Car Leasing: Are You at Risk of Negative Equity?

Car Leasing Pitfalls: Understanding Negative Equity New Jersey-based car salesman Joseph Rodriguez recently highlighted a common car leasing problem: negative equity. In a short video, Rodriguez explained how a customer could end up owing more on their lease than the car is worth. "I just had a customer that was over in service," Rodriguez said. "He was curious on what a Palisade lease would look like." The customer, currently leasing a car, has 17 payments left, totaling about $7,000. When Rodriguez added the payments to the residual value, the total came to $30,000. However, the car is only worth $22,500. This leaves the customer with $7,500 in negative equity. Rodriguez's video serves as a cautionary tale for potential car lessees. Understanding the terms of a lease and the potential for negative equity is crucial to avoid unexpected financial burdens. While the customer could continue making payments to eventually eliminate the negative equity, the video underscores the importance of careful financial planning when considering a car lease.