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      10-26-2019, 02:04 AM   #1
zerosum8
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Question Only way I can get approved to lease a 2019 M5 is a "one pay lease"...

New member here... so here's the situation..

I'm a successful business owner and have very strong credit 750+, but according to BMW, I don't have enough "credit history" to be approved to lease.

They said I needed a co-signer, so my father jumped in and said no problem. He's also a successful business owner, owns several properties, several houses, over $3M in machinery, several cars, etc, etc... BMW financial said that although he has "elite credit" as well as I do, that he ALSO doesn't have enough credit history... my father, being as successful as he is, just pays for everything in cash, including his houses and properties, cars, etc. He doesn't finance, never leased, you get the idea...

I have several hundred thousand in the bank, and can easily buy the car outright, but I'd rather just lease. The best option they could come up with is a "one pay lease", meaning I pay ~$45k for the 3-year lease upfront.

I'm not worried about the money, but I'm more concerned because I'm at the age where I would like to start looking into purchasing a relatively expensive home/property soon. Every car I've ever owned has been gifted to me, my college has been paid-in-full upfront by my family, and I don't really have anything that I've ever paid through installments. I was told that a "one pay lease" of this size would essentially help me in the short future when it comes to future car and home purchases because it would show that I am capable of paying a substantial installment payment.

I know that the "one pay" for a 2019 M5 COMP would be roughly $45k, which is essentially about a down payment for a house, and I'm not sure if I'm being lied to about the credit bonuses since I'd be paying this upfront.

Like I said before, the money isn't the issue as much as whether or not it will actually help me build credit for future substantial purchases.

What do you guys think?
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      10-26-2019, 02:19 AM   #2
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Quote:
Originally Posted by zerosum8 View Post
New member here... so here's the situation..

I'm a successful business owner and have very strong credit 750+, but according to BMW, I don't have enough "credit history" to be approved to lease.

They said I needed a co-signer, so my father jumped in and said no problem. He's also a successful business owner, owns several properties, several houses, over $3M in machinery, several cars, etc, etc... BMW financial said that although he has "elite credit" as well as I do, that he ALSO doesn't have enough credit history... my father, being as successful as he is, just pays for everything in cash, including his houses and properties, cars, etc. He doesn't finance, never leased, you get the idea...

I have several hundred thousand in the bank, and can easily buy the car outright, but I'd rather just lease. The best option they could come up with is a "one pay lease", meaning I pay ~$45k for the 3-year lease upfront.

I'm not worried about the money, but I'm more concerned because I'm at the age where I would like to start looking into purchasing a relatively expensive home/property soon. Every car I've ever owned has been gifted to me, my college has been paid-in-full upfront by my family, and I don't really have anything that I've ever paid through installments. I was told that a "one pay lease" of this size would essentially help me in the short future when it comes to future car and home purchases because it would show that I am capable of paying a substantial installment payment.

I know that the "one pay" for a 2019 M5 COMP would be roughly $45k, which is essentially about a down payment for a house, and I'm not sure if I'm being lied to about the credit bonuses since I'd be paying this upfront.

Like I said before, the money isn't the issue as much as whether or not it will actually help me build credit for future substantial purchases.

What do you guys think?
It will affect your credit. I say "affect" and not "build" because the actual effect depends on how BMW Financial will report the lease. If you pre-pay the lease up front, there won't be any sort of payment history. So worst case...you show a debt on your credit report that shows no payment history for the residual value of the vehicle, or best case, you should a debt on your credit report that shows fully satisfied. It really depends on how they report it.

Also, where in Long Island does $45k cover a down payment for a house?
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      10-26-2019, 08:24 AM   #3
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They are looking for a 'history' of paying stuff off on time. You can get a high credit score even if you never had many different loans, just a few that you paid on.

I leased my first car when I was a 4th year resident making about $45k a year and leased a $35000 BMW 325is without an issue. I had student loans out the wazzo ($400k) and no mortgage, and about 4 years of actual earning history, I had a credit card that I paid on time and was making payments on some of my 'cannot' defer student loans. So I guess BMW has changed???

