How hard to lease a car after BK 7 discharge?

[tazunemono]

Hi all,

I have a car now, but I don't want it anymore and will not sign the reaff. I can do without a car for a few months after my BK is discharged (should be Aug. 6, 2012) but I do want something to get me around town. I live close to work, so I can bike or take the bus.

I'd like to lease a car vs. buying because it's usually cheaper. I never drive more than 12k per year (more like 10k). What would be my best options post-BK? Go direct to a dealer? Appreciate any advice you can give me.

Thanks!

[justbroke]

Your only choice is to go directly to the dealer. Be aware that some lenders will not lease unless you're in one of the top financing tiers. While the interest rates below are a little dated (from a few months ago), these are the "tiers" that Toyota Finance has used. Notice how the interest rate is almost 14% higher at the lower FICO scores. Also note that these scores are "Auto Enhanced" FICO scores which tend to be higher than normal FICO scores.

• TIER 1+ FICO 720+ (UP TO 60 MOS) 5.90%
• TIER 1 FICO 719-690 (UP TO 60 MOS) 5.95%
• TIER 2 FICO 689-670 (UP TO 60 MOS) 7.35%
• TIER 3 FICO 669-650 (UP TO 60 MOS) 9.30%
• TIER 4 FICO 649-630 (UP TO 60 MOS) 13.50%
• TIER 5 FICO 629-610 (UP TO 60 MOS) 15.75%
• TIER 6 FICO 609-580 (UP TO 60 MOS) 17.75%
• TIER 7 FICO 579-520 (UP TO 60 MOS) 19.10%

Generally speaking, you need to be Tier 4 of better to get a lease. With your case open, most dealerships / lenders will not do any lending without the Trustees approval, so you need to wait. I also don't know the impact of surrendering the car in the Bankruptcy and what notation will be placed on your credit bureau record. Bad history with auto loans pulls down your Auto Enhanced FICO score.

It is possible though... but the discharge and FICO are the hurdles. You may even need to wait 30-days after the discharge for it to actually report to all three bureaus -- but most update within 48 hours.

[hmsmith]

From what I've read and heard, leasing a car after bankruptcy is probably not an option. Buying a used car, seems to be possible with good job stability and decent income. There is a link on here for purchasing cars after bk and I remember seeing some posts there about leasing, but I am not sure that anyone was able to lease anything after a BK.

Hopefully someone can tell you first hand whether they have or what they've been told by a dealer. Best of luck to you!

[justbroke]

I can lease a car post Bankruptcy. It really comes down to the scoring (you need to be in the top tiers), and some seasoning (your case must be at least closed but probably needs at least 6 months of seasoning). There are some manufacturer-based lenders that don't like bankruptcy at all.

[HHM]

Leasing is virtually impossible immediately after BK. As JB points out, leasing is very much score driven. Generally, leasing is reserved for Tier 1 (maybe tier 2). No way anyone post BK is going to be in those categories.

JB, out of curiosity, where did you get that chart?

[basketsbears]

How do you know what your auto-enhanced score is. I know that if you don't reaffirm they don't report to credit bureau, but if you keep paying on time, and get a different vehicle is there anyway that shows up anywhere?

Thanks!

[IBroke]

Leasing is virtually impossible immediately after BK. As JB points out, leasing is very much score driven. Generally, leasing is reserved for Tier 1 (maybe tier 2). No way anyone post BK is going to be in those categories.

If somebody had a spotless auto-loan history and didn't even include an auto-loan IB, I don't think it's that difficult to get a post-BK auto-enhanced FICO of 670 or higher. Mine was in the 630s two months after discharge - and I had two previous repos on file. Without them, I'm quite positive that I would have been higher than 670.

[HHM]

I said virtually impossible, not actually impossible

The stars would really need to align to get a within a year after BK. Much will depend on the leasing company. Even though there is a FICO score for auto loans, it doesn't mean everyone uses it. It will just depend on the dealer, leasing finance company, and the car manufacturer.

I think the "proper expectation" to set is that you won't be able to lease within a year or 2 after BK.

[tradinglife]

Hi all,

I have a car now, but I don't want it anymore and will not sign the reaff. I can do without a car for a few months after my BK is discharged (should be Aug. 6, 2012) but I do want something to get me around town. I live close to work, so I can bike or take the bus.

I'd like to lease a car vs. buying because it's usually cheaper. I never drive more than 12k per year (more like 10k). What would be my best options post-BK? Go direct to a dealer? Appreciate any advice you can give me.

Thanks!

Been a salesman, sales manager at 4 different maufacturer stores since 1999. Don't know of any lease options after bk. Keep in mind very few banks are in leasing business anymore. So you would have to go thru Toyota financial, Chrylser (mfg owned banks), don't know of any that will do lease after BK, I have never seen even seen a prepaid lease approved. Now you can get a traditional loan with a higher rate on a decent or sometimes new car. For some reason, leases tend to be harder to get.

[IBroke]

I said virtually impossible, not actually impossible

The stars would really need to align to get a within a year after BK. Much will depend on the leasing company. Even though there is a FICO score for auto loans, it doesn't mean everyone uses it. It will just depend on the dealer, leasing finance company, and the car manufacturer.

I think the "proper expectation" to set is that you won't be able to lease within a year or 2 after BK.

That's certainly true in most cases. After all, it's a fact that a majority of BK-filers will have at least one auto-loan somehow IIB...

[tazunemono]

I'm just looking at the cheapest possible option for having a car. I don't really drive that much, but I do need one. I don't live in a city that offers zip car rentals, unfortunately.

[HHM]

Well, a LEASE in general is NEVER the cheapest option.

[IBroke]

Well, a LEASE in general is NEVER the cheapest option.

That topic reminds me of the good, old discussion about what existed first: The chicken or the egg?

In the long run, a lease is more expensive. From a month-to-month POV, it's oven "cheaper" - WHEN you are focusing on the monthly payment.

[HHM]

That topic reminds me of the good, old discussion about what existed first: The chicken or the egg?

In the long run, a lease is more expensive. From a month-to-month POV, it's oven "cheaper" - WHEN you are focusing on the monthly payment.

We probably shouldn't start that issue here, but it is really isn't a DEBATE....focusing on the monthly payment is just stupid. Why wouldn't you focus on the total deal...also, leased cars are more expensive to insure.

[IBroke]

We probably shouldn't start that issue here, but it is really isn't a DEBATE....focusing on the monthly payment is just stupid. Why wouldn't you focus on the total deal...also, leased cars are more expensive to insure.

As I said, it's difficult, because the "total deal" is hard to define. If you purchase a new car and drive it until it falls apart, I certainly wouldn't lease it either. However, If you prioritize in switching cars every 2-3 years, leasing beats financing hands down.

It even matters what employment-status you have. Lease-payments can be tax-deductible which makes it even more attractive. After all, it depends on your car buying pattern. Leasing is great if you want a new car every couple of years and don't want to worry about costly repairs - all at a very competitive monthly payment and the possibility of tax-advantages. If you want to own you car and stick to it for many years, financing is the way to go.

Of course we can go back to the discussion if you "need" a new car every 2-3 years - but that's a personal choice and as I pointed out, can even save you taxes.