Can you elaborate or provide a reason why you have this overriding desire to not have this on your credit report?
In a one pay lease you have satisfied your financial portion of the obligation up front. Where I think your your taking a left and everyone else is taking a right here….for rough number sakes let’s say you have a one pay lease of $10,000 comprised of depreciation & rent charge, however you are still driving around in an asset that the lessor values at $40,000. One of the many ways a bank protects itself is to put it on your credit report, leading to a higher likelihood you will return a car in good condition so that when they eventually sell the asset, they get within reason of the rv they set 3 years prior. The need for it going on a credit report is that you have satisfied only a certain portion of the total value of the asset.
The bank / lessor will indicate this on your credit report. There isn’t any getting around that.
In your example, you are paying $20,000 for a $50,000 asset. You are holding that $30k on credit. Whereas if you bought the car with cash, you are paying $50k for a $50k asset. In a lease, the auto finance company needs to file a security interest in the vehicle, which they have to perfect and that perfection includes a credit report.
So just to circle back a moment to my ‘traditional lease’ question; how are they reported, the full value of the vehicle? In other words, initiating a traditional lease would report a full $50K credit obligation (and not the $20K of the lease directly), and OPL would just report $30K?
No, for a traditional lease typically just the lease balance and your monthly payment amount is reported on your credit report and not the full value of the car. So $20k in your example.
For example I have 5 payments left on my lease and my credit report specifically calls out this line as a motor vehicle lease and shows a remaining obligation of $4800 to MBFS.
…wtf, that doesn’t make any sense. As far as reported value goes, it sounds like it’s better to traditionally lease than OPL. Or more accurately, traditionally lease and then I guess pay it all off quickly to reduce that amount shown. The auto and credit industries are weird.
Not sure I follow, but exactly how it is reported will depend on the bank. If you do a search there have been lots of similar questions asked about one-pays and how they are reported on your credit report. In most instances it seem they shown as an open and closed line with $0 balance and $0 monthly payment required. So basically nothing.
Because it depends on the bank, I believe in one of the threads it was mentioned that BMW does show a pro-rated balance on the lease but still with a $0 monthly payment. Maybe someone with a BMW one-pay can confirm.
Last time I asked a mortgage underwriter, for DTI purposes every lease is assumed to be replaced by another lease, so paying it off faster doesn’t really help. Financed cars are assumed to remain in place after being paid off.
You were already asked and this thread would move along faster if you just explained what your end goal is, instead of just cryptic questions about one pays. Obviously you need a car… and your goals regarding DTI or accessing more credit (eg mortgage etc) are…?
Like folks have said, it will vary by lender and by credit bureau. As an example, for Mercedes, Experian will show it as an open account, with a balance of $0, an original balance (separate line) of whatever your one pay was, a monthly payment of $0, and the status of “never late”. Payment history will update every month on your report.
The same lease, for Equifax, shows up as “closed”, with a balance of $0, and the original balance in the amount of your one pay. Even though Equifax shows it as closed, it still updated the monthly payment history. The monthly payment line is blank.
So it’s difficult to give a rule that applies to all, but I assume you’ll see a (current) balance of $0 and the original balance as separate lines on most credit bureau reports, for most lenders, for one pay leases.
I (thought) I did. I think credit reports should be private things, but they aren’t, so the end goal is simply not to have a large “luxury” balance present on my credit report. That’s it. I could pay for a vehicle outright, but want to see Lux PHEV SUVs get a little more mature with its current technology first, so leasing seemed like a good option.
I assumed a single-pay lease would either a) avoid an attachment outright (preferably, but it’s been unanimous that’s not the case), or b) be attached, but be zero due to one-pay - there seems to be some scattered answers ranging from “$0 and totally closed” to “the vehicle cost after lease”. I don’t know if this is due to the differing lender rules, or people are giving bad info. That’s why I’ve been asking the same questions in different ways.
To me this is the same - the current balance is zero and original balance is the OPL - I greatly appreciate the datapoint!
If you’re talking about the PHEV versions of the X5 or GLE, those leases are terrible. And that’s even before we attach the insane tax that Maryland lobs on leases.
As for technology or obsolescence or whatever you want to call it, honestly it doesn’t affect depreciation and resale value anywhere near as much as you would think. Because the majority of the buying public don’t know and/or don’t care.
When BMW went to a turbo 6, did buyers of used n/a I6 cars like 530i and 330i care enough to drop their values below normal depreciation? Same for a 2020 Mercedes E450 vs the more modern drivetrain of the 2021? The real world isn’t the enthusiasts forum world. Nobody cares about drivetrain improvements IRL enough to move the needle.
With a BMW, you’re getting around 65% of the savings benefit of the one-pay with like 20% of the cash outlay if you just do MSD’s. From an ROI standpoint, MSD’s are pretty worth it on most BMW’s, at least when you compare cash outlay vs money saved, that equation is a bit skewed on a one-pay.
I appreciate this reply.