My advice, take it for what its worth, walk away from BMW and lease an Audi or a Merc, then go back and offer the sales manager a ride.

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      10-26-2019, 08:51 AM   #4
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If the total you are paying with the "one pay" is the same as if you paid it over 36 months then I would walk away from this. There was a time many years ago where people with sufficient cash would pre pay their lease and save a significant amount over monthly payments.

There are ample threads in this forum and others debating lease vs buy...in sticking with your focused question I would walk away from this deal as you stated. There is plenty of inventory out there.
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      10-26-2019, 09:07 AM   #5
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This story is very familiar to me from when I got my first BMW. I wanted to lease a 2005 545i, and the dealer ran my credit, approved me and I ordered the car to be built.

As the car was finished and being shipped by boat to the USA, my sales person began calling me with updates on the car. The conversation would go something like this....

"Hi, the car is on the boat now and should be here soon. Oh, by the way, my finance department said that they were reviewing your credit application and they said your credit is good, but you don't have very much of it. They said it won't be a problem but they want you to put down more money upfront."


Well, he did this to me like 2 or 3 times, until on that final call he basically said they would only do a prepaid lease for me.

At this point, I stopped taking the phone calls and made him leave voice mails which I did not return.

When the car arrived, I walked in to the dealer with a cashiers check and paid cash for the car because I was fed up with their leasing crap.
I really wanted the car and it was a special order so I would have had to order it again if I tried using a different dealer. So they won in the end.

Last edited by subterFUSE; 10-26-2019 at 09:47 AM..
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      10-26-2019, 09:44 AM   #6
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Also, being self-employed actually makes it harder to get loans, in general. Most people who own businesses don't get a W2 at the end of the year, or have pay stubs. Banks always ask for these when doing loan applications. It's a constant frustration because there are many people who make good money but they don't get paid through the normal W2 payroll method.

When I did my mortgage, I had to use old tax returns to prove income because I am a business owner and did not have a W2.
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      10-26-2019, 10:19 AM   #7
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There is an alternative to leasing. It's called ownership. If you put enough down, then you should be able to be approved for a conventional car loan. Do that, and it will build your credit history. If you have no history, it will take a large down payment to get approved, but it sounds like that's no problem for you.
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      10-26-2019, 10:40 AM   #8
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Never pay upfront on a lease. If the car is in an accident and is a total loss, you’re out the cash... why don’t you put that money down and finance?
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      10-26-2019, 10:57 AM   #9
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@60% residuals on 19s, it makes no sense to buy one. Market is very soft.

I don’t see why you cannot provide financial statements to BMW. But I do understand that banks usually require at least one “major“ source of credit like a car or house.
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      10-26-2019, 11:53 PM   #10
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If you have this massive pile of cash, why not just buy it and build credit that way? Put 10-20% down and make some easy monthly payments while building credit. Pay the car loan off early... Win Win.
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      10-28-2019, 12:48 PM   #11
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Quote:
Originally Posted by zerosum8 View Post
New member here... so here's the situation..

I'm a successful business owner and have very strong credit 750+, but according to BMW, I don't have enough "credit history" to be approved to lease.

They said I needed a co-signer, so my father jumped in and said no problem. He's also a successful business owner, owns several properties, several houses, over $3M in machinery, several cars, etc, etc... BMW financial said that although he has "elite credit" as well as I do, that he ALSO doesn't have enough credit history... my father, being as successful as he is, just pays for everything in cash, including his houses and properties, cars, etc. He doesn't finance, never leased, you get the idea...

I have several hundred thousand in the bank, and can easily buy the car outright, but I'd rather just lease. The best option they could come up with is a "one pay lease", meaning I pay ~$45k for the 3-year lease upfront.

I'm not worried about the money, but I'm more concerned because I'm at the age where I would like to start looking into purchasing a relatively expensive home/property soon. Every car I've ever owned has been gifted to me, my college has been paid-in-full upfront by my family, and I don't really have anything that I've ever paid through installments. I was told that a "one pay lease" of this size would essentially help me in the short future when it comes to future car and home purchases because it would show that I am capable of paying a substantial installment payment.

