OK Hackrs I am coming to you *before* I lease a car ;-)

Ask the Hackrs
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I need a new car and I want to do this right, so let me have it Hackrs…

I am a partner in a business. I am getting a $500/mo car allowance starting this month. No specific requirement what kind of transportation but the expectation of partners is that I am obtaining a car that is reliable and making my current issues of auto repair go away. Currently drive 2001 Lexus ES 175k with a slowly dying trans. Its got some rust and I’m generally ready to move on. I’d like to have the $500 cover car, maintenance, and gas. Leasing for $300/mo or less seems like the way to go, I have low risk of downtime or out of pocket repairs and can safely cover gas after the payment.

Situation is credit is a challenge, I have plenty of history but high utilization as I am an idiot that financed building a business on personal credit cards, so we have balances that are still being paid off over the next few years. Scores from my credit card sites are in the 630-650 range. I have one previous auto loan (Subaru Chase) on my report, always paid and paid off 7 years ago. Wife has stellar credit, but is interested in not co-sign or joint for a car to keep the risk with me, if bad business things happen she would retain the ability to get credit if I am screwed. Wife will do joint if we HAVE to but she isn’t going to do it until I try on my own. DTI I am concerned about but will get to that. I am pretty sure I will be a higher credit tier if not denied altogether but I guess we’ll find out.

I want a fun to drive car and I drove manual all my life until this auto Lexus for the past 7 years, so that’s non-negotiable has to be a stick. And of course nothing that handles good with a stick leases well. Looks like the Honda Civic Si is the best bet, the least bad of all of the options. Would consider GTI, GLI even another WRX as well but the MSRP is higher and terms do not seem as good. I want a Veloster N in the worst way but the lease terms are no good. I could buy any of these perhaps for under $500/mo but would rather not commit to that. Civic at least has a decent RV and the lowest price of all the options I like.

Current terms on Civic Si Sedan for 36/15k are 60% RV, .00108 MF, $600 factory to dealer incentive.I am checking with Edmunds forums on the info for lower tier credit. My strategy based on reading around here is going to be: find in-stock Civic Si sedans at local dealers in a color I like (there are no options) then send offers to the dealers via email, let them know I am ready to buy at that, and see what they come back with and compare between dealers. I figure I will leave the credit part out of it, and just be ready for the dealer I select to come back with “bad news you are Tier 2/3 and the payment goes up” or “you got denied do you have a co-singer?” and go from there.

Does that sound like a good strategy? I’ve put together a theoretical deal here. I used forums to see what people are reporting paying to purchase the car. I took what seemed reasonable from that (23k on 25.2k MSRP) and then deducted the $600 dealer lease incentive and based a deal on a 22.4k using the Tier 1 MF for now.

So I have other questions that this brings up that maybe someone can shed some light on:

How to negotiate when I can’t be sure which tier I would qualify for? Is it worth buying MyFICO to get me auto 8 FICO so I know what likely credit tier? I fear the dealer can come back with “you qualify for Tier 3” when they are really getting Tier 2 and marking it up.

If I want the deal I’ve put together, what would you propose to a dealer to generate the counter offer?

How do you consider the dealer prep/doc fees. They are all different and it doesn’t seem I can know them ahead of time. The proposed deal I put in the calculator, includes the $499 fee of the one dealer I went to to test drive the car last month. If the going rate was say 23k for a Civic Si, should I expect the car would be 22.5k with a $500 prep fee? When giving an offer do you propose the price and stipulate your offer “includes your prep/doc fees”?

I’d like to trade my Lexus, I’d basically like to cover the drive offs with the trade in. I am assuming the car is worth say $500 to the dealer, anything more they are bundling some discount in there is that fair to assume? I know its a convenience and I am willing to take a hit for that vs selling the car myself. Just want to know the best way to deal with that.

DTI, how do they do that with Mortgage? Say our mortgage is 3k/mo do they cut that in half if I am applying myself and the mortgage is joint? I have been told both yes and no to that. If they do I should be around 20% DTI, with the full mortgage payment I may be closer to 40% DTI on my income only. This seems like it will affect Tier placement and approval odds.

