I have seen many people get frustrated when trying to lease a car. This is because lenders are shy to trust borrowers with bad credit histories and low credit scores. In our times of economic stress and tight credit, it is easy to understand financial institutions.
As many banks want to do business with trusted borrowers, many people find themselves unable to lease cars and other items. Luckily, some lenders are ready to take risks. I have put together this resource to help you secure a car lease even with a poor credit rating.
Understanding What Credit Score Is
Credit Score is simply a measure of your credit worth. It is usually represented in figures between 300 and 850. The mean credit score for U.S consumers is around 720.
This means that you are considered prime if your score is 680 and above.
Below 620 is subprime.
While subprime borrowers can still secure cars leases, it usually comes with a hefty price. For example, you will have to pay higher interest rates or higher down payment. Find reports on your credit history from annualcreditreport.com.
According to DMV.org, you are better off leasing than buying with a poor credit record. This is because of the low monthly repayments involved. Leasing needs less down payment and less maintenance.
How to Lease a Car With Poor Credit Score
Before applying to lease any car, it is important to reevaluate your credit score first. Since there are varying degrees of bad credit scores, understand what yours actually means. According to Leaseguide.com, there is still hope for you.
If you have made late payments for your credit card account for example, that is generally not too bad. A recent home foreclosure of bankruptcy is worse. You might just qualify for the car lease that you once thought was impossible.
With increased competition among financial institutions, businesses are desperate to make some sales. Some even choose to investigate your credit details beyond the single number that appears on your report.
Ask, Research and Shop Around
Are you desperate to finally get the keys to a desirable car? Do not let the yearning to lease a car cause you to settle for less. Instead, ask as many people as possible, starting with your closest friends and family. Additionally, visit as many websites as possible.
More importantly, do not settle at the first company that sounds reasonable. Compare the down payments, interest rates and other quotes from other dealerships. Sometimes, it pays to approach the company as if you are buying the car. This strategy may help you secure a better leasing deal.
You can lease a car from lenders such as CarsDirect and Hippo Leasing even you have bad credit. The loan request procedures feature easy steps. They approve it in a short time too. Even if the interest rate here is higher than that of other lenders, the deal is still reasonable.
Huffington Post recommends you to find out the minimum credit for the certain car that you desire. After that, research widely and make requests from several lenders.
Postpone Your Leasing Plans to the Near Future
If your car leasing requirement is not urgent, consider pushing the plan ahead. This allows time for you to sort out your financial distress. During the postponement, strive to save more money so that you may increase your chances of a better deal.
You might just stumble upon a dealership that is offering a better car with better interest rates. As you recover from unfavorable credit score, cut down your spending so that you can save more towards your lease.
Use Lease Takeover to Get a New Car
This option enables you to assume the responsibilities of a car lease from another borrower. It is also referred to as a lease transfer or lease assumption. You can arrange a takeover deal with a borrower who is struggling with repaying the dealership.
Swap a lease is one popular online resource that helps poor credit borrowers find takeover options. This website publishes vehicles for lease in different cities and towns across the United States. It connects ‘buyers’ with ‘sellers’ online.
The car lease company will still evaluate your credit score. However, the scrutiny for such an arrangement is far less strict than if you were applying for a fresh lease. After all, you are doing the company a favor by agreeing to take over the responsibilities of a prospective defaulter.
Lease Your desired Car with a Co-signer
We have all witnessed people failing to secure car leases thanks to their reduced credit scores. If you are one of them, talk to a family member or a friend who enjoys unviable credit rating. A co-signer will be responsible for repayments if you default, hence making the deal reasonable.
According to dmv.org you can secure a car lease by showing proof of steady income. Let the dealer see a couple of your previous bank statements.
Make a Handsome Down Payment
As mentioned earlier some dealers will jump at the opportunity of doing business with anyone, regardless of their credit score. Make an attempt to convince them by making a larger-than normal down payment.
This way, the car lease company sees your seriousness and honest interest. Alternatively, offer to prepay the first couple of months or make payments two times in a month. Do whatever you can to convince them that you are past the unfavorable financial distress that you once suffered.
Poor credit is no longer justification for failure to access a car lease. With business competition, companies have loosened their once tight leasing prerequisites. Otherwise, postponing your lease and taking over another borrower’s lease are options.
If your bad credit score cannot secure you a car lease, try the following strategies-
- Borrow money for a down payment from your family or friends
- Give the company several references as prove that you are not a risk
- Consider applying for a lease at a used car dealership
- Borrow money against a home equity or a 401K fund
- Borrow a car from a family member or friend who trusts you