How to Lease a Car with Bad Credit
A family emergency. A closet full of new clothes. Poor decision making. A sick pet. Life. The reasons hundreds of thousands of people find themselves with bad credit are innumerable. But the harsh reality is that poor credit can impact your life in ways that are often difficult to identify when you are creating said bad credit.
It is common knowledge that a low credit score results in higher interest rates for loans and leases. The other truth is that many of us live in an area where public transportation is not a reasonable option.
So how are you supposed to reliably get yourself to a job to have the money to improve your credit if nobody will give you the means to get a car to get to the job? And is it really so bad to want to lease a new car and trade it in for a new vehicle every few years even though you may not have stellar credit, you ask yourself. The answer is absolutely not.
Perhaps you can find comfort in the knowledge that this conundrum is so common that it warranted the generation of a list. So here you go: five steps bad credit holders can take to lease a car.
Know and Understand Your Credit Score and Report
Despite popular opinion, ignorance, is not, in fact, bliss, even if it may feel like it sometimes. Empower yourself by understanding exactly how bad your credit is. Internet resources such as Credit Karma and Free Credit Report offer free credit reporting services. However, categorizing your score (excellent credit scores range from 750 – 850; good ranges from 700 – 749; fair ranges from 640-699; and poor is a score of 630 or less) is only one of the services provided.
Once you set up an account, you can receive alerts when there is a change—either positive or negative—in your credit score, information about what affects your credit score and how to improve it as well as personalized recommendations to inspire you to make the lifestyle adjustments necessary to use generate and maintain a “Good” or “Excellent” credit score.
In general, a FICO Score of 700 or more is required to qualify for a lease. However, if you have a credit score of that rating, you are likely not reading this posting. If you have a credit rating that ranges from 599 to 699, you are categorized as a “subprime” credit holder. Individuals within this category are often able to qualify for a lease, but will be required to make an additional down payment and will have an increased monthly rate. Individuals with a credit score of 598 or less are considered “super-subprime.”
Unfortunately, if you are in this category, you will be unable to lease until your score is improved.
Identify a Monthly Payment that Fits your Budget
Credit monitoring services again provide a good resource to help identity how much of a monthly car payment commitment is a reasonable expectation for your income, lifestyle and other financial commitments. Establishing a price range prior to initiating your search has multiple advantages. It enables you to have a strong understanding of what type of vehicle is realistic. It enables you to identify a reasonable monthly financial commitment.
Finally, factoring gas and upkeep into your monthly car payment helps identify total vehicle costs.
Research Vehicles that Fit Within Your Budget
Be reasonable. It is true that you shouldn’t be punished for the rest of your life because you generated some bad credit along the way. But neither should you expect to have the option of leasing a top-of-the-line luxury vehicle, either (until you’ve built your credit back up, that is). But the good news is that most of today’s vehicle manufacturers provide vehicle options that cover a range of price points. Additionally, the majority of vehicle models come with a variety of upgrade packages.
Therefore, having a good understanding of the features that are a non-negotiable, like Bluetooth and satellite radio, and those that you can live without, such as leather heated seats will help you understand what vehicles are reasonable with your current financial circumstances. So if your credit isn’t good, but it isn’t considered terrible, either, you can rest assured that leasing a new vehicle may not be out of the realm of possibility for you.
Even if you are categorized as “subprime” but are willing to put additional money down and incur a higher interest rate than something with good credit a lease may still be a viable option.
Explore Bad Credit Leasing Options
Just in case you need more proof that you aren’t the only person who tried to lease a car but has a poor credit rating, here you go. Accepting there may be some unavoidable fees is an unfortunate fact of life. However, understanding that there still could be a leasing option available for you with bad credit may help expand your options.
While most dealerships are wary of leasing a car to bad credit holders, a lease takeover could be a viable option for you. Also referred to as a lease transfer or a lease assumption, this process simply includes you taking over a vehicle and the associated payments from someone interested in opting out of their existing lease. You are still required to qualify for this lease but the criteria is less prohibitive than acquiring a new lease One such company that arranges lease transfers can be found by visiting SwapALease.
This site provides the car shopper with a listing of cars available for a lease transfer by zip code so you don’t find yourself falling in love with a car on the other side of the country. Pertinent details describing exactly how this unique process works can also be found on the site.
Explore Loan Options
At the end of the day, though, you may find that your credit is just too bad to reasonably lease a car. In that case, you might as well put on one of those snazzy outfits or look at pictures from that amazing vacation to help you realize that all is not lost. The truth is that in some cases, getting a car loan for a vehicle may be a more reasonable option. Loan options are particularly appealing for bad-credit holders who have an individual who is willing to cosign a loan for you.
But fret not for there is more good news for you. Making consistent on-time car payments is a relatively easy way to begin to improve that icky credit score. Additionally, when you are done with the car loan you have equity and something of your very own. When you are done with a car lease, on the other hand, you don’t have as much to show for it.
Dealing with the consequences of a bad credit score is stressful, frustrating, and can do a number on your ego. And most everyone knows that building one’s credit score back up to an acceptable rating takes time and commitment. But it does not absolutely prohibit an individual from being able to lease a car they enjoy, take pride in, and can actually afford.