I just got this question about how bad credit affects the way we lease a new car:
Marcus, let me start by saying “GOD SENT YOU FROM CAR DEALING HEAVEN” and I regret dearly not coming across your site before.
I just leased a VW ATLAS and was simply disgusted by the mambo-jumbo tactics and utterly steal I was subject to. As I was hitting my head on the keyboard regarding down payments. However, I still have hope.
I am debating between 2017 Mazda 3 (Sport) vs 2017 Hyundai Elantra GT. Hyundai is making me thirsty for some of these amazing manufacturer incentives which can seriously bring the MSRP down.
My biggest concern is that the rent charge will skyrocket due to credit score. However, under Hyundai website, I was given the mini version of EQUIFAX (BLACKBOOK) and credit score was a lot higher (630 Capital vs 680 EQ black book).
This got me thinking that I wouldn’t be able to get a great deal as I had hoped to. Am I wrong to assume this? I have considered that these car dealers may “approve” my lease by Dec 28 but later calling and ask to take the lease back the first week of January (Read your tutorial on this maneuver as well?)
Thanks for the hat tip. I appreciate the kudos on my KTL Leasing System…
And I would not beat yourself up on seeing this blog earlier. The car industry (and their compromised “journalists”) ignore this blog (for obvious reasons).
Yes. The car industry knows the average shopper no longer visits 5 locations like our parents use to.
These days, we have been tricked into “researching” from home and visiting just one dealership. And this is EXACTLY why car sellers treat us with no respect. They have the car we want. They know we are too lazy to shop around. And this is how they hustle us for thousands extra. Evil genius, eh?
At the risk of sounding like a broken record:
I would NEVER, EVER shop for a new car at the dealership. This is a guaranteed way to pay thousands more than we need to. (It is also a guaranteed way to be held hostage in their dealership between 3 to 5 hours).
Now about your credit situation:
Most people walk into a dealership. Once they find the car they want and agree upon a price, the Finance Manager pulls up their credit report. And when they see “sub prime” credit (i.e. a FICO score under 620), they say something like:
“The bad news is we just pulled your credit report and see you have a “few issues”. But the good news is we have relationships with several banks and can still get you this car for just a few extra dollars per month.”
The truth is sub-prime credit will significantly increase our monthly payment. The interest rate is often double… sometimes triple the best interest rates. I have seen car payments for $250 a month for those with excellent credit become a $425.00 a month payment to those with subprime credit.
Walking into a car dealership will cost us big if we do not have a good credit score.
The good news is my clients are not penalized for so-so credit. Because as long as we get approved, the interest charge remains exactly the same as those with excellent credit. Typically, a 620 FICO score is the lowest score we need to qualify for a new car lease.
We get this benefit because we only get into new cars with high-volume car dealerships. They care more about selling hundreds of units per month than squeezing out the greatest profit per car sold.
You talked about a car dealership “reneging” using the spot delivery scam on us. This can happen to anyone – even with excellent credit. But when using my system exactly as I describe, we virtually cut out any last-minute shenanigans.