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Can You Lease a Vehicle With a 500 Credit Score?

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Leasing is normally reserved for borrowers with great credit. Qualifying for a leased vehicle with a credit score lower than around 660 is going to be hard – let alone qualifying for a lease with a score of 500. This doesn’t mean you can’t get into a car at all, but you may find more options as a bad credit borrower if you decide to get an auto loan.

Bad Credit and Car Leasing

Traditional auto leasing is done through leasing companies at franchised dealerships, and is usually an option for borrowers in the prime credit score category. Your credit score is a large part of your car buying power, and lenders use it as a summary of your credit history.

Here’s the credit score range breakdown according to Experian:

  • Super prime: 781-850
  • Prime: 661-780
  • Nonprime: 601-660
  • Subprime: 501-600
  • Deep subprime: 300-500

If your credit score is in the 500 range, you’re in the subprime category. You’d be hard-pressed to find a leasing company that’s willing to approve you for a new vehicle lease with a 500 credit score. It may not be impossible to qualify if you can prove that your income is substantial, but this is rare.

Getting into a lease to own car or a subprime auto loan is likely to be much easier for you than applying for a lease with a credit score in the subprime range. There are lenders that work with borrowers who have less than perfect credit, and some dealers that don’t even review your credit reports when you apply.

Lease to Own vs. Traditional Leasing

If you want to lease a vehicle because you don’t want the commitment, or you simply don’t want to take a traditional loan out, a lease to own car might be more your speed. There are some key differences between lease to own agreements and traditional leasing, though.

Here’s a quick reference guide that covers the differences between traditional leasing and lease to own vehicles:

 Traditional Car Leasing 

 Lease to Own Cars 

Credit check required

Usually no credit check required

Nearly always brand-new vehicles

Used cars only

Monthly car payments

Could be monthly, biweekly, or weekly car payments

Interest charges to pay

No interest charges to pay

You’re responsible for maintaining auto insurance

You’re responsible for maintaining auto insurance

Manufacturer warranty included

No manufacturer warranty included

You’re responsible for repairs and maintenance unless covered by the warranty

You’re responsible for repairs and maintenance

Traditional leasing is done through a leasing company. Lease to own cars are only done for used vehicles at buy here pay here (BHPH) dealerships. These places have in-house financing, which means the dealer is the lender.

Lease to own agreements can be very helpful for borrowers who simply need a car to get by, and who need to get into it quickly. BHPH dealerships don’t typically check your credit reports or check your credit score, which speeds up the whole process.

With a lease to own vehicle, you get the car’s title once you make your last payment. The dealer holds on to the title until all payments are made. You’re responsible for all of the upkeep on the vehicle and maintaining auto insurance the entire time you’re making payments.

Due to the ease of getting into the lease to own car quickly, and the lack of credit check, expect to pay more for the vehicle than it’s worth – the price of convenience. Additionally, lease to own agreements may not be reported to the credit bureaus, which means there wouldn’t be a chance for credit repair even if you make all of your payments on time.

Bad Credit and Subprime Auto Loans

Subprime car lenders are signed up with some special finance dealerships, and these lenders work with bad credit borrowers who’ve gone through a bankruptcy, past vehicle repossession, or those who are new borrowers with no credit history.

With subprime lenders, there’s a credit check, and they don’t offer traditional leasing, only loans. However, if you qualify, you may be able to finance a new or used car, depending on your income and your overall financial situation.

While you can’t get into a lease with a subprime lender, they do offer loans for borrowers with less than perfect credit scores. You need to meet some requirements, and provide documents that prove you’re ready to take on an auto loan.

Since subprime car loans are reported to the credit bureaus, you can work to repair your credit with timely payments.

Still Want to Lease a Car?

If you’re still set on leasing, you can definitely try. Just know that landing a vehicle lease with a credit score of 500 is difficult. You can work on building your credit score with an auto loan now, which may allow you to qualify for a lease next time around.

If you’re in need of a vehicle and can’t wait for your credit score to heal, an auto loan could be your answer. Financing with a subprime lender offers the chance for credit repair. Working on your credit score while driving the car you need could be the stepping stone to get into that future new vehicle lease.

To get started on your car shopping journey, get with us at Auto Credit Express. We’ve created a network of dealers that are signed up with subprime lenders, and they look at more than just your credit score when you apply.

Begin right now by filling out our free auto loan request form. After you do, we’ll start the search for a dealership in your local area with the bad credit lending options you need.



Source: on 2020-09-06 09:07:30

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