Curious about the latest turn-in date for one of my leased vehicles, I called the GM Financial Lease Customer Support Department. (Scroll to bottom for number.)
During the call, I was told that there was a 15-day grace period from the lease maturity date. For example, my son’s 2014 Chevy Cruze lease is up on Feb. 7. According to the representative on the phone, I would not be penalized or charged additional money until the 15th calendar day after the maturity date, Feb. 21.
Although the representative put me on hold to verify this information with her manager, she said she couldn’t provide anything to me in writing. I wasn’t satisfied with simply taking her word for it. So, I asked for the number to contact the department that handles end-of lease options directly. (Scroll to bottom for number.)
Sure enough, the End of Lease “specialist,” refuted the idea of a 15-day grace period as false and told me that the only way to extend your lease beyond the maturity date is to make proper arrangements and qualify for a predisposed extension of up to 6 months.
A cautionary tale regarding qualifying for a lease extension:
I recently had a customer on a two year lease that will mature in one month. She wanted to see about leasing her next vehicle, but — unfortunately — her credit score has plummeted, making it impossible for her to get another GM Financial lease approval at this time.
I took the deal to my used car sales manager to see about her chances of purchasing a pre-owned vehicle. But, due to the current state of her credit, he suggested she extend the lease 6 months and use the time to improve her credit so she can have more options.
According to the end-of-lease department at GM Financial, this customer can’t qualify for any extension on her lease because of her payment history. Apparently, she was off of work for a couple of months due to an injury. As a result of a lower pay on short-term disability, she made a total of four 30-day late payments on her GM Financial lease.
GM Financial shows little mercy when it comes to late payments. And, therefore, cannot qualify for either another lease or a lease extension. Good news is, it’s tax season…so I’m suggesting this customer purchase a $2000-$3000 car for the time being and work on her credit over the next 6 months.
There’s always a solution to problems, but it’s good to know how to prevent problems ahead of time.
If you’re concerned about your credit score and want to lease a GM vehicle — Chevrolet, GMC, Buick or Cadillac — there are a few things you should know.
1. GM Financial is the leasing company: All General Motors vehicle lease programs are captive to GM Financial. If you lease a GM vehicle, GM Financial will be your leasing company. GM dropped Ally Financial and U.S. Bank lease programs in early 2015.
2. GM Financial uses FICO Auto Score 9: GM Financial uses Transunion’s Auto Score 9 to determine credit score — effective Jan. 3, 2018. Features specific to this score include: third-party collections that have been paid off no longer have a negative impact; medical collections are treated differently than other types of debt. Unpaid medical collections will have less of a negative impact on FICO Score 9; rental history, when it’s reported, factors into the score—this may be especially beneficial for people with a limited credit history.
Auto Score 9 is specifically catered to the auto finance industry. A traditional credit report offers a glimpse of a consumer at a snapshot in time, Auto Score 9 offers an expanded view of credit data with up to 30 months of historical information. This includes available information on each loan account, including payment history, such as dollars paid, amount paid vs. minimum due and the total amount borrowed over time.
3. Don’t rely on Credit Karma: Many people seem to use their Credit Karma app to monitor their credit score. While this tool can be useful, be sure that auto financing institutions are definitely NOT using Credit Karma. Credit Karma what’s called a Vantage Score system, not your FICO score. Your Vantage Score and FICO score are calculated differently. Your Credit Karma score is usually, but not always, significantly better than the reality.
4. GM lease approvals (and interest rates) are based on a tier system: To get the lowest lease payment based on credit, you need a 700+ credit score to get Tier A1 approval. If your score is 660-699, you get a Tier A2 approval. Each notch down the tier system can increase your payment a minimum of $50, depending on the vehicle, money down, etc.
It’s important to remember, this tiering system is based, specifically, on Transunion’s Auto Score 9. Consumers can get access to this score by signing up at MyFICO.com. Consumers will also be able to access their FICO® Score 9 for free through lenders who adopt the score and participate in the FICO® Score Open Access program.
