A Hyundai dealership worker recently posted a video about a customer who racked up 38,000 miles over her allotted mileage when her lease still had 10 months left.
J Rod (@jrodsellscars) has gone viral several times for his candid and straightforward discussions about leases and car-buying tips. In this video, like one that received 568,000 views, J Rod explains what happens when someone violates the terms of their contract. The video has been viewed over 275,000 times as of this writing.
What did the leasee do wrong?
J Rod explains that there was nothing wrong with the car except that she had already gone over her allotted 30,000 miles. This means for every mile she goes over, she gets charged 20 cents. With 10 months remaining on her lease, she already owed the dealership an additional $7,400.
“The penalty would’ve been even bigger if she waited 10 months,” J Rod said.
Luckily for her, she got to deal with a car salesperson with a heart of gold. J Rod said he ended up “trading her out of her current lease into another one with a big rebate,” so her negative equity would get chipped away over time.
How do you get rid of negative equity?
The kicker for negative equity is that it follows you wherever you go.
According to Real Car Tips, there are three ways to deal with negative equity: Keep the car and pay off the loan, pay off the negative equity, or roll over the equity into a new loan.
The first option is to keep the car and pay off the debt, but in this case, that only would’ve made things worse for the customer.
Another way is to trade in your car with a cash-back rebate. The cash-back rebate will offset the negative equity, but you could still incur some out-of-pocket expenses.
Real Car Tips states the worst way to handle negative equity is to roll it into a new loan. Though it is “illegal in most states to include negative equity in a new car loan,” there is a way to get around the law. “Car dealers will simply raise your trade-in allowance while at the same time raising the purchase price of the new vehicle,” it states. This route can lead to defaults on payments, ruined credit, and getting your car repossessed.
Buying versus leasing
Consumer Reports explains that buying a car allows you to not only pay off the loan but also ends with you owning an asset—your vehicle.
On the other hand, leasing has lower monthly payments and gives customers a chance to drive cars they may not be able to afford otherwise.
The upsides of leasing include driving a car during its most trouble-free years. Additionally, leased vehicles are usually covered by an automaker’s new-car warranty, leases can include oil changes and other scheduled maintenance in the fees, and it offers a significant tax advantage to business owners.
According to the Consumer Financial Protection Bureau, the downsides of leasing include early termination charges if you end the lease early, most leases have allotted mileage, and leases usually only last two to four years. On top of that, like renting, your money does not build equity but gets dumped into a black hole, never to be seen again.
Buying a vehicle allows owners to drive their vehicles as much as they want without any allotted mileage restrictions, and the owner has the option to trade in or sell the vehicle at any time.
With an average loan term range of three to seven years and higher payments, it may seem like a good idea to choose to lease, but the costs of buying aren’t that much higher than leasing. CNBC reports that, according to Experian, the average lease payment at the end of 2023 was $606, and the average car loan payment was $738.
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What do viewers think of leasing?
Many viewers advised others to avoid leasing at all costs.
“Don’t lease,” one said.
“Yeah, leasing is a terrible idea. Pay all that money to have nothing after three years and then you have to do it again,” another agreed.
“Just buy a used car for 5-10k cuz I can’t lease when I put almost 48k miles in 1 year,” a third suggested.
Others couldn’t believe the customer had put so many miles on the car so quickly.
“I put 70k miles on my car over 6 years what what she doinnnnn,” a viewer said.
“Would have kept a closer eye on my mileage,” a second added.
“Having negative equity on a lease is like another level of bad spending,” a viewer replied.
Others supported leasing.
“I’m on my third leased Honda and I go over the miles every time. they don’t care if I get something else from them,” a viewer said.
“We’re all over on our lease. And I’ll lease again,” another added.
The Daily Dot reached out to J Rod via TikTok comments and Hyundai via email.
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The post ‘She still had 10 months left’: Woman leases a Hyundai. She goes 38,000 miles over the allotted mileage appeared first on The Daily Dot.
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