Is One-Pay worthwhile?

Ask the Hackrs
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1

I’ve been trying to get solid, complete information on One-Pay Leases (OPL? Is that an acronym yet?).

I had assumed that this was similar to buying a car outright in that you wouldn’t need to finance anything, but it seems this may not be the case? What are you financing if you are paying the lease balance upfront? My intent was to not put anything on my credit report (which is in the 820s, I just want to keep it that way if possible).

Playing around with numbers on the Calculator, it’s telling me I might save roughly 15% doing OPL; does that seem correct?

What other gotchas should one consider. I’ve seen some discussion about totaling a car on a lease. Is this an argument for just eating the 15% (or whatever it is) as essentially a hedge?

Thanks for any thoughts/debates. I am looking at Luxury SUVs (preferably PHEV) and the landscape is a little sparse right now. Thinking that leasing would be a good option to allow the market to modernize.

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One-pay just pays your lease payment up front. You’re still borrowing money on the remainder, so it goes on your credit report. You save money buy paying less interest by making the payments up front, and/or a reduced mf. A lot of people just like it because you won’t have monthly payments. As far as what happens on the total loss, I’m sure that you can get your money back with enough calls to your insurance company.

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Depends on the lessor (aka “the bank”) afaik. Some report one-pays to the credit bureaus as a closed account and not an installment.

If the purpose is optimizing your personal finances for a mortgage application or similar use of credit, that’s probably a more nuanced discussion. Your score is a vanity metric until you need to use it and when you do your DTI becomes a lot more important than whether you’re 820 or 790.

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4

Thank you for the response.

You’re still borrowing money on the remainder

This may be a stupid question, but … isn’t a financed lease just be whatever the cost of the lease is? And if that’s satisfied as a one-time payment, what “remainder” is there?

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Not including taxes and fees, lets say a car is $50000. Your RV is 50% after 3 years, so the difference is $25000.

You pay $25000 up front, but still need to take out a loan for the remaining $25000, with the car as collateral.

When your lease is up in 3 years, you have the option to purchase the car for $25000.

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I doubt a lease will bring down your credit score. My credit score did not move up or down significantly after I signed my lease.

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Same here. Mine dipped by 20 points for about month bc the dealership still had to check my credit even though it was a one-pay lease. It’s back to where it was before now

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Credit score doesn’t work that way unless you have only one 20 years old credit card.
Unless you want to buy a house in 3 months, this doesn’t matter.
You need to use your credit to increase your credit score!

I have like 10+ no annual fee credit cards I only use them once a year or so as an anchor to my credit score, any new account can only drop a few points for me now.

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Just as a general note, I don’t necessarily care about my credit score itself, I would just prefer not to have an entry if possible.

Still looking to understand what would actually go on there with an OPL since I’m not actually taking out credit.

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Yes, your credit still has to be checked on an one pay since they’re still loaning you the collateral.

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11

You 100% are since you’re being loaned the collateral.

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This is interesting and also weird. Why are the banks running credit if there is no credit risk? Maybe that actually needs to change with a one-pay lease, and they should not run a credit check.

13

Have you read the rest of the thread?

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You’re holding their collateral with an adjusted lease balance on credit.

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15

makes sense thanks!

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What you’re seeing now is probably the new normal. It’s been around since … fall 2020? So IDK if biding time can be considered a good strategy any more. Or how much it’s worth to overpay in order to buy time.

The landscape being sparse kinda works against you. Normally you only need a palatable discount from the dealer. The rest is set up for you by a favorable combination of RV, MF and incentives.

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This is with a lease reporting:

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IMG_5982829×678 59.5 KB

A car lease is going to have minimal (if any) impact. If you want to game your FICO scores, play around with the revolving (credit card) balances you allow to report.

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So the whole rest of the vehicle shows as a credit obligation? How does that work if you do a ‘typical’ financed lease; certainly only the value of the lease is reported and not two lines of credit?

Anyway, my goal was to not have anything on my credit report (not for score reasons); I was hoping OPL would be similar to purchasing the car outright in a Lease context. Can someone help clear this up?

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They’re both loans. It’s just that on one, you pay monthly, and the second, you borrow, and pay back the full amount in 2 or 3 years. The way that the loan is paid back in either case is that the bank sells the car either to a dealer or wholesale, and uses that money to pay off the loan. They write down any loses.

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I still feel like I’m misunderstanding, so if you don’t mind, I’d like to make this more obvious and explicit (especially for any readers who haven’t been following the context).

If I buy a vehicle outright, nothing goes on my credit report.

When I finance the purchase of one, obviously the bank reports the debt obligation of the amount of the loan, which is the purchase price.

If I traditionally lease a vehicle for say, $20K, I’m assuming I only have the $20K obligation noted on my credit report?

If so, then who is reporting an OPL - where I’ve satisfied the terms of the lease in one go and without the need for credit - and for what amount?