Does putting a large down payment for a lease help the approval?

[pen_nyc]

Wife and I are looking to lease a new car (Hyundai Tucson 2016). My credit is not great due to a NYS tax lien that won't go away for another couple of years. My wife's highes score is 658 but she does have a large student loan debt. We currently own a 2006 Lexus IS250 that we plan on trading in when we lease a new car. The Lexus is paid off and based on appraisals we should get between $ 6500 and $8000 for the car.

Although I know that putting a large down payment on lease is usually a "no no" but due to the credit score and high DTI ratio we are wondering if this may be a good option. We are startiing a family soon and putting a baby seat in a small sports car just wont cut it. Would putting the trade in as a down payment on the lease help with the approval process?

[lincar66]

You are putting down a huge down payment with your trade in that is same as cash you would be better off using any money for down payment toward any revolving debt before going to the dealership and try to boost scores as much as possible 

[pen_nyc]

Unfortunately we need the car to commute to and from work so cannot sell and use the money to clear up some debt.

[trant3]

why not use the trade as a down payment for financing the vehicle you'll keep. You'll get approved for the lease, likely with a high money factor, but at the end of the lease (2 or 3 years) you'll also lose out on that positive equity with nothing to show. Financing through Hyundai I hear is not hard at all, some consider 675 FICO top tier. I recently gave up my car with negative equity to a lease, but I had nothing to lose, and got rid of the car while at it! Hope that helps you perspective. 

[pen_nyc]

We did consider using the trade in as a down payment on a finance but we did not want to get locked into a larger monthly payment for 5-6 years. What we do hope to be able to do is not have to use the "trade in" value a down payment but put that in the bank and then use tht to help pay off the monthly lease payments. This way if something happens to the car we still have a large portion of the equity from the previous car.

[Hoya08]

Unless you sell your IS privately, it's very-very-very unlikely the dealership will give you cash for the trade-in. 

Trade-in equity is usually applied to the car you're purchasing/leasing.  And as already noted, don't place a down payment on leases since you won't get that money back at lease end.  However, look to see if they accept Security Deposits, you'll get this back at lease end.  If they do, ask if you can apply the trade equity to the security deposits.

Another option is to look into PenFed's payment saver financing plan. 

[pen_nyc]

Interesting. I've never heard of PenFed before. Will discuss this with the boss. Thanks!