As the title states, my husband and I are scheduled to close on a house on Wednesday and the lease on my car ends in 4 months (leave your arguments about why leasing is a bad financial decision at the door please, it was what was best in the moment). I am trying to figure what the best timeline is to end the lease when taking credit score into consideration.
I have good credit, 750 at the start of the home buying process. I use credit cards responsibly and never carry a balance, as well as never missing a car payment. $100 to student loans monthly(5k). That is the extent of my debt.
I own my own business and take home 3.3k every month as a w-2.
Current rent is 1720 which we split, and our new mortgage is ~2k, also split. We are anticipating monthly expenses to go up about $300 each on the high end with utilities.
That being said, the current lease payment is 556 with a buy out of $15-$16k ish in September, or $17,776 as of today. In a perfect world I would turn it in and go buy something cheap outright and be payment free, but we currently have no savings due to the whole house thing. (It happened way quicker than expected)
We are also newly married so I have no idea how that will play into this, if at all, but he will not be contributing to this financially. I don’t even know if dealerships care about your marital status if they aren’t a part of the purchase??
For those who have purchased a home in the past, my concern is HOW badly I can expect all the credit pulls to impact my credit and am worried about my options for what to do with my leased vehicle. My current plan is to finance it, as it is a 2024 Toyota Corolla and will likely be reliable for many years to come, and I have raging adhd and can’t be trusted to take a car to the shop if it needs work done, which is likely with something more affordable but older.
My primary goal is to have a lower car payment to try and offset some of the expected increase in monthly expenses.
So, should I end the lease early before everything hits my credit and finance it in the next couple weeks (after closing) or do you think I will be safe to wait until September when the lease matures? Again, I am worried about how much my credit will affect this option come September. Is there a possibility the bank won’t lend to me? I am afraid they will look at the mortgage and say nope your dti is too much, figure something else out.
Closing on a house next week, car lease ends in 4 months.
byu/literallyscumjuice inpersonalfinance
Posted by literallyscumjuice
4 Comments
In general I believe that it is considered risky to do financial things just before closing on a house. You don’t want to mess that up by financing a car just before closing.
Mortgage inquiries don’t impact your credit scores until they are 30 days old and any mortgage inquiries in a 45 day span are scored as a single one.
It also normally takes 1-2 months for new accounts to show up on your credit reports.
If you want to buy out the current car just wait 1-2 weeks after you close on the house and go and finance it, ideally buying it direct from the bank (Toyota Finance) bypassing a dealer.
You’re buying out the lease, you’re not ending anything early.
To be honest credit inquiries barely impact your scores. You might also want to open a new credit card or three after you buy out the lease and cash in on some new account bonuses.
OMG please don’t buy a house without any savings left afterward
As for the car, if you have no cash to buy older used, just finance the rest of your car. It’s a good car and you know its history
Just make sure you’re doing proper maintenance on it so it lasts long past the time you pay off the loan
Also, consider approaching this and other things necessary for your careers as shared expenses. You have a husband now and need to work together as a team to meet your financial goals. A modest car isn’t a frivolous luxury that could be considered “personal spending”
Your credit will be fine. Just buy the car at the end of the lease if you like it.