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Leasing: 720 Credit Score, $70,000 Income, Only 2 Credit Cards w/low balances

Discussion in 'Model S: Ordering, Production, Delivery' started by KDIceBergSlim, Jan 20, 2015.

  1. KDIceBergSlim

    KDIceBergSlim Banned

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    I wanted to get the opinions of folks who have leased or finance, to see what you're experiences are.

    The specs of my Model S would be: $92320 before tacking on fees and taxes. When i take my Net income ($4972) against the monthly payment $1136, the ratio is only 22% of my income

    So I am trying to find out if i would be a approved for a lease with these credentials. I am working my way up to the 720 credit score, should be there in about 2 months. I havent bought anything on credit for quite sometime, 2004ish..

    I have since opened 2 credit cards with very low balances owed.

    Would i be able to make it happen?
     
  2. sickfox

    sickfox Member

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  3. yobigd20

    yobigd20 Well-Known Member

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    If you have no other liabilities (mortgage, rent) I don't see why you wouldn't be approved. How much do you plan on putting down?

    That being said, in my personal opinion, putting 22% of your monthly income towards a car is really really baaaadddd. I can't tell you how to spend your money though. I will say that if you go to buy a house next you'll definitely get rejected since your debt to income will already be really high. So just realize that you're really boxing yourself in with this decision. If you want one really bad on a $70k income I would look into the used S60 market. Or save up and wait for Model 3. Again, just my advice. You do what you want. Good luck!
     
  4. TexasEV

    TexasEV Active Member

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    None of my business, but that's really foolish to buy or lease a car that costs more than your annual income! Unless you plan to live in your car.
     
  5. dsm363

    dsm363 Roadster + Sig Model S

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    Agree with everyone. Especially since you have two credit cards that aren't paid off. I'd definitely look at used market or Model 3.
     
  6. bonaire

    bonaire Active Member

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    Close one of the cards and wait a month. But really, I assume your percentage is based on gross income and not net? Don't forget insurance costs in the cost of owning. If you do not have family or plan on kids soon, and feel the car purchase is satisfying a personal need, go for it. But is it really worth it to a rational mind? Hard to know. There are and will be a lot of fun EVs on the market in a couple years that might work better with the budget you have. Do you put away money now into 401k? Do you have all the makings of good savings like 6 months of emergency funds?
     
  7. svp6

    svp6 Member

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    Remember you have to add tax to the monthly fee. Also upfront costs (5000 cap cost, first month + registration fees). For me it was ~13k upfront costs, but my configuration was more expensive.
     
  8. Gizmotoy

    Gizmotoy Active Member

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    #8 Gizmotoy, Jan 20, 2015
    Last edited: Jan 20, 2015
    It's hard to know his full credit situation, but based on what he's posted this is probably bad advice. It is extremely easy to negatively impact your credit score by closing accounts, especially if your total revolving credit is low or you have few revolving accounts. The ratio of total available credit to total owed is a major contributor to credit score, and he states those two accounts have low balances. In other words, they currently have no or negligible negative impact on his score, while closing one may have substantial negative impact on his score. Total available credit is a component of risk (not score) and perhaps the only reason to consider closing the account, but his DTI is in the acceptable range, so it's unlikely to be an issue.

    All that said, I know I wouldn't be considering putting 22% of my net towards a car payment.

    Edit: Quick link for the above - Will closing a credit card account help my FICO score?
     
  9. KDIceBergSlim

    KDIceBergSlim Banned

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    The purpose of opening both credit cards was to boost credit score which I have already done..

    I do have rent, very cheap $450 a month. I plan on putting down the minimum $7,000 or I might go over and beyond to $13,000. I don't think putting more money down would really help me that much at all. I figure once I'm locked in to the lease I can contribute more to the 36 month term as I go.

    Taxes look to be $6,000 more all the way to total of $98,320.

    If I calculate my gross income against it, the ratio is still only 23%
     
  10. KDIceBergSlim

    KDIceBergSlim Banned

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    after looking at some outlook.. i think finishing up a couple of certifications, upping my income another $20,000 - $30,000 by 1 year.. Will be my best option.

    I really HATE DELAYED GRATIFICATION... believe you me, I might be the most boastful person after i get this car.

