Rental Property Investor · Orlando, FL · Member since 2017 · 11 posts · 1 vote
Hello everyone!
Looking for everyones great advice on here before pulling the trigger. I have a unique situation in which I leased a car (2017 Jeep Wrangler) I love it and I am looking to buy it before the lease ends, and keeping it forever till it dies. Doing this as opposed to waiting for the lease to end not only will lower my monthly payment by about 100 dollars but it will also save me about 5000 dollars total.
Now... I am looking to buy my first property in the next 3-6 months and was wondering if financing the car now as opposed to keeping the lease will hurt me since my credit will be ran for the loan. My monthly payment will go down so it will help my debt to income ratio but i dont know if the credit check and new car loan will affect my buying a property in a short amount of time (3-6 months).
The options I see are finance it now, or wait and finance it till after the closing on the property in 3-6 months. Suggestions, advice, and all input is appreciated. Thanks!
Model year 2017 is too shiny by BP standards. Or having a car payment at all for that matter.
Turn it in or sell it at a profit, and then downgrade to a 1999 Civic.
I hate to be harsh but ....Leasing a car is foolish and costly . You are actually paying 14% on that loan to drive that car wether you know it or not . Only time this makes sense is if it’s written off for a company and the miles are kept low . You must think smarter in the future if you are going to be an investor bro! Don’t do that again
The effect it will have on your credit should be minimal honestly. A hard check will bump you down 5-10 points. If you are that concerned about 5-10 points perhaps you should get out of the lease and get something more economical. I can’t and won’t tell you what choice to make but you have to prioritize and decide just how important investing in the near term is to you. Is it worth sacrificing a little?
Model year 2017 is too shiny by BP standards. Or having a car payment at all for that matter.
Turn it in or sell it at a profit, and then downgrade to a 1999 Civic.
No one asked your income. So incomplete picture. If the jeep runs well and you can easily afford it, keep it. It is a good choice fir a landlord...I loved my minivan for hauling stuff and you can easily rent a truck at home depot. I am not a loan person so I cannot advise on your credit score, but having a late model reliable vehicle is worth something. Besides, you have probably eaten the biggest depreciation hit.
I have a 2001 Silverado pickup with working a/c and 170k that has been paid off for as long as I can remember. But at one time I was making payments. (I have another kind of old car too, and husband has newer sports car. And yes, cars depreciate but that long gone minivan and this truck were/is handy).
Thanks everyone for the input. @Marian Smith you are right, i make over 6 figures annually from my day job so the car payment is not an issue and its actually a pretty conservative payment. Im not sure why people are so judgmental... I will definitely not be trading it in for a 99 civic. In regards to financing the car before buying the house i will try to do it ASAP that way my credit has some time to recoup before going through with the house loan. Thanks everyone!
I hate to be harsh but ....Leasing a car is foolish and costly . You are actually paying 14% on that loan to drive that car wether you know it or not . Only time this makes sense is if it’s written off for a company and the miles are kept low . You must think smarter in the future if you are going to be an investor bro! Don’t do that again
Not always, there's plenty of good lease deals out there if you can live with the mileage restrictions. Not everyone wants an old car to run in the ground. If you chase inflated residuals and knock down the selling price you can get some really good deals..... however jeep is not in the this category.
Real life example; 15 Q50a, about 38k MSRP
39 mo, 10k miles/yr
Residual 20k.
I paid 28k for the car, so I have 8k spread out over the 39 mo. Additionally, in CA tax is on the mo payment vs sale price (9-10%).
So I'm paying 250/mo for tax included for a 38k car. I have about a year left of the lease where I can buy it for 20k, but it's not even worth that now... it'll be worth closer to 12-13k.
For the majority of cases leases sound great till you go to trade them in or buy them outright . A lease Is a clever way for manufacturers to dump cars off the lot at high rates by tricking people with low monthly payments .
For the majority of cases leases sound great till you go to trade them in or buy them outright . A lease Is a clever way for manufacturers to dump cars off the lot at high rates by tricking people with low monthly payments .
It's not complicated, you know the EXACT value of the car on a set date. You also know the penalties for going over the miles etc...
The "trick" is to chase the artificially high residuals... if you loved the car for some reason buy a CPO version for cheaper than your lease expiration. If you "make" money at the end of lease you paid for that over the course of your lease..
It always amazes me when people earning 6 figures in a job want to bother with the hassles of real estate investing. By most peoples standards a 6 figure income is much more than sufficient to have surplus income to put into something actually passive.
