How soon can I re-finance?

[butters149]

Hi,

So I bought a car on Saturday with a "lease to purchase" option because that was the only way I'd be able to drive off the lot with the car I wanted.  I put $1900 down and $685/month.  There is no limit on miles and no purchase option fee because I will end up purchasing the vehicle.  He told me to refinance in 6 months to lower my interst rate and turn the contract from a lease to a purchase.  Since it is a lease the interest rate is not listed but he thinks it is 10%?  The term for the lease is 60 months, after 60 payments of $685, I have the option of purcahsing the car for $15,500 residual.  My plan is to pay it off ASAP and can pay up to $2500-$3000 per month as I pay no rent and live at home.  

My credit is currently at 582 and I am working on paying off my credit cards.  I can pay it off completely in 1.5 months.  Can I refinance in less than 6 months?  Or should I wait until 6 months to refinance?  Im guessing the 6 months is to show that I can make ontime payments?  The car was $38K MSRP plus TTL.  I know i kinda screwed myself a bit here, but I really wanted that car.

[Luscher]

well since you leased it, you cannot refinance.

also, on leases there is no apr.....

you would have to buy out the lease and then refinance

another note, generally leases more than 36 months are not a good idea.

[Hoya08]

It's true leases do not have an "APR". 

Leases use a money factor (MF); your contract should state what MF your lease is under.  Take that MF and multiply it by 2400 to get an "APR" equivalent.  For example: a money factor of 0.0125 is 30% (0.0125 x 2400).

[butters149]

hmm, i dont see where the MF is on the contract.

[sccredit]

I refinanced a new truck less than 3 weeks after purchase.  However, it sounds like (based on your scores) you may be better off holding it at 10% for a while

[RushXTC]

@Anonymous offense, But I thought I got screwed with my lease... $37,100 car @ $700x36+15.5k to purchase.

I returned the car in 2 weeks due to a dealership error and that got me thinking, Now I just drive a truck that I don't even have to pay monthly, My dad pays it monthly I just pay for insurance and I think that's better for me.

Sorry about off-topic, But as many have said... When you lease, the contract must be completed no matter what, There is no cooling off meaning you can't return it which means you're stuck with $685x60= $41,100 and another $15,500 to keep it after the 60 months = $56,600 on what you said is a $38,000 car... 

What car is it by the way? I think you should have waited a bit.. If you have all that money to spare, You could have dropped a huge down payment on a new purchase instead of using lease to buy.

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@sccredit wrote:

I refinanced a new truck less than 3 weeks after purchase.  However, it sounds like (based on your scores) you may be better off holding it at 10% for a while

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You purchased your truck though, Not leased.

[butters149]

It is a 2014 Mitsubishi Lancer Evo X MR.  What kind of mistake did the dealer make?  The dealer assured me I can refinance it as a purchase contract and get out of the lease contract.  I also called the credit union he recommended and they also said the same thing.  It says on the contract that there is no purchase fee if i decide to buy it out.  

[Hoya08]

Yes, you can re-finance a leased vehicle with certain lenders. 

A purchase fee is not the same as a buy-out.   It appears your contract does not have a [administrative/processing] fee to purchase at the end of the lease contract, this is not uncommon. 

To end the lease, a lessor generally has to buy-out the lease... meaning to pay-off the total obligated payments (685 x 60), prior to the end of the lease terms or per the terms of the contract.  If the dealer approves, a lessor can re-finance by:

1.  Locating a lender willing to re-fi leases

2.  Obtaining the lease pay-off balance

3.  Obtaining a loan to cover the pay-off balance AND the residual

4.  If the acquired loan does not meet 100% of the pay-off balance AND residual, then you will require a down-payment to cover the difference

You will be hard pressed to find a lender willing to extend a loan to cover approx $56k on a $38k MSRP vehicle which, to the advantange of the lender, has depreciated as soon as driven off the lot.

[Speed808ix]

Yeah I agree your EVO X will be costing you around ~56k . I work in the Auto buisness at a dealership, I doubt you will find a bank with your credit score to re-fi a car that doesn't book out to 56k

[RushXTC]

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@butters149 wrote:

It is a 2014 Mitsubishi Lancer Evo X MR.  What kind of mistake did the dealer make?  The dealer assured me I can refinance it as a purchase contract and get out of the lease contract.  I also called the credit union he recommended and they also said the same thing.  It says on the contract that there is no purchase fee if i decide to buy it out.  

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The biggest mistake they made was lying to me. They told me I was approved for a $41,000 car and they let me drive off the lot, I signed paperwork and never did they ask me about the company I work for (I work for an agency) and they did NOT ask me if I'm a first time buyer. Had they asked me if I was a first time buyer, We most likely would have avoided this whole situation. But it was good for me, I used and abused the turbo for 600 miles in the 2 weeks I had it.

P.S. Not everything the dealership says to you is true... After I dropped off the car, I went to a dodge dealership for a challenger, The lady was telling me I could lease the challenger for 3 years $453 a month, I declined and said I don't like the lease to buy option because you pay more... she said it's cheaper because "Your lease is for $16,000 in 3 years, then we re-evaluate the car and see what its worth in KBB and you finance the rest".  I know this is NOT how it works, Just to call her on the BS I asked, "So if the car is worth 18k after the 3 year lease, I can buy the car for $2,000?" which she replied "Yes, Because if we sold it full price it would be illegal because the car is not worth what it's worth now" lol.

We all know this is BS, Because the lease to buy contract makes sure you know how much you're paying after the lease in order to buy it. i.e. $453/m for 36 months + Purchase option of $15,000 after the contract, = $31,308 not $18,000 as she had said. Lol.

My bad for going off-topic, but don't think the dealership won't lie to you just to get the sale, They'll tell you they don't care about the sale, They care about your interests... Sure buddy! =P