If you want to lease a car with bad credit, there are ways to get a great deal. Getting a bad credit car lease usually means paying a higher interest rate and down payment, but with an approved lease option, you can drive away in your new vehicle.
The dealership will likely run your credit report when you apply for a car lease with less-than-stellar credit. The information will show the lender how you have handled credit in the past and what kind of risk you pose to them. If you have a low score, there is a chance you won’t be approved for the auto lease.
You can check your scores for free on Credit.com to see where you stand before you begin shopping around for a car lease. If your score isn’t where it needs to be, here are some things to consider:
Credit Score for Car Leasing
Every leasing company uses no single standard credit score when determining whether or not to approve an applicant. Typically, though, if your score is below 650, you’ll have trouble finding an auto lender who will finance your lease. If you are approved despite this low credit score, expect high-interest rates and extra fees for things like mileage limits and excessive wear-and-tear on the vehicle during the lease term.
Things You Should Consider Before Bad Credit Car Lease
The High Cost: The high cost of financing is one of the significant drawbacks to leasing a car if you have bad credit. Most companies check your credit before agreeing to rent a vehicle, and if they find an undesirable number of points on your score, they may refuse to work with you at all or grant you less favorable terms. This could mean that you pay an extremely high-interest rate on loan used to fund the lease agreement.
Lease-here pay-here: New-car dealerships may offer you a lease with questionable credit. However, the down payment and monthly payments will likely be much higher than you’d pay for a similar vehicle at a traditional dealership.
Tread carefully when considering this option. Tally up all lease costs before you get too excited about the weekly or monthly payment.
Ways to improve your lease approval chances before applying
Approval for a lease can be challenging therefore, you have to prove that you both have enough money to pay for it and that you are accountable enough to make the charges. Here are some ways you can improve your chances before applying:
Make a down payment: Lease agreements require the lessee to pay a down payment of 10 percent of the car’s purchase price to secure the lease. Most lessees elect to pay this down payment at signing, meaning they will be responsible for paying the entire monthly lease amount out of pocket. However, if you cannot afford to put 10 percent down, or if you want to get a lower monthly payment, then you may want to consider making your down payment over time.
Reduce your debt by lowering your debt-to-income ratio: The debt-to-income ratio is one of the critical factors that most lenders use to determine whether or not a borrower is likely to repay their loan in full and on time. The higher a borrower’s debt-to-income ratio is, the less likely they are to get approved for a lease with a leasing company and other lenders.
Lower your credit score: Your credit score is another crucial factor that leasing companies will consider when determining whether or not you will get approved for a lease agreement.
Co-signer: If you’re struggling to meet one or more of these points, consider getting a co-signer. A co-signer isn’t always necessary to get approved, but it can improve your chances if your credit history isn’t good enough on its own.
Great Ways to Enjoy the Open Road without Having to Worry about Bad Credit
There is an open road out there, and it is waiting for you to drive on it. But, more than likely, you will not be able to move on it due to bad credit. If that’s you and you want to know how you can enjoy the open road once again, read on.
Buy Used Car: Buying a used car, as opposed to buying a new one, means you have less to finance, which often means a lower interest rate. Qualifying for a used car loan with bad credit may be easier than leasing a new car.
Lease Swap: In this type of transaction, your current vehicle is traded in for another one at the dealer’s new-car lot. The dealer then assigns the lease from your old car onto the new one and sells it attractive to someone with better credit. The program works both ways: A consumer with suitable credit trading in an old leased vehicle also could find someone willing to take over their lease payments.
Lease/Purchase: Another option if you’re looking to lease a car with bad credit is to work out a deal where you buy the vehicle at the end of your term for a set price. You could make monthly payments toward the purchase price at the same time you make payments on the lease. In some cases, this is how people get around a low credit score and get into a new car anyway. Loans come in many forms for people who don’t qualify for traditional financing.