Take your savings invest in a fund and keep your life simple. Avoid the long hours, hard work and high risk of dabbling in real esttae.
You have it made already you should be very happy.
It always amazes me when people earning 6 figures in a job want to bother with the hassles of real estate investing. By most peoples standards a 6 figure income is much more than sufficient to have surplus income to put into something actually passive.
Take your savings invest in a fund and keep your life simple. Avoid the long hours, hard work and high risk of dabbling in real esttae.
You have it made already you should be very happy.
Um. What?
I know a lot of my family/friends clearing multiple 6-figs enjoy RE investing. Day jobs can be boring at times!
(I may or may not be included in that category as well.)
It let’s you buy Class A rentals that are nice and shiny.
Thanks everyone for the input. @Marian Smith you are right, i make over 6 figures annually from my day job so the car payment is not an issue and its actually a pretty conservative payment. Im not sure why people are so judgmental... I will definitely not be trading it in for a 99 civic. In regards to financing the car before buying the house i will try to do it ASAP that way my credit has some time to recoup before going through with the house loan. Thanks everyone!
I was just messing with you. I drive an enthusiast car myself, so I’m just mocking all the clowns on here that will say you have to be miserable driving around a POS if you want to be successful at RE.
@Aaron Hunt sarcasm is hard to detect through the internet! lol... as long as you arent buying cars that will depreciate by half by the time you drive them off the parking lot im all for buying better/newer cars
@Thomas S. If you think "funds" are a better investment than RE i think you are on the wrong website, way better ROI and its more fun!
@Aaron Hunt sarcasm is hard to detect through the internet! lol... as long as you arent buying cars that will depreciate by half by the time you drive them off the parking lot im all for buying better/newer cars
@Thomas S. If you think "funds" are a better investment than RE i think you are on the wrong website, way better ROI and its more fun!
Nope, I let the OG owner take that initial massive hit on my M3.
I picked it up afterwards, tuned it, and then drove the tires off it. (Literally, two flats in the last 12 months.)
I financed a small amount for a car ($5500) while I was in escrow with my first property. It was not an issue because my DTI was still okay. I was earning 6 figures and had no other debt. The hit to my credit was negligible, and I disclosed to the lender immediately.
As for the comment about 6 figure salaries, they don't stretch as far as you might think in some areas of the country.
Looking for everyones great advice on here before pulling the trigger. I have a unique situation in which I leased a car (2017 Jeep Wrangler) I love it and I am looking to buy it before the lease ends, and keeping it forever till it dies. Doing this as opposed to waiting for the lease to end not only will lower my monthly payment by about 100 dollars but it will also save me about 5000 dollars total.
I would be interested in this math. That scenario doesn't sound quite right. But, that's really neither here nor there.
If you already have 6-9 hard inquiries on your bureau, and are borderline having a good enough score to do your deal, maybe wait.
However, if you don't have more than 1 or 2 inquiries in the last 6 months, this one shouldn't hurt your score much, and not for long. You may be required to write a Letter of Explanation to the lender as to what was the reason, and what was the result of the inquiry? (Bought my lease out. Lowered my payment $100/month)
It should not affect your deal, but I would also just check with your mortgage person first, just to be sure. Some lenders have weird overlays and a recent car inquiry might bother some lender for some reason, so probably better to just check first. It used to drive me crazy when a loan would fall out because a borrower did something like this without asking anyone, and it killed an otherwise sketchy deal.
@Carlos Garcia cars are an emotional decision for most people. That is why you will find some people who will argue that you need a fancy new car, because they are car people. They derive enjoyment from a fancy car, like other people enjoy traveling or electronic gadgets. There is nothing wrong with spending money on enjoyment. Just don't fool yourself into believing that a new car is ever a good financial decision. Mathematically it would be better to ditch the lease and buy a good used car.
Assuming you are keeping the car, then I see nothing wrong with converting the lease to purchase. It should not hurt you when buying a property and could help with a lower payment. Nothing wrong with a new car if you drive it for many years and get use out of it.
How do you keep up with this? Looks like I need to pick up a beginner's book to understand MF, residuals, etc. I'm clueless about this so I've typically avoided discussions about leasing completely.
How do you keep up with this? Looks like I need to pick up a beginner's book to understand MF, residuals, etc. I'm clueless about this so I've typically avoided discussions about leasing completely.
Message me, it's not hard really.
That site basically like here but cars vs houses haha.
I'm paying 250 mo for a q50, 489 (40 tax, 49 warranty ) on a 528i lol. Almost chased down a e300 that stickered for 60 somethng and if that was going to be like 450 haha.