I have a 615 fico score and 5 thousand to put down as a downpayment. The car I really like is a 2007 bmw coupe thats going for $390 a month if you lease. Does my fico score matter? Is leasing not good in the long run?
2007-08-08 07:45:24 · 7 answers · asked by evangelina1980 2 in Cars & Transportation ➔ Buying & Selling
Leasing, you're only paying for depreciation. You DON'T OWN the car.
So if you lease the car for 3 years, you are paying for the difference between what the car is worth today vs what the car will be worth in 3 years.
So say the car is worth $40K today, but 3 years from now, the lease company believes the car will only be worth $18K. Your lease means you will be paying for this depreciated value of the car ($40K-$18K = $22K).
This means over the 3 years you will be paying $22K (+ the interest on that $22K) to drive the car. After the 3 years, you'll need to return the car. Typically dealerships will then allow you to purchase the car for a value that is typically greater than the $18K the car is now worth to them.
The biggest problem with lease agreements is the mileage limitation. You are restricted on the amount of miles you can put on the car. This is fine if you know how much you will be driving the car, but many people don't and many underestimate and end up paying a fine on mileage overage.
You can typically purchase extra mileage at the beginning of the lease for significantly less, and if you can get a good estimate of what you believe you'll be using this will limit your overall cost significantly.
The FICO score does matter a lot because you are still "Borrowing" the remaining $22K or the depreciation amount on the car. In many cases the FICO score is more important on a lease.
My rule of thumb. If you plan to get a new car ever 3 years and you can properly estimate how much you'll be driving in those 3 years, leases can be a good deal. As long as you follow those two conditions, you are never upsidedown on a lease payment, unlike those people who purchase, then try to sell the car before 3 years and find themselves rolling over thousands of dollars into their next car loan.
If you plan to keep the car for more than 4 years, or don't have a clue on how much driving you do on a yearly basis. Then purchasing is typically a safer choice.
2007-08-08 07:57:31 · answer #1 · answered by hsueh010 7 · 2⤊ 0⤋
The general rule I have heard is that renting is not a good option. For some conditions and for certain people, renting is a good idea, but for most people is isn't. For one thing, there are always extra costs and expenses they don't tell you about, for example, the mileage penalty is terrible. Search Yahoo Answers for similar questions, this has been asked many times before.
If you want a BMW, look for a used model. Or, look at cheaper options or models. You are generally better off buying. Plus, the cheaper car will be less expensive to insure and register.
Credit score is an issue. 615 isn't too bad, but you will likely not get a good interest rate unless you have purchased a car with the same company and have a good proven record. Shop around, I found a better rate with my Credit Union than I would have gotten from the dealership.
2007-08-08 07:59:17 · answer #2 · answered by Wundt 7 · 0⤊ 0⤋
Certainly. All lease contracts have a lease-end purchase option. The purchase price is set at the beginning of your lease and is specified in your contract. Some lease companies will negotiate that price if you decide to buy at lease-end. Buying your leased vehicle at lease-end has the advantage that you know the car's history and how it was maintained. It's not like going to a used car dealer and buying a car that you know nothing about.
2016-05-17 07:13:39 · answer #3 · answered by Anonymous · 0⤊ 0⤋
A 615 credit score is considered "sub-prime" and may prevent you from leasing -- or borrowing. If you are approved, your interest rate (money factor, in leasing) will be very high and you'll probably have to make a large down payment.
Before you lease, make sure you understand how leasing works and if it is a good choice for you. The following web site may help:
http://www.leaseguide.com/index2.htm
.
2007-08-10 04:15:59 · answer #4 · answered by Anonymous · 0⤊ 0⤋
If you lease you need to keep the car in pristine condition. You also need to limit you mileage to less than 12K per year or you will pay penalties when the lease is up. If you can't do both of those things - don't lease.
2007-08-08 07:54:21 · answer #5 · answered by Fester Frump 7 · 0⤊ 0⤋
You will pay dearly with your FICO score. The interest rate they will charge you is going to be high.
Settle for a cheaper car such as Honda or Toyota and keep the payment low. Don't bite more than what you chew.
2007-08-08 07:48:43 · answer #6 · answered by Anonymous · 1⤊ 0⤋
leasing is a good option,yes your score matters,sounds like a good deal to me
2007-08-08 07:51:50 · answer #7 · answered by MrZip 5 · 0⤊ 1⤋