Here’s the GM Financial Lease tiering system:
Tier FICO 09 Score
B3 539 and below
5. GM Financial doesn’t like late payments: The changes in GM Financial’s tier approval system are fairly new. But one thing is for sure, if you’ve been 30 or more days late on your current or previous GM Financial lease or loan — even once — it could be held against you when you apply for your next GM Financial approval.
For more information about GM Financial’s credit requirements, click here.
If you’re looking for a way to boost your Transunion credit score, one great way to do it is to report your positive rental history on your credit report.
For car financing and leasing, most lenders now use Transunion’s Auto Score 9 to determine credit score. Features specific to this score include: third-party collections that have been paid off no longer have a negative impact; medical collections are treated differently than other types of debt. Unpaid medical collections will have less of a negative impact on FICO Score 9; rental history, when it’s reported, factors into the score—this may be especially beneficial for people with a limited credit history.
Your score can go up 30 points or more in the next 10 days by reporting the last two years of your rental history! There’s a one time fee of $85 to get the last two years of your positive rental history put on your Transunion credit report.
The cost for this service is normally $95, but use this code to get $10 off — BA969.
Enter your cell phone number and select your desired appointment time — immediately or another specific date and time. You will receive a confirmation text and get regular updates about where you are in line. (The Grand Rapids Area SUPER!Center is closest to the dealership where I work — Berger Chevrolet. This Super!Center is open late on Wednesday evenings and till noon on Saturdays.)
Be sure to request a Michigan Instant Title, not a duplicate title. Be prepared to pay around $20. You want to get the new title in your hands immediately, not sent in the mail if want to trade your car now, rather than later.
It’s amazing to me how many people come to a dealership with nothing but incorrect and preconceived notions — usually negative. As a car sales person, I would like to personally apologize for all the wrongs you have encountered at a car dealership in times past. But it’s a new day, so when it comes to a quality car-buying experience, I recommend you relax and listen.
1. Eat first: Yes, that’s what I said. Eat! Have a good breakfast or some lunch before you go to the dealership. In addition, bring some snacks or vending machine money. You can’t think straight or make big life decisions when you’re stomach starts growling. Don’t expect to stop in the dealership “really quick.” That’s not happening. Don’t waste the sales person’s time or your own time if you’re not willing to put in the effort it takes to shop for a car — no matter what stage of the process you think you’re in. If you end up with a good sales person who guides you through their sales process, it really helps things go more smoothly (and happily) for all involved — especially you — if you’re not “hangry.”
2. Get a baby sitter: This is not a judgment on parents with young children. If you have to bring your kids with you to car shop, then so be it. But, to help take the pressure off of you, worrying about how your child is coping with what can be a painstaking experience, try to arrange for child care, all day and unlimited. This will allow you to relax. P.S. Your 5-year-old cannot be held responsible for your financial decisions. They don’t need to be involved.
3. Make an appointment: If you have been referred to a sales person or you have worked with a sales person at a dealership previously, it’s better if you make an appointment with that person directly and ahead of time. That way, they will more likely be ready for you when you come. If you’ve bought a car from one sales person, and you choose to go to a different sales person at the same dealership and purchase, you are forcing that second sales person to split their commission with the original sales person, even though the second sales person completes the whole job. On the other hand, if you’ve never been to a dealership, don’t have a sales person and haven’t been referred to a sales person, simply show up. That’s just fine. However, if you make an appointment with a specific sales person ahead of time and talk things over on the phone first, your sales person will have time to prepare before you come and hopefully shorten your time at the dealership.
