Bestie, Don't Buy That Car Before You Rent That Apartment

Bestie, if you're planning to rent an apartment and buy a car around the same time, let me give you a little advice:

Rent the apartment first.

I know—you may need the car. You may have already found the one you want. You may even be able to afford both the car payment and the rent.

That is exactly what I thought.

But it wasn't as clear-cut as I thought. Here's what happened.

I Thought My Income and Rental History Would Be Enough

Years ago, my roommate decided to move in with someone else. Financially, I knew I could afford an apartment on my own, so I wasn't particularly worried.

We were living in a two-bedroom apartment, and my plan was simple: I would move into a one-bedroom apartment in the same complex.

I already lived there. I had a good rental history with the property. I had the income to support the rent. I knew they would check my credit, but I assumed my income and history with the apartment complex would work in my favor.

What I failed to consider was that when my roommate and I originally moved in, the apartment was approved based on both of our incomes and both of our individual credit profiles.

This time, everything would be based on mine alone.

Still, I believed I would be fine.

Then I Bought a Brand-New Car

Around the same time, I purchased a new car.

I didn't understand how financing that car could affect another major financial move. I simply thought, "I make enough money to pay my car payment and my rent."

And I did.

What I didn't understand was that qualifying for something is not determined by income alone.

When the dealership searched for a loan with terms that worked for me, multiple inquiries appeared on my credit report. I also took on a brand-new monthly payment. On top of that, there were items on my credit reports that needed my attention—things that had not even been on my radar.

Then I walked into the leasing office fully expecting to move from my two-bedroom apartment into a one-bedroom.

Bestie, I failed fabulously!

Womp, womp.

I was devastated. I had the income. I had a good rental history. I already lived in the apartment complex—and I had just been approved for a brand-new car! So how in the world did I fail the application?

I had made decisions based on assumptions instead of finding out exactly what I needed to qualify on my own.

Your Income Is Only Part of the Picture

Being able to make the monthly payments does not automatically mean that you will meet a landlord's approval requirements.

Depending on the property, a landlord or apartment complex may consider several things, including:

• Your income
• Your credit history
• Your monthly financial obligations
• Collections, charge-offs, or late payments
• Your rental and eviction history
• The information contained in a tenant-screening report
• Whether you meet the property's income requirements

Every property has its own standards. One apartment complex may require your gross monthly income to equal two-and-a-half times the monthly rent, while another may require three times the rent or more.

That is why you need to ask questions before you apply.

Don't assume that, like I did, that your income or previous rental history will automatically carry you through the approval process.

Check All Three Credit Reports First

If you are planning to rent an apartment within the next three to six months, review your credit reports before making another major purchase.

Look at your reports from the three major credit bureaus:

• Equifax
• Experian
• TransUnion

Don't check only one and assume the other two contain the same information. An account may appear on one report and not another.

Review your reports carefully. Do you see any late payments, collections, charge-offs, unfamiliar accounts, or incorrect information? Are there old items you forgot about—or didn't even know were there?

You don't want to discover those things after a leasing office has already reviewed your application.

You can request your credit reports through AnnualCreditReport.com. Remember that your credit reports and credit scores are not the same thing, so make sure you understand exactly what you are reviewing.

Get Preapproved Before Going to the Dealership

If you genuinely need to purchase a car before renting your apartment, consider speaking with your bank or local credit union before walking into a dealership.

Find out whether you can get preapproved and what terms may be available to you. This can give you a clearer understanding of what you qualify for before the dealership begins contacting lenders on your behalf.

Most importantly, pause and consider how the new car loan and monthly payment could affect your upcoming rental application.

The question is not only, "Can I afford this car?"

You also need to ask: "Could buying this car right now interfere with my ability to get the apartment I need?"

Be Careful with Buy Now, Pay Later

That same caution applies to furniture payment plans and buy-now-pay-later services.

It may feel like you're simply dividing the cost of a purse, a pair of Timberlands, a television, or an Apple Watch into smaller payments. But those smaller payments are still financial obligations.

The reporting practices can vary depending on the company, the type of plan, and what happens if you miss a payment. Even when a payment plan does not initially appear on your credit reports, a delinquent account that is sent to collections could create a much bigger problem.

A small purchase is not worth jeopardizing a larger goal.

If you know you're preparing to move, this may be the season to delay buying the new television, the new furniture, or even the new car.

Delayed gratification is not always fun, but neither is being denied for the apartment you were counting on.

The Apartment May Need to Come First

I am not saying that you should never buy the car. I am saying that the order in which you make major financial decisions matters.

If housing is your priority and your current vehicle can carry you a little longer, consider securing the apartment first. Once you have been approved, signed the lease, and understand your new monthly expenses, you can make a more informed decision about the car.

I learned this lesson by living it.

So, here is a little advice from your financial bestie: Bestie, don't buy that car before you rent that apartment.

Know your numbers. Ask questions. Review your credit. Understand the requirements. And don't allow a purchase you can delay to stand between you and the home you need.