It might seem impossible to lease a car with bad credit, but there are many different leasers and financial providers they work with. Leasing a car while you’re in financial straits can actually be a really good idea, considering that getting locked up in a longer-term car loan with a high interest rate might not be wise, or even feasible.
A leased car is usually brand new and totally reliable, and much of the routine maintenance is covered by the lease, so you have a few years of there not being high chances of costly auto repairs, which can help you get on your financial feet.
If you’re thinking about exploring this, then keep reading to learn 9 tips you can use for leasing a car, even with bad credit.
1) Know your credit score: The very first thing you should do is not pick out the car that you want to lease, but instead look up your credit score. You might know that you have bad credit, but you need to find out just what your numbers are, and that’s from all three primary bureaus. If you’re lucky, you’ll find out that your thinking was overtly negative and you’re not actually that bad. On the other hand, you might just find that it’s worse than you think.
2) Check your report: You’re entitled to a free annual copy of your credit report, by law, and if you’re not actively monitoring your credit, then you should at least be getting your hands on this every 12 months. You need to go through each page, line by line. Make sure that you know what each item is, who it is, and the amounts are correct. Dispute anything that’s inaccurate, whether it’s just something that didn’t get cleared or is flat out wrong.
3) Take steps to improve your score: You can move the needle on your credit score faster than you think. Moving more than a hundred points takes time, but the sooner you get started, the better, particularly if you are in a borderline range between bad and medium credit levels. Debt-to-income ratio, getting things off of your report, and paying your current bills on time are all good starting steps that move your number in a positive direction.
4) Ask leasers what their minimum requirements are: You’re likely to find that your own ideas of what constitutes bad credit don’t exactly match the credit bureaus, so be open to the idea that those who lease cars might have their own requirements. Even if you’re not happy with your score, ask them what minimum requirements and standards they have as a cut-off, because you might just make it. It’s sometimes a bit easier to get a car lease than an unsecured loan like a credit card, just given they have the legal right to repossess the physical assets in question should the need arise. Just make sure you do your due diligence when buying or leasing any car.
5) Estimate your mileage: Have some idea what kind of mileage you’re going to be logging in any potential vehicle. Most leases have serious caps on annual mileage, or the total over the whole lease. If you turn in the car with an odometer higher than that, you can expect to pay something a dollar for every two or three miles you’re over, so being over thousands of miles will cost you thousands of dollars.
6) Plan ahead for after the lease: In addition to possibly facing a penalty for the overmileage, you might have the choice or option to purchase the vehicle at the end of the lease. This is a decision that you don’t have to make when leasing it, but if you think you might want to keep a car you’ve gotten familiar with, then it’s good to know ahead of time that’s a possibility so you can prepare your finances and budget for either buying it or financing it.
7) Wait six months: Sometimes, things don’t just line up, or you see you are closer to better terms and deals, so it’s worth it to just keep doing what you’re doing now and then re-investigating the possibility down the road when your circumstances and numbers are better enough to land better numbers in terms of interest rates and monthly payments.
8) Consider a co-signer: If you can’t wait, and your credit is bad enough, you might have to lean on a friend or family member to be a co-signer to help secure the lease. This is particularly true if you’re young and don’t have a long credit history but are looking to establish one.
9) Improve your employment: In a number of cases, your credit scores might be high enough but your income might not be up to the standards that a car leaser would like to see. Steady income helps, but if you can get your monthly income higher than it currently is, then a lease would be a lower percentage of your total regular budget, which only helps your chances of securing a lease and driving off the lot with a new car that serves you well for a few years.
Now that you know 9 tips to leasing a car with bad credit, you can hopefully find yourself a reliable ride that helps stabilize your financial situation for a few years and provide something solid you can build off of into other areas.