4. Bring your driver’s license (and other important documents): Duh! I’ve actually had people come in the dealership with the specific intent of test driving a car, but who failed to bring their Driver’s License. Whaaaa??!! The salesperson is going to need to make a copy of your license to, legally, let you test drive their car. They will also need your license to, legally, take your credit application. Also, bring your trade title. If you don’t have your title or can’t find it, expect to pay a “Lost Title” fee of around $50 and sign some paperwork to authorize the dealership to apply for a duplicate title on your behalf. Note: You can get a Instant Title at a Secretary of State Super Center location for around $20. Also, be sure to have your current plate registration (or at least plate number) and current proof of insurance ID card. Are you worried about your credit? Bring your most recent paystub. Learn more about credit challenges.
5. Know your trade-in value: Have an idea of what you want for your trade. Simply go to KBB.com, enter true information about your vehicle and look at the the low-to-high-range “Fair Condition” value when you trade into a dealership. Second, know who your lender and your loan or lease account number. Also, know your 10-day payoff and your per diem. P.S. If you owe more money than your trade is worth on trade, it’s possible you can roll over that negative equity into a new loan or lease. Or, you can have some money down. Don’t worry about it yet…let your dealer show you options to deal with this issue.
6. Enjoy the ride: Guess what? Your sales person knows how to do their job. Don’t expect to walk in and run the show. You don’t work there. Let your sales person guide you through car buying process. It will save you time and frustration. Just go with it…
7. Know what discounts you might qualify for: Do you get a manufacturer discount through a family member? Know what that discount is and get the information you need from the family member, preferably before you go to the dealership. See more.
8. Have a goal: Know what you want to accomplish in regards to features of your new car, trade value, out-the-door price and monthly payment. Decide what is most important to you. And please, share that information with your sales person. Don’t play games. Be clear about your most important goal.
9. Do math: You’re not going to be able to buy a $30,000 car for $250 a month. Lease — mabye — but not buy. So, if you’re budget is $250, understand that you’re allowing your budget to dictate the model and features of your vehicle; it might also be dictating year and miles if you’re going pre-owned. For example, I had a young woman who turned down a $275 a month payment on a 2014 preowned Chevrolet Cruze LT with 43K miles on it — a 2 year-old car that came with the remaining 5-year, 100K mile powertrain warranty and roadside assistance. She said she wasn’t willing to go over $250. So, she chose to take a 2010 Malibu LT with 59K miles, out of warranty and a bit more…used. It didn’t make much sense to me, but she was happy, and that’s what matters.
10. Be open to different financing options: Perhaps you heard leasing a new car was a bad decision. Or maybe you heard Of course, you have no idea what your best car-buying options are for your unique situation, but someone told you something once and you think you know. Well, you don’t. So, be sure to share your goals, along with information about your credit and your driving habits, with your sales person. Then, let the dealership educate you on all the different options in regards to length of the loan, leasing options, money down, interest rates, etc. If you’re credit challenged, read this…
You want a new car. But you’re worried about getting approved for car financing or car leasing. Sound like you?
As a car sales person, I’ve come to realize that the credit approval process confuses buyers, while also scaring the hell out many. I was one of those car buyers myself…
Even after I started selling cars in 2013, the thought of shedding light on my own credit report terrified me. I work a large dealership with traditional lenders. I wanted to lease a Chevy Cruze, but I thought there was no way I could get approved for a lease with my mud-like name, especially after my divorce. I thought about going to one of those “We Approve Everyone” high-interest, predatory kind of car lots. But I held tightly to the steering wheel of my 1998 Honda Accord. Eventually, after a few months, I got more comfortable with the idea of trying to get a approved for a new car. And guess what? I did! I leased my 2014 Chevrolet Cruze in April of 2014.
I remember going to my sales manager, sliding my credit application across the desk, as if it were a snot rag I had guiltily asked him to take in his hand and throw away for me. He looked it over and said, “Ok, I think we can do something. Go pick out your car.”
I couldn’t believe it. I was stoked! My first brand-spanking-new car at 42 years old!
