Will I have trouble getting a lease?

Young Scholar · 03-02-08, 11:03

I need opinions from more experienced members. Will I have trouble getting a lease?

I will be leasing a vehicle, approximately $400 a month, for 80% business and 20% personal use. This of course will be a tax write-off for my personal business, which makes it worth while to lease.

The reason I think I may have trouble is that I'm 20 years old and a student with low income.

Background:

I have excellent credit, I've always paid in full and have had some rather large bills. I will have bank account statements and retirement plan statements that will cover in excess the full amount of the 36 month lease. My current salary is very volatile as I am in college owning my own business, and working a part-time "real job".

Also, a recommendation on cars?

Here are my picks so far:

2008 BMW 328xi
2008 Audi A4 Quattro
2008 Hummer H3 Alpha
2008 Audi TT Quattro

truzoom · 03-02-08, 11:22

What will be vehicle used for in your business?

I think if you could get a parent to co-sign the lease, you shouldn't have a problem.

az57chevy · 03-03-08, 06:41

Why lease? Let someone else take the depreciation hit and buy one a year old.

jsab9191 · 03-03-08, 07:47

Sounds like the best advise you could recieve would be to pay cash for your cars don,t get involve in a fleece. I,m not sure the write-off can benefit you in the tax bracket your in.

Young Scholar · 03-03-08, 07:59

Thanks TruZoom

Don't take this the wrong way but this isn't a lease or don't lease question. I just want to know the process and if I will be able to lease the said cars at my age.

As far as my personal the tax bracket, it's a business car. I would be writing it off as a business expense. I will use the car to deliver products, get supplies, and commute between my residence and the office/warehouse.

I personally won't pay cash for the car because I can make a higher return on the money than the interest rate.

The tax write off is much better leasing a vehicle rather than owning one IMO. When financing you cannot write off the interest on the loan and you write off depreciation instead of a constant steam of payments.

Dave1 · 03-03-08, 08:29

Quote:

Originally Posted by jsab9191

Sounds like the best advise you could recieve would be to pay cash for your cars don,t get involve in a fleece. I,m not sure the write-off can benefit you in the tax bracket your in.

Bingo.....

I would advise my son your age to buy a car with savings. A band new car is way more than you need to bite off at this time in your life financially....

The insurance and gas payments every month are nothing to sneeze at for young men under 25 years old. That combined with a 400 dollar note is a fairly large commitment.

I'd get a good used one owner car with a few miles on it for between 6-8 grand and that way you won't take a big hit on it when you decide to upgrade a few years from now.

Put the money you would have spent on payments in the bank and you'll have a nice little nest egg saved up in no time.......Good luck......

Young Scholar · 03-03-08, 08:43

I already have a paid off vehicle thats worth more than 6-8k, so that's out. I would be selling it now for around $15,500, rather than it depreciating over time. To preserve my capital I'd be investing that $15,000 averaging around 5-8% percent return on the conservative side. My lease total for three years comes out to $14,400. I get to write off $11,520 for business use. I would be paying $2,800 out of pocket for the three year lease.

At the end of three years the $15,500 will be compounded to $18,989 at 7% annually. An investment income of $3,489. The $3,489 easily covers the $2,800 I would be paying out of pocket. Leaving me with about $16,000 plus personal savings at the end of the lease.

Holden_C04 · 03-03-08, 11:55

If the current vehicle isn't giving you any issues, just continue using it. Save the money you would put into a lease for something more important, like a downpayment on a house or a trip to Europe. A 2008 BMW 328xi is a waste.

Young Scholar · 03-03-08, 12:10

Again, this isn't a lease or don't lease question. I know you guys are trying to looking out for me, thank you but a trip to Europe is more frivolous than any car. I'll be preserving the $15,000 if I have the lease, while the investment grows and I get the tax write off. If I kept my vehicle it would be worth about $9,000 at the end of the lease and I would end up putting the money I saved into a new car as it would be 8 years old.

iamwiz82 · 03-03-08, 12:18

BMW has fairly strict requirements to be able to qualify for their leasing program, from what I have been told.

If you are good at negotiating / scouring for deals, a lease won't involve much in the way of paying for depreciation.

BlueZero · 03-03-08, 12:32

I think you might have a hard time leasing. Credit score and income play a big factor. As well as your debt to income ratio. I say go the the dealer and find out. If it doesn't work your only out a little time.

I had a hard time leasing one of my trucks when I was 24ish. A few years later I lost my job and bought a new truck a few months after. I didn't have a job, was just doing freelance work at the time and had no problem getting a bank loan.

Young Scholar · 03-03-08, 12:44

Would having the cash backing for the lease make it any easier? Do they go strictly off credit?