I know that the "one pay" for a 2019 M5 COMP would be roughly $45k, which is essentially about a down payment for a house, and I'm not sure if I'm being lied to about the credit bonuses since I'd be paying this upfront.

Like I said before, the money isn't the issue as much as whether or not it will actually help me build credit for future substantial purchases.

What do you guys think?

Just because you have a 750+ credit score, doesn't mean you have strong credit. It seems you're a first-time buyer and have weak credit. If you one pay a lease and the car gets totaled *knock on wood it doesn't* you're going to be in a pretty tight spot.
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      10-28-2019, 01:16 PM   #12
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As many have said, a fico score is not an auto approval. You are looking at 120k car. At the level of current default rates for applicants with "thin" 700's I can see why they might have stipulated for a one pay lease. Of course this is supposition but maybe you can divulge more about your file:

Number of trades
Age of oldest trade
Highest credit limit
Highest install limit
Any Auto Credit

As for BMWFS- on a 1 pay they will report your high credit as term x the monthly payment. Even with a 1 pay you still had a monthly payment in which you just up fronted all the monies. It will show an open date with the payment amount but the balance will show zero. This is unless they have changed their FCRA process on 1 pays.
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      10-29-2019, 07:23 AM   #13
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what happens on total loss accident if you have a one pay lease deal?
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      10-29-2019, 10:13 AM   #14
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Quote:
Originally Posted by ss_m5 View Post
what happens on total loss accident if you have a one pay lease deal?
Same as if you were in a normal lease... insurance will determine a settlement amount and send to the lienholder.

The difference will be in the payoff (will be the residual only on a one pay) vs in a normal lease where it would be: residual plus remaining lease payments minus unearned rent factor and unearned sales tax.
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      10-30-2019, 03:59 PM   #15
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I would either :

1) Focus on building your credit for the next couple of years, then buy one. I.e., see what lease they can get you into to build history. Lease for two years. 18 months in see if you have enough credit history to make a big payment jump. They're going to look at history at that payment level, and they won't let you jump too big of a payment without history. For instance, if you can get approved for only $500 lease payment, they won't let you jump to $1500 after the lease is up. As such, you should build history, increase payment, rinse/repeat -- with as little cash possible.

or

2) Buy a used '18 for ~$90k (they've depreciated $40k already) with low miles with enough money down to get approved. Pay off over 2-3 years. Trade in, then lease later. Again, keep payment high enough.

It's not something you can do overnight, and even if you had a mortgage forever, but no car loan payment history -- you still would probably get declined. Just like if you always had $500 car payments, if you tried to jump to $1500 you still might get declined.

Credit score is less important than good payment history with vehicles with a payment amount that's similar to what you're asking for, and then income to go along with it secondary, and credit score # third.

There's always exceptions to everything, but this was my experience. It's not ideal to buy, and doing so will cost you more than leasing, but leasing one might just not be an option for you at this point. BMWFS is especially stringent in my experience.
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      10-31-2019, 01:33 PM   #16
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Others have stated some good ideas here. If you really want to build credit get a few low value credit cards and start charging on them consistently monthly and paying off monthly. You will not incur any interest and it will show consistent credit usage and payment. In addition purchase a more moderate vehicle with a good sized down payment and make payments for 12 to 18 months before paying it off. Do these things and you will be able to purchase or lease whatever you want in 12 to 18 months.

I have a similar issue because I refuse to carry any credit cards other than one Amex card for work expenses. People don't realize how much revolving debt plays into FICO scoring. The way the equation is built you get hit hard for NOT carrying credit cards. It can affect a score by up to 100 points.
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      11-06-2019, 12:53 AM   #17
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Credit score means nothing without a history. Paying off the $150 balance on your Abercrombie and Fitch store credit card will get your credit score to 750 when you are 18. I wouldn't want to lease you a $120,000 car because of this.
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      11-07-2019, 10:45 AM   #18
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you may want to work on building that credit history first as you will surely need come time to buy a house. (You stated you will be looking to buy a relatively expensive property soon) If you're self employed, and it sounds like you are bank will look at your under microscope for approval, unless of course you're coming up with major cash down
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