Lease approval issues

[EVentuallyMyS]

Hello!
First post ever! And not exactly a happy one!

I have a Model S 70 on hold ( ) all due to the Lease agreement.... or should I say disagreement?

I ordered my beautiful car on May 5th and decided to apply for the Lease a couple of days ago.... only to find out that I was not approved.

My credit is perfect and I was lucky enough to never have much debt. The finance department even said my credit is great! and my income is ideal! but I don't have enough history. They want to see higher car payments.... possibly a mortgage?

So do I have to buy a house first?

Did anyone else have issues with the Lease? How did you solve them? Did you end up just purchasing the car instead? I considered that but I don't like to keep my cars for longer than 3 or 4 years anyway so Leasing is ideal.

My only solution here would be to have my husband cosign..... but I want to exhaust any other option before I do that.

 

[Lloyd]

You would likely have the option of depositing more down, reducing the cap cost with a lower residual to protect the lease company, but that sort of goes against the purpose of the lease. I say get the co-sign.

 

[Science fan]

You would likely have the option of depositing more down, reducing the cap cost with a lower residual to protect the lease company, but that sort of goes against the purpose of the lease. I say get the co-sign.

I agree with Lloyd. You're not a risk; you both know that. Save money and get the co-sign. One added advantage: it will help your credit for the future so your next car can be leased under your own name. One other possibility: just buy it and sell it after four or five years. You will likely end up spending less money than the lease would cost you.

 

[EVentuallyMyS]

Yeah they gave me the option to put more down. But since I am leasing and not planning on keeping the car past the 3 years, I don't think I want to put more down than the required amount.

In 3 years (if everything goes well with Tesla and I love the car as much as I know I will) I'll consider purchasing a Model X or if the family doesn't grow, then a Model 3.

I'll talk to the Mr and see if purchasing it is even an option for us.

I just want to solve the issue ASAP. This is my pre mommy gift to myself. I am dying to get my hands on such a beautiful car!!

 

[pdxrunr]

Just to add my $.02 here. If you have the cash, putting more down (cap reduction) isn't a negative or a waste of money. If you're leasing, you are agreeing to pay roughly $35-40K over 36 months. The amount you pay is the same whether you make 36 payments, or a single payment of $35K. You're aren't being affected by putting more down on a lease. The purpose of a lease has many factors, but not taking a depreciation hit on the unknown value with regards to having to sell the car is one of them (business write off being another excellent one). With a lease, you're paying for the use of the car for 36 months. If you were to "finance" the car, make 36 payments, then sell the car, you are essentially doing the same thing, but you are risking what you will be able to sell it for. With a lease, the residual is a known number, which you can walk away from if you like, most likely. If leasing is what is best for your situation and you have the required cash they want up front, you should do that, or the co signer idea is valid as well, but if leasing is desirable, I don't see why you would suddenly finance the car.

 

[chillaban]

Just to add my $.02 here. If you have the cash, putting more down (cap reduction) isn't a negative or a waste of money. If you're leasing, you are agreeing to pay roughly $35-40K over 36 months. The amount you pay is the same whether you make 36 payments, or a single payment of $35K. You're aren't being affected by putting more down on a lease. The purpose of a lease has many factors, but not taking a depreciation hit on the unknown value with regards to having to sell the car is one of them (business write off being another excellent one). With a lease, you're paying for the use of the car for 36 months. If you were to "finance" the car, make 36 payments, then sell the car, you are essentially doing the same thing, but you are risking what you will be able to sell it for. With a lease, the residual is a known number, which you can walk away from if you like, most likely. If leasing is what is best for your situation and you have the required cash they want up front, you should do that, or the co signer idea is valid as well, but if leasing is desirable, I don't see why you would suddenly finance the car.

It's also worth noting that the Tesla resale value guarantee is another interesting alternative if leasing is not an option / difficult to get approved. For financing approval, the amount you put down will likely affect the chances of getting approved at a favorable interest rate….

Like the lease, there is a slight price premium (the interest rates for GRV-qualified loans are higher than credit union loans), but you get the benefit of a known cost to get rid of the car in 3 years.

Just a fun cautionary tale: I currently have a 2014 Audi A6, fully loaded ($73k MSRP), and at the time I entered my lease, it almost seemed like a rip-off with a 49% residual, because at the time, 3 year old A6's were selling on the market for a good 60%+ of their original value. I had expected to break even after 2 years. Then, Dieselgate happened, the A6 got facelifted, new car incentives got better. Long story short, right now my residual is at $38k and the best sale / trade-in offer I've gotten on the car is $34k, which makes me $10,000 underwater with about $6000 in lease payments remaining. It's literally cheaper to park the car and keep making payments than to attempt to get rid of the car right now at fair market value. So leasing definitely worked out well in my favor, and it's one of the reasons why I was able to financially plan my Tesla order. There's a huge peace-of-mind in having a 100% guaranteed, 100% known cost for getting rid of the car. I call it trade-in insurance. Of course, if you were to lease 1000 times, you lose money in expectation versus trading in the car yourself. But once in a while, you end up in a situation like mine where the lease just protected me from a $10,000 loss trying to sell the car.

 

[e-FTW]

I had a different reason for a similar issue as you: lack of credit history.
My reason was that I moved to the US form Canada last year. Meaning I left my fantastic credit score and history up north. Down here, no one wants to lend me anything, and getting a credit card or two was like asking for the nuclear codes.

With Tesla, after US Bank predictably turned me down like some penniless punk kid, they were able to leverage their own financing arm, Tesla Leasing LLC, to lease me the car by using my Canadian credit history. Although, this means I am not building a credit history in the US with the car, I don't care because the car makes me forget about this every time I get in.

This probably does not apply to you, but figured I'd share for the benefit of others.
Am a fan of leasing because it is too early in the game of EVs to have this much skin in the game (owning one). Tech changes too rapidly right now to be on the hook for depreciation, and I planned to get a 3 next all along.

 

[SageBrush]

Yeah they gave me the option to put more down. But since I am leasing and not planning on keeping the car past the 3 years, I don't think I want to put more down than the required amount.

This reasoning is flawed, as mentioned above. How much down payment does the financier want ?

 

[Vrrooom]

You may want to look for FIs that finance leases. I can't remember any offhand, but there were a few local credit unions that leased cars: you pick what car you want (new or used), and they run a lease for you based on required miles. At the time (3 years ago), there were quite a few and my sister did a lease on a BMW at a lower payment and more favorable terms than BMW Financial.

 

[EVentuallyMyS]

Hey guys!
Been MIA for a little bit over here...
After much discussion with my better half, we cosigned the vehicle, got approved almost instantly and we are now awaiting in the infamous production queue.....
I keep checking out my Tesla order every 2 seconds. I can't think! I am having a hard time focusing at work.... July can't come soon enough!