If you’re thinking about leasing a car but your credit score isn’t quite up to par, you may be able to bring a cosigner to sign on the leasing agreement with you.
Cosigners and Car Leasing
For borrowers with poor credit scores, bringing a cosigner can increase their approval odds for auto loans and, occasionally, leases. This is because a cosigner can “lend” you their good credit score. The cosigner promises to pay for the leased vehicle if the primary borrower can’t, which increases your chances of getting approved.
Leasing companies typically have higher credit score requirements, so borrowers with poor credit generally have better chances of working with a bad credit lender for a car loan. Leasing is usually reserved for borrowers with good credit, but a cosigner could give you the boost you need to get into a lease.
Requirements of Cosigners
When it comes to getting a cosigner to help you get into a lease, you need to find the right person for the job.
The most important requirement of a cosigner is that they have a good credit score. If you bring a cosigner with a similar or worse credit score than what you have, then it’s not going to boost your chances of getting approved for a lease.
The other important requirements that cosigners must meet are the income and debt to income requirements. The cosigner must have enough income to cover your car payment in the event that you can’t make it, and they also must have enough disposable income to do so.
As far as who can be a cosigner, anyone that isn’t a spouse or life partner is fair game. Spouses and life partners can combine incomes and become co-borrowers together, which is a different deal than cosigning. Your cosigner could be a parent, sibling, or even a coworker. As long as they meet the requirements and are willing to cosign for you, you could be one step closer to a lease.
Risks for the Cosigner
Before you enlist a cosigner, be sure to let them know the risks of cosigning a lease. For starters, their good credit score is on the line.
Cosigners don’t get rights to the vehicle they cosigned for, but the payments and the lease are reported on their credit reports along with yours. This means that if you miss a car payment, it’s going to impact both of your credit reports and scores. How well you handle the lease is going to reflect on both of you, so reassure the cosigner that you can handle it.
Another major risk for a cosigner is that if you default on the lease, they’re responsible for picking up the slack. Make sure you’re open and honest with your cosigner about the status of the vehicle, the lease, and let them know if you’re struggling to keep up with the payments so something can be arranged – your cosigner probably wants to keep their credit reports clean!
Bad Credit Leasing vs. Bad Credit Car Loans
With a lower credit score, it can feel like your car options are limited. This has some truth to it, but there are ways for bad credit borrowers to get into an auto loan or a car lease. However, without a cosigner, the odds of a credit-challenged borrower getting approved to lease alone aren’t that great.
If you don’t have a cosigner that can help you with a lease but you need a vehicle, look into subprime auto loans. Subprime just means bad credit, and these loans are specifically for borrowers in bad credit, no credit, or unique credit situations like bankruptcy.
Not every dealer can work with bad credit borrowers, but the ones that do are called special finance dealerships. Finding one can be a little like looking for a needle in a haystack, so let us help with that.
Here at CarsDirect, we have a nationwide network of dealers that are signed up subprime lenders. To get matched to a dealership near you with the bad credit options you need, fill out our free car loan request form.
