One pay lease effect in credit

Ask the Hackrs
1

I have an individual who is interested in the Encore Group Lease , but is in a situation where I am not sure how it works so maybe someone here has had a similar issue and would be able to help. The individual is in thr market of buying his first house which he will be financing, but he still has 6 months to go. Right now he is in the phase where he is getting his papers and financials ready but he hasn’t seen any houses or even checked on out. He is worried that his loan officer has advised him not to open any new credit cards, auto loans or anything related to his credit. If he does a one pay lease which will cost him about $3500, how does that show up in his credit?

  1. i think it will still show as a liability with the pay off amount, but monthly will be $0

  2. even if he gets in his childs name and cosigns it, i believe normally you have to have a 12 month history that the payments were going from his sons checking account… what about one pay from sons account?

  3. any other ideas that maybe if therr are any real estate / loan specialist on here shall be appreciated. Thanks

2

Should show as paid. I have done several because I started with little credit history in 2012. I had worked in car business so I never had car loan or leases. Wife always made the calls to change utility phone etc when we moved. So i had nothing on my report except mortgage. Long story short, I think it boosts credit score quicker.

3

But what would the effect be on debt to equity issue on his credit for the home loan? Or you think it will just show as 0 for debt to income ratio calculations ?

4

Unless the son is the one going to drive it daily, this is illegal and considered a Straw purchase. They happen, sure…but I wouldn’t talk to the dealership about it.

Note: I overlooked the cosign part, so this would be legit. Having the son purchase with his credit for the father to drive would not.

5

Thanks. But i wonder even as a cosigner for his son, How will the loan officer see it on the guys credit for the home loan approval.

6

Did he ask the loan officer? That would be my first step.

7

Im sorry, I meant loan underwriter The loan officer has told me that it might be an issue but hasn;t given him a clear answer which is crazy i know. And the guy cant directly reach out to a loan underwriter I think

8

There’s been several threads similar to this. Search for DTI and several pop up. Here’s one that’s almost identical to your situation.

9

Just looked at mine, 3 signed in last 6 mos, all reflect closed with 0 balance.

1 Like
10

Thanks all ! Helps a lot.