Most dealerships consider any credit score below 620 to be subprime, but bad credit car leasing is still possible. Your interest rates may be higher, though, and your vehicle options may be more limited.
Leasing a car with a bad credit score does come with its compromises. You might have to make a larger down payment, find a co-signer, or adjust the terms of your lease.
Although this may seem intimidating, you can rest easy knowing that there are more leasing options for low credit than ever before.
Victory will always favor the prepared. That’s why it’s important to fully understand your leasing options and do everything you can to increase your chances for approval. Read on, and let the trusted comparison tool
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What credit score do I need to lease a car?
A credit score between 680 and 739 will guarantee smooth sailing, although lower scores between 620 and 679 are still on the good side. As you search, you’ll find that these ranges will vary from dealership to dealership, but, the higher your score, the better your leasing options will be.
A good credit score shows that you have a history of paying your loans back on time. In contrast, bad credit would suggest otherwise.
Why all the fuss when it comes to leasing a car with bad credit?
Simply put, bad credit means increased risk for the leasing company or dealership. They already take on depreciation risk factors like physical damage, excessive wear and tear, and extra mileage, so the added risk of a borrower with bad credit certainly doesn’t help.
A bad credit score shouldn’t define you, but the reality is that the assumed risk that comes with a lower score makes it more challenging to qualify for a lease.
Key Takeaway Dealerships often require a minimum credit score of 620.
Factors to consider before leasing with bad credit
If you’re shopping for a lease with bad credit, here are some factors to consider.
Expensive financing
People tend to opt for leasing instead of buying a car outright
because the out-of-pocket costs will be smaller when they’re divided between a down payment and subsequent monthly payments. If your credit has more than a few dings, however, you should expect those costs and your interest charges to be significantly higher. When leasing a vehicle, the rate you pay is called the money factor or lease rate. The lease rate is very similar to the interest rate you pay when buying a car. The calculation of your credit rating, the price of the vehicle, and the car’s residual value determine your lease rate and the cost of financing.
If you get approved for a lease with bad credit, you should expect and prepare for a higher money factor. Other car-related expenses like car insurance may also need preplanning. Jerry
is a useful tool to help you shop ahead and prepare for additional spending. Lease-here, pay-here dealerships
In the face of rejection, it might be tempting to seek out a lease-here, pay-here dealership. Proceed with caution as this would be considered a last resort option.
These dealerships are known for offering slim pickings, with leases only available for older used cars. Not only will you be required to pay high rent charges, but you’ll be on your own when it comes to coverage for repairs or maintenance.
Try to explore all other options before arriving at a lease-here, pay-here dealership. If this is the next step for you, make sure you fully understand all the lease terms and charges. Otherwise, be prepared to overpay for very little.
How to get approved for car leasing with bad credit
When you find a dealer ready to work for you, be prepared to jump through a few hoops.
Make a substantial down payment
When you sign a lease, putting money down will reduce your cost upon signing and can help alter your credit requirement. Saving for a down payment in advance will also put you in a good position to lower the amount of your lease and monthly payments. However, shop wisely because some companies restrict the amount you can put down.
Get a co-signer
Having a credible co-signer like a friend, family member, or partner can strengthen your chances of getting approved. Try to find someone with a much better credit score so that the leasing company can trust that payments will be made on time. The relationship with your co-signer will require some transparency because they’ll have to answer if you miss your payments.
Key Takeaway Your best chance of getting approved for a lease with a bad credit score requires planning ahead.
Alternatives to leasing a car with bad credit
Get a cheaper car
Cheaper cars come with a smaller lease, which could lower the amount of interest that you pay. So it would be beneficial to target a less expensive vehicle when it’s time to lease.
Lease transfers
When considering leasing a car with bad credit, you also have the option to do a lease transfer, also known as a car lease swap
. This means that you would take over an existing lease from another party by making the remaining payments and fulfilling the original lease terms. Chances are, you'll need to have a credit score similar to that of the previous owner to get approved.
In-house financing
Some dealerships have an in-house financing department whose focus is to work with people who have bad credit. It might benefit you to shop around for a dealership that offers special financing and see if you can strike a bargain.
Once approved, expect the interest rates to be a bit higher if you want to lease with a bad credit score.
Keep in mind that these options may have their own credit requirements.
How to find affordable car insurance
Overall, leasing a car with bad credit will likely be a costly task, so you’ll be looking to save money on all of your other car-related expenses, especially your insurance. Most lease agreements will require you to take out full coverage car insurance
, especially when dealing with a low credit score. Jerry
can help you find the best savings on the coverage you need. A licensed broker, Jerry does the hard work of finding cheap quotes from the top name-brand insurance companies and buying new car insurance
for you. To ensure you always have the lowest rate, Jerry will send you new quotes whenever your policy comes up for renewal. Get the coverage you want at the best price.
“When I started shopping for insurance for my new car, the estimates I received were around $150. Jerry
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