topic Re: Auto Lease Question in Auto Loans

Auto Lease Question

Anonymous — Mon, 09 Dec 2019 19:59:02 GMT

I printed out my credit report, sent it car salesman to have finance manager look it over prior to applying. The dealership pulls Equifax which has two auto loans (one with VW which I immediately refinanced through NFCU) this was an auto purchase with a $425 payment on a 60 month $24k loan.

The vheicle I'm purchasing now is a $130k full size range rover. But I'm leasing it for 24 months, 12k miles year. It has a

MF .00355
Residual 66%
$2886 monthly payment ($2,500 cap cost reduction - optional)

The total "lease loan" amount is 34% depreciation cost + taxes, fee's etc. rolled in so somewhere around $45k

The finance manager says going from a $20k something loan to a loan for $130k car will be tough to get approved for since I have limited large installment loan history even though I'm in 700's and qualify for tier 1.

I'm having an auto installment loan added to my Experian report for $75k over 36 months basically Paid In Full - wasn't being reported previously as it was under business, but I'm able to transfer to my personal and have all payment history, balance, etc. reflected on my personal report - but it wont report for a few days and I'm impatient and want the vehicle today.

So my question is this :

1. Is the "loan" amount the $130k or the total of the lease loan payments I would be paying (the $45k in total over 24 months)?

2. If I have this aged tradeline for the auto loan added to report, will this help the approval process? Or would Chase verify the lease with my current low 700 (no baddies) without it being added?

*** For those of you immediatley wanting to say something about the jump in vehicle price, etc. the tech company I work for just raised a large round of venture capital and I have a much larger salary now and auto payment reimbursement, so that's why I can now afford higher monthly payments that I couldn't before.

Re: Auto Lease Question

Girlzilla88 — Mon, 09 Dec 2019 20:08:11 GMT

LOL I'm not going to 'jump you' but you should wait those few days out .....that's really the best advice I can give I'm 1000% against Leasing in General so I don't want to talk you out of it but it would help you and can possibly get you a better deal if it does reflect Good luck

Re: Auto Lease Question

sccredit — Mon, 09 Dec 2019 20:18:46 GMT

As you know the total lease amount is what will show on your credit report ($45k) but the lender is basing a credit decision based on the total vehicle price ($130k).

Re: Auto Lease Question

Shooting-For-800 — Mon, 09 Dec 2019 21:51:16 GMT

Ummm...

Maybe I am confused here but:

2883 x 24 = $69,264 in payments

Where does $45k come in?

2883 / 1000 miles per month = $2.88 per mile

So your RR will cost you over $3 per mile and you will not own it?

I assume you make like $250k per year?

Re: Auto Lease Question

sccredit — Mon, 09 Dec 2019 23:44:00 GMT

@Shooting-For-800 wrote:
Ummm...
Maybe I am confused here but:

2883 x 24 = $69,264 in payments
Where does $45k come in?
2883 / 1000 miles per month = $2.88 per mile

So your RR will cost you over $3 per mile and you will not own it?

I assume you make like $250k per year?

Good point, I didn't do the math on it and just used OPs information provided.

I decided long ago not to get into the mud on leases. I have one for DW's car and it works for us (albeit substantially cheaper than OPs proposed lease). I drive too much for one for it to work for my car. In fairness I wouldn't want to own an out of warranty Land Rover!

Re: Auto Lease Question

Anonymous — Mon, 09 Dec 2019 23:52:16 GMT

Ah - you are correct, I don’t know why I even typed that number. I quickly jotted this down after getting off phone. My best bet is to wait out a few days for the older aged higher auto installment posts for $75k PIF OnTime over last 36 months so its somewhat comparable to the lease payment.

Don’t want to run risk of hard pull if I’ll get denied.

I make $350k annually - so yes take home post taxes is $250k give or take a bit after deductions for healthcare and retirement contributions

Re: Auto Lease Question

Shooting-For-800 — Tue, 10 Dec 2019 11:34:35 GMT

With that type of verifiable income, I would think you would be ok.

Worse case, put down a large chunk of cash to lower the payment.

You could also buy a 3 year old one for half the price.

Re: Auto Lease Question

SFLSpotter9210 — Tue, 10 Dec 2019 20:46:04 GMT

A piece of good advice. Keep the car you have paid off. And invest that money for your future. Prime example Warren Buffett. He lived a very frugal lifestyle. Vehicles will be the worst purchase you could ever make in your life. Good luck.

Re: Auto Lease Question

Anonymous — Tue, 10 Dec 2019 21:03:07 GMT

Leases are typically harder to get approved for than purchases. The loan amount is the amount depreciation - the difference between the selling price and the estimated value of the car at the end of the lease. To be frank, you pulling a Tier 1 doesn't mean jack if you don't have the comparable credit to back it up... in this case, the dealer is correct in stating it'll be touch to get you bought on a jump of that amount, but definitely not impossible. I jumped from my highest auto loan of 33k to a lease on a $112k vehicle with Toyota Financial. Granted, I already had history with them and I had 7 paid autos in the span of 2 years, but definitely not impossible.
Edit: to answer your second question, yes, adding the 75k auto loan installment history to your report will definitely help. Chase Bank won't verify anything.

Re: Auto Lease Question

RyVision — Tue, 17 Dec 2019 08:48:01 GMT

Ever hear of the 1\10th rule? That's the rule no one follows (almost no one) that if you want to be sure you'll always be financially ahead. It means you only spend 1\10th of your annual income on a car, unless you can deduct it for work or need it to impress clients (usually deductible).

If you're not guaranteed that income for life, nor have enough to just pay cash for that machine, you'd be much better off sticking closer to the rule... There were a lot of techs (among many others) that went BK over the last couple of recessions because they thought that income would always be there. And how some ended up here looking on how to repair their credit from such mistakes. The fact you haven't made that income for long is the first red flag against this plan.

You won't heed this advice, but there are a lot of people who say "I wish I would have known" or "I never would have dreamed" who wouldn't have before the fact either. Are you trying to spend nearly all of your annual net income, I'm sure the Rover isn't the only upgrade your considering, those things don't tend to park in average apt complexes. Already own a home? Give this some serious thought, I'm sure you have a lot of years ahead.

Friendly advice only, not to judge. Put at least half that payment into an investment\retirement and the other half or less into full transportation expense (payment, insurance, gas etc). I can guarantee you in a few years you'll be very glad you did. And that you won't regret it either. Give it some thought. Either way, I hope it works out for you in the long term.

Re: Auto Lease Question

Anonymous — Tue, 17 Dec 2019 15:39:59 GMT

How much will your employer give you for the auto payment reimbursement?