August 18, 2006
The Truck Lease Saga - Got me a Trailer
A few months ago I was trying to dump my GMAC lease on a Chevy Avalanche.
For those of you following that story, I am pleased to say that I now have something to tow behind my super expensive lease of $830/month on that stinkin' truck.
Yes...I went out and bought a new 27 foot travel trailer to tow behind my overly expensive lease payment.
This time rather than finance or lease I had the cash so I purchased the trailer with cash. No payments - No future cash flow headaches. The trailer is mine!
I have about 15 months or so left on that lease and upon expiration I will be buying another Avanlanche (or whatever truck strikes my interest at that point) with cash - And I will be buying outright a truck that is a couple years old.
It really ticked me off when I looked at the prices of 3 year old Chevy Duramax Diesel, Dodge Cummins Ram Diesel and Ford F-350 Diesels (which have a much higher towing capacity) - All of the forementioned trucks at 3 years old with low mileage were going for about a third the price I paid for my Avalanche!
The towing capacity of my Avalanche is more than enough to tow my trailer - I do love that truck but the payments sometimes make me reconsider my feelings towards the vehicle :)
Oh well, in about a year I will be able to shed that debt - Maybe I will return the Avalanche and then buy it at a much more reasonable price - Or who knows what will be my new tow vehicle.
Readers and truck owners, please submit your comments for "best travel trailer tow vehicle with a touch of coolness" on a truck with a reasonable price tag.
April 10, 2006
Still Hope In Breaking GMAC Lease
I am the type of guy that when I want something to happen, it happens. I am persistent and tenacious - I love my Chevy Avalanche but regret the decision to lease it because the total cost of operation is truly a mortgage payment.
Rather than driving a really cool vehicle, I could be growing my net worth. At this point I was going to sit back with the "live and learn" attitiude but not me. I was told by a representative at GM that if I broke the lease via a voluntary repossession that GMAC would seek seizing my retirement savings (I live in Canada and the equivalent of a 401k is an RRSP). I called my banker to find out if this is true. Her answer was that RRSP's are protected and can not be seized in this type of situation, I guess the only entity that can go after that is the government ;)
I checked with the banker again that all will still be will with me acquiring a mortgage for an investment property even if I take a hit on my credit rating. She says it's a go. I will make sure the paper work is in progress on the investment property before finalizing a voluntary repossession on the truck. If any readers are considering taking such measures I highly recommend that you keep checking the status of things with your bank and making sure that the end result is desirable. My actions are completely against the norm so it is critical that I keep checking with the bank and explaining the situation.
Tomorrow I will further research what assets GMAC can potentially go after if I terminate the lease - or if they truly will proceed with any action.
Next steps:
1. Call GMAC to tell them I am bringing the truck back (yes, I am proceeding with the pest approach in hopes they get sick of me and voluntarily take the truck back)
2. Research the legal issues again
3. Prepare list of questions for a consultation with a lawyer.
I will post again on this topic as things unfold.
Posted by Colin at 09:10 PM | Permalink | Comments (0) | TrackBacks (0)April 08, 2006
Bad Feeling Lurking About Dropping Lease
I woke this morning with some very bad feelings about doing a voluntary repossession on my lease. While I can afford the lease, the vehicle payment could be funneled into a revenue producing investment.
Last night I was certain that I would be off to the GM optimum dealership to buy a car that was 2 years old and drop the truck off under a voluntary respossession. However, that gut feeling of "something bad is going to happen if I do this" kick in. I called the salesperson who sold me the truck to go over (again) what I was doing.
His advice this morning was "don't do it, GMAC will come after you" - Kenny (the salesperson) mentioned that something similar had just happened where a lease holder passed away and GMAC came after the estate to recover the costs on the remainder of the lease. Kenny mentioned that since I do have savings and equity in my house that GMAC would come knockin' on my door to recover any costs on returning the truck early.
Certainly makes a lot of sense that this would happen so the "dump the lease" plans are on hold until Monday.
If anybody wants to take over payments for the next 1.5 years let me know - I have a beautiful Chevy Avalanche LT and willing to cut a deal - How about your first months lease is free ;)
Posted by Colin at 02:34 PM | Permalink | Comments (0) | TrackBacks (0)April 07, 2006
Tommorrow - The Truck Lease is Gone!
Here I go - Is it a foolish move - Sure is going to be a relief - These are just some of the thoughts rolling through my head right now.
The wheels are in motion, a final call to my banker about breaking my lease via a voluntary repossession - I am told this will put an R8 on my credit file which means it is a voluntary repo, I spoke with Trans Union about this. The rep that I spoke with has seen this a few times in his job.
Again, I must mention that if you are going to consider an action such as this that you make sure your banker is keeping detailed notes of all transactions and moves that you are making. Be sure everything is captured on file at your bank as a repo will leave a blackmark on your credit rating.
Here are my next steps:
1. Purchase a fuel effecient car
2. Finance the car - Mainly to keep my credit in some kind of good standing
3. Drop off truck
I may contact my banker one last time for to secure a mortgage for an investment property prior to dropping off the truck. The goal is to keep spending the money that I was spending on the Avalanche only spend it wisely on an investment property - Something that will generate positive cash flow and increase in value.
