If your credit is shot but you need to lease a car, there are a few things you can do to help improve the chances of leasing a car with bad credit.
And even if you’d rather purchase your automobile rather than lease, there are some positives to leasing rather than getting a loan or buying outright.
So get comfortable with leasing, look at the positives and be realistic in your situation. Leasing long term and making payments over time will help your credit rating, so perhaps by the time you finish your first lease, you’ll have a strong enough credit rating to get a loan for your next vehicle and be able to buy it out right.
So let’s talk about a few positives on leasing rather than buying your car or truck.
First off when you lease, you aren’t fully responsible for the maintenance of the vehicle. This can be really helpful if you aren’t a natural mechanic and barely know where to add the gas like me. Since the company will get the car back, they will often maintain it for you so that once they do get it back, they’re able to re-lease it again or sell it.
Although having bad credit may block you from buying a car, leasing is a viable option. But, it is not a guarantee. If you have bad enough credit, you may have far more trouble leasing a car than you think.
Leasing is usually less expensive than actual car payment, on the whole. While it totally depends on the make and model of the car or truck, leasing is usually more affordable than buying which is great if you’re on a tight budget.
So here’s a recap of the positives…
- No maintenance or low maintenance
- Easier to get a lease than an auto loan
- Less expensive
Now for the negatives.
Since you credit score is an issue, when trying to lease the dealership may require you to give a down payment as a kind of security. This can be whatever the dealership requires, but is usually no more than 20%. Of course if you don’t have a lot of cash on hand, this could be a real problem.
The second drawback that may occur is the dealer want you to have a co-signer. Since your credit is “lacking” they may require a co-signer to guarantee they get their money. It’s the same in the states or if you want to lease a car in the UK with a bad credit score. This may or may not be a big deal for you, it’s totally dependent on your situation.
Another trade off is that you’ll probably be paying a higher interest rate when getting the lease. You’re a bigger risk to the company, so they want to see a return on their risk. That equates to higher interest rates to your lease.
Again, lets recap here…
- Down payment needed
- Higher interest rates
So, if you still want to go after getting a lease, then there are a few things you can do beforehand to help you improve your chances of securing one, and maybe with less hassles as the ones mentioned above.
First, consider taking over an existing lease. People will always default on loans and leases, and if the dealer has a defaulted lease, they may let you take it over. Simple stated, whatever the terms and length of time wa agreed upon by the dealer and lease holder would be transferred to you for the remaining lease. So you’re just “taking over the payments” of a previous lease. When this is available, it is often times much easier to be accepted as a lease takeover than a new lease. So ask the dealer if this is an option. It could save you some hassle.
If you’re having a lot of trouble qualifying for a lease, offer to put more cash down, or even agree to pay for the first 6 months “up front’ so there is less risk to the financer.
Shop around for the best deal. Each dealership is owned and operated by different people and have different prerequisites when it comes to terms they’ll accept on a lease.
Be realistic. If you have bad credit and are expecting to lease the newest Porsche, you’re probably going to walk away dissatisfied. Get a good running and reliable car. Forget about being sporty or cool. This is a tool to help you live a better life, to get you from A to B. So look at reliability and cost, not how cool your friends will think you are.
And lastly, get a copy of your credit report to give to the dealerships. When your credit report is requested by a financing company, that request actually has a small negative effect on your credit rating. So if you’re going to multiple dealerships and they are all requesting your credit report, it can have a noticeable effect. By giving them a copy and asking them to base their decision on the copy rather than a live report keeps your rating from getting knocked down. Then whomever you choose to lease from can run the final report, and it is just a one time occurrence that will have the most minimal effect.
So there you have it, our best advice to get you a car lease with bad credit. If you have any tips you’d like to share with our reader, please leave a comment below.