Opinions please, should I refinance my car lease early?

[SueInBoston]

I have a lease on a.2018 Honda CRV, great car and I plan to keep it. I have another year left on the lease and I'm debating the pros and cons of buying it out now with a auto refinance loan. I'm thinking if I refinance now then my next year's payment will be towards something I will own vs. paying another's year's lease payment and still looking at probably 3 year loan.
the current payoff is about $19,500, monthly payment of $309. I have funds to pay it down to $15k, get a refinance for 36 months at 2.5% and monthly about 288.

I'm a weekend driver so car is in great condition (garaged) and about 13k miles.

[kork13]

The specific numbers may vary somewhat, but in general I'd say that the sooner you get out from a lease, the better. That said, I'm surprised that the refinance (with $4.5k extra principle down) would only save you $20/mo -- typically a lease charges the equivalent of around 10+% interest (including fees, "cost of capital", etc). I'd still do it to get out from under the lease's thumb though.

[bjl584]

If you plan to keep it, then I'd do the refi to get rid of the lease so you can start taking ownership.

[ua_guy]

I'm not super-well versed in car leases, but buying a lease early would really depend on the residual value that Honda Credit would let you buy it for. If it's the $19,500 you stated; how does that compare to current market values? If it's under market value, then yeah, it makes sense to buy it. If not, then you have to look at the residual at the end of the lease and any other fees you might owe. It sounds like you're keeping mileage low, so that's good...

[SueInBoston]

Thank you all, I actually miscalculated $15k for 3 years at 2.5 would be over $400 a month. I don't want to stretch so I'm doing 48months to bring it to $328 which closer to what I'm currently paying. The currently market value is at or over payoff (KBB has it at 19,5-21,5). I do plan to pay it down early but want the option of lower payments in case of personal financial downturn.

I've been divorced for 4 years and am finally at a point in my life that I feel financially stable. I refinanced my mortgage to lower the monthly payments, and this auto refinance will also help stablized my spending.

My ex is a great guy but had no financial sense at all, it was very difficult to break up the family. but I'm in my 50's and didn't want to go through another bankruptcy scare. In our 29 years of marriage, he's bought us to near bankruptcy 3x, each time I whacked my brain, refinance the home, cut expenses to dig us out of the hole and he still didn't learn from his mistakes.

I've learned so much from you guys in the past 4 years, thank you!!

[myrdale]

I generally try to stay away from topics I am not informed on, doubly so in this thread, so hopefully I will not step in it.

My gut reaction is the sooner you get out of the lease the better off you are. That said, I suspect this may be like whole life insurance where it falls on some curve that depending on how far in you are will make a difference on how bad of a deal it is to stay.

Congratulations on reaching stability. Removing worry from your life is as important as diet and exercise.

Reading your postmortem on the marriage is interesting: "a great guy but had no financial sense", "he's brought us to near bankruptcy 3x", "he still didn't learn". It sounds like you were either not engaged, not included, or just ignorant of the financial decision making.

"I've learned so much... in the past 4 years". This is how you get to a better place for sure. I do think all schools should teach personal finance. That you both weren't gaining this knowledge 29 years ago, and had to learn hard, expensive lessons over time sucks.

It will be interesting to see how he manages finanically on his own over the next decade.