Tesla lease denied due to lack of credit history

[evme]

The reason was lack of credit history, not bad credit; missed payments = nil.

I am now second guessing if I still want the P85+ or a more luxurious car since $120K opens up a lot of options.

I think the best way of looking at this is turning the tides around. You own a business, if someone came to you, showed you that they had a million dollars but there was no history on them, would you do business with them where you can be left financially hanging?

The whole point of a credit history is to show that you pay bills on time and have a stable flow of income. There are plenty of people who earn a lot of money and end up bankrupt the following morning. Not saying you are one of them, but as a business owner you should be well aware that there are risks to doing business.

It may not even be related to them, sometimes financial companies get insurance and there might be requirements that they must meet for that insurance.

As far as which car to get, as the saying goes. You only live once, get w\e makes you happy. Though there are not much cars in the 120k range that can compete with a Tesla Model S, it is hard to go back after driving one.

 

[Al Sherman]

So you have little or no credit history, get refused (rightfully) when you seek a $100k loan without any such credit history, and then complain that the process of getting a loan from Tesla is a "joke" and a "waste of time." Hmmm, I think we have a clearer picture now. How is Tesla (or any other potential creditor of something north of $120k) supposed to know you are a good credit risk with no credit history? Moderators: I would suggest revising the title to something like "Tesla lease will be a waste of time for anyone who has little or no credit history."

If you were looking to buy a Tesla only for the "luxury" of it, let me know when you can find something else that is electric, has 200+ miles of range, does 0 to 60 in less than 4 seconds, and looks like a Maserati.

^^^Yeah. Don't let your lack of credit history change what car you get. It's just the way this system works. It probably has very little to do with Tesla. Probably will be the same results regardless of which car you try to lease in this manner.
The car is simply too amazing, groundbreaking, stunning to let go of just because of this issue. Electric driving is just so good. The company is remarkably different. It's too good an experience to pass up.

Incidentally; off topic but tangential (imho) have any Model S' been repo'd?

 

[Ugliest1]

Thank you mods for changing the thread title. Once the details came out, the title was bugging me. Now it makes complete sense.

 

[SFOTurtle]

Thank you mods for changing the thread title. Once the details came out, the title was bugging me. Now it makes complete sense.

Yep, moderators did a good job with the title which is much more accurate and fair.

 

[dsm363]

Mod note: Thanks for suggesting the title change. If additional info comes to light that makes the original title more valid we can update it again.

 

[AmpedRealtor]

The reason was lack of credit history... So my advice is unless you have excellent credit history, think twice before applying for their lease as you may waste a hard hit on a super tight underwriting process.

Lack of credit history is not the same as excellent credit history. You can have excellent credit, but still lack credit history to qualify for a loan, mortgage, or lease. Was it the business that lacked the credit history, or you as the individual? If your business lacked credit history, perhaps you should contact Dun & Bradstreet, Experian Business, or Equifax Business to ensure your business is building credit history.

 

[xza8]

I think the best way of looking at this is turning the tides around. You own a business, if someone came to you, showed you that they had a million dollars but there was no history on them, would you do business with them where you can be left financially hanging?

The whole point of a credit history is to show that you pay bills on time and have a stable flow of income. There are plenty of people who earn a lot of money and end up bankrupt the following morning. Not saying you are one of them, but as a business owner you should be well aware that there are risks to doing business.

It may not even be related to them, sometimes financial companies get insurance and there might be requirements that they must meet for that insurance.

As far as which car to get, as the saying goes. You only live once, get w\e makes you happy. Though there are not much cars in the 120k range that can compete with a Tesla Model S, it is hard to go back after driving one.

Some businesses are more savvy than others.

For example, Chase: no US credit history = no mortgage, period. It's competitors: no US credit history = let's see what else we can do like pull an international credit report = underwrite a 7 figure mortgage based on Equifax Canada instead of Equifax USA.

In this case... Tesla loss and Porsche's gain.

Tesla now needs to sell my customized P85+ while I walk away with just a credit inquiry.

 

[evme]

Some businesses are more savvy than others.

For example, Chase: no US credit history = no mortgage, period. It's competitors: no US credit history = let's see what else we can do like pull an international credit report = underwrite a 7 figure mortgage based on Equifax Canada instead of Equifax USA.

In this case... Tesla loss and Porsche's gain.

Tesla now needs to sell my customized P85+ while I walk away with just a credit inquiry.

There are many factors that play into that as I mentioned from getting insurance on the loan liabilities to selling the loans to other companies. I know when I got a mortgage, it got sold to some other company in a matter of months (which sucks to be them since I paid off my mortgage in full in a year instead of 30). The flexibility depends on the lender, to the individual you deal with. Obviously Tesla being new to the financial game gives them less flexibility. But it also might have to do with the fact that Tesla can be more picky at this point.

