In March & during the heat of the unknown of the pandemic, I delayed my payments for my BMW (April, May, and June). I was at the time put on notice for furlough but then immediately brought back on at full pay. The deferral didn’t help my credit but didn’t impact it too much. I’m still sitting at ~an 800 and have had no issues making payment (and plan to pay the balance off full on Feb 10th, 2020 when my lease is due).
My question is, do you think BMW will use this against me if I’m taking over a lease with similar / lower payments than my current vehicle? I know it’s a specific question, but would appreciate anyone’s insight on this. And yes, I’m specifically targeting a lease takeover here.
The real issue here is isn’t so much credit related but that it would be a lease takeover. With BMW, generally speaking you need to have an equal or better credit file than the person you’re taking the lease over from.
So it’s definitely safe to say that past payment deferrals might be viewed in a negative manner by BMW on a takeover application, but I don’t think anyone short of someone that works for BMW will be able to say for certain.
I’m more versed with credit reporting and credit scoring than I am with the idiosyncrasies of the decisioning logic in place at specific companies that extend credit… so I’ll make some general statements.
In general, if you were granted Covid-related payment forbearance on a consumer credit account, the data furnisher (creditor) likely reported the monthly payments on the trade line (account) as “no data” for each month that the account was in forbearance, instead of 30, 60, 90 days late.
They also noted on the trade line that the consumer was “impacted by natural disaster.” (This reporting methodology was created for consumers who were impacted by other large-scale events like hurricanes and floods.)
“No data” trade line information is ignored by FICO, and once out of forbearance, future months would report and be scored normally going forward, according to whether you were meeting the “then-current” account terms or not. The “natural disaster” notation should also drop once out of forbearance.
With all of that said, most credit decisions aren’t based solely on credit scores or even just credit reports. In addition to income, employment history, etc., most companies will look at their prior account experience with the same consumer to determine risk.
Some companies like American Express keep records on their experience with you essentially forever, and will hold a 30-year BK against you if they have it on file… even though the info has long since disappeared from the 7-10 year max duration this info can appear on your credit report.
From what we are seeing on the forum, transfer applications are being held to a very high standard. Lots of self-reported “strong applications” are being turned down.
Even though your score is good, and as @trism said
Which won’t affect score itself
But you are technically in arrears, with the very people you are trying to swap into a lease with, who are known to be picky in that regard. If you had already closed and satisfied the current lease, I would think that might be more favorable (closed/paid in full).
Also BMWFS is one that if you take them down in bankruptcy, they tend to ignore score and auto-decline. Less about this scenario than to say, they use their own internal data as much as score in their decisions.
It’s a good question to call and ask BMWFS - the only people who might know for certain have either tried this exact scenario themselves in the past few months (though with a different credit profile than you): a dealership can’t even say for certain since they aren’t originating the swap.
Thank you all for this feedback - it’s all very insightful and gives me some ideas. I think my best next step will be to call BMWFS and ask them for their opinion (if they can give that type of advice over the phone). In the past 5 years, I’ve had 1 loan through them (~$20k - paid off after 3 years), taken over a lease with a $610 payment (8 months remaining) and another with a $999 payment (11 months remaining - this is the one I obtained forbearance on for three months). I’ve had a great history with them recently but I also can’t discount the fact that I didn’t make payments for a short period of time.
Maybe they’ll suggest I pay-off the outstanding balance on my account prior to make the swap? Who knows.
Overall appreciate the feedback so far - if you hear anything else on the topic from others please let me know. I’ll keep you guys updated with anything BMWFS says to me when I call them Monday.
In case anyone was curious I wanted to give a quick update. I spoke with BMWFS and went over my situation with them. They said that it would be a non-issue and that they’ve been “over-looking” any COVID-19 related deferrals but mentioned that in the event of a takeover / new lease they’d ask for the previous balance to be paid off first.
