Poorish credit: Lease or buy?: Grassroots Motorsports forum: Grassroots Motorsports Magazine

Subscribe get a full year for only $23.95 Sample Free Test Drive—no strings attached

March 7, 2011 3:30 p.m. Bench Racer (BowtieBandit) Reader

My wife and I's combined credit score is around 600, and we're looking at buying a new or very late model small car for her. I love the new Elantra's, and when I showed her the MPG rating she liked it too. Basicly, with our pretty-much-poor credit rating, do you guys think we will get a better rate leasing? Normally I wouldn't even think twice about it, since if I'm going to pay for a car I'm going to want to keep it. Most people I've seen that have leased have gone through with an option to buy later.

Is this always an option? I know leasing is generally cheaper month to month, but do you have to have better credit to be approved for a lease?

I work mostly evenings and she works nights, and we have one car. She can't drive stick, so I do all the driving, and we're racking up miles pretty quick. We have one small daughter, and wouldn't mind one or two more, but a small car will still do us just fine for atleast another 6 or 7 years.
March 7, 2011 3:57 p.m. wearymicrobe Reader

Typically you need better credit A or above, bad redit means worse terms which drive the cost per month way up.

Additionally 15K miles a year is going to be the limit on a Kia lease. 12K would be better.

As for the total cost, depends on the money factor, typically they raise the residual and lower the money factor for low dollar leases which makes purchasing the car better in the long run. In the short run kind of depends on the math.

Personal opinion, unless you have bad credit for some out there reason focus on getting that up first and then going after a lease.
March 7, 2011 3:59 p.m. pete240z SuperDork

I know we talk this guy up a lot but he has some good advice to follow. Leasing is the worst deal ever.

http://www.daveramsey.com/index.cfm?event=askdave/&intContentItemId=10367
March 7, 2011 4:01 p.m. Javelin SuperDork

Fix the credit before you do anything resembling a new car. You need to buy a cash-outright used banger and suffer for a year while you get the numbers back into the 700's. Once that's accomplished by a then 1-year Certified Pre-Owned Elantra for ~30% less than it was new with a low interest rate based on your newfound credit.
March 7, 2011 4:10 p.m. carguy123 SuperDork

Check the thread on homebuying for some credit improvement tips.
March 7, 2011 4:17 p.m. car39 Reader

You may not be able to do either, right now. Banks have loosened up, but they still are looking a lot closer than they did a few years back. It's good advice to buy used and build your credit by lowering debt.
March 7, 2011 4:37 p.m. SupraWes Dork

You need a $1000 economical car /thread
March 7, 2011 5:33 p.m. unevolved Dork

I agree with some of the other posters in here, you don't need a new/newish car, you just want one. Your priority should be your credit. I vote buy a cheaper car outright and work on getting your credit score up before taking on another financial burden.

Besides, life is more fun with cheap cars.
March 7, 2011 6:22 p.m. Bench Racer (BowtieBandit) Reader

I{/i] Can live with a cheap, used car. I was looking for my wife, who hates anything that isn't "cute"

March 7, 2011 6:27 p.m. 93gsxturbo HalfDork

Sucks for your wife. Get her a pink Z26 Beretta.

March 7, 2011 6:50 p.m. Javelin SuperDork

Agreed. With credit like that she doesn't have the option to drive a not-cute car. Cheap car and deal with it until the credit is fixed.

March 7, 2011 6:52 p.m. Curmudgeon SuperDork

Leasing makes sense only if you own a business and can write off the cost of the lease. Otherwise, buy cheap used cars. [probably gonna piss you off] If the wife refuses to drive anything that's not 'cute' then she needs a big dose of reality check.[/probably gonna piss you off]

March 7, 2011 7:17 p.m. TR8owner Reader

In reply to Curmudgeon:

"Leasing makes sense only if you own a business and can write off the cost of the lease. Otherwise, buy cheap used cars"

Excellent advice. Even leasing has disadvantages for business. My last leased vehicle I got dinged on mileage, tires, dent in the door, etc, etc. and had to pay $3500 in penalties. Yes its a "write up" but it was still over three grand I wasn't expecting.

Its crazy to lease if you can't deduct the expense from a business income.

March 7, 2011 7:38 p.m. njansenv HalfDork

Cute?
Get her a $2k Miata. In truth, leasing (and payments in general on a rapidly depreciating asset) are usually best avoided from a purely financial sense.

March 7, 2011 7:52 p.m. Travis_K Dork

I agree, don't buy/lease anything you can't pay cash for.

March 7, 2011 7:55 p.m. red5_02 Reader

Credit around 600? Do yourself and the dealerships a favor and fix your bad credit. With credit that low you're looking at about 17-20% or HIGHER for an auto loan. There are only a handful of banks that will buy your problems and these banks are loan sharks. Typically a buyer of your caliber will be looking down the barrel of a $1500 finance fee. The dealer WILL tack this on to the price of car. I see people with piss poor credit every day and the only thing you'll be able to finance is a 5 year old beater with 100k on the clock. Find yourself an automatic Taurus and pay cash. They're cheap reliable and roomy.

March 7, 2011 8:57 p.m. Derick Freese Dork

I buy myself cheap vehicles. I've never put out more than $1000 on anything for me. My wife drives a 2008 Saturn Astra that we bought during C4C.

Is your current car manual, and that's the reason you're looking for something else? Automatic Dodge Neons are plenty cheap and totally cute.
March 7, 2011 11:10 p.m. jrw1621 SuperDork

Not to be a dick and not to pile on but rather to state the hard truth... You can not afford a new car! There I said it.
If you think I am wrong, think about how your credit score got to where it is today.

My positive advise: Take the money you think you have for a down payment and buy a car for that amount, cash.
March 8, 2011 6:00 a.m. Leach SuperDork

Bench Racer (BowtieBandit) wrote:

I{/i] Can live with a cheap, used car. I was looking for my wife, who hates anything that isn't "cute"

You should have asked the buy/lease question looking for a wife. After three years you could turn her in for a less picky one.
March 8, 2011 6:51 a.m. alfadriver SuperDork

May be a dumb suggestion- but maybe to improve your credit rating, find a car you can pay cash for, but finance it via your bank. I'm sure the rates will be maginal, but if you pay it off, quickly, your record will show that you had credit, managed it well, and finished it.

Reading the home thread, it appears that buying via credit when you can pay fully in cash isn't a bad idea sometimes. Assuming you don't touch that cash but to pay for the loan.

Oh, and a +1 for a decent used car.