Ending a Tesla Lease early

[Staypuffman]

With the current ongoing increase in interest rates, my mortgage next year is going to increase by alot!

I'm starting to think about ending my lease early as i may not be able to afford both. Its not due to end until 2026

Is it possible? Anyone have experience of this?

 

[Sixer]

Yes it’s possible, a colleague of mine has done it. You request a settlement figure as such through the app

 

[Staypuffman]

Yes it’s possible, a colleague of mine has done it. You request a settlement figure as such through the app

Mine was £13k which i can't afford. Will be struggling to pay the £600 a month for car let alone £13k!

 

[yessuz]

it sounds stupid, probably, but maybe if that's the case and you will struggle to pay for the car, which result in late payment and will **** up your credit history, maybe you can go for some loan of 13k for 5 years or so, which will be in region of 250 a month - this would allow you to end lease early.. but you would still have payments to make for the loan (probably in region of 250 a month) and will have no car :/

 

[ewoodrick]

I guess that you are learning to not over extend yourself.

Can you not switch your house to a fixed rate? It will be a little more, but think of how much happier you would have been if you did it 2 years ago.

 

[Fursty Ferret]

Early Lease Termination

 

[The_Cable_Guy]

think we are going to see a lot of this over the next year.

 

[Mrklaw]

I guess that you are learning to not over extend yourself.

Can you not switch your house to a fixed rate? It will be a little more, but think of how much happier you would have been if you did it 2 years ago.

there is 'learning to not over extend' and then there is 'interest rates have been low and flat for years so risk seems low of a sudden huge spike screwing everything up'

 

[ewoodrick]

there is 'learning to not over extend' and then there is 'interest rates have been low and flat for years so risk seems low of a sudden huge spike screwing everything up'

Let me put it a little differently. The interest rates over the past 5 years or so have been at historically low rates. When I bought my first house, 40 years ago, I was super happy to get a low rate at 8%, and they went up from there.
This house that I got about 3 years ago I'm at something stupid like 2%, really stupidly low. There is no way that I was going to get an adjustable rate at that point, because the ONLY direction is up. It may have saved a few bucks for a few years, but the downside is huge.

But that again is part of the learning process. Adjustable rate mortgages are great for the banks when the interest rate is low. They are great for the consumer when interest rates are high. Even today, interest rates are low. With the US Fed rate at about 5% it is still a bargain as opposed to what it has been.
Fed's Interest Rate History: The Fed Funds Rate Since 1981 | Bankrate Scroll down and see that current rates are pretty average.

 

[yessuz]

Let me put it a little differently. The interest rates over the past 5 years or so have been at historically low rates. When I bought my first house, 40 years ago, I was super happy to get a low rate at 8%, and they went up from there.
This house that I got about 3 years ago I'm at something stupid like 2%, really stupidly low. There is no way that I was going to get an adjustable rate at that point, because the ONLY direction is up. It may have saved a few bucks for a few years, but the downside is huge.

But that again is part of the learning process. Adjustable rate mortgages are great for the banks when the interest rate is low. They are great for the consumer when interest rates are high. Even today, interest rates are low. With the US Fed rate at about 5% it is still a bargain as opposed to what it has been.
Fed's Interest Rate History: The Fed Funds Rate Since 1981 | Bankrate Scroll down and see that current rates are pretty average.

40 years ago your house mortgage was 2.5-3x your annual salary. not 7x as it is now.

you got STUPID LOW rate just because your LTV is low (probably under 50%). if you are on high LTV (80%) like most first time buyers, the rate now is above 6%. which value wise corelates with the ~10%-15% interest rate you would have 40 year ago.

you cannot compare rates and prices now vs ones 40 years ago as your wage and house value rate to wage were completely different

 

[The_Cable_Guy]

40 years ago your house mortgage was 2.5-3x your annual salary. not 7x as it is now.

you got STUPID LOW rate just because your LTV is low (probably under 50%). if you are on high LTV (80%) like most first time buyers, the rate now is above 6%. which value wise corelates with the ~10%-15% interest rate you would have 40 year ago.

you cannot compare rates and prices now vs ones 40 years ago as your wage and house value rate to wage were completely different

i have this same argument with People from that time aswell, we had it so bad...... 15% interest rates, its not apples for apples.

House prices were not scaled to salaries anything like what they were back then.

 

[Staypuffman]

I guess that you are learning to not over extend yourself.

Can you not switch your house to a fixed rate? It will be a little more, but think of how much happier you would have been if you did it 2 years ago.

Wow. You obviously are oblivious to the huge increase in the interest rate. We have a fixed but it runs out next year.

 

[pgkevet]

Agreed you can't compare. My first house was all I could afford after the gazumping boom. However well off you think we were I used all my holidays for 2 years doing locum work for extra and all my spare time scraping, stripping, fixing up the place..sometimes up a ladder until the wee hours wire brushing and priming the cast iron gutter i couldn't afford to change.
Old uns may recall the 'cukoo waltz ' tv show. We lived on deck chairs and second hand appliances too.
Best idea I had was inviting all the local kiddies in to crayon and pick at the horrid woodchip paper. They stripped the lot to kiddie height and parents grateful for a days piece came in and did the rest...

