Hey all! So I'd like to believe I am pretty knowledgeable when it comes to auto loans..... But hardly about leasing?
I know some people say it's a financial disaster and others say it's for a good benefit. Regardless of the opinionated case, I want to learn about how leasing involves itself with ones credit, income, etc.
I have a few questions that I have always wondered regarding getting a leased vehicle:
1. I know in the auto loan world, sometimes dealerships will run multiple inquiries to "get you the best deal." What happens when you lease? Is there just one hard inquiry and that's it?
2. Are there any personal banks that you can go ahead and get approved with (BoA, Wells Fargo, Chase, etc) before you step on the lot? Or is it something you have to go to the dealership and do?
3. Do you need any auto loan history to be able to lease?
4. Are there income requirements to get a lease? Say you make $25k a year and lease a $45,000 car, but you live at home with your parents and have no bills.
5. Is there a "rate" when it comes to leasing? I have the mentality that it is a simple yes or no when it comes to that advertised lease price. Auto LOANS of course give you variable APR's depending on your creditworthiness.
Thank you for everyone who reads & helps me!! 
@Anonymous wrote:Hey all! So I'd like to believe I am pretty knowledgeable when it comes to auto loans..... But hardly about leasing?
I know some people say it's a financial disaster and others say it's for a good benefit. Regardless of the opinionated case, I want to learn about how leasing involves itself with ones credit, income, etc.
I have a few questions that I have always wondered regarding getting a leased vehicle:
1. I know in the auto loan world, sometimes dealerships will run multiple inquiries to "get you the best deal." What happens when you lease? Is there just one hard inquiry and that's it? When I leased, there were two. One from the dealer and one through the manufacturer, which is typing who does the lease.
2. Are there any personal banks that you can go ahead and get approved with (BoA, Wells Fargo, Chase, etc) before you step on the lot? Or is it something you have to go to the dealership and do?
3. Do you need any auto loan history to be able to lease?
4. Are there income requirements to get a lease? Say you make $25k a year and lease a $45,000 car, but you live at home with your parents and have no bills. A lease is just like any other loan, but you're getting a loan for the amount of the car you'll use v. the full amount of the car. In short, yes. A lot of leases have score requirements as well.
5. Is there a "rate" when it comes to leasing? I have the mentality that it is a simple yes or no when it comes to that advertised lease price. Auto LOANS of course give you variable APR's depending on your creditworthiness. You'll want to look up something called a money factor. It's comparable to an APR and it'll let you know if you're getting a good deal on the money you're financing when you lease the car.
Thank you for everyone who reads & helps me!!
I answered what I could. Hope that helps! Leasing is great if you don't drive a lot of miles and would like to drive something newer every day. The ONLY reason why I'm not leasing now is because I would be over miles.
@Anonymous wrote:Hey all! So I'd like to believe I am pretty knowledgeable when it comes to auto loans..... But hardly about leasing?
I know some people say it's a financial disaster and others say it's for a good benefit. Regardless of the opinionated case, I want to learn about how leasing involves itself with ones credit, income, etc.
I have a few questions that I have always wondered regarding getting a leased vehicle:
1. I know in the auto loan world, sometimes dealerships will run multiple inquiries to "get you the best deal." What happens when you lease? Is there just one hard inquiry and that's it?
The dealer will hard pull one, two or three of your reports depending on the dealership. The Leasing Bank that the dealer submits your application to will pull (as a general rule) your credit once from their primary bureau (EQ, TU or EX). Rarely, does the Leasing Bank pull a second report.. this would only happen if there is a request to access an alternate bureau to gain better terms.
2. Are there any personal banks that you can go ahead and get approved with (BoA, Wells Fargo, Chase, etc) before you step on the lot? Or is it something you have to go to the dealership and do?
Generally, you need to lease via a franchise dealer. Years ago there used to be programs available to some consumers. Unfortunately, almost all Credit Unions and Direct Lenders stopped their independent leasing programs during the financial meltdown in 2008-2009. They made the difficult decision to stop because of the massive wave of losses they were taking as people were returning their leases at lease end per the lease agreements. The banks were on the hook for the end values, not the consumers.. one of the key features of closed ended leases that favors the lessee (consumer).
3. Do you need any auto loan history to be able to lease?
It depends.. some Captive Lenders tend to classify leases as a lower lending risk, some don't. The lenders that are more lenient, consider the amount of credit extended to the lessee is the amount equal to the total of payments for the duration of the lease thus the applicant is asking for a lower amount of credit. Other lenders consider the full value of the collateral (net capitalized cost) as the extension of credit (risk) and history of previous high installment credit could weigh more heavily in the decision resulting in the lessee applicant being asked to contribute aditional capital cost reduction (down payment).
4. Are there income requirements to get a lease? Say you make $25k a year and lease a $45,000 car, but you live at home with your parents and have no bills.
Income requirements are the same.. it's based on gross (before taxes and other deductions) monthly income vs estimated monthly payment for the lease. One of the larger factors will be the lease price (negotiated selling price) vs the MSRP of the collateral. Lease advance is usually based on MSRP of the collateral vs retail financing, which is based on the Invoice. Other factors will play into the equasion such as stability of employment and residence.
5. Is there a "rate" when it comes to leasing? I have the mentality that it is a simple yes or no when it comes to that advertised lease price. Auto LOANS of course give you variable APR's depending on your creditworthiness.
Each lender has their own tiers of qualification. Each tier has a coresponding Money Factor (monthly lease charges.. cost of borrowing) provided by the leasing bank. Each Model and Trim Level could have varying Money Factors even within the same Model Year. The Money Factor itself can be equated to an (estimated) APR by multiplying the Money Factor by 2400. Keep in mind the Money Factor is subject to rate mark-up by the deaker at the dealers' descretion. The leasing bank does cap the amount of mark-up. The lease payment is then comprised by the Depreciation, Lease Charge and Use/Sales Tax (if applicable).
Thank you for everyone who reads & helps me!!
(edited for spelling)
