Archive for the ‘Articles’ Category

Can you Lease a New Car with No Credit?

Wednesday, May 16th, 2012

Leasing a car with no past credit history can be difficult. Car dealers typically want to lease vehicles to individuals who are most likely to make their lease payments on time every month and who are least likely to default on their monthly payments. When you have no credit established, it isn’t as easy to prove to the dealer that you will not default on your car lease because you have no established credit to show the history of your debts and payments on various credit accounts. Although leasing a car with no credit can be difficult, it isn’t entirely impossible. In fact, there are several methods through which you can successfully lease a car despite the fact that you have not established any credit.

One way to successfully lease a car with no credit is to show proof of your income to the dealer. Many times, even when you have an excellent credit score and an excellent credit history, dealers will ask to see bank statements or paycheck stubs in order to prove that you have the financial capability to make the monthly lease payments. Your goal as someone with no established credit is to prove to the dealer that you have a stable job and/or a stable income in order to make the monthly lease payments.

You should also consider asking a close friend or family member to act as your cosigner. It is important to remember that your cosigner will be equally responsible as you will be for making the car payments every month until the end of the lease. Therefore, if you lose your job and are no longer able to make your lease payments, his credit score will suffer just as yours will. You should pick a cosigner who has not only established a long credit history, but who also has a relatively high credit score.

Because you want to lease a car with no credit, expect to pay more. The dealer will most likely require you to make a higher down payment along with a higher monthly payment in order to offset the risk that is associated with someone who does not have any established credit.

Can you Modify a Leased Car?

Tuesday, April 24th, 2012

Some people who are interested in leasing cars often ask whether or not a leased car can be modified. These people may be interested in such modifications as adding spoilers, tinting windows, or even changing the rims. The short answer is that yes, you can modify a leased vehicle, but a couple important things must be taken into consideration before doing so.

Whether or not you can modify a leased vehicle really depends on whether you plan on buying the car at the end of your lease. If you plan on buying the car at the end of your lease, modifying it should not be a problem because you will eventually own the car. However, if you plan on returning the vehicle to the dealership after your lease term is up, you need to return the car in its original factory condition without modifications. Therefore, any modification you make must be removed or reversed without damaging the car. The policies on damage to a leased vehicle may vary from one finance company to another, but you could be charged for any excessive damage to the car. To sum up, if you plan on returning the vehicle upon the end of the lease, either modify the car with caution or avoid modifying the car altogether, but if you plan on buying the car upon the end of the lease, modifying it should not be a problem.

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Can a Car Dealership See Your Credit Card Balances?

Tuesday, April 24th, 2012

The car dealership can definitely see your credit card balances. This information is readily available on your credit report and upon checking your credit, the dealer will have access to all your credit accounts including your credit card accounts. In spite of this, there is no reason to worry about them having access to this information unless your credit card balances are affecting your credit score. Most dealers mainly focus on the credit score itself as opposed to specific details about your credit history and payment history.

If you are concerned that high credit card balances may affect your ability to lease a car, this could be a possibility. High credit card balances that are not paid off entirely when the payment is due, have a negative effect on your credit score. In fact, 30% of your FICO credit score – one of the most well known credit scores – is based upon the amounts you owe. If you have high credit card balances, it would be in your best interest to come up with a payment plan to reduce those balances as much as possible. Reducing the amounts you owe will definitely help boost your credit score.

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Does Leasing a Car Build Credit?

Tuesday, April 24th, 2012

Leasing a car definitely helps build credit. Leasing a car is actually an excellent way to help build your credit because it requires you to make a payment every single month until the end of the lease. As a result of this hefty responsibility, having an auto lease on your credit report is much more advantageous that having say a credit card account. The consequences of missing a payment on a credit card aren’t nearly as intense as the consequences associated with missing a payment on an auto lease. If you miss a payment on your auto lease, the bank can and will repossess your car.

The most popular type of credit being used is probably credit cards partly because they have become so easy to get access to. Some people only have credit cards and no other type of credit such as mortgages, loans, or car leases in their current or past credit history. This is not smart if you are attempting to build your credit. One of the factors that influence your credit score is the types of credit you have used. In fact, one of the best known credit scoring companies, FICO, uses the types of credit that you have used in order to determine 10 percent of your FICO score. Therefore, using different types of credit can significantly improve your credit score.

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Am I Paying Interest on Leasing a Car?

Tuesday, April 24th, 2012

Some car leasers often wonder whether there is some sort of interest being paid on their monthly lease payments. Technically speaking, there is no “interest” on  leasing a car, but that’s only because dealers use a different term for interest or interest rates when it comes to car leasing. You see, for financing the purchase of a vehicle, interest rates are used, but when leasing a vehicle, money factors are used. The money factor is generally a small decimal number that is similar to an interest rate. The money factor can even be converted into an interest rate by simply multiplying it by 2400.

