Spending 100% cash isn’t going to improve your credit. Paying off an auto loan on time every month will improve your score.
You have to use the cash as a down payment that will lower the LTV on a loan to within their lending limits given your credit score.
I don’t really care about improving my credit right now. My dilemma is that I have cash, but don’t want to own a car in my name. Kind of ridiculous that I cannot prepay a lease. I guess I’ll have to look into buying a car through an LLC or something.
You’d rather go through the hassle of establishing an LLC and misrepresent the lease usage as opposed to just building credit for future use?
Have at it.
Even if you pay the lease in whole, you’re only paying for part of the vehicle cost but holding the entire vehicle. As such, your credit is looked at all the same. It’s not just about if you’ll pay for the lease.
HELLO THIS IS EVERY CAPTIVE IN AMERICA: we are not lending our collateral to someone like this. Consider any of our exciting financing options in Tier 7, but we are not buying a car and renting it to you, whether you 1-pay or not. Humans with credit scores like yours are notoriously bad at returning other people’s property, on time, in the agreed condition.
The consistent theme in these types of discussions is the gap between perception and reality.
Statistics consistently show that someone with a FICO in the 500s has a high likelihood of missing multiple payments, defaulting, disappearing with the vehicle and/or returning the vehicle at the end of the term in rough condition. Sure, 3-5% of the people in that tier will perform better than that but lenders don’t care.
If you are in this credit tier, you need to dig your way out over time by making a ton of good credit decisions along the way. You’ll need to adjust your expectations of what is a realistic vehicle you can drive in the mean time.
I wonder how much this dead horse will be beat.
Some manufacturers/captives do offer a one-pay lease, where you can prepay. However, you are probably not going to get approved with such a low credit score. Cash is not always king.
Until a captive offers to lease that horse to a 500 credit score for 36 months at T1 buy rate and $0 DAS
Bad credit? The ONLY lease option you have (or should at least consider) is to not lease at all. Not to be abrasive, but leasing isn’t meant for those with poor credit.
Maybe LH needs to do a soft pull before people can post.
Not worried about building credit right now?
You should be, you never know when you’ll need it.
Financing through an LLC will require a PG on a new company with no established credit. Setting up a new LLC (or using one with no established history) will put you in the same boat you are in now, albeit with more tax filings each year.
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