I can now say, driving a new ride improves the quality of one’s life — my confidence and deserve-level went way up. Peace of mind reduces stress. I never have to worry about my car and if it’s going to make it to my next destination. At the same time, making an on-time, regular payment on a car greatly improves one’s credit score. In fact, later in November of that same year, I co-signed for my son to lease a car as well. Me – a cosigner!
In my experience selling cars, I find there are two types of credit challenged car buyers: The first are those who think there is little chance of getting approved because of their poor credit or no credit score. And when they find out that they got an approval, they are grateful. Then there are the oblivious ones — those who have zero concept of how bad their credit situation really is. They are often surprised they are offered fewer choices or even turned down. Not only are they shocked, they are outright offended they might be asked to lower their expectations about the type of car they can qualify for.
Anyway, no matter what kind of credit-challenged buyer you might be, here are a few tips…
When it comes to getting approved for an auto loan or lease, credit is much more than just a score. If you’re a 740+, you’re probably going to be invited to purchase anything you want. If you’re less than a 700, you might have a few hoops to jump through before finding out if you’re approved or not. My advice is: just go with it. I’ve seen a “0” FICO score get approved for a car purchase and I’ve seen a 625 get turned down. It just depends.
Now, in all fairness, I work at a dealership where the sales and finance managers are masters at what they do. And I get the feeling we’re a little special in that regard. But no matter what dealership you visit, getting an approval is simply a process you must go through to find out what your options are. Trust me, your dealer wants to get the car deal even more than you want to get into a new car. So let them do their job.
I often get questions about interest rates. My answer is: don’t worry about it. Your dealer is going to work to get you the best possible interest rate. However, DO NOT — if you can at all help it — go to a J.D. Byrider or a Car City or some other “Buy Here, Pay Here” kind of place. The interest is something like 18-24 percent and even higher. Of course, those kinds of dealership serve a purpose when there is no other way. But unless you’ve been turned down at two or more traditional dealers, don’t go to those shady kind of car lots.
Like I said earlier — instead of a number — a person’s credit score is made up of several financial aspects. Getting approved for a car loan or lease involves a lot of moving pieces: income, stability, open accounts, equity, debt, down payment and even current incentives or discounts you qualify for.
Here are a few of the questions you will be asked when submitting a credit application for a vehicle:
Income – What is your gross monthly income? Whether your income flows from a wage-earning job, salary, social security, child support, it all counts — but make sure you can prove it. If you’re credit challenged, you should be able to show at least $2K a month in gross income. If your income is that low and your credit score starts with something less than a “7,”, you can expect — at best — to get approved for a low payment on an economy car.
Stability – How long have you worked at your job? You will also be asked how long you’ve lived at your current address. If it’s less than a year, in either case, be prepared to provide details about your previous job and address.
Accounts – Are you current on your bills? When a lender reviews your credit report, they are looking for answers to the following questions: Have you paid a current or previous car loan regularly and on time? How many times have you been late? How recently did you pay off your last car loan? Do you have an repossessions — even voluntary? How long ago? Are there charge offs or judgements on your credit report? If you don’t have any accounts on your credit report — because you’ve never had credit or it’s been years since you’ve had any credit, then you’re credit score is likely a zero. That doesn’t mean you can’t get approved for a loan, but it presents a challenge to getting approved. Money down is usually the answer, but let your car dealer worry about this before you start worrying about it.
Equity (or negative equity) – Do you have a trade? How much do you owe on the vehicle you’re trading in? Who is your lender? What is your account number for your current car loan? How much is your payment? How many miles a year do you drive? What’s the 10-day payoff? What is your per diem? (Your sales person will be able to help get this information, usually during normal business hours.)
Debt-to-income Ratio – How much debt do you have? I’ve not seen this be a particularly huge problem, but depending on credit score and income, you might have too many auto loans in your name to get approved on another one, unless you’re trading one in or paying one off. Maybe you cosigned for someone and they pay the bill. Either way, don’t worry about this until you go through the whole process. Remember, your dealer is your advocate. The more information you provide about your finances, the better. When a deal is submitted, the bank will let the dealer know what is needed in order to approve a the deal. And if your dealer is armed with information, they can often have some bank requirements waived.
