Can You Lease a Vehicle with Bad Credit?

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Even with poor credit.

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


, - April 16, 2019

Unlike car buying, leasing a vehicle may not be in the cards if you have bad credit. Leasing is typically reserved for people whose credit score is 660 or above, so your chances of leasing a car with bad credit are often slim. Leasing a vehicle may ultimately cost you more than buying, but it's up to you to decide which is right for your situation.

Credit Scores Needed for Car Leasing

Leasing a car isn't like buying a vehicle. In both cases, however, if you have bad credit, it’s going to be more difficult to find someone to finance you than if you had good credit. Typically, leasing is reserved for people with good credit scores, either falling into the prime and super prime category. To be in these categories, you need a credit score of 661 or higher, according to the credit bureau Experian.

In order for your credit score to be good enough to qualify for leasing with bad credit, you’re typically going to have to have a credit score that falls into either the subprime (credit score of 501 to 600) or nonprime range (credit score of 601 to 660). These ranges see the most results when it comes to leasing with poor credit. If your credit score falls into the deep subprime category (credit score of 300 to 500), it typically is virtually impossible to qualify for a lease deal.

According to Experian’s State of the Automotive Finance Market report from the fourth quarter of 2018, only 21.69 percent of all leases went to people with credit scores of 660 and below – 15.32 percent in the nonprime range and only 6.37 percent in the subprime range. Compare that to the 77.85 percent of leases that go to people with credit scores of 661 and higher, and it’s easy to see why it may be more difficult to find a lessor that deals with bad credit car leasing.

Leasing a Car with Bad Credit

It might seem like a smart idea to lease a vehicle, especially with the draw of lower payments and new cars. Under good credit leasing standards, your monthly payment is usually lower than it is when financing. However, if you have bad credit and choose to lease a vehicle, your monthly payment would generally be higher than if you financed a reliable used model.

According to Experian, the average monthly lease payment for subprime lessees was $471 in the fourth quarter of 2018, while the average payment for nonprime lessees was $456. On the other hand, the average monthly used car loan payment was $403 for people with subprime credit scores, while those with nonprime credit paid $388 a month on average.

Even though you only pay for the portion of the car you use during a lease, the true expense in leasing comes down to ownership. Because you have to get a new vehicle every two to three years, you're never without a car payment.

At the end of your lease term, any equity in a leased vehicle belongs to the leasing company, and you never benefit from the car’s residual value. But, when you finance a vehicle with an auto loan, any value in the car after you've paid off the loan belongs to you since you own that asset.

Buying May Be Better with Bad Credit

Since leasing is more common among people with better credit, there are other options when you need a vehicle and are struggling with credit issues. Usually, you can wait until your credit score improves and see if you qualify for a lease deal then, or get a bad credit car loan – which, incidentally, helps your credit improve with each on-time payment.

When you choose to finance a vehicle with bad credit, you have a better chance of getting approved because there's a group of lenders across the country that work through special finance dealerships. Called subprime lenders, they look beyond credit scores to help people in need get cars based on factors like income, residency, and employment.

Plus, you can research the vehicle you want to finance right here using our new and used car sections. Then, once your credit has improved over the term of your loan, you may be eligible to lease the next time around.

Finding a Dealership That's Right for You

Rather than driving all over town looking for a dealer that works with the right group of lenders, why not let CarsDirect help connect you to one without all the hassle? Our process is simple, free, and fast – just fill out our auto loan request form to get started today.

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Meghan Carbary has been writing professionally for nearly 20 years. A published journalist in three states, Meghan honed her skills as a feature writer and sports editor. She has now expanded her skill-set into the automotive industry as a content writer for Auto Credit Express, where she contributes to several automotive and auto finance blogs.


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