Which one is easier to get approved for? I hear that dealerships play more of a role in pushing for approval in customers where as with an assumption the lender can be more picky because they technically don’t have to take any more risks since they’ve already made the sale… can anyone confirm the truth behind this?
Reason being is that I’m looking into a lease for work as it’s much easier to write off compared to a purchase. However, I’m only 24, and my wife and I have only been building credit for about 3 years so between two credit accounts and one auto loan our profile is pretty thin and that’s given us trouble before when trying to get approved for things (It took a few lenders to find one that would write for our first auto). Then, on top of that we’ve consistently kept our credit scores around the 760/770 mark for the last year and a half or so and our income has been increasing annually since we started this credit building journey.
@max_g Yeah - well for the backstory my wife and I got married summer of 2017 and got a credit card in both our names first thing because we both had virtually no credit history, and no student debt out of school to contribute to either. Over the course of that year I ended up opening a 2nd credit account that’s just in my name (PayPal credit - I pretty much opened it because it was really convenient to have), and we bought our first car together at the end of 2018 with which we didn’t get approved until our third lender. Tried a local credit union in my parents town as well as Ally Auto, then finally landed with State Farm with a 9.75% interest rate and took it because it was the only thing we could get at the time. Since then we’ve just been riding out the loan (debating on whether or not we want to refi right now or just pay it off because we have the capacity to) and using our credit accounts for regular purchases and paying them off regularly. Between those things we haven’t really found anything else we could add to the mix that would make sense for our situation, as we’re not ready to buy a home quite yet. A lease seemed like the next logical step because I’m going through some work transitions and I’ll be spending a lot of time in the car so I could write off a majority of it.
Edit: Current DTI is around 25% considering only our rent and the one auto loan
Paying it off gives you a guaranteed 9.75% return… where else are you going to get that post-tax?
Also having a clear, lien-free title in hand gives you a lot more flexibility to sell it privately and not be beholden to the vroom/Carvana duopoly for wholesale bids on your car (carmax bids are garbage IMO, don’t even waste your time).
I would be curious to hear this from someone at the captive vs a dealer or broker. Nobody I know who worker at bmwfs is there anymore, I never got anyone to confirm or deny this.
And: possibly irrelevant in your situation:
Are you leasing this vehicle as you or in the business?
Who is the current loan with? What brand(s) are in your short list?
Yeah that’s a big consideration… We’ve been wondering if a refi at a lower rate and continuing to pay it would be good for continuing to build our credit. But that aside, the return of paying it off is a big draw. We’re expecting to have some big work expenses as well as a move in July (rent won’t change much though) so we were kind of giving ourselves the next month or so to decide and then to pull the trigger in August and just pay it off unless something told us otherwise.
I would agree. Understand you can’t write off mileage anymore but either refi at a much lower rate today or pay it off. As for lease, 100% with you, but it’s half way through the tax year and it sounds like that’s something you could potentially hold until Jan 2021? Is the Car unreliable? Lease will be a replacement or second car?
You’re effectively talking about pretax dollars on 50-80% of 6 lease payments/insurance tax, and btw a fair bit more complication in your taxes. Personally I like to phase those sorts of things in.
Just trying to understand where this is on a want <—> need scale.
Leasing as myself as 1099 employee (full-time) but then some self-employed work on top of that. Current auto loan is with State Farm, and I’ve been looking at BMW patiently hoping for a new/loaner partial unicorn or just a good assumption opportunity to pick up loyalty down the road. Other option I’m highly drawn to is Mazda (currently own one free and clear), but there’s not as lively of an assumption community there so that would probably be new.
That’s SUPER helpful to consider I definitely haven’t thought of it from that point.
I think I’ve been more on the want side of the scale, but not to a point of actively searching with a timeline/deadline it’s a lot more of if I see a good deal and I’m on it early enough I’d like to think I have the option to pursue it, but I definitely don’t want to waste my time if my approval odds are really low just for sake of having pretty young credit.
Yes. And you don’t have to put any more money down, get someone else to give you a better rate on that note and switch it out ASAP.
You both sound like you’re doing the right things w/r/t credit and jobs, I wouldn’t over extend (which it sounds like you aren’t) but it may be time to graduate to big-person banking and lending (with the rest of A Tier).
Extreme to make a point: my sister was a tenured teacher with good income and credit score (who thought it was worse because she never checked), banking exclusively with Santander (not anymore, but a couple years ago).
You can have an Amex. You can bank with BofA and Chase (or not if you hate big banks), but I suspect you are only stuck with Ally at 9.25% because your relationships haven’t changed as your status improved. Hopefully that came across correctly.
May more than likely be the play it will just depend on if we want to lower our DTI once we get to the end of next month.
Our current setup is credit with Discover and Paypal, Banking with Ally, and the auto loan with State Farm… I’m not 100% sure if I’m following the relationship comment
I think he’s referring to your financing company relationships don’t feel ‘tied’ or beholden to anyone of them… feel free to change or explore other options when it makes financial sense. You’re not ‘cheating’ on any of them
That’s all self-employed income, so welcome to the island of misfit write-offs.
Back to my comment on relationships: are you a soda drinker? I’m not anymore (yikes 15+ years) but I was. BMW drivers drink Coke. As you describe yourself, you not only can drink Coke, but out of those dumb Star Wars special edition space grenades if you want.
If I ran your Auto Enhanced SODA-score:
It tells me you drink warm, flat Sams Cola, and aspire to Mr Pibb.
You don’t have to spend a dollar more than you do today, but who you spend those dollars through, and how, can recast the story from aspirational Mr Pibb drinker to tosses Star Wars Diet Coke grenades in the recycle bin - which can influence credit decisions.
Your credit score is important, but it’s just a number. Your bureaus (and the associated transaction data that is bought and crossed referenced to them) tells the tail.
You’re doing the right things and asking the right questions. Check out the Credit Thread and Mortgage Thread here to get a preview of what’s next. And congratulations on working for yourself (which always means your customer).
Haha, no I’m not a soda drinker unless you count the ginger beers I put in my mules I’m more of the cold brew and exotic iced teas variety. But who knows maybe in my age group it’s comparatively the same thing.
I appreciate the advice! And thanks! There’s a lot of information to take in learning how to manage finances in this wild world.
don’t feel ‘tied’ or beholden to anyone of them… feel free to change or explore other options when it makes financial sense. You’re not ‘cheating’ on any of them 
- which can influence credit decisions.
I’m more of the cold brew and exotic iced teas variety. But who knows maybe in my age group it’s comparatively the same thing.