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Valued Contributor
Posts: 3,406
Registered: ‎12-19-2012
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Re: looking to finance a vehicle.

Leasing wouldn't impact your DTI as much as financing and I am sticking to my statement. And your income will be fine to qualify for the house you need. Only half the MSRP shows up on my credit report for a 36 month lease along with a lower monthly payment than financing. I leased in Nov and I am closing the first week of February! Honestly I wish I was able to lease sooner as I put tons of money into maintenance and repairs and it still broke down on me with enormous repairs before I could pay it off. I won't have to worry about all that with a lease which means more money in my pocket! :-)
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! :smileyhappy: Last App: 4/5/13 Gardening until July 2014
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Registered: ‎03-06-2010
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Re: looking to finance a vehicle.


alessandrom wrote:
Thank you all for the input. I'm a small business owner and make little over 250k a year. I was looking to finance a car because I thought perfect payment history would look great upon purchasing a home two years from now when I improve my scores. I can certainly buy a car cash like I did with my current vehicle, but I doubt that will do anything towards my credit scores. Should I lease? Or finance any other opinions? You guys have been very helpful thank you

IMO, financing is a better option than leasing. From your post above I assume that is your adjusted gross after business expenses.

 

If it isn't, the income that will be used is the adjusted gross from your two years tax returns prior to your mortgage application. Since you are self-employed you may have to supply P& L's too.  Where this can be an issue is if your accountant is too aggressive. You have time to fix it though since you aren't planning to buy for a couple of years.

If you decide to lease, you are just getting a liability without an asset. If you finance it you balance the liability out, somewhat, with the asset value of the vehicle. It will give you an installment TL on your report which won't hurt unless the monthly payment is too large. Since you have the cash to pay off the vehicle loan, if the payment is too large once you find a place in a couple of years, you could always pay down the installment to less than 10 mths or pay off the vehicle and it won't impact the mortgage at all. So have fun looking for your new vehicle! 

 

New Contributor
Posts: 72
Registered: ‎12-20-2012
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Re: looking to finance a vehicle.

Thank you all for taking the time to look into this and give me some input really appreciate the help!! now is time to decide and think for a week or two in order to do whats best! Thank you once more




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Valued Contributor
Posts: 3,406
Registered: ‎12-19-2012
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Re: looking to finance a vehicle.

Leasing will be better for me going into our home purchase. All my maintenance costs are rolled into the lease and the car is under full warranty throughout the entire lease. I am looking forward to no more costly repairs and maintenance that occurs when the car gain more mileage. That is more money in my pocket for house stuff. I spent a ton of money babying my last car that was a brand that had history for being very reliable. And it broke down requiring multiple high priced repairs at 100,000 miles despite my superior care of the vehicle.

The fact is that financing creates an asset. It is a worthless asset. A house is a much better asset to have. I have a paid off broke down 2004 that is worth less than $2000. It is more of a nuisance than an asset because the longer you have it, the more it drops in value until it is worth almost nothing. Such a waste of money!
Cards: Orchard Bank ($1100) | Cap1 Cash Rewards ($2500) | Chase Freedom ($1000) | Best Buy ($2500) | Discover It ($1000) | Barclay Rewards ($2500) | Current scores: EX FAKO: 684, CK TU: 649, FICO EQ: 680, FICO TU: 698, FICO EX: 658 Happy Homeowner Since 2/6/13! :smileyhappy: Last App: 4/5/13 Gardening until July 2014
Frequent Contributor
Posts: 371
Registered: ‎12-30-2012
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Re: looking to finance a vehicle.

Autos are a double edged sword. Without my auto loan my credit was non existant and it helped me get some good credit cards, and my house.  It also hurt me having it when I was getting pre approved. I didnt get a very expensive house.


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