Posted by Colin at 10:36 PM | Permalink | Comments (0) | TrackBacks (0)April 06, 2006
Dumping the Lease
Here I go again - Last week-end I contacted the dealership where I leased my Avalanche and the response from them was more like a lack of response. The buiness manager was a bit boisterous and mentioned that I would never get credit again. What he doesn't realize though is the excellent relationship I have with my bank.
My bank understands that I am finally growing up (I am 36 years old) and want to do smart things with my money. I have set a goal of retirement by the age of 40 and to do that I need to start seriously growing my savings. An $830/month lease on a truck does not work to the goal of super-early retirement. What I want to do as mentioned in previous posts is take the money that the truck is sucking from my bank account every month and start investing in real estate. At about $1400/month total cost of operation on my vehicle that would easily cover the payments on an investment property. Buy a house - Rent the upper portion for $900/month and the basement suite for $650/month makes for an income of $1550/month - Since I already spend $1400 every month with lease, fuel and insurance on the truck, it is very clear that I can afford to have the mortgage on my residence and have a mortgage on an investment property so what I am aiming to do is find a property where the payments will be about $1200
So it would look like this:
Rental property income: $1550/month
Mortgage payment: $1200/month
Property Taxes: Approximately $150/month
Maintenance/Insurance: Approximately $150/month
Total cost on property: $1500/month
Rental income - Total cost on property:
$1550 - $1500 = $50
A $50/month positive cash flow on a property that is building equity for me and I will repeat this every time.
So then I will be in a position of being free from the lease and operation costs of the truck. That money goes into floating a mortgage until I get renters at the point when I get renters in that money is once again freed for me to go buy another property.
If I had purchased a home in the area I currently live rather than the truck - The payments would have been on par yet had I bought a second home as an investment that home would have increased by close to $100000 since the time when I took the lease on the truck.
Anyhow, getting back to the lease dumping - I have received a call from the GM Optimum lot tonight (I went to see them last week-end) and they are considering taking the truck into their inventory and will need to know the buyout on the Avalance.
I will be calling GM tomorrow to get the exact buyout price of the Avalanche and will take things from there with the dealer after that. I will be purchasing a fuel efficient vehicle this time!
Continuation of the "Dump the GMAC Lease Saga"
Today, I called my banker again to go over things regarding my GMAC lease and terminating the lease prior to the expiration of the term. I have also called the business manager at the dealership where I got the lease.
Here is the run down:
- Banker says it will be fine. I have had no missed payments on anything and a voluntary repossession will show on my credit report. She also says this will have no impact on getting a mortgage on an investment property as my credit has been spotless to date.
If you are going to try something like this the greatest piece of advice I can offer is to make sure that your banker is documenting everything. This is what Sharron (my banker) is doing. With every call she makes notes on my file at the bank.
- The bank suggested that I call Trans Union (the reporting bereau they use) to speak with them. I have just got off the phone with Trans Union.
Here is what Trans Union said about the situation:
1. It will show up as an R8 on my credit file (meaning a repossession)
2. Trans Union's recommendation if I proceed with this is to send them a Consumer Statement of around 200 words (or less) the reason I am doing the voluntary repossession. The consumer statement will accompany my "credit black mark" so that any future creditors will be able to see the reason for breaking the lease.
Sharron also suggested before taking the step of voluntary repossession that I contact the Law Society for a referral to a lawyer who might know of GMAC lease agreement loopholes so that the whole situation of a voluntary repo can be avoided. So I am off to do that know. I will report back with how this goes.
Posted by Colin at 03:41 PM | Permalink | Comments (0) | TrackBacks (0)Returning a GMAC Lease
I mentioned in this posting http://www.crediteria.com/CreditChat/2006/04/gmac_lease_return.htm that I was going to take my Leased Chevy Avalanche back to the dealership before the expiration of the lease agreement to free up some cash flow for an investment property.
I spoke with a dealership last night and it seems that with rising fuel prices the demand for a large fuel guzzling vehicle is not that high so there is much hestitation on the part of every dealership I have spoken to about trading it in. I was talking to the sales representative last night about my plans to do a voluntary repossession to offload the truck.
They highly recommended that I talk to my banker again to ensure that there will be little to no impact on my ability to get a loan for an investment property. While I do have a verbal OK from my banker on returning the truck through a voluntary repo and taking out a mortgage on an investment property, the conversation I had with the sales rep at the dealership got me thinking and I will be calling my banker again immediately after posting this entry.
If you are in a similar situation, I highly recommend that you check, double check and triple check that all the financing you are after will actually work out - I will be going over scenarios with my banker such as:
Get mortgage for investment property
Then return the truck via a voluntary repossession.
Always remember nobody cares more about your money and finances than you do and all choices ultimately reside on your shoulders.
Posted by Colin at 01:33 PM | Permalink | Comments (0) | TrackBacks (0)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!