Discounts & Incentives – I work at a GM dealership. So my first question to everyone is: Do you, for any reason, get the GM Employee Discount through a family member? Or, do you get the GM Supplier Discount? I’ve got a list of current GM discount questions I ask. That way, if you do qualify for any current discounts or incentives, it will help lower your payment and, perhaps, better allow for an approval.
Down Payment – What is the minimum amount of money you plan to put down? In most cases, you can sign and drive at a dealership. In other words, you can get approved for a car loan or lease without any money down — even if your credit isn’t great. I’ve seen it hundreds of times. In fact, I had a 580 credit score when I leased my Cruze for $0 down. However, there are many cases when the lender requires a down payment in order to get approved. This will happen if:
a) you’re a first-time buyer; you have no credit score or limited credit history
b) your credit history is chaotic enough that the bank asks to see a good-faith chunk of change down, showing your commitment to the deal to lower the bank’s risk; or…
c) the car you have selected is more car than the lender thinks you can afford based on your over-all credit situation. For example, I worked with a single mother in her early 20s who made $12 an hour. She wanted a car that would be safe for the upcoming winter. Her credit score was 604. She wanted to lease a new 2015 Impala, which is — at minimum — a $30K car. The leasing company said they would approve her at a $250 a month lease payment, which meant she’d have to take a Chevy Cruze. I was excited for her — she could get into a new car that would be reliable and safe for her and her toddler. And she’d get an opportunity to build more credit history so she could have more choices in a couple of years. But she was deeply offended by this notion and wasn’t having it, so she drove away in her old car. She didn’t want to accept that she’d have to walk before she could run.
To help make the credit approval experience more tolerable, the following are what we call “Stips” — short for stipulations — which a bank might require for your car loan or lease approval. You might feel more prepared and save you and your dealer a lot of time if you have these things with you –
Proof of income (POI): Most recent pay stub with year to date earnings. In most cases, this is all you will need. However, extenuating circumstances might also require the following.
If the Year To Date (YTD) earnings don’t show the income you are claiming, you need to have a documented reason for that, i.e. pay raise documentation, new annual contract, sick leave, etc.
Are you self employed or 1099 contract worker? Bring two years worth of tax returns with Schedule C.
30-day bank statement
Last year’s W-2 (I recently saw this stip required by a bank who approved someone with no credit score).
Proof of Residency (POR): Driver’s license with your current address on it. In most cases, this is all you will need. However, if you don’t have the correct address on your license, you should also be prepared to provide a utility bill (i.e. cell phone bill, cable bill, electric bill) in your name and listed at your current address.
References: Name, number and address of three personal references who are over 18 and don’t live at your address.
Billing Statements: Proof that current Mortgage and Auto loans are up to date without a past due balance. (Needed in case any of these loans are showing as late on your credit report.)
Down Payment: In some cases, you will be asked to have the first payment down, or $500 or $1000. In extreme cases, in which you have more than $5,000 in negative equity on your trade, you will be asked to have more down. (If you don’t have any money down, and are asked to put money down, think about ways you can get some, i.e. credit card, borrow, sell an item.)
Trade Title: If you are trading in a vehicle, you will want to have your car title with you. If you can’t find your title, get an Instant Title. Or, in some cases, you will be able to pay a $50 Lost Title Fee and sign Lost Title paperwork, so the dealer can apply for a new title for the trade they are taking in. However, some dealers don’t allow this, or they don’t allow it when they are running a Cash for Junker event. By providing your own title, you’ll save some money and stress. Lastly, if you are still making payments on the car you want to trade, know who your lender is and have your 10-day pay off and per diem. Usually, your sales consultant can help you with this, but — obviously — it’s good for you to have this information.