reduces the MF by .00004 with a maximum of 7 security deposits and a .00028 rate reduction from the agreed upon MF.
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12-20-2023, 09:09 PM | #11 |
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I think we've been through the math and even MSDs to reduce MF still isn't worth it. With interest rates where they are, keeping those MSDs in a HYSA would net you more money over the reduced money factor. You're only reducing your interest rate by ~0.1% with each MSD.
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12-20-2023, 09:09 PM | #12 |
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They used to allow for 10 MSDs as well, but ended that in like 2013 or so. And in the days now with HYSAs paying 5+%, you’re probably better off stuffing it there instead and being able to access it if needed.
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12-20-2023, 09:11 PM | #13 |
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12-21-2023, 12:52 AM | #14 | ||
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12-24-2023, 11:31 AM | #15 |
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If I remember correctly, you can make extra payments, they will just come off your remaining total due. Let's say you have a 36 month lease with payments at $1000 each. First month's payment is up front. So you have $35k in payments left. If you pay $2000 in advance, you'll have $33k to go over the same 35 months. Unless it's changed, you can then pay a little bit less for all the remaining months ($942.86 ish) or you can skip two payments because they won't be due. No matter what though, you'll be paying all of that remaining $33k.
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