[mango]

We live away from our home city at the moment and probably will continue to do so indefinitely. One month before this job came up, we took out a 4 year novated lease on a new car. All car repayments, repairs, petrol and even car washes came off my husband's pre-tax pay so from a taxation point of view this move was a winner. We needed extra cash to fund an Amex bill (yes, I know let's not even go there!) so the lease in effect was for $3000 more than the car was worth.

We couldn't afford to sell the car and pay out the lease before we left so decided to keep the car and keep paying the monthly repayment. We use it a few times a year when we visit our family but the rest of the time it sits at a family member's home and is driven by them on a semi regular basis.

Fast forward to now. Am totally fired up to get rid of our massive personal debt and just don't know what the right thing to do about this lease.

Have rung the leasing company today and the current balance is $14,601.79, interest rate is 11.15%, monthly repayments are $473.08. The lease will finish in June 2012 and the residual to pay out will be $8217.87 including GST.

I checked out the red book (Australia) and the current value of the car for a private sale would be between $11,500-13,300 with mileage of 45,000-75,000km. Our car has less than 30,000km so we would definitely be looking at the higher end of that price guide.

If we sell the car, we will need to hire a car when we visit but I am thinking that will only be a fraction of what we pay out every month.

So my question is do we sell now and make up the difference to pay out the lease (probably a few thousand) or keep paying it off, until next June when we will then need to come up with over $8000 to pay out the lease, use it every time we visit until it dies in 20 years time and put it down to a very poor financial decision never to be made again?

 

[Greebo]

Yes I think you sell it now. Better to borrow a few k to get rid of a useless $15k obligation.

 

[mango]

Thanks Greebo, we've definitely decided to sell the car and start that snowball rolling!

 

[khaski]

I vote sell too...why leave it hanging over your head? From your post I gather this is what you guys feel you need to do.....why not sell it, buy a 'clunker' for the time or two a month you need a car? To keep a $400+ obligation every month to use 1 or 2 times would be counterproductive to your goals.

 

[Pianolady]

Another sell vote here. Chalk it up to lesson learned and get rid of it. I did something like that once and felt a lot better to have it gone.

 

[HappyMama]

Yes, sell it now! Glad you have decided to rid of the debt and can start snowballing! Good luck to you.

 

[mango]

Thanks so much Khaski, Pianolady and HappyMama for taking the time to reply.

Am going to give the family member who drives the car now first option to see if they might like to buy the car otherwise Used Cars - New Cars - Search New & Used Cars For Sale - carsales.com.au here we come!

 

[Preston]

sell it and don't look back. I have been trying to be car free for a few years now and have not had success. But I may become a stay at home parent fairly soon or change jobs where there is a busline so I may accomplish it afterall. But the impact of not having that ankle-weight is going to be offset the few times you actually use it. Plus having a car sitting too much causes its own problems.

 

[mango]

Thanks for your advice Preston!

 

[mango]

Well it took awhile and there were a few will we or won't we sell but last night we finally sold the car. We ended up getting a good price and will clear close to $2000 when the bank cheque clears which we will put straight onto the snowball. By the end of the month we should be down to only one debt left to pay - yeah!

 

[esb3357]

YEAH That's awesome. One debt is always a nice bonus.

 

[Libby]

Thats a great sigh of relief you just let out didn't you? I agree, its more cost efficient in renting a car for the long trips that you do make throughout the year vs owning the car and not using it.