Leasing companies usually have high credit score requirements that need to be met in order to qualify for a car lease. You can expect a leasing company to request your reports and check your credit score.
What Credit Score Do I Need for a Car Lease?
Your credit score is a major factor for most traditional lending institutions and leasing companies. Lenders and lessors use your credit rating as a way to determine if you’re a good fit for approval. Even if you have the income to pay for a lease or an auto loan, a poor credit score could be the thing that knocks you out of the race.
Leasing companies vary in their specific requirements, but generally, you may be required to have a credit score above 660 – possibly even in the 700s. The higher your credit score, the higher your chances of meeting their leasing requirements.
Extra Fees for Bad Credit Lessees
Along with your overall eligibility, your credit score also determines your money factor, which is the lease interest rate. Borrowers with less than perfect credit may end up paying more for a car lease because of those money factor fees. These fees are predetermined, and added to your monthly payment, so a bad credit lessee may have a higher payment than a good credit lessee as well.
Bad credit lessees may also be expected to provide a security deposit to qualify for a lease. A security deposit is usually around the same amount as your monthly lease payment, and they’re used to cover any possible damage that happens to the leased vehicle during the term. If the security deposit isn’t used once you return the car, it’s typically refunded. Still – it’s another cost that credit-challenged consumers may face at the start of an auto lease.
Are Bad Credit Car Leases Common?
Unfortunately, bad credit consumers can run into issues qualifying for a lease, due to the higher credit score requirements. Most leases are issued to borrowers with good credit scores.
Leasing companies are typically only allowed to lease out brand-new vehicles, so they may not offer a lot of wiggle room for those with credit issues.
Vehicle Options With Bad Credit
There are resources for borrowers in need of a vehicle – subprime car loans through special finance dealerships.
Subprime lenders specialize in assisting borrowers with credit challenges whether it be bankruptcy, no credit, or just a lower credit score. Subprime financing allows borrowers to buy a new or used car, depending on their income and stability. If you can meet the requirements of a subprime lender, then you could also have a shot at credit repair too!
Subprime lenders report loans to the national credit bureaus. A reported loan means the timely payments are reported, which allow you to improve your credit score. Payment history is the most important part of your credit score, so making sure the things you pay on are reported is key to repairing your credit.
With an improved credit score by taking on new credit that you can comfortably handle, you could be meeting a leasing company’s requirements next time you need a vehicle.
Car Resources for Bad Credit Borrowers
It’s not always easy to find resources for bad credit borrowers, but here at Auto Credit Express, we want to alleviate some of that stress. Finding a dealership that’s signed up with subprime lenders can be as simple as completing our free auto loan request form, and letting us do the hard work of finding a dealer in your local area. If you’re striving to turn your credit around, do it while driving your next vehicle – let’s get to work!