Leasing a Car with Bad Credit

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.

, - September 28, 2018

In some cases, it’s possible to lease a car with bad credit. However, leasing may not be the best option for every driver with credit issues. In fact, drivers with very bad credit ratings may not qualify for a lease at all.

Whether or not a borrower should opt to pursue leasing comes down to a few factors. These include their exact credit situation, how much they’re willing to pay for a lease, and the lease deals available to buyers with bad credit.

Lease Costs

For people who like the idea of driving a new vehicle and don't mind always having a car payment, leasing is an attractive option even with bad credit. With a lease, monthly payments are typically lower because a lessee is only paying for the part of the car that they use.

What this means is that lease payments are largely based on estimates of how much a vehicle depreciates in value during the time covered by the lease contract, with interest charges and taxes factored in. With some leases, lessees must also have a down payment.

Of course, on a vehicle that’s available for lease, there isn't one set payment that is available to all consumers. Instead, most leasing companies have credit tiers for leased cars. Drivers with excellent credit get top tier rates. But drivers with good to average credit, if they can get approved, fall into lower tiers. So, they pay more than buyers with the best credit to lease the same vehicle.

The lease deals that are prominently advertised are meant for drivers with excellent credit. So, even if a driver’s credit is fair, they probably won’t qualify for a "zero down, sign and drive, $199 a month" lease offer. This kind of rate is called a "promotional rate" and is typically only available to consumers with the highest credit scores.

When You Want to Lease a Car with Bad Credit

To put it in car dealer terms, some automotive captives are more likely to "buy deep" than others. Automotive captives are finance companies that are tied directly to major automakers. If a captive finance company is buying deep, this means that they’re accepting applicants with lower credit scores. Also, with captives that buy deep when it comes to leasing, it varies as to how low a credit score they’ll still approve for a lease.

If, for example, an automaker ends up with too many of a certain vehicle model, their captive lender may loosen the leasing requirements for that particular car. Because of this, if a consumer has poor credit and still wants to lease a car, doing a little research might pay off. Check manufacturer websites frequently and call around to local dealerships to see whether or not there are deals available for those with less than perfect credit.

How Lease-to-Own Programs Work

You may see lease-to-own programs being advertised to drivers with bad credit. But it's important to understand that these dealers aren’t offering lease contracts on new cars. Lease-to-own, rent-to-own, and buy-here-pay-here programs are basically all the same.

Most of the time, a consumer can qualify for a lease-to-own program without a credit check if they put down a cash deposit. Also, they’ll probably end up with a used vehicle and weekly or bi-weekly payments. These payments probably have to be made in person at the dealership. What’s great about these programs is that the consumer actually owns the car after they’ve made all of the required payments.

How to Get the Car You Need with the Credit You Have

At CarsDirect, we understand that not every person who needs a vehicle is going to have good credit. That's why we've partnered with car loan providers that make financing options available for most credit types. Also, whether you're interested in buying or leasing your next vehicle, we can help make the process faster and easier.

Get started today and fill out our fast and secure auto loan request form.

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Megan Foukes is a recent graduate from Indiana University who graduated with a bachelor’s in journalism. Megan works as a content writer for Auto Credit Express and contributes to several automotive and finance blogs.

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