I’m open to all advice, this time before I make a move!

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I’m only tackling this point. With a trade in value of $600-1,200 (per KBB) you may be better off donating the car and taking the tax break. Whatever you do, don’t include the trade in the new car transaction; have the dealer cut you a check in a separate deal if you insist on trading.

Good luck.

:bat:

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How many miles do you plan to realistically drive for the year? Since you are a partner of this company are they willing put this car as a company asset? If the company credit is good they opens up more financial doors for you.

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There is a lot to unpack here, but generally I think your strategy of developing a lease offer to email to dealers is the right approach. Just email several dealers in your area what you think is a fair deal and they can either counter offer or deny it. There’s really nothing you can do beyond that.

Now, here’s for my .02 cents on your choices:

If you’re in a strange financial position, I think you should reconsider the “want” over “need.” It sounds like you should focus on practicality and low cost. To that end, may I humbly suggest a Civic Sport hatchback wit hthe 6MT? I test drove one and honestly, I liked it almost as much as I liked test driving the Civic Si. I mostly liked that it handled similarly to the Si and came in a hatchback.

If you can afford it, I would absolutely recommend financing a GTI S. They are heavily discounted and it’s possible to get a sales price of a GTI S at what you’d get a new Si for. The GTI has significantly more cargo room and space and I honestly think it’s an overall better car than the Si. Hard to beat the 72k mile warranty, as well.

With the amount of driving you’ll potentially be doing, financing may be a better option just to err on the safe side. If not, you can probably just write off part of the lease as a business expense since you’re a business owner. I don’t know for sure, I’m not a tax accountant.

Best of luck.

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The world is your oyster on a $500/mo budget. Does this need to include insurance or is that covered under corporate?

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From OP

:bat:

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Too long of a post to fully reas but you can get a base bmw 5 series for 500. Or look at repeat Lexus ES.

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So then it is a personal lease but the amount is reimbursed. Got it.
Maintenance shouldn’t be a huge concern depending on the make.

While I’d love to see you take our advice here to put together a cherry deal for yourself, challenged credit will almost always put you at lower ground on the buy rate which as I’ve said before can turn a “steal” into a robbery…on your wallet. I’d advise contacting a broker in your unique situation.

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Seems like the perfect scenario for a broker, would help you avoid the pit falls of having the rate marked up and could steer you the right way to start as far as makes that would be best for your credit situation

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Lease it as a business car.

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This place is amazing how quick you get replies, thanks all :wink: To the ones who don’t read it all, I get it its a lot, but the people who don’t give any info get blasted. I’ve done the research, and that takes time to describe so there you go.

Yes allowance is a business deduction, I substantiate it with either lease payments or running costs and it becomes non-taxable.

Company does not want to lease the car. Its part of having partners I can’t just do whatever I want, they don’t want it on the company, just pay me and have me take care of it.

I COULD spend up to $500 this is more negotiation with the wife than anyone else. We already pay for my insurance, gas etc. out of the house budget. But I want to do something more prudent for the next 3 years, drive a car I can be happy with, and the partners will be happy I drive a new car with no issues, everyone wins :wink:

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Don’t listen to any of us jackasses here in this arena.

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OK how do I find a broker around here. I am in Boston area.

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I can easily get you a WRX in budget in MA

I can get you an STI in budget even

$500 is a good budget and you have many options.

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I know a really good broker in Boston if you need one :slight_smile:

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Ha the want is strong on an STI lol. Sounds like I need to talk to you though how does it work let me see if I can PM you…

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You’ll notice @Bostoncarconcierge is referring to himself :P.

Jump on it, buddy. Sounds like he can hook you up.

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You can give me a call haha

3393640356

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besides the Civic Si…

Not many cars anymore that are stick-shifts. Stick shifts are on base econoboxes and high end sports cars and some trucks. Every year more and more OEMs decide to get rid of all the manual transmissions. Every year the available manual models decline.

leasing aside, If you buy a stick-shift it will be difficult to re-sell

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Couldn’t agree more.

Maybe a 6 spd Toyota Tacoma for like $225/month!

Best bang for buck right now by far