Leasing a car with bad credit is no easy task. While having a car lease allows you to drive the vehicle you want, despite having limited income, while still saving money. Monthly payments are often lower than with purchasing a vehicle. However, it can still be a challenge to lease a car with bad credit.
How to Lease a Car with Bad Credit
First, here’s how leasing a car works. Instead of buying it, you sign a lease agreement that includes a maximum amount of mileage and that covers a two-to-four-year time period. If you know how much you can afford each month, you can find a vehicle from a dealership with a leasing program, apply for a loan, and start making payments once you’re approved.
Oftentimes, you have the option to buy the car at the end of the lease term. But generally, once the lease is over, you must return the vehicle to the dealership, and possibly pay for damage (outside of normal wear and tear) and overages on mileage.
What Does My Credit Score Need to Be?
Your credit score is important, but there’s no minimum credit score to be approved for a car lease. Every dealership has its own qualifications. Generally, the lower your score, the riskier it is for the dealer to lease a vehicle to you. They’re looking at how responsible you are with paying your bills. For auto financing applications, dealerships often look at FICO® Auto Scores, which range from 250 to 900 (most other credit scores go from 300 to 850).
Your Credit vs. Lease Terms
A lower credit score doesn’t necessarily disqualify you from approval. You can still qualify for a lease, but the terms may be impacted in ways such as:
- A higher down payment or security deposit.
- Being charged a higher interest rate.
- Fewer vehicle options to choose from.
How Do I Get the Car I Want?
With poor credit, you may have easier access to cheaper vehicles. Some leasing agents specialize in helping customers with bad credit, while some dealers work with all types of credit. If your credit isn’t what you’d like it to be, seeking vehicles the dealership is more eager to lease may be successful. This is especially so as new models are released and the dealership needs to clear its previous years’ inventory. It helps if you can verify a steady income, show you’re working to improve your credit, or have a co-signer.
If the Dealership Doesn’t Approve My Credit, What Other Options Are There?
If you have bad credit, car dealers have the option to approve or deny your application. However, a lease may not be the only way to access a car. One option is a lease transfer, in which an auto lease is transferred from one driver to another. You could, for example, take over a lease from a friend or loved one, or use a service that connects leaseholders with someone looking for a vehicle.
Car sharing services allow you to rent cars for short periods of time. If your city has one, you could get access to a car, even just for a few hours. Alternatively, you can work with your dealership’s financing department; some have programs for helping people with poor credit get a car loan.
Therefore, when applying for an auto loan with bad credit, instant approval is still possible.
Use Credit Repair Services in Los Angeles
If your credit rating isn’t where you want it to be, American Credit can help you with credit repair. Negative information on your credit report can drive down your credit score. However, errors can be disputed. We employ a pre-litigation process to encourage creditors to report information correctly, which is more effective than sending a dispute letter. To learn more or receive a free credit consultation, call 855-213-1043 today.
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