Does car leasing affects your Credit history?
If leasing doesn't afect the credit history then this would work for me because in next few months i've to apply for home mortgage as well and so i donot want my mortgage int rates to go high based on car's amount sitting on my account.
ANy advice?
Answers:
Yes it does. Buying a car is better on your report then leasing. Not score wise, but to the lender. It will take 6 on time payments on your history either way in counter acting the affects of any major purchase. A lease does not count against you, but when the lender sees that you are spending money on something you own virsus doesn't own it is a small factor (collateral). I think what you are refering to is DTI. Debt to income value. This is base on how much you have coming in virsus going out. There are 18 points that determin a mortgage.
1. Credit history. Does the borrower have 3 trade lines with no lates. ( A trade line is a credit card, car payment, mortgage or student loan. Anything that is not a utility bill that you pay on a monthly basis.) How much is collateral based(secured), and how much is not.
Do they have any bad marks on thier credit? Judgements? Tax leins? Law suits? Defaulted credit?
2. DTI Debt to income. How much is going out virsus comeing in. Can they afford this house?
3. Loan to value. (LTV) Are they putting any money down?
4. Recent major purchases. Are they spending too much money to quickly.
5. Disposable income. Do they have any extra money that has been sitting in an account for more then 3 months like savings, IRA 401k so on.
6. Credit score. Is there score under or over 660? How much?
7. Income source? Have they had the same job for 2 years? Are they self employed? Can they prove thier income?
8. Rent or mortgage history. Can they prove that they have been paying on time, and can they provide 2 years history?
Those are the big ones, and then a whole bunch of little ones. If you are counting, count the sub-questions because they are important.
My advise is to have a professional in the mortgage and banking industry look at your report and see what you need to prepare for a purchase BEFORE buying or renting a car. It may be used for or against you, and you need someone who knows thier stuff to get you ready.
Weather you buy or lease the obligation will still show up on your credit report. Used to be you had to have better credit to lease than to buy. I don't know if that's true anymore. How well you pay your bills is what effects your credit and not the type of obligation. They also compare your income to the financial obligations you have as you are apparently aware of.
Leasing, just like a loan, is reported in your credit files with all three credit reporting agencies. It will affect your score (slightly positive over time) and it will affect your debt load (used to compute whether you can afford the monthly mortgage payments)
Pay cash for your cars, don't buy or lease them. Cars lose value very rapidly in the first few years of ownership. So you pay $35,000 today, and in six months it's worth $26,000. Why do this?
Leasing equals perpetual payments.
Auto finance is what I do for a living and as far as credit is concerned there is no difference in buying and leasing.
They both show up on your credit report with the amount borrowed, the term and the payment.
They both effect your score the same way, if you pay as agreed the effect is good, if you do not pay as agreed the effect is bad.
They both impact your DTI (debt to income) ratio the same way.
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