Will I be able to finance a new car if I am currently in a lease and am looking to flip?

Ask the Hackrs
1

I am set to take on a lease on a 4XE. I also have a Bronco on the horizon (Summer) that I will finance. The plan was sell the lease a day before I take on the Bronco. The wife is worried that the Bank will see that I am looking to carry both the lease and the loan and that I will be denied. The easy way I guess is to trade in the Jeep when I pick up the Bronco, but I’d rather shop around to get the best deal.

I guess my question is, how does the bank view these things? Does it matter if I tell them I plan on selling the Jeep? Does a lease carry less weight when it comes to Debt/Income Ratio? How have others handled this?

For the record, I do have 820+ credit.

2

Your DTI ratio is what matters. You can have an 850 score with a sky high DTI and get denied. On the flip side you can have a 700 score with 1% DTI and get approved. Start there.

3

Thanks. So on the lease, Ther bank doesn’t consider the value of the Jeep as a liability just what’s owed on the term, correct?

Also, WIll the bank be able to see I just sold the lease a day prior?

4

Takes time to reflect account was closed. I would call the bank and get a letter showing lease was paid off. When applying for the finance keep the letter in case you get a stipulation.

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5

Correct. The lender will use your monthly payment and add this to your “debt” when factoring DTI.

Regarding payoff, 1 day is cutting it very close. I highly doubt that a payoff will be reflected that quickly unless it’s perhaps the same lender that has real time visibility on their accounts.

It typically takes a cycle or two to get this reflected, although you can always try to contest this with something like a payoff letter or account closure notice as referenced above.

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6

Would doing an one pay by OP help offset this? Would they view the one pay differently since it would have a monthly payment of $0?

7

A one pay would help in my experience (at least with GM). My one pay lease with GM was reported as a closed auto lease from day one with all payments satisfied.

OP, banks typically let you get 4 or 5 auto loans before they start giving you problems. This depends on your DTI though.

8

Will the same bank reject your application or funding if lets say you lease and then sell the car, payoff completed, account closed, like 3x (IE with CCAP for Wrangler 4xe) within a short period of time?

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That entirely depends on the bank.

10

Thanks that the answer I was looking for. If I carry both lease and the loan, It would push me to 42% DTI. The problem in my case is that I have a Mortgage in my name alone that I really only pay 50% for. But I have to use the entire mortgage payment in my DTI ratio. But it sounds like at 42% I may be able to squeeze it in.

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You will have paperwork that shows you sold the Jeep that you can bring into the dealer (knowing the loan will be paid off). That should satisfy Ford credit that you are no longer responsible. This is only if they give you a problem (and probably will not if you are a good risk candidate). This isn’t like getting a mortgage where everything is being looked at. It is usually an automated process for an approval.

Option 2 is to finance either the jeep or the ford in your spouses name solo and leave yours off.

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