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720 credit score, $105K income - can I get approved a lease for a $110K msrp car?

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Anonymous
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720 credit score, $105K income - can I get approved a lease for a $110K msrp car?

Hi there - 

 

I am in the market to lease a specific car which MSRP's at $110K. I have a 720 score, 3 years credit history, 100% payment record, 8 credit cards with < 30% utilization, my gross income is $105K. The lease amount would be approx $40K (36 month lease). Could I get approved or do I need a higher credit score? Any insight/advice would be appreciated!

Message 1 of 12
11 REPLIES 11
Anonymous
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Re: 720 credit score, $105K income - can I get approved a lease for a $110K msrp car?

You'll get it but DTI matters a ton with leases.

Also keep in mind that a 5% down payment on the lease might help so walk in with that available.
Message 2 of 12
Appleman
Valued Contributor

Re: 720 credit score, $105K income - can I get approved a lease for a $110K msrp car?

$105,000 is $8,750 gross monthly.

 

.4 X $8,750 = $3,500 available for payments to keep the conservative lender happy by keeping DTI at 40%.

Add up everything that shows a payment due on your credit report. Credit cards, student loans, mortgages. Add rent if yuou rent. Subtract this amount from $3,500 and that is the amount the lender may allow for your payment.

 

For reference, a $100,000 car note at 3% for 60 months is a payment of $1,796.83 or a 20% DTI ratio for the car loan alone.

 

Welcome to myFICO. May be a good time to think about Needs versus Wants and how this will affect the future you.

Message 3 of 12
Anonymous
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Re: 720 credit score, $105K income - can I get approved a lease for a $110K msrp car?

Appelman, that really cuts nicely to the quick!  Also, I might add that about 10% of yearly total income is a nice figure to wrap up in a vehicle, using the rest to build wealth... 

Message 4 of 12
Creditplz
Valued Contributor

Re: 720 credit score, $105K income - can I get approved a lease for a $110K msrp car?

I've leased a car near the MSRP you're talking about (98k). Have you ever leased or car loan above $50,000?. Is this your first auto loan?.
Message 5 of 12
Anonymous
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Re: 720 credit score, $105K income - can I get approved a lease for a $110K msrp car?

Thank you ABCD2199 - I will have that 5% down payment and my DTI should be good!

Message 6 of 12
Anonymous
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Re: 720 credit score, $105K income - can I get approved a lease for a $110K msrp car?

Appleman - this helps a lot. I did some calculations at my DTI should be at 15% by the time I apply for the lease. And I appreciate your words of advice around needs vs wants. Yes, this is definitely a want - but I have worked really hard to save and be able to get my dream car. I know that doesn't justify the 100K MSRP but I promise I will make the most of it! 

Message 7 of 12
Anonymous
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Re: 720 credit score, $105K income - can I get approved a lease for a $110K msrp car?

Creditplz - I have leased a car before (6 months left on the lease term) but it was only a $40K MSRP. This would be my first auto lease for a $100K MSRP car. Do you see this as a problem if my credit score is 720, 3 years credit history. no missed payments, and 15%-20% DTI? Anything else I can do to make sure I get approved? Thanks!

Message 8 of 12
Creditplz
Valued Contributor

Re: 720 credit score, $105K income - can I get approved a lease for a $110K msrp car?

I like you have low credit history (39 months). I think you should be fine, the dealer or better (MBFS) might question how you've never had a installment loan that big or close to it before... buttttt if the finance manager REALLLLY wants his sale, they'll find a way.
Message 9 of 12
iced
Valued Contributor

Re: 720 credit score, $105K income - can I get approved a lease for a $110K msrp car?


@Anonymous wrote:

Appelman, that really cuts nicely to the quick!  Also, I might add that about 10% of yearly total income is a nice figure to wrap up in a vehicle, using the rest to build wealth... 


This. Every time one of these threads comes around i end up shaking my head at the irrationality of it all, but it's the OPs prerogative to make a bad decision.

 

I would add using gross may be what lenders do, but they also don't really care if you eat or not as long as they get paid. In this case, you should look at your net. It is likely closer to $6000 after taxes and health insurance and stuff ($4000 if the OP has the wherewithal to be throwing $18000 a year into a 401k and 5500 into a Roth IRA). Then:

 

- The lease payment (40k/36 + points) will be in the 1200 range somewhere.

- Location isn't specified so I can only use the national average for a studio/one bedroom, which is about $1000. I find this highly unlikely as people who live in $1000/month apartments don't park $100000 cars at them.

- Utilities of $300 or so per month. This is reasonable but also on the low end.

- Auto insurance on that won't be cheap. If I'm forking over $2300/year for a $25k car, I can only imagine that for that car it would be considerably more, but lets go $200/month anyway.

- I'll assume no other debt even though 8 cards are mentioned.

 

If these numbers hold up, that leaves $3300/month for gas and living expenses in the scenario where no saving is occurring, but if rent is higher (say $2000/month) or if there are other debts like student loans or CCs, you can suddenly be pushing a ramen noodle diet and/or foregoing all saving just to make ends meet here.

 

Be VERY sure you've studied your budget and checked it twice so you know you can take on this debt. With your profile, the dealer can likely approve you, but the bigger challenge I see is if you can maintain that load for 3 years.

Message 10 of 12
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