Overall though, I wouldn't be too worried about Tesla, at this point in time they can't produce cars fast enough to meet demand. Your car will probably be used as a loaner car and sold the same day. Enjoy your Porsche.

 

[Larry]

This thread reminds me of the joke-what's the difference between a Porsche and a porcupine? I know I know but I just couldn't resist.

 

[Ugliest1]

This thread reminds me of the joke-what's the difference between a Porsche and a porcupine? I know I know but I just couldn't resist.

But....but...but... What's the punchline? I either haven't heard that one or forgot it.

 

[AmpedRealtor]

The reason was lack of credit history, not bad credit; missed payments = nil.

I am now second guessing if I still want the P85+ or a more luxurious car since $120K opens up a lot of options.

If your goal is luxury, why are you looking at a Model S? Model S is a premium car, not a luxury car. What you get for the price is a technology and drivetrain experience like no other. You don't get shiatsu massage seats, if that's what you're thinking. If that's what you want, you are probably not the right customer for a Model S to start with. Sorry to say.

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Also, who cares what your gross income is? It's your net income that matters.

 

[SFOTurtle]

Some businesses are more savvy than others.

For example, Chase: no US credit history = no mortgage, period. It's competitors: no US credit history = let's see what else we can do like pull an international credit report = underwrite a 7 figure mortgage based on Equifax Canada instead of Equifax USA.

In this case... Tesla loss and Porsche's gain.

Tesla now needs to sell my customized P85+ while I walk away with just a credit inquiry.

I'm sure Tesla will have no problem selling this car, assuming it has been produced. Tesla generally can't keep inventory cars in stock long enough to even use them as loaners. Wish they could for the times I bring my car in for service.

OTOH, Porsche's gain is actually your loss. Assuming you bought a Panamera over a Model S because you couldn't qualify for loan, I feel sorry for you. But it does sound like you never were really interested in owning a Model S for the reasons it is such a unique and ground-breaking car and instead were only interested in having a "luxury" car. Again, your loss.

And there are a lot of reasons why Chase (and other large banks, it is not alone) has tighter credit guidelines, although in many cases there are work-arounds if someone is truly a good credit risk. Time will tell if these other competitors will suffer the same outcome as countless financial institutions did by over-extending credit during the housing bubble (like what is happening right now in many Canadian cities that had dramatic price increases from Asian investors but having seen double digit home price losses from two years ago).

 

[Canuck]

Update with Details
- a personal guarantee was agreed, it is part of the leasing program
- the principal earned almost a million in salary
- the company earned several millions in net profit
- the company has $1M+ in cash

The reason was lack of credit history.

I call BS on the numbers. They just don't make sense. If you have a company that makes "several millions in net profits" and "the principal earned almost a million in salary" then how come the company only has "1M+ in cash"? Right there, we can see gaping holes in his story. He'd be destroyed under cross-examination.

But, let's just pretend the numbers are legitimate (really hard to do, but let's try). Then we must ask: What happened to the net profits? The only way a company can shed profits is (1) Salaries -- that didn't happen because the company has several millions in "net" profits and salaries take away from net profits; (2) Reinvest in the company (again that takes away from net profits -- so that also does not apply; and (3) Dividends -- but this has to go to the principal shareholder (who must be the owner - no one gives money away) and we would not be told of his "salary" since the dividends would far exceed the principal's salary (the company has to shed millions) and that would be disclosed on his "personal tax returns".

So, please OP, come back and explain away my concerns. I don't see any way you can do it but I do like watching people dig a bigger hole for themselves.

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You really should have kept your promise...

I'm not going to post numbers...

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Since I like the car, I will just buy the car outright despite the wife nagging that I should get a Porsche (already have one, want something new).

Hmmm... no mention of your Porsche in this thread:

S85 vs P85+ ... Is the P+ Worth It at Today's Pricing (Feb 2014)?)

when you posted this:

However, I am fairly young (27 y/o), love to drive spiritedly and currently drive an Audi S5 (0-60 in 5.1 seconds). Although the S5 is fast enough for daily driving, the youth in me wouldn't mind a faster car like a RS5... but then again, I'll be starting a family soon so I will need to calm down. Lastly, I work from home so my time on the road would be very minimal.

 

[SwedishAdvocate]

…/ In this case... Tesla loss and Porsche's gain. /…

You are right. It is Tesla’s loss.

I am always amazed by people who opt out of a planned purchase because they feel offended for whatever reason, and then go and by something completely different just because.

A Car Manufacturer is only people. And people may (or may not) make mistakes.

But is that all that this is about?

You seem to be among those who can afford to by a Tesla. Not everyone can do that. It also seems that you would like to start a family. If what you post is true then you have the power to stop burning fossil fuels, and instead drive an electric car. Such a purchase would have been both an investment in a brighter future, and a divestment in even more CO2-emissions. I’m assuming you’re aware that Tesla is using all their money to bring the so-called Gen3 car to market as soon as they possibly can.

