Should I consider a one-pay car lease?

I’m a full time grad student 27 y/o with one more year to go. I want to get the 2017 Honda Civic EX and with your system I’m confident I can get one for $200/mo with no down payment.

I wanted to know your thoughts about single payment lease? I think it would increase my chances of getting approved. My Fico score is 730 and I have student loans and 5-6 credit cards with 30k limit less than 10% utilization. However, since I dont have a real income other than my student loan, I wasnt sure about my approval.

Prepaying a lease defeats the biggest benefit of leasing – to minimize the use of our hard-earned cash.

I get the appeal to consider a one-pay lease. We think we do not have a high enough credit score to get approved.

But:

I find car shoppers significantly underestimate the “eagerness” of car sellers. They will do just about anything to lease us one more car today…

And this includes pulling off minor miracles to get us into one of their cars.

I am continually amazed how easy it is to get a car loan (or lease).

I helped my client get into this Honda Accord EX lease with a credit score even less than 680 FICO. I remember her concern the night before – her credit score was sort of awful… yet, the next day, she was driving her new car – and with no money down, too.

Now:

Rumor has it there are up to 50 FICO scores. And there is certainly an Auto FICO score (which tends to weigh more on previous auto loans rather than “real income”).

But, you have a 730 FICO score. And when it comes to getting into a car, you are a dream come true for car sellers. (Because a lot of shoppers have TERRIBLE credit scores).

I find any score 680 and above tends to get approved these days. (The lowest I have seen get approved is around 630.)

One pay leases’ (possible) dirty little secret

Here is something NO ONE is talking about with one-pay leases:

Imagine you take delivery of your new car, drive it down the road and crash it real bad. If the insurance company considers it a total loss, you get $0. Or, maybe it gets stolen. Instead, the insurance claim’s proceeds go to the leasing company. And as a result, you lose your entire one-pay, lump-sum payment. And you have no car to show for it.

Of course, the earlier it happens during the lease term, the more we (might) lose.

Now:

The fine print of some lease agreements say one-pay leases MIGHT be compensated for a total loss – like in this agreement:

one pay lease total loss fine print

But, I would NEVER trust a car leasing company to “do the right thing.” There is little incentive for them to help us out.

See how the fine print reads:

… we may at our option…

YIKES! That is not a confidence-boosting piece of legalese.

Call me jaded, but I have personally seen too many horror stories with this stuff.

A better option is to open up a FREE bank account with that one-pay cash and use auto-pay for payments. This way, it seems like we are not making payments. It keeps our cash safe. It guarantees us on-time payments (which helps to boost our credit score). And it gives us a no-interest line of credit in case of unexpected emergencies.

Plus, some leasing companies offer an additional discount when we setup auto-pay for our monthly payment.

One pay leases (might) wreck our credit scores

Your 10% utilization is a BIG win for you. And from all the leases I see cross my (electronic) desk, anything above a 680 FICO score is usually a lock for getting approved for a leased car.

Even better, leasing a car is better for our credit score than traditional financing. Here is a case study about it.

Those who use a one-pay lease (might be) hurting their credit score, too. Because depending on how the leasing company reports the transaction, the entire one-pay balance might remain on our credit report until the day we return the car…

On the flip side, making regular lease payments reduces the debt amount that shows up on our credit file with every payment. And this helps our debt-to-income ratio… which helps our credit score.

Here is why it is easy to get approved with a car lease

Car companies are in cahoots with their captive lease companies. For example, Toyota “writes” a lot of leases through their Toyota Financial Services arm. INFINITI writes their leases exclusively with their INFINITI Financial Services. And so on.

I am 100% sure they scare us about low credit scores so car leasing companies can raise their “Rent Charge” rates on us. It has almost nothing to do with us getting approved.

I suspect this is the real reason for credit scores – to justify a boost in interest rates and fees.

Punchline

When you use my KTL leasing system, it is almost impossible for car leasing companies to inflate the cost of borrowing money on our car lease.

Because with my system, car sellers have to keep all costs low to meet the price we ask for.

In simple speak, it does not matter what your credit score is – as long as you get approved.

And yes. I am confident you can get a 2017 Honda Civic EX for near $200 monthly with $0 cash down.