HOW TO LEASE A CAR WITH BAD CREDIT
Many people believe that car leasing is much easier than car buying and it depends less on your credit score. Unfortunately this is not the case, but there are work-arounds. Often times customers have major credit issues that put a barrier between getting that perfect car they need. This tends to happen the most when you would want to get approved for a car lease, but unfortunately they have iffy credit history from that late credit card payment. Most banks now screen each potential borrower much harder and go through a serious vetting process. On the plus side, most banks will go the extra mile to get you into a new car because they’re hungry for business. Let’s take a look at potential steps you can take if you think your credit is bad.
Make sure your credit is what you think it is
Typically customers with lower credit pay higher APR, or put more money due on signing to reduce risk. So what exactly constitutes “bad credit”? Credit scores typically vary from 300-850 and anything above 680 is premium. Anything below 500 could deny your credit app.
Here’s how to get around this nightmare:
Make “Sub-prime loan” your gospel
It might seem that when you are leasing a car, you are in the palm of the dealer’s hand, but you don’t have to go through the finance companies they want you to go through. Rather, you could get a loan from a sub-prime lender. These are companies who will loan poor-credit candidates money, but there’s a catch – higher interest. Beggars can’t be choosers, right? In fact, that statement deserves it’s own headline:
Beggars can’t be choosers
Opting for a cheaper car on the market could get you approved much more easily than if you’re trying to get a car high in demand and more expensive – that’s because the more expensive the car is, the more you’re going to need to borrow, the more the bank would need to trust you to pay that money back, the riskier of a candidate you become for a loan. See that? That’s logic right there.
Consider other options
Maybe car-leasing loans just aren’t working out for you. Another viable option you could consider would be lease-takeovers or lease-transfers. The way this works is basically a person who has a leased car wants out of their lease early without having to pay cancellation or early-termination fees, so they get someone else to take over their leasing contract (and subsequently, their car) and pay off the rest of their lease that way. This isn’t to say that the bank just won’t check your credit, but their credit guidelines on lease transfers are definitely much less stern than new car leases.
Let’s say your credit is, in fact, as bad as you think it is
Well, that sucks. After throwing a (necessary) pity party, feel free to check out these tips on moving forward afterwards:
You could buy a used car from someone willing to take interim payments over a gradual amount of time, get a guarantor with better credit than you, or borrow money against home-equity.
I don’t want to do any of those things. How do I rebuild my credit?
If none of the above tickle your taste buds, here are some ways to build up your credit for the future:
- Make sure there is a wide gap between the card’s limit and your balance by paying down your largest credit card balance
- Start on some novel credit card accounts
- Gas stations and department stores also offer credit cards that can help build your credit
- Try to take out a minimal loan from a credit union and pay it back as quickly as possible
Credit is important. So don’t mess it up. BUT, if you do, we’re here to help 🙂
Check out our exclusive lease deals here.