 

[ewoodrick]

40 years ago your house mortgage was 2.5-3x your annual salary. not 7x as it is now.

you got STUPID LOW rate just because your LTV is low (probably under 50%). if you are on high LTV (80%) like most first time buyers, the rate now is above 6%. which value wise corelates with the ~10%-15% interest rate you would have 40 year ago.

you cannot compare rates and prices now vs ones 40 years ago as your wage and house value rate to wage were completely different

Maybe so. But 1+1 = 2 is a pretty undeniable statement.

When house payment + car payment + other expenses = monthly income, it's not too had to understand that if ANY of these increase, then you are in trouble.
AND, if you went for an adjustable rate mortgage, the probabilities of it increasing is pretty high. (especially when bought during exceptionally low rates)

As my wife and I were buying our house 2 years ago, we were laughing at the companies pushing adjustable rate mortgages. They didn't make any sense. It is really naive to think that the interest rates would never increase over 30 years.

Of course the other side of the coin is buying a new and/or expensive car when that money SHOULD have been going to savings.

I'm pretty sure that my math applies to both sides of the pond. Adjustable rate mortgages are going up over here as well. Home prices are increasing. Salaries are not increasing to keep up. Rents are going too high, too quick.


Living outside your means is common to many countries.

 

[ewoodrick]

Wow. You obviously are oblivious to the huge increase in the interest rate. We have a fixed but it runs out next year.

How does a fixed rate mortgage "run out"

Or was it an adjustable rate with a fixed portion? That's still an ARM, although it's a wolf in sheep's clothing.

 

[Mrklaw]

How does a fixed rate mortgage "run out"

Or was it an adjustable rate with a fixed portion? That's still an ARM, although it's a wolf in sheep's clothing.

The UK doesn’t tend to have lifetime fixed mortgages. They’ll be more likely 2-5 year fixes which then revert to the standard variable rate. They’ll have tie-in penalties to prevent you moving during the fix, with the result is that you’ll play out a fix and then move to another product. Not uncommon to bounce around a few different offers during the lifetime of your mortgage.

Rates have been flat for long enough that that will be normalised for many and they won’t have factored in ‘what if my rate goes up 4x’ which is what some are facing now. From a pragmatic affordability point of view even the banks checks probably won’t have

 

[yessuz]

How does a fixed rate mortgage "run out"

Or was it an adjustable rate with a fixed portion? That's still an ARM, although it's a wolf in sheep's clothing.

that's why you should not comment on the stuff you do not understand in full. Dunning Kruger here.

FYI:

As MrKlaw said - usually lenders offer 2 types of mortgages:
- Interest only mortgages (Usually buy to lets or areas where property is very expensive and always appreciating (read: London). If it is your home, then you are essentially paying rent to bank, but any value appreciation is yours.
- Repayment mortgages.

Repayment mortgages are split into products: tracker rate mortgage (where it is tracker from day one) and fixed rate mortgage. Usually fixed rate mortgages are the same tracker mortgages, but you have rate fixed from 2 to 5 (or more) years - meaning that if BoE increases base rate, your mortgage rate does not change until the fixed term finished.

Lenders usually promote BETTER fix term rate for fixed period in order to lure customers. therefore majority of people have fixed rate mortgage (I, for example, was somewhat lucky to fix my mortgage rate for 5 years early August 2022 - so I still have a fixed rate valid for next 4 years).

Lenders also have early exit fees if you decide to leave fixed rate earlier than fixed rate expires (i.e. if you fix for 5 years and decide to leave to another lender for better deal after 2 years, you will have to pay the fee...)

Many people are being caught in the situation where they have expensive exit fees and their mortgages end are ending in month or few - these people at the end of the term will be caught is double/triple interest rates compared to what they used to pay.

so here - crash course to mortgages in UK

 

[The_Cable_Guy]

A few months ago I paid £5ks in ERCs to secure a low rate, my morgage ends this month and go onto the new agreement, already the rates are 1.5% above what I secured, saving me 9k already over a 5year term if rates stay the same as they are now, but I have a feeling rates are going to push higher for the next 6-12 months before coming down towards the end of 2024 to try and stop run away inflation

 

[Mrklaw]

I was super lucky to jump on a 10yr at a decent rate in 2022. I normally would have done 5years but I wanted something to take us to term (with some heavy overpayment). more luck than judgement but a huge weight off our minds for now at least.

I’d consider looking at how much damage defaulting on a car loan would be. House is obvious priority, a lease you never own anyway so I’d never look at paying thousands to cancel early - might as well keep paying monthly and have the facility to drive it. If it has to default then so be it but its unsecured unlike your home.

 

[ACarneiro]

And perhaps contact the leasing company early and explain your situation? They may be able to offer some sort of solution.
Good luck, you must be under a lot of stress and for what it’s worth have my sympathy.