gixxer750

Please help me to understand this....

I decide to lease an e320 with some basic options. I am under 25 and although my credit is perfect, I do not have a long enough credit history to lease this car. The dealership tells me that I need a co-sign on the car.

I put the $500 deposit on the car so the dealership can hold the car for me.

My aunt who is close to me agress to co-sign for me. I am graduating college this month and she felt it was a nice thing for her to do.

Some backround on my aunt. She holds a very good job, with a base salary over $150,000. She owns a home, pays a mortgage and has 3 cars and 2 motorcycles. I hand in her information for the co-sign.

The dealership calls me the next day to tell me that she did not get approved for the co-sign. I questioned as to how this can be.

He told me one of the requirements for approving the lease is that either the person signing the car or the co-signer needs to show a history of making CAR payments. Unfortunatly or fortunately, however you look at it, my aunt buys her cars outright and never does have monthly CAR payments. How can a dealership want to lose a deal on a car over this?

Any input?

Ebrigham

Does she have a mortgage? If so, is her payment history good? What about other credit lines (credit cards, etc)? I am no credit analyst, but I would imagine that if she has shown the ability to successfully carry a mortgage, it should be satisfactory. Is there a chance she has a checkered credit history or is overextended? I have never tried to lease a car, but his reason sounds odd to me.

jim256

Most likely your aunt's age coupled with an apparently small amount of credit history is causing their credit scoring model to kick it out. To protect themselves from discrimination suits, most credit granters rely on credit scoring models. You need two things to get credit: both the ability and the willingness to repay. Many folks have the ability, but their willingness goes astray, so when the model sees someone with little history at middle-age, it's a red flag. No news becomes bad news. Mortgage payment and installment loan payment history are not the same because people seldom default on a mortgage for obvious reasons. Being a co-signer is really being a second party on the loan/lease, her obligation is the same as yours, and here apparently the entire loan depends upon her credit. Co-signers are not someone that the banks just look to if you don't pay. (If she was reading this, I'd advise her not to sign, but that's another matter.) Her current debt may also be an issue when they add on the monthly payment for the car. If the salesman wants to sell the car, he can usually find a lender interested--at some rate.

gixxer750

1. Why would you advise her not to sign?

2. Her mortgage payments are low due to the fact she put a lot down. But non the less, she pays a mortgage and has no problems paying it. On top of this she does have credit cards which she pays in full every month

3. She is in her late 40's. I am in my early 20's

4. According to the credit analyst, her credit is perfect. What is holding them back from accepting her is the fact that she specifically has not CAR payment history. Is it such a bad thing that she buys her cars on the spot?

5. Both her and my income/debt ratio is extremely low

rhahn

Car dealerships never want to lose a deal...especially when it comes down to getting someone approved. Without looking at her history, it's difficult to say why the application was declined. Other factors that were not mentioned may be length of time at current company and/or length of time at current residence. Another factor that may be involved is if she charges quite a bit per month on her credit cards, they still show as outstanding debt on her credit report even if she pays them off within the allowable grace period. This may cause the lender to think that she is over extending herself. Is the loan or lease going through Dalmer-Chrysler Credit Corp.?

rhahn

I also forgot to mention that since you have not graduated yet and are still a student, you presumably don't have an income or much of one. Although legally your aunt would be legally and finacially responsible for the car, they know that in most situations it is the main applicant that will be making payments. Ultimately, finance companies never want to get into a position where they have to repossess the vehicle. So it may not be your aunt's lack of credit but yours that is preventing the loan or lease from getting approved. In any case, good luck!

skymast

The issue is that the lux car company's do not lease to people with limited big credit history (house, car, etc). You would have the exact same problem at BMW.

You need to go to a leasing company (such as enterprise) and you should have no problem.

As I recall, you tell the lease company the car you want, they negotiate / purschase it from the dealer, and then lease it to you.

Check with your local bank and tell them the situation, they may be able to recommend a company in your area. Also, you will probably find a better lease deal.

pogotango

im 21, credit wasnt good enough was 605, to get a benz from chase credit, you need credit of atleast 685. so my dad co signed for me, but becareful, my dealer tricked me. they put my dad as the owner and me as the co signer. those *******s, so i called them the next day and was gonna sue, but they changed it right after

gixxer750

1. 15+ years at current job

2. I gradaute this month, start my new position 1st of June. Starting salary over 60k.

I still cannot believe they will not approve.

The dealer specifically stated, both of our credits are perfect

the problem - my credit history is not long enough
- my aunt has no history of making CAR payments

but yet she has history of making other monthly payments such as credit cards and mortgage

The dealer also stated i have real low income/debt ratio since this will be my only monthly payment. I have no kids, no rent, no mortgage.

jim256

gixxer: All the points made by others are correct. It's simply a score, on a model that was empirically derived from the credit granter's own files, and it predicts repayment likelihood. Any number of the factors could cause a lower than required score.

Why not sign as a cosigner? First of all, she is not a "co-signer" she is a "joint applicant"...and because for all the best reasons people try to help others or their family, situations change and she could be called upon to make the payments on a car she does not use and possibly may not even have available to her in the event your situation changes. Also, the payment obligation will now be listed on her credit report as an installment debt, even though she might not expect to pay it. I spent 20 years working for a bank, and saw this too many times to count. People called upon to make payments on a car for a person they no longer even speak with because of a deteriorated relationship. Sad but true. No reflection on you or her, just my experience.

You will have a good job but I doubt you have an employment contract guaranteeing your salary for the life of the lease, things change, companies change, they are bought and sold, and people change, as do their relationships. My advice, given those 20 years at a senior level in banking, is don't be a joint applicant for anyone except your spouse.

pogotango

you be the co signer and your grandma the owner and then the next day call the bank and switch it, thats what i did.