Leasing a Car with Bad Credit

Your credit score can be an important factor when leasing a new car. If your score is good, then you can use it as a bargaining tool for getting lower monthly payments. If your score is bad, it can make it difficult to find a dealer to lease to you and make your down payment and monthly payments considerably higher. You also may not be able to take advantage of special promotional deals being offered. Find out what your credit score is before you start shopping for a new car quote. It’s important to know what your score is so that you can’t be taken advantage of by a dealer.

A credit score is a number between 300 to 850, with 850 being the best and 300 the worst. Here is a breakdown of how your score is calculated:

35% of the score is based on your payment history.
30% of the score is based on outstanding debt.
15% of the score is based on the length of time you’ve had credit.
10% of the score is based on new credit.
10% of the score is based on the types of credit you currently have.

If you have a poor credit rating, you can still lease a new or used car but you will need to do a little more work. Here are a few things that you can do to make it easier:

• Consider spending some time improving your credit score before you try to lease a car. First, check your credit report to make sure that there are no errors on it that are dragging your score down artificially. Reduce the balances on your credit cards as much as possible. Pay all of your bills on time and in full. Limit the number of inquiries of your credit rating. Credit inquiries can take points off of your credit score. Your score is not affected when you check your credit yourself.



• Shop around, lease credit requirements can vary between different dealers and some dealers are more willing to work with people with poor credit than others. You may get turned down a few times, but don’t give up too easily. Ask the dealers what their lease guidelines are before trying to work out a deal. Ask them straight out if they will lease to someone with a poor credit rating.



• If possible, get a friend or family member with good credit to be your co-signer. Keep in mind that if you do end up having problems with the lease payments, your co-signer will be responsible for the payments and your co-signers credit can be affected as well as your own.

Once you have successfully leased a car, making your lease payments on time and keeping the vehicle until the end of the lease term will help to improve your credit score. That means that the next time you want to lease you will have more choices and be able to get a better rate. Alternately, making payments late will further damage your rating. Make sure to lease a car that you can genuinely afford and for a time period that you feel comfortable with. Although terminating a lease early is an option, it can damage your credit rating and should be avoided at all costs.