But it seems that you instead will buy yet another gasoline- or diesel-burning car.

I wonder what the children you want to bring to this world will think of your decision.


So again:

You are right.

This is Tesla’s loss.

But there are more of us who are loosing out…

 

[Canuck]

You are right. It is Tesla’s loss.

I don't agree. Tesla was right to head for the hills on this one. If someone wants to lease a vehicle, they can't provide a financial history that makes no sense -- see my previous post for the details. Also, if you read the OP's other posts, his story become extremely suspect. He said this:

I'll be relocating to San Jose so I'm not familiar with the roads... Lastly, I work from home so my time on the road would be very minimal.

So how can a company write off a lease for a vehicle whose business use would be "minimal". That would not comply with IRS guidelines for a business vehicle. So who is this car for? The company use? for other employees? or for the principals? Is he a principal who works from home? If it's for others, then why does his wife's say have anything to do with it? Remember, she wants the Porsche -- his second one -- more suspicion because he only tells us of his Audi in prior posts.

This whole story stinks but the OP will come back and clear it all up for us, I'm sure....

Answers!! We need answers.

 

[EarlyAdopter]

Question to the OP (xza8): Who owns the company? You or someone else, like your father?

 

[xza8]

I don't agree. Tesla was right to head for the hills on this one. If someone wants to lease a vehicle, they can't provide a financial history that makes no sense -- see my previous post for the details. Also, if you read the OP's other posts, his story become extremely suspect. He said this:



So how can a company write off a lease for a vehicle whose business use would be "minimal". That would not comply with IRS guidelines for a business vehicle. So who is this car for? The company use? for other employees? or for the principals? Is he a principal who works from home? If it's for others, then why does his wife's say have anything to do with it? Remember, she wants the Porsche -- his second one -- more suspicion because he only tells us of his Audi in prior posts.

This whole story stinks but the OP will come back and clear it all up for us, I'm sure....

Answers!! We need answers.

I'll answer your questions so I don't leave the boards as a troll

- cash is just one type of asset... you forgot to ask about investments
- commuting to work is not a valid business trip so I don't understand your logic of working from home != business vehicle
- the Audi is my daily driver and the Porsche is my wife's daily driver (and yes, I bought both of them)

Question to the OP (xza8): Who owns the company? You or someone else, like your father?

Mine... my father is a blue collar worker. I was fortunate to jump in on a profitable business opportunity and worked hard in the past few years.

 

[MarkR]

Sour Grapes. The guy sounds angry about being rejected. First he talks about being shut out of a lease deal, then says he'll purchase it outright, and ultimately decides to cancel the MS to buy a Panamera partly because he likes the sound it makes. Personally, I like the sound of silence.

 

[Canuck]

I'll answer your questions so I don't leave the boards as a troll

- cash is just one type of asset... you forgot to ask about investments
- commuting to work is not a valid business trip so I don't understand your logic of working from home != business vehicle
- the Audi is my daily driver and the Porsche is my wife's daily driver (and yes, I bought both of them)

I see, so your business has millions in investments but you don't mention that in the financial disclosure part. Instead, you only mention the much less in cash on the financial statements. That makes no sense.

Of course "to and from work" do not count. Everyone knows that. But you said "my time on the road would be very minimal". In fact, for "to and from work" your time on the road is zero! nothing! for to and from work. It's not "very minimal". I guess we are now expected to believe that your "very minimal" time on the road doesn't apply to business use. Again, that makes no sense.

If your wife has a Porshe, it makes no sense that you would say "already have one, want something new" instead of "my wife has one, and I have an Audi."




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Sour Grapes. The guy sounds angry about being rejected. First he talks about being shut out of a lease deal, then says he'll purchase it outright, and ultimately decides to cancel the MS to buy a Panamera partly because he likes the sound it makes. Personally, I like the sound of silence.

Yes, sour grapes is the best description. He obviously doesn't qualify when it comes to financing. Then to get back at Tesla, he comes here, makes up a story about how he runs a business with "$1M+ in cash" (many more millions in investments -- but he forgot about those until pressed) he makes nearly a million himself a year, drives a Porshe (then his wife drives it, he drives an Audi -- but only when asked about his prior posts) but yes, Tesla wasted his time... lol

 

[SwedishAdvocate]

I'll answer your questions so I don't leave the boards as a troll /…

You wrote nothing about my moral question...

Also, I'm not sure if someone asked you the following:

You posted:

Some businesses are more savvy than others.

For example, Chase: no US credit history = no mortgage, period. It's competitors: no US credit history = let's see what else we can do like pull an international credit report = underwrite a 7 figure mortgage based on Equifax Canada instead of Equifax USA.

/…/ I walk away with just a credit inquiry.

Did you use this argument with Tesla? If so, what did they say?