Archive for the ‘Your Credit Rating’ 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 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.


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.


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.


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.

Can a Lease Price be Negotiated Lower than MSRP?

Sunday, April 15th, 2012

A lease price is quite often negotiated lower than the MSRP. The lease price, which in technical leasing terms is known as the “selling price” or “gross capitalized cost,” is used to come up with the monthly car lease payment. The lower the selling price of a car, the lower the monthly car lease payment. Therefore, it is in the best interest of people interested in leasing a car to negotiate the selling price of the car to bring it as low as possible.

If the dealer offers you a lease deal that uses the MSRP as the selling price, you have not necessarily received a good deal. Most good lease deals use selling prices that are significantly lower than the MSRP. Prior to visiting a dealership, you should look up invoice prices for the cars that you are interested in leasing. Invoice prices are the prices that dealers pay the manufacturers in order to buy their cars. The selling price of a car lease deal should be as close to the invoice price as possible in order for it to be considered a good lease deal. In some cases, the selling price is even lower than the invoice price.


What to Know When Leasing a Car

Thursday, March 15th, 2012

When shopping for a new car to lease, many people tend to visit car dealerships without much prior preparation or knowledge about car leasing and what it entails. Most people will probably have a fair idea of the make and model vehicle they are interested in leasing, but knowing this piece of information by itself is far from sufficient when it comes to what you should know when leasing a car. In this article, we will provide specific information regarding what to know when leasing a car so that you are well-prepared and well-informed.

1. You should know that you are absolutely sure that you want to lease a car. Keep in mind that once you lease a car, you have signed a legally binding contract that obligates you to make a payment every month until the end of your lease. Of course, there are ways to end your car lease early, but they aren’t always available or easy to do.

2. You should know what car you want. It is important to know what car you are looking for so that you don’t waste your own time or the dealer’s time. Do your research before going to the dealership and come up with the ideal car that you plan on leasing. This significantly reduces the time that you will spend at the dealership.

3. You should know your credit score and be familiar with your credit history. Your credit score will essentially determine how good of a lease deal you can get. People with tier 1 credit can get the best deals available because they have exceptionally high credit scores. If your credit hasn’t been established, which is common for younger people whose access to credit is more limited, you may not qualify to lease a car and you should seek a co-signer to help you get approved.

4. You should know the invoice price of the car you plan on leasing. The invoice price of a car is the price the dealer pays the manufacturer to buy the car and place it in the showroom or lot. It is important to know the invoice price because it tells you just how much you can reduce the selling price to bring it as close as possible to the invoice price in order to get the lowest monthly payment. The selling price is the negotiated price of the car that the dealer uses to calculate your monthly lease payment. The lower the selling price, the lower your monthly lease payment.

5. You should know how to calculate your car lease payment. If you understand how a car lease payment is calculated, you stand in a better position to negotiate because you have familiarized yourself with with what can or cannot be changed or adjusted with respect to a lease deal provided by the dealer.


Do Car Leases Appear on Your Credit Report?

Sunday, March 11th, 2012

Yes, car leases do appear on your credit report! They typically appear on your credit report as “installment loans” or “installment accounts.” An installment loan refers to a type of loan that requires you to pay a certain amount of money in a fixed amount of time. A car lease is listed under the installment accounts section of your credit report because it requires you to make a payment every month for a specific number of months.

Depending on the credit bureau (Experian, Equifax, or TransUnion) and the type of credit scoring being used, your credit report could also include details that lists how much is left to be paid or even the total sum that you are obligated to pay by a specified number of months. The term, or total number of months, can also be listed.


What is Tier 1 Credit?

Tuesday, February 28th, 2012

If you watch television or listen to the radio often or regularly, you most likely have heard automobile commercials use the phrase “tier 1 credit.” For example, a commercial on TV or the radio may specify a particular lease deal on a particular make and model of car and subsequently mention that the deal is available to tier 1 credit customers only. Once this is mentioned, many people often wonder what exactly tier 1 credit is and whether or not their credit score is high enough to be classified as “tier 1.” In this article, we will explain what tier 1 credit is and what credit score can be considered tier 1.

Tier 1 credit customers are classified as having the highest credit scores. A tier 1 credit rating is one that provides you with the best deals available on auto leasing or auto financing. Generally speaking, a FICO credit score of 720 or higher is identified as tier 1 credit. Tier 1 credit customers can obtain the lowest interest rates and the lowest payments possible because they are considered the most responsible and least risky credit customers. If your credit score isn’t considered tier 1, it could be tier 2, tier 3, tier 4 or even lower. Each tier below tier 1 would give you increasingly higher interest rates, which would also give you increasingly higher car payments.


Video: How to Calculate Your Car Lease Payment

Saturday, January 7th, 2012

In this video, learn the secret formulas that dealers use in order to calculate car lease payments from start to finish. By learning the formulas that dealers use, you will fully understand what a lease payment consists of, which allows you to better negotiate a good deal on any future car leases.