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April 04, 2006
GMAC Lease Return
It was about a year and half ago that I decided to lease a Chevy Avalanche through GMAC. This vehicle is now simply sucking me dry.
The cost of operation on the Avalanche is an $830/month lease, insurance runs about $150/month and gas on a month when I don't drive much costs $400/month and some months runs as high as $700. While I am able to make the payments on the vehicle it is not the wisest move I have made. The money that I am putting into that truck could pay for a mortgage on an investment property. Which is the smarter move? Leasing a truck or buying an investment property? I think the investment property!
I called the dealership where I got my lease to see if there was anything that could be done to return the truck prior to the expiration of the lease term. The dealerships response was simply "get somebody to take over the lease". With new Avalanches now leasing at $500 to $600 per month that is going to be a tough sell. In fact I tried getting somebody to take over the lease payments and could find nobody to step in. Why would they when they can get a new Avalanche at a lower lease rate - They wouldn't!
So at this point most people will sit back and accept the fact that they are stuck in a lease until the term is up.
Not me! I have established a really good relationship with my bank and explained to my account representative what my plans where:
Terminate the lease via a voluntary repossession
Get a mortgage from the bank for an investment property
Re-invest the savings from the truck into an investment property
While the voluntary respossession will leave a blackmark on my credit rating, that blackmark will have no impact on my future financial plans because of the open and honest discussions I have with my banker.
If you find yourself in this type of situation and want out your first step is to work on building a relationship with your bank. Don't jump bank to bank based on the latest offers of the day, but stick with one bank and build a solid relationship with them and you will find that you can do almost anything you want (within reason).
Don't sit back and take it - Take action - Talk to the parties involved and you will be surprised at what is possible!
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