Re: looking to finance a vehicle.
02-03-2013 07:09 AM
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!