    In the meantime.. I will save up the cash towards the lump sum down payment..
     
  11. sandpiper

    sandpiper Active Member

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    Also none of my business, but I agree. One of the best decisions that I ever made many years ago, is to NEVER EVER borrow money for a discretionary consumption item. And a lease is effectively a car loan. I would suggest buying a lower cost vehicle and then getting into a Tesla once your finances permit. Sorry.

    - - - Updated - - -

    Great decision. I've seen far too many very bright, high income people with high potential careers dig themselves into a deep credit spiral.
     
  12. dalamchops

    dalamchops Member

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    I am 25, gross about 65k... love my MS60 and I have good credit (790)... Just gotta make some sacrifices in life.
     
  13. Gizmotoy

    Gizmotoy Active Member

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    The problem with these kind of black-and-white statements is that they often turn out to be incorrect. For example, financing rates are at historic lows right now and gradually rising. Even if you could buy the car outright today, it's probably wise to consider taking on some risk and financing at ~1.5%. Chances are good leaving that money invested instead of putting it into the depreciating asset up front is beneficial. The chance of the cost of money being any lower than it is right now within the next few decades is exceedingly small.

    Agreed.

    It might seem like small consolation, but with how quickly Tesla is improving, you'll be getting a better car by waiting until you're in a better financial situation.
     
  14. randompersonx

    randompersonx Member

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    There is a big difference in borrowing when you can afford to pay off in full, and have money making money elsewhere, and borrowing because you cannot afford to pay cash.
     
  15. Gizmotoy

    Gizmotoy Active Member

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    Absolutely, which is why I noted that black-and-white statements like the one made are often incorrect.
     
  16. sandpiper

    sandpiper Active Member

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    That would be true, except that it ignores the human element. What I've observed is that people who start out young to take on substantial consumption debt, too frequently let themselves get buried in it. Soon enough, they're one or two missed paycheques away from blowing a payment, and are having a hard time saving a penny for the future.

    I don't borrow money and I've never regretted it for a second in my life, even if it means that I've bought used cars or a smaller house.
     
  17. bonaire

    bonaire Active Member

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    I will be very boastful once I reach a point of no-debt in my life. In the mean time, one statement from a guy I am going to recommend (below) reminds me that "maturity is the ability to delay pleasure". Boosting income first is a great step forward for you.

    I would suggest you go through what is called "Financial Peace University" setup by an advocate of getting debt out of your life, Dave Ramsey. Some may say "why put off what you can do today". But building a growing debt load is not really beneficial to a long and stable financial life and as such, you have seen warnings in this thread about making any rash decisions until you are really sure of your financial future. The US Economy may look good to some but be sure to reach as high on your skill level in life before doing big deals. You know that a car is a fast-depreciating asset. Once you drive any new car off the lot, you are losing $8K in value (or more). About $1 per driven-mile after that.

    I have blindly paid-forward for others to go through Financial Peace University, a couple who I met on forums like this. It is not much, about $99, but I am actually going to offer it up to you (the OP) and say if you will go through FPU, I am willing to pay for it for you to get a head start on your financial planning life ahead. Just send me a PM and I would be glad to go through with my offer (it's genuine).
     
  18. ReddyLeaf

    ReddyLeaf Member

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    +1+1 Amazing people on this forum! You are making the correct decision. There is scientific evidence that delayed gratification is good predictor of future success. Personally, I waited 25 years for my first EV. While Tesla is an amazing car and company, in the end, it's just a car. I've considered purchasing one just to help support the industry, and in the future I may still. Instead, I purchased a 2011 Leaf which more than meets my needs (and many of my wants). If you are able to work within the Leaf's range constraint, a 2-yr lease can now be had for less than $300/mo in most areas. Other short-range EVs have similar lease prices. All EVs have seen significant depreciation and many used vehicles are "good" deals, based on pricing, but with "older" technology. Yes, these other EVs are not a Tesla, but they will still meet the transportation needs of many people. As strange as it may seem to some, I've never had an automobile loan and don't quite understand why anyone would get one (even at today's insanely low rates). Heck, my 2nd newest vehicle will turn 24 yrs next month, runs great, and I still consider it new. But then again I've never thought of myself as a normal American consumer.
     

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