Is Good Credit Required to Lease a Car?

Get Car Financing
Even with poor credit.

By

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.


, - December 6, 2017

Leasing a new vehicle gives borrowers more options and can save money in the long run, but, despite the positives, credit troubles can keep buyers from qualifying.

How Credit Can Affect Leasing

A borrower’s credit score and history will affect whether or not they can lease a vehicle. A consumer with bad or no credit history typically won’t qualify. But some lenders may be willing to work with bad credit applicants.

Shoppers with less than perfect credit need to be realistic when shopping for a lease because an affordable vehicle offers the best chance at qualifying. DMV.org suggests waiting until the end of the model year, when manufacturers work to get rid of current inventory to make way for newer models and offer the best incentives.

The Pros and Cons of Bad Credit Leasing

Leasing can be a good option for some borrowers with credit problems. Here’s why:

  • Lower monthly payments – Financing is almost always more expensive per month than leasing. In addition, the overall cost in the long run is usually higher due to interest charges.
  • Lower down payment – The rule of thumb for subprime financing is to have at least a 10 percent down payment. Bad credit lessees can put down less – usually one or two times the monthly payment.
  • Helps improve credit – Leasing is a great way to improve credit. Making all payments on time will raise credit scores and lead to deals with better rates and terms in the future.

Poor credit can keep consumers from qualifying to lease, and only borrowers with the best credit scores qualify for low-interest or “no down payment” incentives. Some other issues bad credit lessees face are:

  • Higher interest rates – The lower the credit score, the higher the interest rate. A bigger down payment is an option to counteract high interest rates, but that’s not always the best idea on a lease since leased vehicles don’t build equity like financed vehicles. The down payment money just goes toward lowering the monthly payment.
  • Security deposit requirement – Lenders often require subprime borrowers to make one or more security deposits due to the added risk.

The Bottom Line

Leasing is a popular option in the automotive industry. Borrowers can drive a reliable vehicle and get the opportunity to improve credit in addition to receiving a shorter term and lower payments. However, bad credit can make it difficult to get approved.

If you have poor credit and need a car, subprime financing may be more attainable. At CarsDirect, we help people dealing with credit trouble get connected to local special finance dealerships. Get started today by filling out our free, no-obligation online auto loan request form.

Free Credit Score

Get your free credit score now! Get a copy of your most recent credit score.

Get Your Free Score

Auto Insurance

Get competitive quotes on insurance in your area.

Sell Your Car

We will buy any car, running or not, with or (in most cases) without the title.

Get My Price

Need a Car Loan?

It only takes a minute.

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.


Search New Cars by Lease Payment »

Explore estimated lease payments with the latest manufacturer discounts.

Loan approval is not guaranteed and is subject to credit application and approval of the lender. Individual loan terms may vary. Use of this website constitutes acceptance of CarsDirect.com's Terms of Use, Disclaimer, Privacy Policy, and Cookie Policy.

Privacy Policy|Terms of Use|Cookie Policy|Disclaimer
COPYRIGHT 1999-2019 MH Sub I, LLC dba CarsDirect.com