The money factor is used to come up with the finance fee, which makes up a small portion of the monthly lease payment. The finance fee is a required fee that is paid to borrow the finance company’s money in order to lease a car. Similarly, when you purchase a vehicle, an interest rate is used to come up with the amount you are obligated to pay in interest charges.

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Why do People Lease Cars Instead of Buying Them?

Monday, April 23rd, 2012

There are plenty of reasons why people lease cars or prefer to lease cars instead of buying them. In the past decade or so, car leasing has actually become a popular way to drive a brand new vehicle for several years without the burden of owning it. In fact, according to the Bureau of Transportation Statistics, car leases made up approximately 20 percent of the total vehicles sold and leased in 2010. What follows are several reasons why people lease cars instead of buying them.

Leasing a car costs less than buying or financing a car. If you are looking for lower monthly payments, leasing a car is the way to go. The reason why leasing a car costs much less than financing a car is pretty simple. When you lease a car, what makes up the most sizable portion of your monthly payment is the difference between the selling price of the car and its value at the end of the lease. This difference is called the “depreciation” and what you pay as a result of this difference is called the “depreciation fee.” However, when you finance a new car, you are paying for the entire agreed upon value of the vehicle over a specific number of years, which generally leads to higher monthly payments when compared to lease payments.

Leasing a car helps build or improve credit. Some people view leasing a car as an effective means to build their credit or to even improve their credit if they have suffered from credit problems in the past. One of the factors that affect your credit rating is types of credit that you have used. In fact, 10 percent of your FICO credit score is determined by the types of credit you are using now and that you have used in the past. Therefore, by using different types of credit, you can help build or improve your credit score.

Leasing allows people to drive new cars every few years. Some people do not want to be permanently attached to their cars. By leasing cars instead of buying them cash or financing them, they can simply return their cars to the dealership at the end of the lease term and subsequently lease another car that they like. This is one major reason why leasing is quite popular for luxury cars. Since many luxury car drivers may get tired of driving the same car, they tend to lease their cars so that they can choose a new luxury vehicle once every few years.

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Difference between MSRP and Invoice Price

Friday, April 20th, 2012

What is the difference between the MSRP and the invoice price? The MSRP is the manufacturer’s suggested retail price which is also known as the “sticker price.” It is essentially the “suggested” retail price but it isn’t necessarily the price that dealers use as the selling price for their cars. Depending on various factors such as demand and availability, the actual selling price could be higher or even lower than the MSRP.

The invoice price is simply the price that dealerships pay for cars. The invoice price is significantly lower than the MSRP, but how much lower depends on the make and model of the vehicle. Many car buyers today look up the invoice prices for the cars that they are interested in purchasing or leasing so that they have an idea of how much the MSRP can be negotiated without reaching a price that is lower than the invoice. In some cases, dealers will even offer a deal where the selling price is lower than the invoice price.

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What is Rent Charge on a Car Lease?

Tuesday, April 17th, 2012

The rent charge on a car lease refers to the total sum of finance charges that the lessee will pay over the entire term of the car lease. The rent charge is also known as the “lease charge” and it is one of the three components of what is paid for over the term of a car lease. To come up with the rent charge, the dealer uses the money factor. The money factor is a small decimal number that is similar to an interest rate on loans or vehicles that are financed. The money factor is based on the lessee’s credit worthiness, which essentially entails that people with higher credit scores will be offered lower money factors and thus lower monthly payments.

The rent charge is essentially a fee that is paid for borrowing the finance company’s money. Think of it as paying interest on a loan. The rent charge makes up a small portion of the total monthly car lease payment. The depreciation charge is what makes up the majority of the total monthly lease payment.

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Can I Lease a Car With Bad Credit?

Tuesday, April 17th, 2012

Many people who suffer from bad credit often wonder whether they can lease a car with bad credit. While having bad credit puts you in a risky position from the point of view of the leasing company, it isn’t entirely impossible to lease a car with bad credit. In fact, most banks and finance companies today realize that in such hard economic times where many people have trouble making ends meet, it isn’t surprising to find people who have high credit card balances and who may have even missed a few credit card or mortgage payments.

If you are wondering whether or not you can lease a car with bad credit, the short answer is that yes you can. Obviously, it is more difficult to lease a car with bad credit, but there are still several options available to individuals who want to lease a car but have bad credit or less than ideal credit. To learn about these available options, read the article on how to lease a car with bad credit.



What is the Difference Between Gross Capitalized Cost and MSRP?

Monday, April 16th, 2012

The difference between the gross capitalized cost and the MSRP has to do with two things. The first is pricing and the second is the actual price that is used to come up with the monthly lease payment. The MSRP, or the “sticker price” is the price that you’ll find printed on a car’s window at the car dealership. The MSRP is not the final price that the dealership uses in order to calculate your monthly car lease payment. The gross capitalized cost is the final negotiated price of a vehicle which is used to calculate the monthly lease payment. The gross capitalized cost is also known as the “selling price.” If the gross capitalized cost is significantly lower than the MSRP, the lease deal can be considered a “good” deal.

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