Can You Lease a Car with Bad Credit?

Get Car Financing
Even with poor credit.

By

Contributing Writer

Amy Fortune is a contributing writer for CarsDirect and lead writer/editor for AutoCreditExpress. She also contributes regularly to several other high-traffic blogs. Amy was born in North Carolina and grew up with an appreciation for NASCAR and everything automotive. Now based in the Motor City, she continues to be happily immersed in car culture and automotive finance.


, Contributing Writer - October 31, 2016

It is sometimes 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 the worst credit ratings may not be able to qualify for a lease at all.

Whether or not you should opt to pursue leasing comes down to a few factors. These include the severity of your bad credit, how much you're willing to pay for a lease and your timing.

Why it Can be Expensive to Lease a Car with Bad Credit

For those who like the idea of driving a new vehicle and don't mind always having a car payment, leasing is an attractive option. With a lease, monthly payments are typically lower because you are basically only paying for the part of the car that you'll be using.

What this means is that lease payments are largely based on how much the vehicle will depreciate in value during the time covered by the lease contract. When leasing, the lessee will also pay interest charges, taxes and, often inception and termination fees.

Also, some drivers know that they'll need more miles than a typical program allows. They can go ahead and pay for miles up front. This is usually cheaper than having to pay penalty fees for going over in mileage at the end of the contract.

Of course, on a vehicle that is available for lease, there isn't one set payment that is available to all customers. Instead, most leasing companies have different credit tiers for leased cars. Drivers with good credit get top tier rates. But drivers with not-so-great credit, if they can get approved, will fall into lower tiers. So they will pay more than good credit lessees to lease the same vehicles.

In fact, the lease deals that are prominently advertised are meant for drivers with the best credit. So even if your credit is just fair, you probably won’t qualify for a "0 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 Really Want to Lease a Car with Bad Credit

Some automotive captives are more likely to, as they say, "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 are accepting applicants with lower credit scores. Also, with captives that buy deep when it comes to leasing, it varies as to how deeply they'll buy.

If, for example, an automaker ends up with too many of a certain vehicle model, their captive may loosen the leasing requirements for that particular car. Because of this, if you have bad credit and are looking to lease, doing a little research might pay off. Check manufacturer websites frequently and call around to local dealers 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 are not 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, you can qualify for a lease-to-own program without a credit check, but you will need to put down a cash deposit. Also, you will probably end up with a used car and weekly or bi-weekly payments. Those payments will probably have to be made in-person at the dealership, and you will actually own the car after you'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 car is going to have good credit. That's why we've partnered with the best car loan providers in order to make financing options available for most credit types. Also, whether you're interested in buying or leasing your next vehicle, we can make the process faster and easier.

If you have just one minute to spare, you can fill out our simple and secure 1-Step Auto Loan Application. Go ahead and get started today.

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, Contributing Writer

Amy Fortune is a contributing writer for CarsDirect and lead writer/editor for AutoCreditExpress. She also contributes regularly to several other high-traffic blogs. Amy was born in North Carolina and grew up with an appreciation for NASCAR and everything automotive. Now based in the Motor City, she continues to be happily immersed in car culture and automotive finance.


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